Performance appraisal in business

Why do firms undertake performance appraisal? What are the implications of orthodox and radical critiques of performance appraisal for the effective design of performance appraisal systems?

INTRODUCTION Introduction

Every organisation has some goals and to achieve those goals organisation hire people who can perform as per their standards to enable the organisation achieve its mission and vision. So performance is the key to achieve organisational goals. But to keep records and to analyse the performance, organisation needs to follow a specific processes which is known as “Performance Appraisal”. The important aspect for an organisation is not just to recruit good employees but also to retain them. Good working environment, promotions, career growth, rewards and recognition in return of their good performance will automatically retain the employees with the organisation. It is essential for an organisation to undertake different activities so that their employees feel motivated and give their best to the organisation. To increase employees’ morale and performance resulting in better productivity, organisations should undertake performance appraisal system.

”Performance appraisal systems are formal methods of planning and evaluating employee’s performance which involve employee interviewing.”(Strategy and human resource management, Peter Boxall and john John Purcell, palgrave Palgrave macmillanMacmillan)

Performance management is one, which links organisations, individual and departmental goals together. It perform many functions like deciding upon incentives and rewards to the employees on the basis of their performance and establishing good relations between the employees and the organisation. Performance appraisal is a part of performance management. It organises the working environment in such a manner so that the best results can be obtained.(performance management handout gvn in class) Another The objectives of performance appraisal are is to encourage the employees for open communication so that they can directly communicate with the each other and the management. It helps in providing feedback and recognition for their performance. The process of Performance appraisal also provides them the knowledge understanding of the skills required for the particular job which is assigned to them, i.ei.e. the basic requirements for the job and expectations of the organisation. It also helps in determining the need of training for the employees for developing their skills and working environment. Performance appraisal identifies the problem areas for improvement, s then providing adequate solutions for the same and also set goals to be achieved in the coming year. (employees manual pdf save)

Performance appraisal can be done with the help of formal meetings between manager and employee. In that meeting manager shares feedback, set their goals for the coming year and decide how to achieve them by meeting deadlines. There are more methods of measuring the performance of the employees which will serves as a basis for the rewards, recognitions, benefits and also the pay hikes. Then there are radical critique and orthodox critique of performance appraisal and we will focus on the implications of these critiques on the design of performance appraisal system.

“ The performance appraisal is often the central pillar of performance management and our a performance management survey carried out in 2004 found that 65 per cent of organisations used individual annual appraisal, 27 per cent used twice-yearly appraisals and 10 percent used rolling appraisals”. (cipd.co.uk)

H ow firms conduct performance appraisal:

Most of the organisations conduct the performance appraisal by taking into account the key elements like Measurement, Feedback, Positive reinforcement, exchange of views and agreement. Measurement means that the performance of an individual is measured against the specified goals and objectives. Feedback includes positive and negative aspects of the employee’s performance . In positive r einforcement acknowledgement is given to worker about the wor k they did well and the areas of improve ment.M anager also exchange his views openly with the employee s so that they can feel motivated and can improve their performance . Agreement i s also a key element in which all the persons are agreed on the same topic and jointly solve the problems. (cipd.co.uk)

Techniques of performance appraisal:

Following are the d ifferent techniques for performance appraisal : Graphic rating scale, Straight ranking method, management by objective, field review, critical inci dents, essay appraisal methods and 360 degree appraisal .(naukrihub.com)

The first one is Graphic rating scale this methods involves measuring the performance of an employee on the scale of yes, no or outstanding to un – satisfactory level . I n this we measure performance on the basis of the rating scale.

Straight ranking method is used to compare the performance of one employee with the other employees. Ranking is given one by one after making comparison with the other employees , after this the final ranking is given on the basis of overall comparison.(naukarihub.com) Management by objective is that method which helps a manager and a employee to agree on the same objectives an d then employee work on the towards the same. They need to show regular perfo rmance to the manager and on the basis of that performance the managers give s ranking to the employee by comparing the performance with the agreed objectives.(ehow.co.uk)

Field review is a method in which , head of the department ask s from their supervisors that g i ve the feedback of their subordinates and rate their performance. (naukihub) Critical incidents methods are those in which the analysis of an employee’s performance is done on the basis of their behaviour in a critical situation , then the negative or positive feedback is given on the basis of their reactions.

The other method of doing the performance appraisal is 360 degree method , t his method is widely used by managers and employees in every organisations. In this method views of customers , colleagues , and subordinates are taken for the performance appraisal process and then a 360 degree review is prepare d. After this a final opinion of manager is taken to complete the employe e s feedback. This method is used globally for the performance appraisal .(ehow.com)

Reasons to conduct performance appraisal:

According to the work place employee relationship survey(WERS), it was noted that formal performance appraisal were conducted in 79 percent of workplaces, with appraisal being slightly common in public sector (83percent)than the private sector (77 percent). Armstrong and baron (2004) survey showed that 87 percent of the respondents operated a formal performance management process, 65 percent are were planning to introduced this system in over next two years.

” According to IRS survey, the main visible reasons of adopting the performance appraisal vary but ultimate aim being continued organisational growth. As per the study, that the 87 percent of the organisation has adopted it for identifying the needs of training and development where as 82 percent used to evaluate the performance of an individual employee, 32 percent to ensure that the communication between supervisors and employees is good and 19 percent used that for taking desiciondecision regarding the performance rewards. After Studying the survey we can see that performance appraisal serves multiple objectives for the employers. (Stephen bach Bach managing human resources)

On the basis of the above survey following are the reasons to conduct performance appraisal :

Performance appraisal helps in deciding the percentage of increment in the salaries of the employees. By performance appraisal evaluation of performance is done for the whole year and then on the basis of that evaluation, management decides the percentage of hike provided to the employees.

Basis of promotions, ie.i.e., by the process of performance appraisal, management do analysis and then decides to whom the promotion should be given .Those employees who have shown the outstanding performance in the whole year will may be rewarded with the promotion . It is also used in providing the fair and reliable judgement on the performance of the various employees soemployees that they can rely on that judgement and receives benefits according to that.

Another reason is that it helps an organisation in setting the goals and objectives for the coming year. Performance appraisal helps in assigning the task, roles, authorities and responsibility to the employees for the coming year on the basis of their previous year performance. It also helps the organisation in enhancing the performance of the employees and motivating them to work and achieve new targets and goals.

Another important reason for performance appraisal is Other reasons i s to let the employees know that where they are standing on the expectations of the organisations. In other words, employees become aware of the expectation of the organisation and whether they are meeting the expectation of management or not.

Another reason is to p Providinge feedback to the employees, so that employees they can improve their performance in future and will gotget to know about their strength and weaknessesweaknesses, is equally important role of the appraisal process. Performance appraisalIt also helps in identifying the need of training to the employees for their personal development and for their good performance. (ppt saved)

How firms conduct performance appraisal:

Most of the organisations conduct the performance appraisal by taking into account the key elements like Measurement, Feedback, Positive reinforcement, exchange of views and agreement. ‘Measurement’ means that the performance of an individual is measured against the specified goals and objectives. ‘ Feedback ‘ includes positive and negative aspects of the employee’s performance. In ‘Positive R einforcement ‘ acknowledgement is given to worker about the work they did well and the areas of improvement. Manager also ‘exchanges his views ” openly with the employees so that they can feel motivated and can improve their performance. ‘Agreement’ is also a key element in which all the persons are agreed on the same topic and jointly solve the problems. (cipd.co.uk)

Techniques of performance appraisal:

Following are some of the techniques for performance appraisal : Graphic rating scale, Straight ranking method, management by objective, field review, critical incidents, essay appraisal methods and 360 degree appraisal .(naukrihub.com)

The first one is Graphic rating scale this methods involves measuring the performance of an employee on the scale of yes, no or outstanding to un-satisfactory level. It measure s employee’s performance on the basis of the rating scale.

Management by objective is that method which helps a manager and employee s to agree on the same objectives and then employee work towards the same. They need to show regular performance to the manager and on the basis of that performance the manager gives ranking to the employee by comparing the performance with the agreed objectives. (ehow.co.uk)

Field review is a method in which, head of the department asks from their supervisors to give feedback of their subordinates and rate their performance. (naukihub)

Critical incidents methods are those in which the analysis of an employee’s performance is done on the basis of their behaviour in a critical situation, and then the negative or positive feedback is given on the basis of their reactions.

The other method of doing the performance appraisal is 360 degree method . T his method is widely used by managers and employees in organisations. In this method views of customers, colleagues, and subordinates are taken for the performance appraisal process and then a 360 degree review is prepared. After this a final opinion of manager is taken to complete the employe r’ s feedback. This method is used globally for the performance appraisal. (ehow.com)

the 360 degree feedback is based on important implications this is that with the help of different feedbacks an employee can know that where their performance is lacking it helps in increasing the self awareness of an employee, and with the self awareness an employee can easily increase his/her performance.

There are so many reasons of doing the 360 degree appraisal. This appraisal is important because it increases the moral of an employee and gives them the courage of continuous improvement in their work. Another is feedback from the different persons helps in easily accepting for the because it is more valid. the information gathered through this appraisal method is used to do further planning in the organisations.

It also helps in giving the efficient framework for assessment and with the help of this framework employees can improve their further performance. It also helps in directly communications between the employee and with colleagues, customers, managers by giving and receiving the feedback. This type of appraisal system is best specially for customer oriented organisations so that the customers feedback is also taken while doing the appraisal of an employee.

Effect of performance appraisal on employeesemployees’ attitude:

Employees Employees’ attitude plays a very important role in every organisations. When the attitude of employees it is positive is positive then they will be satisfied with their job and if their attitude is negative than they will not be satisfiedthey may create unhealthy environment in the peer group. Employees attitude depend on various factors like pay, promotion opportunities, aspirations, instrumental benefits, needs, working conditions ,co-workers and supervisors .

N ow we discuss that how performance appraisal affect the behaviour of an employee’s so that they can work effectively for the organisations as well as to satisfying their personal needs.

Research studies show that employees are likely to feel more satisfied with their appraisal result if they have the chance to talk freely and discuss their performance. It is also more likely that such employees will be better able to meet future performance goals.(Nemoroff, journal of occupational psychology,Vol-52,25-34).

Studies by researchers shows that if freedom is given to an employee to talk and discuss the performance than they will be more satisfied with their appraisals because they don’t have any doubt in their minds regarding their appraisal and it also leads to improvement in employees future performance for the organisational goals. (Nemoroff, journal of occupational psychology,Vol-52,25-34)

As per Bannister notes, it is important that the appraiser be well-informed and credible. If it is so, employees are more likely to view the appraisal process as accurate and fair. They also express more higher acceptance of the appraiser’s feedback and a greater willingness to change.

According to Bannister ,an appraisal should be reliable and open in front of the employee, so that they came to know that the appraisal is correct and reasonable and also they will accept with more belief. it is very important to include an employee in their performance appraisal so that they can gain more trust on the appraisal process conducted by the organisation.

Orthodox and radical critiques of performance appraisal:

Performance appraisal process is increasingly being used by organisations. Every organisation uses the performance appraisal as tool to motivate their employees and to achieve organisational goals. This process is used in the both public and private sector organisations. But the said assessment process or Performance Appraisal process faces another question – whether the outcome should be allowed to be driven by the characteristics of the appraiser or quantifiable checks and processes should drive it?But on one hand performance appraisal is gaining the popularity on the other hand there are some critiques, who are raising question on the design of “performance appraisal system “.These are two diverse approaches are the Orthodox critiques and Radical critiques.

The orthodox Orthodox cCritique

Orthodox critique says that there are imperfections in the design of performance appraisal and the implementation of performance appraisal is also not favourable for employees as well as for organisation . organisation. Orthodox frame work of management is based on subjectivity, ie.i.e., we can say that this process is more over a subjective process of qualitative thus lacking on the actual quantification through the assessment. When management is evaluating the performance of an employee and judging on his/her own perceptions rather than following a process or a set of rules then it will result in a subjective decision. So, orthodox critique can results in a bias decision. (class notes)

Sometime manager is the only individual who has to perform many tasks such as performance evaluation, providing feedback, trainings, etc. So as he/she is facing administrative difficulties, this can may result in skewed outcome of the affect performance appraisal process.(class notes)

The halo effect assessment in orthodox critiqu e means i Individual’s impression can impact on the his performance assessment is termed as “halo effect assessment”. This means that if a manager has some positive impression about an employee just because of one instance then he will rate that employee high on performance rating scale, whether he deserves it or not. Same can happen if manager has some negative impression for an employee then he will assign a negative score on performance rating scale whether this employee is good on other things.(class notes)

In orthodox critiques we find doppelganger effect, which means that when we go through the whole performance appraisal data, we find similarities in various aspects between the manager who is doing performance appraisal and the employee who’s appraisal is done. So, here we find that the manager wants to promote or praise only those employees who’swhose attitude and behaviours matches his own attitude and behaviour. So, we can say that sometimes manager give rewards and recognition only to those employees who are alike him and score them high on performance appraisal scale.(class notes)

Sometime we find that supervisors are showing favouritism to few subordinates just because of their personal relation. This favouritism and personal relation is not related to performance, capability or qualification of the employee and will results in cronyism. Crony effect can affect the performance of the other employees as they know that manager is doing favour to an employee and this will ultimately affect the organisation. If an performance appraisal is done by orthodox critiques then the appraisal will result in de motivation of employees, misuse of data, issues of trust, complexity in working processes, etc. (http://www.springerlink.com/content/j07r216nu3257431/)

The radical critique

Radical critique is totally different from orthodox critiques. In radical critiques there is no place for subjectivity. In radical critiques the manager who is doing performance appraisal always follows rules and regulations of the performance appraisal cycle. In this the performance appraisal is done by management without concerning about that individual employee, what concerns to them is performance, qualification, and capability of the employee.

In radical critiques performance appraisal is more paper based process, in other words we can say that while doing performance appraisal manager scores the employee on the basis of data which he has in records about his performance. (class notes)

As employees knows that their management is based on radical approach, they always obey to the rules and regulations of the organisation. Under this type of performance appraisal employees become more disciplined, active, capable, efficient and always try to initiate new approaches in the organisation. (class notes)

Performance appraisal is based upon facts and figures which makes working environment more transparent. Data which is used for performance appraisal is timely updated so that whatever employees are delivering would be recorded without any discrepancy or delay. More reliability is there in radical critiques. Feedbacks which are provided by the manager to the employees are acceptable and reliable thus results in an open discussion between manager and employee. Open discussion after the feedback always motivate employees to improve themselves and work efficiently to achieve his goals as well as organisational goals.(class notes)

Chances of bias decision are less. Manager can not show any favouritism to any employee as he has to support his decision with data. Because performance analysis is totally based on practicality there is a full control of management over employees behaviour and working patterns which will provide employees a standardise working platform and thus reduce employees conflicts , struggle or opposition.(class notes)

Individualism is observed in radical critiques as all the decisions are taken by an individual. All the rules , patterns, working conditions, goals, etc in performance appraisal cycle are framed by individual for group of employees .(ortho & redcl pdf)Mutual benefit also become doubtful sometimes, that is whether the performance appraisal process is beneficial for both manager and employee or not. Because the evaluating pattern and assessment methods are decided by individual.(orthdx & red pdf)

There is a assumption In radical critiques that there should be a consistent reaction of both the manager and employee towards scores of appraisal ratings. It is assumed because the whole performance appraisal process is based on data and facts which are there in records.(class notes)

Conclusion

From the above discussion it is become clear that meaning of performance appraisal is an integral part for the continued growth strategy of the organisation. Visible , how organisation conduct performance appraisal with the help of different techniques and methods of performance appraisal. There are so many rreasons to for conducting performance appraisal like range from salary increments, promotionsemployee satisfaction (through increments, promotions, etc.), initiatives required to increase productivity (through trainings and skill enhancement) to better communication (360o feedback). etc. and pPerformance appraisal also affect employees attitude towards the work and organisation. Orthodox and radical critiques of performance appraisal and implications of Orthodox and radical critiques in different organisations.

When performance appraisals are done well, then they will result in a motivating the employees to thus resulting in improvede their performance. When the performance assessment feedback is provided by the manager to the employee it will provide a chance for an open communication between them. Because of performance appraisal process employees got to know about their areas of improvement, strengths and weaknesses. Performance appraisal provide an opportunity to the manager to know his subordinates more closely and to find whether subordinates need any training for their development. Employees got to know that what organisation expects from them and where they stand. Performance appraisal helps in setting goals for the employees as well as for the organisations for coming year and helps in framing strategies about how to achieve those goals.

And Conversely, if performanceif performance appraisals are done poorly then they will may result in negative enviornment. When employees are not satisfied with the performance appraisal and the feedback provided by their supervisors are is not satisfactory and reliable then they will may react in a provocative way. They may become de-motivated, start thinking negatively and waste their time in correcting the management and policies. It can also results in conflicts as employees may raise questions on management’s work, their approach, policies, attitude and working strategies. Importance of both quantitative as well as qualitative approaches (Orthodox & Radical critique) can not be ignored. Proportionate mix for the two may differ based on the field / sector / segment of the organisation. For example, a completely process driven organisation may want to have higher allocation to quantitative approach. Whereas, a sales organisation might want a mix of the two, as personal preferences of the supervisor will have direct impact on the sales productivity.

So it is necessary for an organisation to do performance appraisals in a right manner to achieve organisational goals and employees retention and satisfaction.

References:

Boxall, P., Jhon, P.,(2003) Strategy and Human Resource Management. New York : PALGRAVE MACMILLAN

Bach, S., (2005) ‘Managing Human Resources’,(5th edn). Australia: BLACKWELL PUBLISHING

Marchington, M., Wilkinson, A.,(2008) ‘Human Resource Management At Work’,(4th edn). LONDON : Chartered Institute Of Personnel Development.

Cipd.co.uk,2009. CIPD.Performance Appraisal. Accessed on 3rd December 2009.

http://www.cipd.co.uk/subjects/perfmangmt/appfdbck/perfapp.htm

Naukrihub.com.2009.Techniques of Performance Appraisal.Accessed on 5th December 2009.

http://appraisals.naukrihub.com/techniques-of-performance-appraisal.html

ehow.com.2009.Types of Performance Appraisal.Accessed on 5th December2009.

http://www.ehow.co.uk/about_5370143_types-performance-appraisals.html

Khatri,N.,E.W.K.,Tsang.2003. Antecedents and Consequences of Cronyism in Organizations.Journal of business ethics.Vol 43., N0 4,6th December 2009.289-303.

http://www.springerlink.com/content/j07r216nu3257431/

Forde,J.,2009.Performance Appraisal and Performance Management,Lecture notes distributed in LUBS 5330M.Human Resource Management, University Of leeds Business school,9 November

Napier.A., Garwood,S.,2009.Performance Appraisals for Professional Staff.Unpublished

http://library.princeton.edu/hr/training/ProPerfAppraisal/PerformanceAppraisalsforProfStaff.ppt.ppt

bnet.com.2004. Effects of Performance Appraisal on Employees Attitude. accessed on 7th december

http://referaty.atlas.sk/cudzie-jazyky/anglictina/15834/effects-of-performance-appraisal-on-employee-attitudes

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