Performance Appraisal, Importance and Organizational Effects

Performance Appraisal discussion Highlights

• EFFECTS OF PERFORMANCE APPRAISAL ON EMPLOYEE PRODUCTIVITY
• PERFORMANCE APPRAISAL SYSTEMS GRAPHIC RATING SCALE (GRS)
• MANAGEMENT BY OBJECTIVE
• PITFALLS OF PERFORMANCE APPRAISAL
• TECHNIQUES OF PERFORMANCE APPRAISAL
• FOUNDATIONS OF PERFORMANCE APPRAISAL
• METHODS OF PERFORMANCE APPRAISAL
• MANAGEMENT BY OBJECTIVES (MBO)
• EFFECTIVE APPRAISAL PROCESS
• CHALLENGES OF PERFORMANCE APPRAISAL
• EMPIRICAL REVIEW

ADDITIONAL INFORMATION : DEFINITION OF TERMS

Performance Appraisal And It’s Organizational Effects

In every work setting, performance needs to be evaluated, as all efforts are supposed to be geared towards achieving organizational objectives.

Performance appraisal as an attempt which thinks clearly about each person’s performance and future prospects against the background of his/her total work situation.

In the same direction, it as a system used to review the individuals performance during a set period to identify his areas of strength and weakness and establish target for his/her for achieving within the overall corporate objective of the organization.

Performance evaluation is not just an inquisition but a means to developing the employees on his/her job.

Performance appraisal is a process of formal evaluation of employee’s action over a period of not more than a year. It involves three processes a subordinate is assigned a problem area and gains experience in recognizing crucial faces of it, and assumes primary responsibility for his areas smooth functioning and receives a performance evaluation from his superior .

Monappe cital (1998:208) opine that “performance appraisal is a systematic and objective way of judging the relative wrath or ability of an employee in performing his task it primary help to identify those who are performing their assigned task well and those who are not, and the reason for such performance.

This depicts that performance appraisal is not end itself but a means to an end, i.e it seeks not to be judgment but corrective performance appraisal is important both to the organization,

it provides information about job performance and potentials. It helps responsibilities on the basis of competence and to plan relevant training and development it also enable the organization to reward the individual adequately and to learn of his views and aspirations concerning his own career.

For the employee, appraisal helps employee  know the role expected of him/her in the achievement of the corporate objectives.

It also helps the employee to know the standard of performance required so that they can evaluate their own performance.

To be productive, the performance appraisal process must contain general three steps: evaluation and job analysis, appraisal interview, and post-appraisal interview.

During the first step, both the appraiser and the appraised should prepare for the interview by considering job performance, job responsibilities, and employee career goals, goals for improving performance, and problems and concerns about the job.

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 EFFECTS OF PERFORMANCE APPRAISAL ON EMPLOYEE PRODUCTIVITY

Competent appraisal of individual performance in an organization or company serves to improve the overall effectiveness of the entity.

Kane and Lawler, 2009, indicated that, the three main functional areas of performance appraisal systems are administrative, informative, and motivational.

Appraisals influences administration in that it serves the role of facilitating an orderly means of determining salary increases and other rewards, and of delegating authority and responsibility to the most capable individuals.

The informative function is fulfilled when the appraisal system supplies data to managers and appraises about individual strengths and weaknesses.

Finally, the motivational role entails creating a learning experience that motivates workers to improve their performance. When effectively used, performance appraisals help employees and managers establish goals for the period before the next appraisal.

Appraises, appraisers (managers), and companies all reap benefits from effective performance of appraisals.

Appraises benefit in a number of ways; for example, they discover what is expected of them and are able to set goals. They also gain a better understanding of their faults and strengths and can adjust behavior accordingly.

In addition, appraisals create a constructive forum for providing feedback to workers about individual behavior, and for allowing workers to provide input to their managers.

Finally, appraises are (ideally) given assistance in creating plans to improve behavior, and are able to get a better grasp on the goals and priorities of the company.

 

PERFORMANCE APPRAISAL SYSTEMS GRAPHIC RATING SCALE (GRS)

A graphic rating scale (GRS) presents appraisers with a list of dimensions, which are aspects of performance that determine an employee’s effectiveness.

Examples of performance dimensions are cooperativeness, adaptability, maturity, and motivation. Each dimension is accompanied by a multi-point (3, 5, or 7) rating scale. The points along the scale are defined by numbers and/or descriptive words or phrases that indicate the level of performance.

The midpoint of the scale is usually anchored by such words as “average,” “adequate,” “satisfactory,” or “meets standards.”

Many organizations use graphic rating scales because they are easy to use and cost little to develop. HR professionals can develop such forms quickly, and because the dimensions and anchors are written at a general level, a single form is applicable to all or most jobs within an organization.

Graphic rating scales do present a number of problems, however. Such scales may not effectively direct behavior – that is, the rating scale does not clearly indicate what a person must do to achieve a given rating, thus employees are left in the dark as to what is expected of them.

For instance, an employee given a rating of 2 on “attitude” may have a difficult time figuring out how to improve (Meyer, 2001) Graphic rating scales also fail to provide a good mechanism for providing specific, nonthreatening feedback.

Negative feedback should focus on specific behaviors rather than on the vaguely defined dimensions the GRSs describe. For example, if told that they are not dependable, most employees would become angered and defensive; they would become less angry and defensive if such feedback were given in behavioral terms: “Six customers complained to me last week that you did not return their phone calls. 

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MANAGEMENT BY OBJECTIVE

Management by objectives (MBO) is a management system designed to achieve organizational effectiveness by steering each employee’s behavior toward the organization’s mission. MBO is often used in place of traditional performance appraisals.

The MBO process includes goal setting, planning, and evaluation. Goal setting starts at the top of the organization with the establishment of the organization’s mission statement and strategic goals. The goal-setting process then cascades down through the organizational hierarchy to the level of the individual employee.

An individual’s goals should represent outcomes that, if achieved, would most contribute to the attainment of the organization’s strategic goals. In most instances, individual goals are mutually set by employees and their supervisors, at which time they also set specific performance standards and determine how goal attainment will be measured.

As they plan, employees and supervisors work together to identify potential obstacles to reaching goals and devise strategies to overcome these obstacles.

The two parties periodically meet to discuss the employee’s progress to date and to identify any changes in goals necessitated by organizational circumstances. In the evaluation phase, the employee’s success at meeting goals is evaluated against the agreed-on performance standards. The final evaluation, occurring annually in most cases, serves as a measure of the employee’s performance effectiveness.

Other advantages of MBO include:

1. Through MBO, assessment becomes an integral part of the organizational planning and continuos system.
2. The commitment is a powerful motivational force.
3. The emphasis is no work achievement and not on the main personal characteristics.
4. The cycle is highly participatory e) It goes further towards the ideals of self-appraisal and self-direction

However, MBO is still not without disadvantages. Some of its disadvantages includes

• (a) With MBO, the total process, especially the counseling, is very time consuming.
• (b) Special circumstances (e.g) change in economic environment) too often make the objective unrealistic
• (c) It encourages an emphasis on the short term the selection activity.
• (d) Research shows that many individual are not self-directive they want to be told what to do.

 

PITFALLS OF PERFORMANCE APPRAISAL:

According to Oberg W (1981:290) formal performance appraisal is familiar to most Managers either from painful personnel experience or from the growing body of critical literature”.

In his view, performance appraisal programme demand too much from supervisions. They obviously require at least periodic supervision observation of subordinate’s performance.

However this does not mean that appraisal lacks standards but that the standards they are sometimes wrong ones. The situations where a subordinate may be unfairly rates so that he will not promoted out of the rate department.

More often than not,  some right bias indicates favored treatment for some employee”. There is also a communication gap between the employee and the appraisal by which employee think they are being judge are different from these, their superior actually use improving performance and developing people are two of the most common appraisal plan goals”.

There may be sound reasons identified for this reluctance, as many supervision are uncomfortable when they are placed in the position of playing with God.

Another limitation that operators practice is that performance appraisal is so often made recorded filed and forgotten. Yet personnel decisions are made as a late time without reference to this appraisal, despite the fact that the whole purpose of performance appraisal is to improve the employee’s performance by promotion, favorable transfer merit wage and salary increase.

Thus, if performance appraisal can be more clearly related to performance standards expected on each job, it is also likely to be criticized as wholly subjective because such traits as dependability and initiative are being evaluated.

Yet listed limitation of performance appraisal is the difficulty of establishing performance standard for professionals and technical employees such as scientists and engineers.

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TECHNIQUES OF PERFORMANCE APPRAISAL

Formal performance appraisal programme have often yielded unsatisfactory results. This may be partly due to the manner which and partly as a result for failure to close a particular approach or method that most adequately suit the objectives.

There are many techniques of appraisal some of these are simple while others are more complex there by, requiring well trained appraise who can effectively use them. The most commonly used appraisal techniques include:

•  Field review
•  Essay appraisal
•  Critical incident appraisal
•  Ranking method
•  Assessment
•  Work standards approach
•  Forced – choice rating
•  Graphic rating scale
•  Check list method MODE

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Subordinate participation in the setting of performance targets increases the commitment to and success in establishing them.

1. Constructive attitudes by supervisor and outcome not predetermined.
2. Participation in discussion and decision of the subordinate should be of high level. · Material approach to solving problem
3. Opportunity for self-appraisal encourage son that managers can be spared to develop himself. 4 Appraisal must be a regulate activity of the organization (e.g end of a finished product car furniture) refer to suit the needs of the individuals or work groups.

 

FOUNDATIONS OF PERFORMANCE APPRAISAL

Performance appraisal measures that how effective people have been doing in their jobs and what they must apply to do it in a better way. It all depends on the content of the job and about the expected achievements in each aspect of their work

Following are the foundations in Performance Appraisal process:

1. Job Profile:

Job profile means the job description which focuses more on the detail of the tasks which the jobholder has to accomplish. It includes the detailed information of reporting relationship and normally covers all the responsibilities of the job. It shows that how the objectives of a team or a department and the mission of the organisation can be achieved by the individual’s job (Wijesiriwardena, 2013).

1. Objectives:

An objective describes that what has to be achieved. Objectives define the expectation of organisations, functions, departments, teams and individuals to achieve.

According to Henman, (2012), there are two types of objectives:

1. Work or Operational Objectives:

It directs to the results which are to be achieved or the contribution to be made for the success of teams, departments and corporate objectives.

1. Developmental objectives:

It is the objectives which tell that what an individual should do and learn to improve their performance and their knowledge, skills and competencies. Or it can be called as training and personal development plans.

III. Competencies:

Competencies refer to the behavioural dimensions of a role. It is the behaviour which is required by the people to carry out their work satisfactorily. Competencies mean what the employees or people bringing to job in the form of different types and levels of behaviour. They ruled the aspects of the process of job performance (Grote, 1998).

1. Values:

Even more, organisations think the behaviour of all the employees should be governed that is why they set out the core. Value statements are prepared which define core values in areas like care for customers, concern for people, competitiveness, excellence, growth, innovation (Grote, 1998).

 

Three Essential Steps for Effective Performance Appraisal

The process of getting to know the people who work for the organisation involves three essential steps that are training, evaluation and review

• 1 Training:

Successful training is the accomplishment of a system in which every employee of the organisation geared towards improvement. It gives an approach in which employees are encouraged to evaluate himself or herself under the guidance of the appraiser.

How it works?

Firstly, the employee should be involved in the appraisal process. When an employee knows that the opinion of his or her can affect the other employees, as the opinion of the other employees can affect him or her. This

This not only empowers the employee and improves relations in the workplace, but it encourages higher productivity as well. This interactive approach is made complete with the leadership of the appraiser. Carefully administering praise coupled with constructive criticism keeps the workforce on its toes.

• 2 Evaluation:

The best methods for employee evaluation are based on results and behavior.

While conducting performance appraisal based on employees’ characteristic traits is quite common, the results are often subjective and unsatisfactory.

A results-based approach to performance appraisal is by far the cleanest, most objective method of tackling the complex task of evaluation. It uses a rating system to measure productivity within a given timescale. If an employee makes a certain number of sales in a certain week, he or she can be rated by sheer worth as well as ranked against other employees.

The study of behavior is closely tied to productivity. The pace of work, willingness to put in overtime and ability to work with others all contribute to overall productivity.

• 3 Review:

The review process should, again, employ the techniques of interactivity. Before sitting down together, the appraiser should give the employee a chance to review him or herself.

This do not only empowers the employee, but also saves a lot of time and possible contention during the actual discussion. Initially the appraiser should walk the employee through the process. The successful supervisor starts out with an overview of why the review session is needed. Then the supervisor takes the employee down a point-by-point list of every aspect of the job.

In each case, the employee should be given a chance to describe his or her achievements and shortcomings. The supervisor should always supplement this with added insight. While praising and applying criticism, the supervisor maintains authority throughout the review and indeed, the entire appraisal process.

 

METHODS OF PERFORMANCE APPRAISAL

The Critical Incidents File

The critical incidents file is a performance appraisal method in which the manager writes down positive and negative performance behavior of employees throughout the performance period. The critical incidents file is a form of documentation that is needed in this litigious environment.

The Rating Scale

The rating scale is a performance appraisal form on which the manager simply checks off the employee’s level of performance. Some of the possible areas evaluated include quantity of work, quality of work, dependability, judgment, attitude, cooperation, and initiative.

Behaviorally Anchored Rating Scales (BARS)

BARS is a performance appraisal method combining rating and critical incidents. It is more objective and accurate than the two methods separately. Rather than having excellent, good, average, and so forth, the form has several statements that describe the employee’s performance, from which the manager selects the one that best describes the employee’s performance for that task. Standards are clear when good BARS are developed .

Ranking is a performance appraisal method that is used to evaluate employee performance from best to worst. Under the ranking method, the manager compares an employee to another employee, rather than comparing each one to a standard measurement. An offshoot of ranking is the forced distribution method, which is similar to grading on a curve. A predetermined percentage of employees are placed in performance categories: for example, excellent-5 percent, above average-l5 percent, average-GO percent, below average-l5 percent, and poor-5 percent (Kimball and Lussier, 2009)

 

The Narrative Method

The narrative method requires the manager to write a statement about the employee’s performance. The system can vary. Managers may be allowed to write whatever they want, or they may be required to answer questions about employees’ performance. The narrative is often combined with another method.

MANAGEMENT BY OBJECTIVES (MBO)

MBO is a process in which managers and their employees jointly set objectives for the employee, periodically evaluate the performance, and reward according to the results .

The concept of ‘Management by Objectives’ (MBO) was first given by Peter Drucker in 1954. It can be defined as a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed.

The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfil their responsibilities (Raia, Anthony P, 1974).

EFFECTIVE APPRAISAL PROCESS

When it comes to performance appraisal, managers and employees agree about one thing: They hate going through them. Employees, managers and HR experts agree that fear, guilt, responsibility and resentment are the real reasons why most employees dread the appraisal process. Besides some think that it is a ritual that is mandatory to follow (Kulik, Carol T., 2004)

An effective review process helps organizations in three areas:

1. evaluation and improving personnel selection and training systems;
2. preventing wrongful termination; and
3. increasing real employee diversity
4. Good appraisals start with information from multiple sources, and they evaluate employees at all levels from top to bottom.
5. This system requires both the appraise and appraiser to jointly assess the employee’s ability to complete the duties and achieve the goals set forth in the previous appraisal (Ford, Deborah Kilgore, 2004)
6. HR professionals should consider the following steps and make the appraisal process simple yet effective:
7. The performance Appraisal form should reflect the strategic objectives of the company. Many organizations use a form that contains several sections.
8. The results and impact section should address accomplishments related to job responsibilities, goals and projects. It is a review of past performance (Simmons, J.E.L. et. al., 2003).
9. A skills and abilities section should discuss the ways those results were accomplished. By listing the core competencies for each job classification and for the entire organization – this section can address the kinds of behaviour that are critical for success (Stevenson and Starkweather, 2009)

Appraisal results, either directly or indirectly, determine reward outcomes. The better performing employees may get the majority of available merit pay increases, bonuses and promotions, while the poorer performers may require some form of counseling or in extreme cases no increases in pay.

The assignment and justification of rewards and penalties through performance appraisal is a very uncertain and controversial matter and conveys both satisfaction as well as dissatisfaction with an employee’s job performance.

Whatever is the case, organizations should foster a feeling that performance appraisals are positive opportunities that provide for overall development of the employee, in order to get the best out of the people and the process. Hence performance appraisals should be positive experiences and it should never be used to handle matters of discipline (Floyd, Robert, n.d).

 

CHALLENGES OF PERFORMANCE APPRAISAL

There are chances of opposition for valuation due to fear. If the evaluation system is poor, it will not give adequate effect.

Rater’s problems like leniency or harshness error, central tendency error, personal bias error, contrast error are also affecting the performance appraisal of an employee. Each employee should evaluate by his supervisor and to discuss each other to set objectives for upcoming evaluation.

This discussion should cover the review of overall progress, problems encountered, performance improvement possibilities, long term career goals, specific action plan about job description and responsibilities, employee development interest and needs, to concentrate specific areas of development, to review performance objectives and performance standard, ongoing feedback and periodic discussions Performance appraisals are important for staff motivation, attitude and behavior development, communicating organizational aims, and fostering positive relationships between management and staff.

Performance appraisals provide a formal, recorded, regular review of an individual’s performance, and a plan for future development. In short, performance and job appraisals are vital for managing the performance of people and organizations.

 EMPERICAL REVIEW

Performance Appraisal (PA) usually involves ― evaluating performance based on the judgments and opinions of subordinates, peers, supervisors, other managers and even workers themselves (Jackson & Schuler, 2003).

Generally an appraisal, performance review or a career development discussion is a method by which the job performance of an employee is evaluated in terms of quality/quantity/ cost/time.

The system of performance appraisals as regular reviews of employee performance within organizations is being widely adopted.

As a process, performance appraisal is seen as a key contributor to successful human resource management, as it is strongly related to organizational performance. (Erdogan, 2002).

According to Lardy and Robbins (1994), PA as a process of enhancing human performance has attracted the attention of both academics and practitioners.

Historically information from PA has been used as a basis for administrative decisions (Boleman et al, 2009). Several service institutions are using a PA system that was developed at a time when organizations were typically large and hierarchically arranged, as organizational environments were relatively stable, when employees were homogeneous and relatively well qualified and when long term employment was the norm.

(Cleveland, Murphy, 1995) PA can be perceived, described and implemented in different ways in organizations. With PAs in groups, the group is known to push each member to perform at his or her highest level and thus members may be heavily motivated to participate in PAs. Research has shown that the PA must have a positive purpose and employees must be participants in the PA if they are to improve their job performance.

(Vasset et al, 2012) Job satisfaction is known to emerge from a variety of factors, including characteristics of the organizational environment, specific features of the job, human resource practices, PA and the personal characteristics of the employee. Job satisfaction has been widely researched by the terms of its determinants, and its predictive power.

Important and recurring questions in organizational science are why employees perform well in their jobs and why they are satisfied with their jobs. Research suggests that employees’ job satisfaction depend on their goal orientations. (Farr, Hoftmann and Renginbach, 1993). Performance oriented individuals tend to believe that working hard does not lead to performance improvement. In their view, working hard indicates low competence, and those who perform poorly do not have the attributes necessary to do well in their jobs.

 

DEFINITION OF TERMS

IMPACT: Have a strong effect on someone or something.

PERFORMANCE: The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed. In a contract, performance is deemed to be the fulfillment of an obligation, in a manner that releases the performer from all liabilities under the contract.

ORGANIZATION:  A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems–they affect and are affected by their environment.

PRODUCTIVITY: Productivity describes various measures of the efficiency of production. A productivity measure is expressed as the ratio of output to inputs used in a production process, i.e. output per unit of input. Productivity is a crucial factor in production performance of firms and nations

APPRAISAL: performance appraisal a meeting in which an employee discusses his or her progress, aims, and needs at work with his or her manager or employer: Many companies operate regular job appraisals, often on an annual basis.

INSTITUTE: An institute is an organizational body created for a certain purpose. Often they are research organizations (research institutions) created to do research on specific topics. An institute can also be a professional body, or one involved in adult education, see Mechanics’ Institutes.

MANAGEMENT: Management includes the activities of setting the strategy of an organization and coordinating the efforts of its employees (or of volunteers) to accomplish its objectives through the application of available resources, such as financial, natural, technological, and human resources.

TECHNOLOGY:  the branch of knowledge that deals with the creation and use of technical means and their interrelation with life, society, and the environment, drawing upon such subjects as industrial arts, engineering, applied science, and pure science.

 

Content by

OKONKWO C. TIANA

BUSINESS ADMIN (OND, HND)