The effectiveness of performance appraisal system

In this essay, the effectuality of different types of performance appraisal systems adopted by the organisations was critiqued for both the employer and employee. In order to defend the arguments, the essay will be critically evaluated by analysing in terms of conceptual bases, main findings and practical implications. Lastly, these systems improved the quality of management in an organisation, but failed to satisfy employees.

According to (Wright et al, 2001), a highly productive workforce is an important route to be in competitive advantage. Performance appraisal systems is used as a tool and viewed critically by organisations as a management practice to leverage the human capital in a desired direction for the effectiveness and efficiency (Erdogan,2002), whereas these efforts of the employees determines the success and survival of an organisation (Barney, 1998). It has long been considered as one of the strategic, high performance and human-capital enhancing constitutes in the bundle of human resources management practices (Takeuchi et al, 2007). The appraisal system can potentially aligned with the aims of an organisation goals, where the employees are motivated and the performance can be managed (Cook and Crossman, 2004). Many researchers determined that the effective performance appraisal systems leads to a number of important outcomes of work, such as improved employee productivity and quality, job satisfaction, commitment and trust (Kuvaas, 2008). The firms introduced new forms of performance appraisal systems for benefits of the appraisers and apprises. The advantages and disadvantages of the key detriments of effectiveness of performance appraisal systems were critiqued in perspective of employer and employee.

Primarily, Individual-focused performance appraisal systems have traditionally viewed as the measurement of individual differences within or either among the individuals by the organisational practitioners (Cleveland et al, 2003), whereas the individual is capable and responsible for influencing the tasks done in an organisation. This system is evaluated by conducting questioner, or observation on individuals in the field. Even though, this perspective appraisal system helps the contemporary companies to evaluate the individuals who adapts and achieves the objectives and goals in different aspects of changes in the business environment (Schneider, Klein, 1994). Indeed, it helps to improve the organisations performance by the aggregation of the individual improvements. But, in some cases, focusing on individual performance has seen to distract the organisation’s to improve systematically (Murphy and Cleveland, 1995). But, when the managers forced to compare with their co-workers, for individual performance for overall perceived effectiveness, may result in rivalry among the employees which affects the organisational objectives (Ghorpade and Chen, 1995).

According to (John 1999 ), Individual appraisal system is essentially evaluative and developmental, which helps managers to implement their personal decisions in order to improve the performance of the employee in acquiring skills for a better advancement in their career either by motivating or providing training. But, when managers focus faults on employees instead of systems, discourages the employee from seeking help from co-workers to avoid challenges, which may indeed reveal personal performance weaknesses.

Secondly, Organisations which are restructured into highly interdependent teams, where as teams are given responsibility for allocating work tasks, hiring new staff, or even disciplining errant staff, conducts performance appraisal based on team’s output (Redman et al 2009).Whereas, managers sets the target and access the performance using multi-rate evaluation, appraises the whole team and rewarded on equal platform (Lawler 1994). Later, the internal appraisals of individuals are encouraged within the team. Whereas, the superior performer is appraised greater than the other sub-ordinates and were rewarded.

According to (Schaubroeck,1999), these systems plays an efficient role in achieving the organisational objectives rather than individuals. An organisation achieves the TQM and changes in business with the effective team-work with low costs. After receiving the feedback from rater, it is easy to motivate and provide training as a group. Moreover, team based appraisal systems are more successful than individual based appraisal systems. But, these systems will face increased legal challenges, unless the team performance is evaluated simultaneously with the issues of accuracy and fairness. Although, organisations which maintains the reliability and validity of team performance, demonstrates the fairness and accuracy and may use with more confidence in making important personal decisions. Indeed, helps the employees to have strong co-relation between their peers, maintains balanced peer evaluation scores and individuals performance will indicate a positive relationship between the team evaluations, by those elements deemed for consistent group work, with improvement in their individual tasks (Roberts, 1992).

Relatively new, Upward or peer appraisal system is used as a tool to rate and appraise the performance of a manager by their peer and sub-ordinates (Redman and Mathews 1995). Whereas, the ratings given by these peer and subordinate is an important issue in implementation of these systems for the acceptance of a performance appraisal (Bemardin et al 1993). In these systems, managers improve the leadership qualities based on the ratings given by peers, which enhances better organisation objectives. But, if a manager who suspects, much not done with the leadership qualities (Taurallie 1996). According to research by (Hazucha et al., 1993), suggests that the support received by supervisors or sub-ordinates helps to improve employee development, which suggests that social support will facilitates developmental issues.

For example, a manager may receive critical feedback on “Facilitating Departmental Communication.” by the peer and sub-ordinates. Suppose, if the peers and subordinates are busy with their own tasks, may not be supportive, as the manager attempts to improve by alternative strategies, this may impact a negative effect on participants’ beliefs about the capability to improve (Taurallie 1996). The organisational teams works efficiently, if the manager is in touch with the sub-ordinates needs and values in order to be effective leaders (London and Beatty, 1993).

Customer based appraisal system, where customer care programme is widely spread in both private and public sector organisations, which impacted the organisations to evaluate the performance of an employee standards based upon the customer feedback and appraising staff associated with these (IRS 1995b). Data from customers is collected in different methods like surveys, online surveys, completion of customer cards, telephone surveys, postal surveys or some times by conducting interviews with customers, to appraise the employees (Redman et al, 2009). Manager’s uses a range of surveillance techniques like gathering customer feed backs by recording staff-customer conversations, surface acting skills to deliver immediate feedback for appraisal review process (Redman et al, 2009).

Employers appraises based upon the customer feedback, which helps them to apprise the employee who are profitable, which minimizes the cost and time and provided better understanding between the customers and services they deliver as a part of their businesses. But, some employee often questions about ethics and lack of managerial trust in them (Shing and Spence 2002). Employees who have better surface acting skills benefits rather than hard working peers.

For example, Mc Donald’s restaurant in U.K, used counter staff observation checklist, in which employees are rated based on a variety of surface acting skills, like whether ‘there is a smile,’ greeting is pleasant, audible and sincere with a eye contact with customers, lastly with a thank you or sometimes with a pleasant parting comment is used and asks for repeat business sincerely, based on these feedbacks the customer service manager used to file reports on the service and quality of individuals and departments (Newton 1996), which in turn used to appraise the employees. This method improved the profits, by reducing costs and most of the time employees are rewarded on the profit of the business.

Many organizations use 360-degree appraisal system feedback to provide information on work performance to individual employees (Tornow & London, 1998). According to Leanne et al (2007), 360-degree performance appraisal system is a process in which the executive receives the feedback from subordinates, peers, colleagues at senior and customers. A survey conducted on 350 organisations of fortune 500 companies, (Kandola and Galpin, 2000) indicated forty percent had experienced of such feedback system, later on out of sixty HR departments shown seventy five percent were benefited, which shows growth of the 360-degree appraisal system by organisations.

It is conducted by framing well-structured questioners based upon the different models of managerial competency, later appraisers responds to open questions, which asks for the descriptions of the appraisers ‘major value-adding areas of the year,’ summaries of the managers strengths, description of the key fields, which improves the strategy( Redman et al 2009). The performance of an employee is appraised based upon the different ratings awarded by the multi-rater.

Managers who work with a coach to review feedback with a set of developmental goals of an organisation have shown more improvement than those un-participated members (Smither, London and Flautt 2003). Behavioural aspects like facilitation of others, respect for diversity and delivery of results helps in organisational context in which task occurs likely to making it a helpful, respectful, and dedicated environment in which to work (Sparrow, 1994). Diversity in perspectives through involvement of multiple raters gives a certainty, to provide more accurate and meaningful feedback by the organisations. Employees expect to use feedback data for developing their personal development skills and receive training in the fields, for improvements and further growth in a long-term career. Although, despite of benefits, some of the questions remained unanswered, whether the data evaluated is accurate by the multi-raters, regarding the validity and reliability, due to the raters were observed in different aspects.

For instance, a British mobile company Mercury one 2 one implemented 360-degree appraisal for effective organizational changes and improve management performance (Gore 1996). To implement, they have selected the top performers of different departments in overall organisation and interviewed them to develop the feedback questioner, later these questioners were distributed to employees in order to evaluate their performance which are mainly focused on to demonstrate their performance rather than opinion . The feedback received from the different groups were collected and analysed for appraise by conducting workshop. Based on the feedback, organisation developed ‘development toolkit,’ as a part of their appraisal system, which indeed helped the employees to evaluate their feedback and also provided the managers with a vital insights in their short term objectives, which would have remained unaddressed .

Common outcomes of an effective performance appraisal systems were benefit of employees’ motivation by appraises, knowledge about how they perform, learning about ‘what management values,’ which helps to motivate, training they receive after appraisal for improving performance. According to,(Dobbins,1990) the five outcomes are use of evaluations as feedback by both the employee and employer, to improve the performance, reduced the employee turnover, increased motivation between peers, existence of feelings of equity among employees, clear linkage between performance and rewards, and were achieved to some extent by these appraisal systems. The provisions of information for the development of managerial strategies for training and development and intensive pay have improved for employee. Employers optimized the training and pay incentive from the outcomes of appraisal systems. (Teratanavat, 2006) found these systems helps for the outcomes like reduced employee stress, review of overall progress, linkage between current performance and employee’s goals, and development of specific action plans for future. Appraisal is thought to be deeply rooted in terms of its norms, values and beliefs, in which employees satisfaction is a major concern. Although, the results shown that complementary human resource management practices, such as formal training and incentive pay have improved for an employee. Although, employer benefited by improving their quality management, improved cohesion between teams, reduced the risk to some extent.

The following aspects which makes harm to the effectiveness of performance appraisal by these appraisal systems for both the employers and employees are exemptions to the highly visible employees, conducting of performance appraisal to punish the low performers, benefit rewards on non performance, doubts in the mind of performers about appraisal’s after the effects by feedback, organization’s politics that leads to disturb performance of targeted employee (Deluca, 1993), gender differences, use of fundamentally flawed appraisals, focus on encouraging individual performance, which automatically discourages teamwork/collaboration, inconsistencies in setting and applying appraisal criteria, focus on extremes (exceptionally good or poor performance), appraisal’s focus on achievement of short-term goals, support to autocrat supervisors, subjectivity of appraisal results and creation of emotional anguish in employees (Segal, 2000),use of vague qualities and irrelevant measurement criteria, use of useless checklists for evaluation, monologues instead of dialogues in feedback sessions, reluctance of appraisers to offer feedback, supervisor’s misguidance to appraiser, inaccuracies at supervisor/organization’s end (Horvath & Andrews, 2007). Moreover, these systems are hated by most of the managers, due to restrictions on their personal decisions.

In conclusion, it can be said that appraisal systems improve the quality of management in an organisation, but fail to promote satisfaction to the employees in a broader context. Moreover, the failures outweigh the achievements. Furthermore, these systems can have more effective by improving in larger prospects, which benefits both the employee and employer.