27-09-2013, 03:24 PM
PERFORMANCE APPRAISAL SYSTEM
Introduction:
The efforts of employees can determine the success and survival of an organization
(Drucker, 1994; Barney, 1995), and appraisal is potentially one way in which those efforts
can be aligned with the aims of an organization, employees can be motivated and their
performance managed (Orpen, 1997; Martin and Bartol, 1998; Cook and Crossman, 2004).
Performance appraisal is among the most important human resource (HR) practices (Boswell
and Boudreau, 2002; Judge and Ferris, 1993; Yehuda Baruch, 1996) and one of the more
heavily researched topics in work psychology (Fletcher, 2002), a subject of research for over
70 years (Landy and Farr, 1980). Still, many organizations express dissatisfaction with their
appraisal schemes (Fletcher, 1997).
Performance Appraisal System: Different Methods
Most appraisal methods used throughout the world today are based, to some extent at
least upon the following techniques: Graphic rating scales; behaviourally anchored rating
scales (BARS), behavioural observation scales (BOS); mixed standard rating scales; and
management by objectives (MBO). Most commentators agree that goal-based appraisal
systems, in which an employee‘s work performance is measured against specific goals, are
the most satisfactory (Dorfman et al., 1986; Locke and Latham, 1984; Latham and Wexley,
1981).
Performance Appraisal System: the specific case of the 360-degree
Whatever method of performance appraisal is used, it‘s necessary to decide whom to
use as the source of the performance measures. Each source has specific strengths and
weaknesses. We can identify five primary sources: managers, peers, subordinates, self and
customers.
Now, we can clearly see the development of multi-source appraisals, initially as a
means of initiating effective organizational change, but eventually as part of what has been
termed 360-degree appraisals. By the 1990s, this type of appraisal was extremely widespread
and growing in popularity in both the research and practice arenas (see for example, the
review by Dalessio, 1998).
Proponents of the 360-degree feedback approach offer it as a ―progressive‖ means of
conducting performance appraisal, a means that addresses many procedural justice concerns.
Church and Bracken (1997) contend those 360-degree feedback systems and other forms of
multi source or multi-rater assessment methods in organizations have evolved from an
innovative ―nice-to-have‖ technique administered only to the most senior levels to a ―must-
have‖ tool for integration into overall performance and human resource management
strategies. These systems appear well suited for the flexible, team-based, change-oriented
organizational cultures of many organizations today.
Performance Appraisal System: Different Purposes
Firms engage in the performance-evaluation process for numerous reasons. Managers
may conduct appraisals to affect employee behavior through the feedback process, or to
justify some sort of human resource management action (termination, transfer, promotion,
etc.). However, many other benefits may also accrue from the information yielded by the
appraisal. These benefits include increases in knowledge regarding the effectiveness of
selection and placement programs, training and development needs, budgeting; human
resource planning, and reward decisions (Cocanougher & Ivancevich, 1978; Dubinsky,
Skinner, & Whittler, 1989; Thomas & Bretz, 1994; Wanguri, 1995). Perhaps the overriding
reason for performance appraisals is provided by Ilgen and Feldman (1983).
Problems in Performance Appraisal
The performance appraisal systems tend to have several problems. Raters‟ evaluations
are often subjectively biased by their cognitive and motivational states (DeNisi & Williams,
1988; Longenecker et al., 1987), and supervisors often apply different standards with
different employees which results in inconsistent, unreliable, and invalid evaluations (Folger
et al., 1992). In order to create better systems, researchers have traditionally focused on
validity and reliability (Bretz et al., 1992) by designing newer ―forms‖ of performance
appraisals (e.g., behavioral-based systems that better define specific essential job functions of
employees or 360-degree feedback mechanisms that allow for cross-validation via multiple
raters). However, despite these recent advances in evaluation design, critics continue to argue
that performance appraisal systems are not consistently effective (Atkins & Wood, 2002;
DeNisi & Kluger, 2000).