Performance Appraisal

Organizations are run and steered by people. It is through people that goals are set and objectives realized. The performance of an organization is thus dependent upon the sum total of the performance of its members. According to Peter Drucker, “An organization is like a tune; it is not constituted by individual sounds but by their synthesis.” The success of an organization will therefore depend on its ability to measure accurately the performance of its members and use it objectively to optimize them as a vital resource. The performance of an employee is his resultant behavior on the task which can be observed and evaluated. It refers to the contribution made by an individual in the accomplishment of organizational objectives. Performance can be measured by some combination of quantity, quality, time and cost. People do not learn unless they are given feedback on the result of their action. For learning to take place, feedback must be provided regularly and should register both success and failures, and should follow soon after the relevant actions. Performance appraisal system provides the management an opportunity to recall as well as give feedback to people as to how they are doing, so that they can correct their mistakes and acquire new skills.

Performance appraisal can be viewed as the process of assessing and recording staff performance for the purpose of making judgments about staff that lead to decisions. Performance appraisal should also be viewed as a system of highly interactive processes which involve personnel at all levels in differing degrees in determining job expectations, writing job descriptions, selecting relevant appraisal criteria, developing assessment tools and procedures, and collecting interpreting, and reporting results.

Performance Appraisal

Definitions of Performance Appraisal

Edwin B Flippo defines performance appraisal as a systematic, periodic and as far as humanly possible an impartial rating of employee’s excellence in matters pertaining to his present job and potentialities for a job.

To Maurice, B. Coming performance appraisal means “attempts to recognize and reward for personnel abilities that an individual brings to his job, measured by the extent to which his output or quality of his work exceeds the minimum that is fixed as the basic rate of pay”.

To Yoder Performance Appraisal refers to “the formal procedure used in an organization to evaluate personalities, contributions and potentials of group members”.

According to Heyel it is “the process of evaluating the performance and qualification of the employee in terms of requirements of the job for which he is employed, for the purpose of administration including placement, selection for promotions, providing financial rewards and other actions which require differential treatment among the members of the group as distinguished from actions affecting all members equally.”

According to Martin Fisher performance appraisal is a process for establishing shared understanding about what is to be achieved, and an approach for managing and developing people in a way which increases the probability that it will be achieved in the short or long-term.

Purpose of Performance Appraisal

Objectives for performance appraisal policy can best be understood in terms of potential benefits, identify the following:

  • Increase motivation to perform effectively
  • Increase staff self-esteem
  • Gain new insight into staff and supervisor
  • Better clarify and define job functions and responsibilities
  • Develop valuable communication among appraisal participants
  • Encourage increased self-understanding among staff as well as insight into the kind of development activities that are of value
  • Distribute rewards on a fair and credible basis
  • Clarify organizational goals so they can be more readily accepted
  • Improve institutional/departmental manpower planning, test validation, and development of training programs

Performance appraisal should be viewed as a process, and not simply as the creation of ubiquitous standards.

The overriding purpose of performance appraisal is to help staff to improve and, thus, to improve organizational effectiveness. Performance appraisal therefore addresses institutional needs as well as staff member needs, abilities, motivation, and expectancies.

The integrated staffing model suggests two integrated functions toward this purpose: the evaluation of staff relative to job requirements and the development of staff for improved performance. Thus, performance appraisal and staff development are closely related and should operate in concert with one another.

The integrated staffing model also suggests that staffing practices occur within a larger context of institutional culture. Thus, judgments about performance appraisal, as well as the design and implementation of appraisal systems, should be considered contextually. Effective appraisal systems should address clarity, openness, and fairness; recognize productivity through rewards; and be cognizant of appraiser leadership qualities.

Appraisal System Attributes

The performance appraisal system must possess the attributes of clarity, openness, and fairness. While specific implementation of these attributes may vary, the following should be represented in effective performance appraisal:

  1. Ongoing Review of Position and Performance – Effective performance appraisal systems conduct ongoing evaluations of both the position and the staff member occupying it. With ongoing position analysis and performance appraisal, there are few surprises, and changes in the environment are quickly incorporated into the official appraisal system.
  2. Job Descriptions – Job descriptions should be reliable, valid, understandable, and specific enough to provide direction for staff behavior. Job descriptions should focus on what the staff member does (e.g. advises the student government association) and what outcomes are expected. These outcomes should be clearly linked to departmental and institutional objectives and needs. Job descriptions should use action words such “plans” or “supervises” rather than “demonstrates initiative” or “is likable.” Job descriptions should provide guidelines for staff so they know the specific behaviors expected to perform. The responsibilities of the staff member should be listed in order of importance and weighted relative to importance, if possible.
  3. Participatory and Interactive Appraisal – Appraisal system processes should be designed in concert with all stakeholders and open to constant interaction with them. Plans made jointly by staff and administrators have a better chance of working than plans made independently by either party.
  4. Workable Formats that Avoid Systemic Bias – Effective performance appraisal systems must include workable formats that avoid systematic biases. Checklists of performance criteria completed at the same time every year should be avoided. This type of approach simply fails to produce any useful information for individual or organizational improvement. Other biases include giving preferential treatment to some but not all staff, rating all staff the same, being overly lenient or overly harsh toward some or all staff, and practicing conscious or unconscious racial or gender prejudice. Adopting a format that includes the standards of clarity, openness, and fairness and that involves more than one appraiser may help to control some of these biases.

Productivity and Rewards

Appraisal systems are related to institutional productivity requirements. Appraisal systems are expected to reveal under-productive units and to serve as a response system to focus attention on problem areas. Appraisal systems should also function to reward productive units and staff.

One of the most crucial response systems is the institution’s reward structure. Hypothetically, performance appraisal is used to reward productive staff through upward salary adjustments. While salary adjustment may be fixed, especially in state institutions, alternative reward structures may be initiated by departments to recognize productive staff. Concerns with under-productive staff may be addressed through targeted staff development activities or through other means as appropriate.

Appraiser Leadership Attributes

Supervisor or appraiser behavior may be more important than the format used in the performance appraisal system. Appraisers who act like leaders in their organization are more likely to experience successful results from the appraisal system than will appraisers who behave as non-leaders.

Leaders can model desired behavior and prescribe behavior sought from staff. This modeling carries the advantage of organizational prestige and power associated with the position.

Objectives of Performance Appraisal

The main objectives of Performance Appraisal are as follows:-

  1. To provide feedback to employees so that they come to know where they stand and can improve their job performance.
  2. To provide a valid database for personnel decisions concerning placements, pay, promotion, transfer, punishment, etc.
  3. To diagnose the strength and weakness of individuals so as to identify further training needs.
  4. To improve coaching, counseling, career planning and motivation to subordinates.
  5. To develop positive superior-subordinate relations and thereby reduces grievances.
  6. To facilitate research in personnel management.
  7. To test the effectiveness of recruitment, selection, placement and induction programmers.

Thus, Performance Appraisal aims at both judgment and developmental efforts. The first two objectives are judgmental whereas the remaining is developmental. Under developmental efforts employees are helped to identify their weakness and take steps to overcome them.

Approaches to Performance Appraisal

There are two approaches to performance appraisal viz. administrative approach and developmental approach.

  1. Administrative approach: Making and carrying out employment decisions are the fundamental goals of the administrative decision making. Administrative decisions include deciding which employees to promote, which to terminate, which to discipline, which employees to transfer etc. In administrative approach, performance appraisal can be used as a key input for administering a formal organisation reward and punishment system. Administrative approach deals with the following: – Human resource planning – Reward decisions e.g. salary and wages increase – Promotions; and – Personnel research (e.g. effectiveness of training programmes.)
  2. Developmental approach: When performance appraisal information is intended to be used for developmental purposes, employees receive concrete feedback about their job performance. This serves a valuable function because in order to improve in the future, employees need to know what their weaknesses were in the past and how to correct them. This also enables managers to identify which employees would receive the most benefit from developmental inputs. Pointing out strengths and weaknesses is a counseling function for the manager, while receiving meaningful feedback and acting upon it is a motivational experience for the employee. In this way performance appraisal serves as a vehicle for personal development. Developmental approach deals with the following: – Provide employee with feedback on their strengths and weaknesses and how to improve future performance. – Aid career planning and development; and – Provide inputs for personal remedial interventions.

Benefits of Performance Appraisal

Appraisal offers a valuable opportunity to focus on work activities and goals, to identify and correct existing problems, and to encourage better future performance. Thus the performance of the whole organization is enhanced. However benefits of performance appraisal can be summarized as follows.

  1. Motivation and Satisfaction: Performance appraisal can have a profound effect on levels of employee motivation and satisfaction – for better as well as for worse. Performance appraisal provides employees with recognition for their work efforts. The existence of an appraisal program indicates to an employee that the organization is genuinely interested in their individual performance and development, which can have a positive influence on the individual’s sense of worth, commitment and belonging.
  2. Training and Development: Performance appraisal offers an excellent opportunity – perhaps the best that will ever occur – for a supervisor and subordinate to recognize and agree upon individual training and development needs. Performance appraisal can make the need for training by an employee’s work performance, the presence or absence of work skills, by linking it clearly to performance outcomes and future career aspirations.
  3. Recruitment and Induction: Appraisal data can be used to monitor the success of the organization’s recruitment and induction practices. Appraisal data can also be used to monitor the effectiveness of changes in recruitment strategies.
  4. Employee Evaluation: Evaluation is a major objective of performance appraisal. Performance appraisal is the process of examining and evaluating the performance of an individual. The need to evaluate employees is to encourage and develop them.
  5. Career planning and Development: Performance feedback guides career decisions about specific paths one should investigate.
  6. Compensation adjustments: Performance evaluations help decision makers determine who should receive pay raises and who should not. Many firms grant part or all of their pay increases and bonuses based upon merit, which is determined mostly through performance appraisals.
  7. Placement decisions: Promotions, transfers, and demotions are usually based on past or anticipated performance.

Ethics of Performance Appraisal

In a performance appraisal, due consideration must be given to the ethics of appraisal, failing which may give rise to organizational problems and the very purpose of appraisal may be defeated. In this connection M.S. Kellog has suggested the following do’s and don’ts:-

  1. Don’t appraise without knowing why the appraisal is needed.
  2. Appraise on the basis of sufficient and relevant information.
  3. Be honest in your assessment of all the fact you have obtained.
  4. Don’t write one thing and say another.
  5. In offering an appraisal, offer it as only your personal opinion of the facts you observed.
  6. Pass on the appraisal information only to those who have good reason to want it.
  7. Don’t imply the existence of an appraisal that has not been made.
  8. Don’t accept another’s appraisal without knowing the basis on which it was made.

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  • czander

    Edward Deming writing, about 14 points needed to transform management and the corporation, believed performance appraisal or pay for performance and bonuses were counterproductive and simply bad management. In his point #3 called – Evaluation of Performance, Merit Rating, or Annual Review- and he proposed their eradication. Deming writes, “The performance appraisal nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics… it leaves people bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior, some even depressed, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior. It is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in.” In other words, commitment is destroyed.
    It is commonly understood that performance reviews, pay for performance, and incentive systems have little to do with the motivation, but they are successful in punishing employees and rupturing relationships. Many studies point out that rewards actually undermine the very process they are intended to enhance. In agreement, Deming believed that extrinsic motivators were a fallacy. When asked the question, “Is money a motivator?” he replied, “It is not!” He believed the same applies to all forms of extrinsic motivators, they do not motivate. When it comes to intrinsic motivation the relationship between reward and motivation is more complex. For example, offering rewards for easy tasks or just completing a task may lower intrinsic motivation. It is a mistake to assume that employees are motivated in predictable ways by differential rewards and punishments.