Performance Appraisals and Appraisal Tools in Practice

 

Performance appraisal has been synonymous with performance review, performance evaluation, performance assessment, performance measurement, employee evaluation, personnel review, staff assessment, service rating, etc. (Aggarwal & Thakur, 2013).

Performance appraisal provides information that is relevant for many personnel decisions, including salary increases, recommendations for promotions, transfers, and training programs, as well as for employee development and performance feedback as cited in (Cleveland, et al., 1989) by Huber et. All (1983). Performance appraisal is potentially a key tool for organizations to make the most of their human resources and the use of appraisal is widespread (Prowse & Prowse, 2009). Performance appraisal can be defined as the formal assessment and rating of individuals by their managers at, usually, an annual review meeting (Armstrong, 2006).

Appraisals often take the form of an appraisal interview, usually annual, supported by standardized forms/paperwork. The key objective of appraisal is to provide employees with feedback on their performance provided by the line manager (Prowse & Prowse, 2009).

Employee’s appraisal system may be considered one of the indicators of the quality of Human Resource Management in an organization. Properly designed and realized process of employees‟ appraisal is not only the necessary basis of successful employee performance management, but also provides valuable information for other human resource management functions (Aggarwal & Thakur, 2013). Performance Appraisal can be broadly classified into two categories: Traditional Methods and Modern Methods (Aggarwal & Thakur, 2013).

Table 1 - Techniques of Performance Appraisal

Sl. No.	Technique	Key Idea	Advantages	Disadvantages
A.	Ranking Method	Ranking employees from best to worst on a particular trait, choosing highest, then lowest, until all ranked.	1.Fastest 2.Transparent 3.Cost Effective 4.Simple and easy to use	1. Less objective 2. Morale problems who are not rated at or near the top of the list. 3. Suitable for small workforce. 4. Workers strengths and weakness cannot be easily determined.
B.	Graphic Rating Scales	A scale that lists a number of traits and a range of performance for each, the employee is then rated by identifying the score that best describes his or her performance for each trait.	1. Simple. 2. Easily constructed. 3. Ease of use. 4. Results are standardized what allows comparison to be made between employees. 5. Reduce the personal bias.	1. Rating may be subjective. 2. Each characteristic is equally important in evaluation of the employee’s performance.
C.	Critical Incident	Keeping a record of uncommonly good or undesirable examples of an employee’s work related behaviour and reviewing it with the employee at predetermined times.	1. Easy and economical to develop and administer. 2. Based on direct observations. 3. It is time tested and provides more face time.	1. Time consuming and laborious to summarize and analyse the data. 2. Difficult to convince people to share their critical incidents through a survey.  3. Provides a personal perspective of organizational issues.
D.	Narrative Essays	Evaluator writes an explanation about employee’s strength and weakness points, previous performance, positional and suggestion for his (her) improvement at the end of evaluation time.	1. Report actually shows employee’s performance. 2. Can Cover all factors. 3. Examples are given. 4. Provides feedback.	1. Time consuming. 2. Supervisor may write a biased essay 3. Effective writers are very difficult to find.
E.	Management by Objectives	Employees are evaluated how well they accomplished a specific set of objectives that have been determined to critical in the successful completion of the job.	1. Easy to implement and measure. 2. Employee motivated as he is aware of expected roles and accountability. 3. Performance oriented diagnostic system 4. Facilitates employee counselling and guidance.	1. Difficult to employees agree on goals. 2. Misses intangibles like honesty, integrity, quality, etc. 3. Interpretation of goals may vary from manager to manager, and employee to employee. 4. Time consuming, complicated, lengthy and expensive.
F.	Behaviourally Anchored Rating Scale	BARS combines elements from critical incident and graphic rating scale approaches. The supervisor rates employees‟ according to items on a numerical scale.	1. Job behaviours describe employee performance in a better way. 2. More objective 3. More acceptances due to participation of managers and employees.	1. Scale independence may not be valid/ reliable. 2. Behaviours are activity oriented rather than result oriented 3. Very time consuming for generating BARS. 4. Each job will require creating separate BARS scale.
G.	Human Resource Accounting(HR A)	The people are valuable resources of an organization or enterprise, Information on investment and value of human resource is useful for decision making in the organization	1. Ascertain the cost of labour turnover. 2. Development of human resources. 3. Planning and execution of personnel policies. 4. Return on investment on human resources. 5. Improve the efficiencies of employees.	1. There are no specific & clear-cut guidelines for finding cost and value of human resources of an organization. 2. The method measures only the cost to the organization but ignores completely any measure of the value of the employee to the organization. 3. The life of human resources is uncertain and therefore, valuing then under uncertainty seems unrealistic.
H.	Assessment Centers	Employees are evaluated over a period of time; say one or three days, by observing their behaviours across a series of selected exercises or work samples.	1. Concepts are simple. 2. Highly flexible methodology. 3. Helps in selection and promotion decisions and for diagnosing employee development needs. 4. Allow for the measurement of multiple attributes. 5. Exercise is hard to fake.	1. Expensive and difficult to manage 2.Requires a large staff 3. Requires a great deal of time. 4. Only a limited number of people can be processed at a time. 5. Much cognitive loads of assessors.
I.	360 Degree	It relies on the input of an employee’s superior, colleagues, subordinates, sometimes customers, suppliers and/or spouses.	1. Excellent employee development tool. 2. Accurate, reliable and credible system 3.Legally more defensible 4. More objective being multi-rate system.	1. Time consuming and very costly. 2. Sensitive to organization and national culture. 3. May damage self-esteem of employees if the feedback is brutal. 4. Prone to political and social games played by people. 5. Difficult to implement in cross functional teams. 6. Maintaining confidentiality may pose challenge in small organizations.
J.	720 Degree	360 degree appraisal method is practiced twice. When 360-degree appraisal is done, then the performance of the employee is evaluated and having a good feedback mechanism, the boss sits down with the employee again a second time and gives him feedback and tips on achieving the set targets.	1. Improved feedback from more resources. 2. Team Development 3. Personal and organizational Performance Development. 4. Responsibility for career development. 5. Reduced discrimination risk. 6. Improved customer Service. 7. Training	1. Exceptional Expectations for the process. 2. Insufficient Information. 3.Design process downfalls 4. Failure to connect the process. 5. Insufficient training and process understanding. 6. Focus on negatives and weaknesses. 7. Requires commitment of top management and the human resources (time, finance, resources, etc) 8.Paperwork (computer entry overload) 9. Rater inexperience and ineffectiveness.

Source: (Aggarwal & Thakur, 2013)

I work for a company in IT industry. The company uses Management by Objectives (MBOs) as a tool for performance evaluation of employees annually. This has been easy for both managers and employees to easily understand and execute throughout the year. The company tries its best to have more than two formal reviews every years, however most of the times annual year end review was done at the end of the year to provide ratings for the employees. These reviews play a major role in deciding employee performance bonus, annual salary increment, development plans, etc. However, incorporation of measuring employee behaviors has been a challenge as most MBOs cover only the results achievement rather than the behavioral indicators of performance. The company plans to increase the number of reviews every year in the expectation of more proactive feedback sessions and to support improved performance of employees.

References

Aggarwal, A. & Thakur, G. S. M., 2013. Techniques of Performance Appraisal-A Review. International Journal of Engineering and Advanced Technology, 2(3), pp. 617-621.

Armstrong, M., 2006. A Handbook of Human Resource Management Practice. 10 ed. London: Kogan Page Limited.

Brown, M. & Heywood, J. S., 2005. Performance Appraisal Systems: Determinants and Change. British Journal of Industrial Relations, 43(4), pp. 659-679.

Cleveland, J. N., Murphy, K. R. & Williams, R. E., 1989. Multiple uses of performance appraisal: Prevalence and Correlates. Journal of applied psychology, 74(1), pp. 130-135.

Levy, P. E. & Williams, J. R., 2004. The Social Context of Performance Appraisal: A Review and Framework for the Future. Journal of Management , 30(6), pp. 881-905.

Prowse, P. & Prowse, J., 2009. The dilemma of performance appraisal. MEASURING BUSINESS EXCELLENCE, 13(4), pp. 69-77.

Werner, J. M. & Bolino, M. C., 1997. Explaining U.S. Courts of appeals decisions involving performance appraisal: accuracy, fairness, and validation. Personnel psychology, Volume 50, pp. 1-24.