Introduction A ll companies have some formal or informal means of appraising their employees’ performance. If employees’ performance is good, organizations will want to reinforce it; and if it is bad, they will try to take corrective actions. Performance appraisal is the ongoing process of evaluating and managing both the behavior and outcomes in the organization (Carrell, Elbert & Hatfield, 2008). It is not a process that happens once a year or every six months, but one that happens every day.
Stripped to its essentials, performance appraisal always involves setting work standards, assessing the employees’ actual performance relative to those standards, and providing feedback to the employees with the aim of motivating him or her to eliminate performance deficiencies or to continue to perform above par (Dessler, 2011). Indeed, performance appraisals are widely used for administrating wages and salaries, giving performance feedback, and identifying individual employee strengths and weaknesses (Mathis & Jackson, 2011). Definition of Performance Appraisal
P erformance appraisal is the process of evaluating the behavior of the employees in the work place (Maxwell, 1992).
This process assumes that the employees are aware of their performance standards, and that the supervisor also provides the employees with the feedback, development, and incentives required to help the person eliminate performance deficiencies. Basically, performance appraisal is intended to engage, align, and coalesce individual and group effort to continually improve overall organizational mission accomplishment (Vance, 2006).
According to Dessler (2012, p. 332), “Performance appraisal means evaluating an employee’s current and/or past performance relative to his or her performance standards. ” Dessler also emphasized that performance appraisal aims to improve performance. Moreover, performance appraisal can also provide answers to wide array of work-related questions, and by advancing a road map for success, poor performance can be improved as recommended by Mathis & Jackson (2011, p. 329). Organizations use various terms to describe this process.
Performance review, annual appraisal, performance evaluation, employee evaluation, and merit evaluation are some of the terms used (Carrell, 2008). Purposes of Performance Appraisal: Why Do It? P erformance Appraisal has many facets. It is an organizational intervention. It is a measurement process as well as an intensely emotional process. Above all, it is an inexact, human process. Not surprisingly, therefore, it is judged effective in less than 10 percent of the organizations that use it (Cascio, 1998, p. 303). So, why do appraisals continue to be used? Most importantly, what purposes do they serve?
According to Noe, et al. (2010, pp. 355-359) there are three purposes served by the formal performance evaluation: Administrative purpose: The formal evaluation is used to collect information to make personnel decisions for such things as raises, promotions, terminations, and layoffs. This tends to be the area where most organizations focus their attention. Developmental purpose: The performance evaluation should also be used to identify the employee’s strengths and weaknesses. From there, future opportunities in the organization can be identified to take advantage of the employee’s strengths.
At the same time, a development plan can be built to try to address the employee’s weaknesses through training, on the job experience, or coaching. Strategic purpose: This is an area where few managers focus their attention in the performance evaluation process. This time provides an excellent opportunity for the manager to discuss the link between the employee’s performance and the strategy of the organization. Here, the manager can take the time to show how the employees contribute to the overall success of their department and the organization as a whole.
Besides these three purposes, there are five more specific purposes served in the organization as suggested by Cascio (1998, p. 303). Here, those are: * Appraisals provide legal and formal organizational justification for employment decisions to promote outstanding performers; to weed out marginal or low performers; to train, transfer, or discipline others; and to justify merit increases (or no increases). * Appraisals are used as criteria in test validation. That is, test results are correlated with appraisal results to evaluate the hypothesis that test scores predict jib performance. Appraisals provide feedback to employees and thereby serve as vehicles for personal and career development. * Once the development needs of employees are identified, appraisals can help establish objectives for training programs. * As a result of the proper specification of performance levels, appraisals can help diagnose organizational problems. They do so by identifying training needs and the knowledge, abilities, skills, and other characteristics to consider hiring, and they also provide a basis for distinguishing between effective and ineffective performers.
Despite their shortcomings, appraisals continue to be used widely, especially as a basis for tying pay to performance (Cascio 1998) and it is a manager’s crucial responsibility to notice whether the purposes of appraisals are being served effectively, or not as par the context of organization. Important Performance Appraisal Issues and Uses N ot surprisingly, managers consider fairness and justice issues to be very important. Most organizations report having an informal dispute resolution system (e. g. open door policies) that employees may use to contest the appraisal outcome.
However, a sizable minority reported that no appeals process was available. While it may be common to have a mechanism for handling appeals, it is far less common to solicit employee opinions about the appraisal process. Most organizations do not systematically collect data to determine either the managers’ or the employees’ perceptions of fairness of the appraisal process or the results obtained (Russell & Goode, 1988). Managers identified fairness as the most important performance appraisal issue organizations face as cited by (Hedge & Kavanagh, 1988).
They also tend to be very concerned that the appraisal system be an effective tool to manage future performance, not just one that reflects past performance. Managers indicated that they are most likely to use performance information for improving future performance, making pay distribution decisions, and communicating expectations regarding future performance (Jackson & Mathis, 2011) stated that organizations use performance appraisal in two potentially conflicting ways. One use is to provide a measure of performance for consideration in making pay or other administrative decisions about employees.
The other use focuses on the development of individuals. The administrative role often creates stress for managers doing the appraisals and employees as well. On the other hand, developmental performance appraisal emphasizes identifying current training and developmental needs, as well a planning employees’ future opportunities and career directions (Jackson & Mathis, 2011, p. p. 329-330). The Expected Benefits of Employee Performance Appraisal S everal benefits for organizations are seen to stem from this system.
First and foremost, performance appraisal systems are designed to help improve employee performance (Hewitt Associates, 1991; Roberts, 1995; Swan, 1991; Tiffin & McCormick, 1958/1962). Employee performance appraisal is seen as an integral part of performance management. Swan, (1991) noted that performance management helps supervisors successfully carry out their role in managing the workforce by providing feedback and guidance to help their employees achieve performance goals throughout the year. The performance appraisal is the annual codification of this ongoing process” (Swan, 1991, p. 9). According to McGregor (1962, p. 71), performance appraisals help supervisors facilitate improvement by informing employees about their “behavior, attitudes, skills, or job knowledge”. Other writers emphasize how employee performance appraisal is needed to identify the training and development needs of employees. In addition, the employee performance appraisal system provides data to support decisions about salary increases and bonuses, especially when so called “merit-pay” systems exist.
Moreover, the employee performance appraisal helps in identifying candidates for promotion and provides a basis for employee transfer, reassignment, reinstatement, retention, demotion, discipline, layoff, termination, discharge, and dismissal (Daley, 1993; Klingner & Nalbandian, 2003). Furthermore, it assists with personnel research and validating selection criteria (England & Parle, 1987). Lastly, it helps with identifying larger problems existing within the organization (Roberts, 1995). Steps in Developing a Performance Appraisal System T e specific steps followed in developing a performance appraisal system will vary somewhat from organization to organization. Nonetheless, Carrell, Elbert, and Hatfield (1995),-these three authors have suggested the following steps adopted by most employees when developing an appraisal system: Determine Performance Requirements: In the first step of the process, administrators must determine what skills, outputs and accomplishments will be evaluated during each appraisal. These may be derived from specific job description or they may be a uniform set of employee requirements included in all performance appraisal system.
Choose an Appropriate Appraisal Method: The manner in which a supervisor conducts the appraisal is strongly determined by the method. In an organization, different appraisal methods can be adopted for different departments, such as: Production, sales and administrative employees. Train Supervisors: A critical step in the appraising process is training supervisors so that they prepare fair and accurate appraisals and effectively communicate the evaluation to the employee. Requirements of Effective Appraisal System L gally and scientifically, the key requirements of any appraisal system are relevance, sensitivity and reliability. In the context of ongoing operations, the key requirements are acceptability and practicality (Cascio, 1998, p. p. 304-306). These requirements are considered as follows: Reliability: Reliability refers to the consistency of the performance measure. One important type of reliability is interpreter reliability the consistency among the individuals who evaluate the employee’s performance. Evidence seems to indicate that most subjective supervisory measures of job performance exhibit low reliability (King, 1980).
With some measures, the extent to which all the items rated are internally consistent is important (internal consistency reliability). Acceptability: Acceptability refers to whether the people who use the performance measure accept it. Many very elaborate performance appraisal systems are extremely valid and reliable, but they consume so much of managers’ time that they refuse to use it. Alternatively, those being evaluated by a measure may not accept it. Acceptability is affected by the extent to which employees believe the performance management system is fair.
Relevance: This requirement implies that there are clear links  Between the performance standards for a particular job and an organization’s goals, and  Between the critical job elements identified through a job analysis and the dimensions to be rated on an appraisal form. Performance standards translate job requirements into levels of acceptable or unacceptable employee behavior (Cascio 1998; Mathis & Jackson 2011). The critical role of performance standard in the job analysis and performance appraisal has been linked in the following grid: *(Cascio, 1998, p. 305)
Sensitivity: This implies that a performance appraisal system is capable of distinguishing effective from ineffective performers and if it is not, then the appraisal system cannot be used for administrative purposes. Practicality: This requirement implies that appraisal instruments are easy for managers to measure the performance of the employees and employees to understand without any complexity. Other than these very important requirements, Dessler (2012) has suggested another crucial requirement or, criteria to measure performance which is known as strategic congruence. Strategic Congruence S rategic congruence is the extent to which the performance management system elicits job performance that is congruent with the organization’s strategy, goals and culture (Schneier, 1991). Performance appraisal should be strategy focused. If a company emphasizes customer service, then its performance management system should assess how well it employees are serving the company’s customer. Strategic congruence emphasizes the need for the performance management system to provide guidance so that employees can contribute to the organization’s success (Jackson, 1987). Methods/ Approaches of Performance Appraisal
P erformance can be appraised by a number of methods. Some employers use one method for all jobs and employees, and others use a combination of methods (Jackson & Mathis, 2011, p. 339). However, many regard rating methods or format as the central issue in the performance appraisal; but, this actually not the case. Broader issues must also be considered- such as trust in the appraisal system; the attitudes of managers and employees; the purpose, frequency, and source of appraisal data; and rater training (Cascio, 1998). Performance can be measured by focusing on employee attributes, behaviors, or results.
In addition, performance can be measured in a relative way, making overall comparisons among individuals’ performance. Finally, performance measurement system can be developed by incorporating some variety of the preceding measures. The following discussion highlights different methods or, approaches that can be used in the appraisal system: The Comparative Approach The comparative approach to performance measurement consists of techniques that require the rater to compare an individual’s performance with that of others. This approach usually uses some overall assessment of an individual’s performance or worth (Noe, 2000).
At least three techniques fall under the comparative approach: ranking, forced distribution, and paired-comparison. Ranking Simple ranking requires managers to rank employees within their departments from highest performer to poorest performer. Alternation ranking, on the other hand, requires that a rater initially list all employees on a sheet of paper then, decides who the best employee is, and cross that person’s name off the list( Cascio, 1998). From the remaining names, the manager decides who the worst employee is and crosses that name off the list—and so forth. Forced Distribution
The forced distribution method is also used as ranking format but employees are ranked in groups. The forced distribution method is similar to grading on a curve. This technique requires the manager to put certain percentages of employees into predetermined categories. One reason why firms have mandated the use of forced distribution for appraising ratings is to deal with “rater inflation” (Jackson & Mathis, 2011, p. 343). Paired Comparison The paired-comparison method helps the managers to compare employees with each other in a group so that he/she can give an employee a high score every time that employee performs well.
The paired-comparison method tends to be time-consuming for managers as well as a subject to legal challenges (Cascio, 1998). Evaluating the Comparative Approach The comparative approach to performance measurement provides an effective tool when the major purpose of the system is to differentiate employee performance. These techniques virtually eliminate problems of leniency, central tendency, and strictness. This is especially valuable if the results of the measures are to be used in making administrative decisions such as pay raises and promotions.
One problem with these techniques, however, is their common failure to be linked with the strategic goals of the organization. These techniques lack specificity for feedback purposes. Based only on their relative rankings, individuals are completely unaware of what they must do differently to improve their ranking. Finally, many employees and managers are less likely to accept evaluations based on comparative approaches. Evaluations are dependent on how employee’s performance is relative to other employees in a group, team, or department rather than to absolute standards of excellent, good, fair, and poor performance (Noe,2000).
The Attribute Approach The attribute approach to performance management focuses on the extent to which individuals have certain attributes believed to be desirable for the company’s success. The techniques that use this approach tend to define a set of traits— such as initiative, leadership, and competitiveness—and evaluate individuals on them. Graphic Rating Scales With the graphic rating scale method, the rater assesses an employee on factors such as quantity of work, dependability, job knowledge, attendance, accuracy of work, and cooperativeness.
Graphic rating scales include both numerical ranges and written descriptions (Byars, 1997). The graphic rating scale method is subject to some serious weaknesses. One potential weakness is that evaluators are unlikely to interpret written descriptions in the same manner due to differences in background, experience, and personality. Another potential problem relates to the choice of rating categories. It is possible to choose categories that have little relationship to job performance or to omit categories that have a significant influence on job performance. Mixed Standard Scales
Mixed standard scales were developed as a means of getting around some of the problems with graphic rating scales. To create a mixed standard scale the relevant performance dimensions must be defined, and then statements representing good, average, and poor performance along each dimension must be developed. These statements are then should be mixed with the statements from other dimensions on the actual rating instrument. Evaluating the Attribute Approach Managers need to be aware that attribute-based performance methods are the most popular methods in organizations.
These are easy to develop and are generalized across a variety of jobs, strategies, and organizations. In addition, if much attention is devoted to identifying those attributes relevant job performance and carefully defining them on the rating instrument, they can be as reliable and valid as more elaborate measurement techniques. These methods usually have very vague performance standards that are open to different interpretations by different raters. Because of this, different raters often provide extremely different ratings and rankings. The result is that both the validity and reliability of these methods are usually low.
Virtually none of these techniques provides any specific guidance on how an employee can support the company’s goals or on what to do to correct performance deficiencies. In addition, when raters give feedback, these techniques tend to elicit defensiveness from employees. The Behavioral Approach The behavioral approach to performance management attempts to define the behaviors an employee must exhibit to be effective in the job. The various techniques define those behaviors, and then require managers to assess the extent to which employees exhibit them.
Five techniques that rely on the behavioral approach are described as follows: Critical Incidents In the critical incident method, the manager keeps a written record of both highly favorable and unfavorable actions performed by an employee during the entire rating period (Jackson & Mathis, 2011). As they are recorded over time, the incidents provide a basis for evaluating performance and providing feedback to the employee. The main drawback to this approach is that the rate is required to jot down incidents regularly, which can be burdensome and time consuming.
Also, the definition of a critical incident is unclear and may be interpreted differently by different people. This method may also lead to friction between the manager and employees when the employees believe the manager is keeping a “book” on them (Byars, 1997). Behaviorally Anchored Rating Scales (BARS) A behaviorally anchored rating scale (BARS’) builds on the critical incidents approach. It is designed to specifically define performance dimensions by developing behavioral anchors associated with different levels of performance (Kendall, 1963).
Dessler (2005) founded that developing BARS typically requires in five steps: 1) Write critical incidents: Ask persons who know the job to describe specific illustrations (critical incidents) of effective and ineffective job performance. 2) Develop performance dimensions: Have these people group the incidents into 5 or 10 dimensions; then define each dimension. 3) Reallocate incidents: To verify these groupings, another group of people who also knows the job reallocate the original critical incidents. This group gets the cluster definitions (from step 2) and the critical incidents, and reassigns each incident to the duster. ) Scale the incidents: This second-group then rates the behavior described by the incident as to how effectively or ineffectively it represents performance on the dimension. 5) Develop a final instrument: Finally, choose about six or seven of the incidents as the dimension’s behavioral anchors (Schwab, 1975). Organizational Behavior Modification (OBM) Organizational behavior modification entails managing the behavior of employees through a formal system of behavioral feedback and reinforcement. The techniques vary, but most of them have four components.
First, they define a set of key behaviors necessary for job performance. Second, they use a measurement system to assess whether these behaviors are exhibited. Third, the manager or consultant informs employees of those behaviors, perhaps even setting goals for how often the employees should exhibit those behaviors. Finally, feedback and reinforcement are provided to employees (Anderson, 1983). Assessment Centers Although assessment centers are usually used for selection and promotion decisions, they have also been used as a way of measuring management performance (Wexkey).
At an assessment center, individuals usually perform a number of simulated tasks, such as leaderless group discussions, in-baskets, and role playing. Assessors observe the individuals’ behavior and evaluate their skill or potential as managers. Evaluation of the Behavioral Approach The behavioral approach can be very effective. It can link the company’s strategy to the specific types of behavior necessary for implementing that strategy. It provides specific guidance and feedback for employees about the performance expected of them.
Most of the techniques rely on in-depth-job analysis, so the behaviors that are identified and measured are valid. The major weaknesses have to do with the organizational context the system. Although the behavioral approach can be closely tied to a company’s strategy, the behaviors and measures must be constantly monitored and revised to ensure that they are still linked to the strategic focus. This approach also assumes that there is “one best way” to do the job and that the behaviors that constitute this best way can be identified (Dessler, 2011; Jackson & Mathis 2011).
The Results Approach The results approach focuses on managing the objective, measurable results of a job or work group. This approach assumes that subjectivity can be eliminated from the measurement process and that results are the closest indicator of one’s contribution to organizational effectiveness (Patten, 1982). Management by Objectives (MBO) Management by objective (MBO) is a generalized procedure which lends itself well to that portion of management capable of being systematized (Odiorne, 1965). It (MBO) is both popular in private and public organizations (Wonnel, 1983) (Streib, 1989).
In an MBO system, the top management team first defines the company’s strategic, goals for the coming year. These goals are passed on to the next layer of management and these managers define the goals they must achieve for the company to reach its goals. This goal-setting process cascades down the organization so that all managers are setting goals that help the company achieve its goals (Latham, 1990). These goals are used as the standards by which an individual’s performance is evaluated (Tosi,1973).
To establish objectives, the key people involved should do three things: meet to agree on the major objectives for a given period of time,  develop plans for how and when the objectives will be accomplished, and  agree on the “yardsticks” for determining whether the objectives have been met (Cascio, 1998, p. p 313-314). According to Jackson & Mathis (2011), implementing a guided self-appraisal system using MBO is a four-stage process. The stages are as follows: Job Review and Agreement:The employee and the superior review the job description and the key activities that constitute the employee’s job.
Development of Performance Standard: Together, the employee and the employee’s superior develop specific standards of performance and determine a satisfactory level of performance that is specific and measurable. Setting of Objective: Together, the employee and the superior establish objectives that are realistically attainable. Continuing Performance Discussions: The employee and the superior use the objective as bases for continuing discussions about the employee’s performance. The MBO process seems to be most useful with managerial personnel and employees who have a fairly wide range of flexibility and control over their jobs.
Work Planning and Review: This approach is similar to MBO; however it places greater emphasis on the periodic review of the work plans by both supervisors and subordinates in order to identify goals attained, problems encountered and the need for training. Evaluation of the Result Approach The most significant effect of result based approach is that it can focus on results and on identifying each employee’s contribution to the success of the unit or organization. In addition, through work planning and review, process over outcomes can be emphasized.
However, MBO and work planning both are unable to facilitate comparisons across employees. Furthermore, MBO is generally short-term oriented and work –planning is time consuming. So, these two are not very easy to implement (Cascio, 1998, p. 315). Potential Appraisers P erformance appraisal can be conducted by anyone who is familiar with the performance of individual employees (Wilson, 1997). The most fundamental requirement for any rater is that he or she has an adequate opportunity to observe the employee’s job performance over a reasonable period of time (Cascio, 1998, p. 16). This requirement suggests several possible raters. The Immediate Supervisors In most jobs, supervisors are the person who does the best evaluation because; he has direct contact with his sub-ordinates and is most familiar with the individual’s performance. In addition, because supervisors have something to gain from the employees’ high performance and something to lose from low performance, they have the motivation to make accurate ratings (Moore, 1987). Finally feedback from supervisors is strongly related to performance (Klimoski, 1989).
Supervisors sometimes prefer to avoid the appraisal process as uncomfortable face-to face confrontations often results (Carrell, Elbert & Hatfield, 1995). Peer Evaluation Peers are an excellent source of information in a job such as law enforcement, where the supervisor does not always have the opportunity to observe the employee. Peers have expert knowledge of job-requirements, and they often have the most opportunity to observe the employee in day-to-day activities. One disadvantage of using peer ratings is the potential for friendship to bias ratings (Farr, 1983).
Little empirical evidence suggests that this is often a problem, however. Another disadvantage is that when the evaluations are made for administrative decisions, peers often find the situation of being both rater and rate uncomfortable. Subordinates Appraisal by sub-ordinates can be a useful input to the immediate supervisor’s development. Sub-ordinates know firsthand the extent to which the supervisor actually delegates (Cascio, 1998). One problem with subordinate evaluations is that they give subordinates power over their managers, thus putting the manager in a difficult situation. Self Appraisal
Although self-ratings are not often used as the sole source of performance information, they can still be valuable (Klatt, 1985). Obviously, individuals have extensive opportunities to observe their own behavior, and they usually have access to information regarding their results on the job. One problem with self-ratings, however, is a tendency toward inflated assessments. Customers An increasing number of jobs are now considered service jobs, so evaluations by customers and clients are becoming more valuable as part of the multiple-rater performance appraisal (Carrell, Elbert & Hatfield, 1995, p. 370).
Although, customers’ objectives cannot correspond completely with the organization’s objective, the information provided by the customers can be useful input for employment decision (Cascio, 1998, p. 317). Computer Based Appraisal C omputer-based appraisal involves using a computer to monitor and evaluate employee performance (Dessler, 2012). This method is used mostly for judging performance in jobs involving repetitive, quantifiable tasks—for example, data entry. Several inexpensive performance appraisal software programs are available. Computer appraisals tend to be objective because they are not subject to human biases.
The principal disadvantage of computer-based appraisal is that relatively few positions involve only quantifiable tasks that are readily monitored and evaluated by computer. Multi-Rater or 360-Degree Feedback T he use of multisource rating, or 360-degree feedback, has grown in popular in organizations. Multisource feedback recognizes that for many jobs, employee performance is multidimensional and crosses departmental, organizational, and even global boundaries. Therefore, information needs to be collected from many different sources to adequately and fairly evaluate an incumbent’s performance in one of these jobs.
The major purpose of 360-degree feedback is not to increase soliciting. Instead, it is designed to capture evaluations of the employee’s different roles to provide richer feedback during evaluation (Jackson & Mathis, 2011, p. p. 337-339). Developmental Use of Multisource Feedback Conflict resolution skills, decision-making abilities, team effectiveness, communication skills, managerial styles and technical capabilities are some of the developmental areas that are examined by multisource feedback. Administrative Use of Multisource Feedback
When using 360-degree feedback for administrative purposes, managers must anticipate potential problems. The popularity of these systems has led to the results being used for compensation, promotion, termination, and other administrative decisions. Potential Errors in Appraisal Systems S everal common errors have been identified in performance appraisal. Humans have tremendous limitations in processing information. Because of these limitations, humans often use “heuristics,” or simplifying mechanisms, to make judgments, whether those are judgments about investments or about people (Kahneman, 1973).
These heuristics, which appear often in subjective measures of performance, can lead to errors in performance appraisal process. Similar to Me “Similar to me” is the error employers make when they judge those who are similar to them. Most of them tend to think of their selves as effective, and so if others are like them—in race, gender, background, attitudes, or beliefs—they assume that they too are effective. This effect is strong, and when similarity is based on demographic characteristics such as race or sex, it can result in discriminatory decisions (Nemeroff, 1974).
Distributional Errors Distributional errors are the result of a rater’s tendency to use only one part of the rating scale. Distributional errors are happened in three ways. Leniency occurs when a rater assigns high ratings to all employees. Strictness occurs when a manager gives low ratings to all employees—that is, holds all employees to unreasonably high standards. Central tendency reflects that a manager rates all employees in the middle of the scale (Wright, 2000). Halo and Horns
These errors refer to a failure to distinguish among different aspects of performance. Halo error occurs when a rater allows a single prominent characteristic of an employee to influence his or her judgment on each separate item in the performance appraisal (Rue, 1997). Halo error leads to employees believing that no aspects of their performance need improvement, so employees becoming frustrated and defensive. Biasness The number of things that can lead to biasness during appraisals is limitless. One study focused on the rater’s personality.
Raters what scored higher on “conscientiousness” tended to give their peers lower ratings—they were stricter, in other words; those scoring higher on “agreeableness” gave higher ratings—they were more lenient (Timasetta, 1995). Even the appraisal’s purpose, biases on the results. In one study, “performance appraisal ratings obtained for administrative purposes [such as pay raises or promotions] were nearly one-third, [higher] than those obtained for research or employee development purposes. ” (Willams, 1997).
Personal preferences, prejudices, and biases can also cause errors in performance appraisals. Managers with biases or prejudices tend to look for employee behaviors that conform to their biases. Appearance, social status, dress, race, and sex have influenced many performance appraisals. Overcoming Errors in Performance Appraisals O vercoming the errors in performance appraisals is very important. There are many ways to overcome those errors. Such as, the forced-distribution method of performance appraisal attempts to overcome the errors of leniency and central tendency.
In addition, behaviorally anchored rating scales are designed to reduce halo, leniency, and central tendency errors, because managers have specific examples of performance against which to evaluate an employee. Unfortunately, because refined instruments frequently do not overcome all the obstacles (Rue, 1997) A more promising approach to overcome errors in performance appraisals is to improve the skills of raters. A specific training could be given to evaluators which are often vague, but they normally emphasis that evaluators should be trained to observe behavior more accurately and judge it more fairly.
More research is needed before a definitive set of topics for rater training can be established. Ethical Dilemmas in Performance Appraisal P erformance appraisal actually encompasses two distinct processes: observation and judgment. Managers must observe performance if they are to be competent to judge its effectiveness. Yet some managers assign performance rating on the basis of small samples of their subordinate’s work. Is this ethical? And further, is it ethical to assign performance ratings that differ from what a manager knows a subordinate deserves? (Cascio, 1998, p. 10) Appraisal Schedule H ow often to formally apprise employees’ performance is an important question. Probably the most common answer fixes a specific interval between formal appraisals such as one year or six months. Cascio (1998) indicated that once or twice a year is far too frequent. Cherrington (1995) has a contradictory opinion regarding the fact and he reviewed that performance appraisal ought to occur at the conclusion of a typical work cycle. No matter when it takes place, schedule provides consistency in the appraisal process (Carrell, Elbert & Hatfield, 1995, p. 69). Secrets of Effective Appraisals R egardless of the approach used, managers must understand the intended outcome of performance appraisal. Jackson & Mathis (2011, p. 351), have encountered consistency with the strategic mission of the organization as the primary secret of effective performance appraisal. On the other hand Carrell, Elbert & Hatfield have found designing input and task team approach as the criteria of successful appraisals. According to Cascio (1998, p. 325), judging performance, not the personality could be a driving factor of effective appraisals.
He also added that specification can lead to an effective appraisal system. Accountability and Performance Appraisal A ccountability has been referred to as “the adhesive that binds social systems together” (Frink & Klimoski, 1998, p. 3), and it provides a mechanism through which societies and organizations can direct and control the conduct of their members (Beu & Buckley, 2001). The expectation of not only being held answerable for one’s actions, but also receiving consequences as a result, has obvious implications regarding behavioral motivation, and in a larger sense, social order (Tetlock, 1985).
Frink and Ferris (1998) suggested that evaluation is a major component of accountability. As such, the performance evaluation process provides a unique context for investigating accountability-based phenomena in organizations. Indeed, performance evaluation systems are formal mechanisms of accountability in organizations, and are construed as such for purposes of this paper (see also, Ferris & Treadway, 2008; Ferris et al. , 1995). Total Quality Management and Performance Appraisals T otal quality management generally requires cultural changes within an organization. “Father of TQM”, W.
Edward Deming viewed TQM as a system which hinders teamwork, create fear and mistrust and discourage age risk- taking behavior ,thereby stifling innovations ( Cascio, 1998). However, performance appraisal can incorporate key elements of TQM by letting customer expectations generate individual or team performance expectation and including behavioral skills that make a real difference in achieving quality performance. Part: 2 Performance Appraisal Practice in an Organization in Bangladesh F or our project we have selected Unilever Bangladesh for evaluation of ‘Performance Appraisal’ practices.
At Unilever there are five main divisions; Brands and Development, Customer Development, Supply Chain Management, Human Resource Development and Finance and IT Department. As an organization Unilever has its central appraisal methods and under each division there are separate appraisal systems. For the sake of simplicity we shall only discuss the appraisal system central to Unilever. Performance Appraisal in Unilever Unilever believes that performance appraisal is a vital cog in its human resource management program because it, 1.
Provides management with feedback regarding its training program, and highlights the need for further training if needed 2. Helps in developing plans for improvement based on previously set goals and allows the management to analyze the strengths and weaknesses of its employees 3. Identifies opportunities for further growth Job Assessment Performance appraisals besides just providing employees with feedback on how well they have performed on established goals also sets to measure other aspects such as employee behavior and commitment.
At Unilever the performance appraisal is a lot like the annual confidential report (ACR) prepared in government sectors. The basic job objectives of job assessment include, 1. Checking the overall performance of employees 2. Checking to see whether the job was done properly or not 3. Integrity and honesty of the employees 4. Loyalty of the employees 5. Devotion and commitment on the part of the employee to achieve organizational objectives Measures to Check Overall Performance Unilever Bangladesh measures its performance appraisal through 5 basic steps, as shown below,
Compensation and Administration The Unilever Bangladesh Limited conducts the wages survey in the market and of the major competitors after every two years and compares the results with its own package and there is any difference then adjustment is made. The desire of Unilever is that its employees must be satisfied in every aspect because it has the opinion that satisfied employees are more productive as compared to dissatisfied. The Unilever gives 25 different types of allowances to its employees. Some of these are annual, some are semi-annual, and some are monthly while some are once in the whole employment period.
Shortcomings of Appraisal Tools At Unilever the appraisal system is designed mainly to see whether employees are performing job duties properly or not. Before the manager rates employees, he/she will contact the employees and give them opportunities to clear up misunderstandings, as well as offer guidance, encouragement and support. While this may lead to an accurate job evaluation, in some cases too much focus is put on the job itself and other factors such as employee satisfaction, peer evaluation, and motivation may often be neglected. Part 3: The Relation between Theory and Actual Practices A tudy becomes effective when the theory and the actual practices are matched with each another. In this part of the research paper the relation between theory and actual practices in the context of Unilever Bangladesh has been evaluated. An appraisal system is both a reflection of the organizational culture and an intervention into it (Stewart, 1987). After observing the appraisal systems of Unilever, it can certainly be said that the company is following ‘management by objective (MBO)’ as its central appraisal system. This system is designed to meet both the needs of the individual managers and the business plans of their divisions.
As MBO dictates, the mutual agreements of objectives are first set and then the employees work toward that. In addition, work planning and review is also used as a method of appraisal in Unilever Bangladesh. Therefore, it can be said that result approach is followed to determine the objectives and evaluate employees’ performance as par basis. The potential appraiser is the manager’s immediate superior and the whole appraisal process is conceived as a one-to-one basis. So, first of all, the managers and their boss draw up a work plan, with clearly defined objectives, covering a period of at least six months.
Second of all, an agenda of the appraisal interview is formed so that the manager can compare employees’ performance with their work plan. This interview method gives an opportunity to the employees to discuss their problems, future career plans, pay, as well as any amendments to future work plans or job description. So, we can relate the interview system of Unilever’s appraisal process to the multi-rater or 360 degree feedback. Managers are responsible for managing employees’ job performance, holding them accountable for completing their assigned tasks, and coaching or counseling them to overcome barriers or improve performance.
Any feedback given should be with the intention of praising positive behavior and performance, ensuring that the employee understands the expectations, or identifying areas of development. Appraisal system are also used to make assessment of potential and recently more realistically. Unilever compensates its employees according to their performances so; the whole appraisal process comes under pressure as it is linked with the subject of performance related pay. During 1980s, employees used to be paid in accordance with their level of seniority, length of service and job class.
But, the managers of Unilever have examined that, this way of compensation is causing failure to retain the talents of the company and thus, they have developed the performance based pay system. The Unilever’s managers receive bonuses in a large percentage throughout a year for their good performance. These bonuses are given based on the principle of achieving targets, not surpassing them. Unilever has proved a professionalization by unifying and coordinating all the divisions. The best performers are selected basing on the comparative approach.
Comparative approach suggest that performance measurement consist of techniques that requires the rater to compare an individual performance that of others. Part: 4 Suggested Appraisal Method for Unilever Bangladesh W hen someone designs an appraisal system they are making statement(s) about the way managers and staff relate within the organization as well as a statement about the way they would like them to relate in future (Harper, 1987, p. 308). In this part of the research paper, a model or a system has been suggested which could be used by Unilever Bangladesh.
It has been already mentioned that Unilever is following a ‘management by objective’ method to evaluate its employees’ performance and appraise them according to that. However, several challenges and issues are associated with it. Here, a model has been proposed to eradicate the adaptive challenges and issues that can be brought on by the use of MBO. Figure: The Process of Establishing an Effective Model of Performance Appraisal Projecting the objectives in a long term basis It has been examined that the objectives are short-term and are not much helpful in rapid or qualitative change.
Thus, the objectives could be projected in a long term basis so that these can be used for implementing long-term plans. Remaining Adaptive The objectives should remain adaptive so that these can adopt the qualitative changes without having any technical or, managerial issues. Using Comparative Approach Along-side MBO MBO often fails to identify the best performer over the good ones. That is because MBO does not focus on comparing the employees with each other. If comparative approach can be implemented properly to appraise the employees along with MBO then, the manager would be able to appraise the right employee.
Comparison will enable him to evaluate one employee’s potential over another to perform a particular job. But, the manager needs to be careful about making a fare decision so that the employees can rely on that decision. Include Sub-ordinates in Determining the Objectives Including the subordinate’s opinions in determining the objective could lead the manager to generate a transparent and decentralized working environment. The employees would easily adopt the objectives, if they believe that their participation has been critically facilitated. References Byars, R. (1997).
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