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A Performance appraisal system is first implied in 1914 by Lord and Taylor Co. At that time, performance appraisals seemed to be based on annually rating. Law (2007, p.18) states that the company`s aim was to rate their workers performance against the organization`s pre-established objectives. Through the years numerous industrial developments have been achieved which lessen the amount of manual labour required from employees. In it has impacted on organization`s financials and human resources. These conditions naturally force to evolve performance appraisal methods. In today’s society, performance appraisal methods tend to focus more on feedback and development. In more recent times, professionals in the business sector now consider performance appraisals as either the part of the problem or part of the solution in organisations. They are the ways of evaluating the overall performance of the employees. It is aimed to manage performance of employees which in turn will efficiently manage the human resources sector of an organization.

Performance appraisals are a highly important measure of an organizations efficiency rating, an investigative tool used to determine if an organization`s objectives are being met in accordance with the organization`s culture. Despite many endeavors to make performance appraisals successful for both managers and employees, it is still a system which has problems and common pitfalls if it is not structured properly. It is important to note that,
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any system created and structured by human is expected to contain some human error, as the human being itself is not perfect. In this paper, performance appraisals will be examined with its positive and negative attributes. Despite there

are plenty of appraisal methods and discussions about the topic, one cannot describe all techniques. . Thus this paper will investigate if there is a fundamental problem with performance appraisals or a possibility of a number of problems that can be solved with some further attention, investigation and accurate implementation

Purposes of performance appraisals

Performance appraisals have four main objectives. They are principally; performance evaluation, performance reward, development and feedback. Performance evaluation is a method used by the mangers of a company to calculate each employee’s effectiveness within the company. Once the fundamental evaluation is undertaken then all other aims of performance appraisals can be implied. Performance reward is used for career promotions and that brings an increase in employee`s motivation. Development and feedback are perhaps the key elements of performance appraisals however these are often overlooked by many mangers. Stone (2008, p.296) states that “Consequently a key function of performance appraisal is to
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communicate organisational norms or culture so that employees internalize the organisations value.”

Instead of just talking to employees and being critical when giving feedback, it is important to be constructive. The endowment of constructive feedback to employees is of key importance for a business to reach its company objectives. Also, companies should always choose the right

appraisal system for their type of organization. This should be done after determining the organization`s objectives in relation to culture, financial status and other business objectives. Since managers understand how the company is run and what key objectives of the organization are, they play the vital role of commutating these across to the employees. The mangers feedback holds a critical function on the performance of individual employees. Thus, part of manager’s duty is to explain how to get the job done at its best.

Primarily, performance appraisals began as a measure which to adjust employee`s salaries. To determine if there is an inherent problem with performance appraisals or if a new system needs to be developed, an investigation of the former methods is required. Positive elements of the former systems are as stated by Schraeder, Becton & Portis (2007, p. 20-21) Performance appraisals can help organization effectiveness and productivity.
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It has been suggested that employee uncertainty can be reduced with a review of their performance and gives an opportunity for communication between managers and employees and what is expected from them. When a performance appraisal is structured appropriately, they can play a crucial role in reducing the amount of environmental distractions and can lead to greater trust within the organisation. They can provide a means for the employee to discuss issues they have or things that they are uncertain of what expectations they required to meet.

Negative aspects of formal appraisal methods

The rating system is fundamentally flawed. Critically this method is used highly throughout the workplace because it is a quick system; which can mean that many organisations are failing to complete accurate performance appraisal. The reason is that it uses a numerical rating to determine the performance of employees. The problem is how can one determine if an employee should be rated as a one or as a five? The systems do not give a clear indication of the set criteria in which to rate an employee, and fail to provide clear reasons as to why an employee received a certain rating. One article indicates that problem with giving an example of halo effect. (“Performance Appraisals, Rating scales”, n.d., ¶13)
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“An example is the supervisor who believes that an employee is inherently good (halo effect) and so ignores evidence that might suggest otherwise. Instead of correcting the slackening employee…” Another problem is legal issues. Poor ratings resulting dismiss without a clear explanation of the basis of decision may lead a legal actions taken by external factors such as unions. Hansen (Performance appraisal tips, n.d. ¶16) indicates that traditional systems mainly concerned with the overall organization where developmental approach views the employees as individuals and has been forward looking through the use of goal setting. Hansen`s opinions seems still valid where most of the journal articles, reports addresses the same problem.

One of the UN (United Nations) reports on performance appraisals indicated by Othman (1994, p.5) says “The performance appraisal system should be structured to provide clear communication between staff and supervisors about expected and actual performance.” Even though fifteen years have passed since this report was released, it appears that we are still experiencing the same problems and concerns. Performance appraisals aim to be a positive element of human resources as
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it gives a means for communication to let employees know how well their efforts are conforming to the organisation’s main objectives. Through the years, satisfying that important objective has not been changed. Mainly this is due to a lack in communication and feedback between mangers and employees, and as mangers perceiving it as an “annual formality” which is time consuming on their behalf. Most of the managers do not spend enough time and effort on complement performance appraisals.

An analyse from a non-metropolitan, smaller organizations` view

Despite the fact that the articles that are referred in this work likely reflects big organisaitons` perfective, and it is likely to refer metropolitan areas, some traditional methods might be useful for reasonably small organizations. For instance, the essay method is one of the traditional methods and is exceedingly time consuming for large organisations. This type of process is highly subjective where the appraisals should only concern about the performance, not the employee`s personality and specific attitude. Just because it is too time consuming, demanding, lacks objectivity and far way from being a clear and simple form of performance appraisal, it is

likely to be only affective in smaller organisations. The reason is that within these smaller companies, there are fewer employees therefore the managers
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have more time to complete these and also, have more personal relationship with the employees.

The rating system: The persistent problem with performance appraisals.

Also, instead of numerical ratings, some systems also use common words such as “excellent”, “very good” or “keep doing what you are doing”, therefore it is too general for the employee and does not provide constructive and developmental feedback. If an employee receives a bad rating or comment, this method does not provide adequate information on what they were doing wrong or what should be implemented on how to improve. It appears that duties and responsibilities of an employee are not clearly outlined in the job description. Schermerhorn, Campling J., Poole, D., & Wiesner (2004, p.327) describes job description as: “Job description is a written statement of job duties and it details responsibilities of a job holder.” After the process of performance appraisal employees may be surprised with the results displayed within the appraisal. Therefore managers should not wait for performance appraisals to give feedback. An example of this could be a response like“I didn’t know that I was expected to perform that duty”. In order to avoid that, managers need to communicate more and need to show employees that they are interested in their work, so that employees will feel valued, and in turn they will perform at a higher rate thus the performance
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appraisal was successful. Even though this method of performance appraisal is used, feedback is still essential. To most

of the employees receiving a negative feedback is better than not receiving any at all. Hence, developing strategies for improvement of employee`s performance will lead to greater productivity and higher motivation to achieve goals and organization`s objectives.

Development approaches and feedback

The 360 degree method or multisource method is a modern method and it is becoming increasingly popular. The main reason for this increasing use is that it is not biased and not based purely on the manager`s rating. This system is based on judgments from a wide variety of sources such as customers, subordinates and even CEO`s. Therefore it is thought to be rich in information quality. Heathfield (2007, p.23) suggests that 360 degree provides the developmental plan which establishes the organization's commitment to help each person continue to expand his or her knowledge and skills.

However, the fact of the matter is this type of appraisal system is a prolonged route which requires the input of many people. Due to the fact that the questionnaires often long, people may suffer from exhaustion
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therefore the collected information may not be always reliable. It is possible that too much information about each employee can be given away in this type of appraisal system. In addition to that, it appears that this technique is more likely to be a feedback system than an appraisal method. Also to mention its pitfall, it could be lacking in terms of individuals motivation and the commitment within the workplace because not everyone would see them within the workplace environment for example customers of the organisation or the CEO who would be too busy to view all employees on a day-to-day basis.

Additionally, MBO (Management by Objectives) method have become more commonly used than the traditional methods. A reason why this change has occurs is that this approach deals with employees as a “team”; therefore it is more likely to achieve performance goals. With goal-setting, employees become progressively more motivated and consequently the tenancy for higher focus on tasks. This minimises the one of the inherited problems with performance appraisals as mentioned earlier. MBO’s key objective is to establish a constructive relationship with employees while setting a leadership and team based system for performance appraisals. The MBO Style of performance appraisals are more suited to the modern world as they aim to address performance as a whole, as a “team” effort. Also importantly set out leadership rolls and as a result give constructive feedback.

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Why there are lot of critics around performance appraisals

W.Edwards Deming is probably the most famous and harsh critic against performance appraisals. In his words “Annual ratings are a disease, annihilating long term planning, demobilizing teamwork, nourishing rivalry and politics, leaving people bitter, battered, desolate, despondent, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior” (Deming, 2000, p. 102). Deming perhaps is right concerning the rating system, but to him, there should be no performance appraisal methods because it is an external-control mechanism. Yet, it is well know that discipline plays a vital role in meeting a organisation`s objectives. Hence there should be always a performance measurement which should lead to training, communication, and rewards. For the system to work it needs to work in conjunction with good communication throughout the year.

Conclusion

It is the fact that an organization cannot survive without its employees. As long as employees contribute the organization`s culture and its objectives (which are the aims of human resource strategies employees) and organization are not a separate entity from that point of view. Therefore a system of performance appraisal is key to looking out for the employees. Although performance appraisals have inherited problems accordance to its context, it is still in use all around the world. Above and beyond, all organizations need a proper performance measurement which strictly meets
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the organization`s culture and pre-set objectives. Critics may have valid points against the system itself; however they also assume some conditions and circumstances. Hence, organizations sooner or later can create an appropriate performance appraisal method that fits their objectives and culture, along with good communication.

REFERENCES
Law, D.R. (2007). Appraising Performance Appraisals: A Critical Look at an

External Control Management Technique. International Journal of Reality Therapy, 26, 18-19 Stone, R.J. (2008). Managing Human Resources (2nd ed.). Australia : Wiley Schraeder M., Becton J.B. & Portis, R. (2007). A Critical Examination of Performance Appraisals. An Organization's Friend or Foe? [Electronic version]. The Journal Participation, Spring 2007, 20-21 Performance Apprasial Methods: Rating Scales. (n.d.). Retrieved April 24, 2009, from http://www.performance-appraisal.com/ratings.htm Hansen, D.A (n.d.). Performance Appraisal Tips. Retrived April 23, 2009 from
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http://iso9k1.home.att.net/pa/performance_appraisal.html Othman, K.I., (1994). Toward A New System Of Performance Appraisal In The United Nations Secretariat: RequirementsS For Successful Implementation. (Report No. 94/5). Geneva Schermerhorn, J.R., Campling, J., Poole, D., Wiesner, R. (2004). Management : An Asia-Pacific Perfective. Australia : Wiley. Heathfield, S. (2007). Performance Appraisals Don`t work- What Does? [Electronic version]. The Journal Participation, Spring 2007, 23. Deming, W.E. (2000). Out of the Crisis. Cambridge, MA: M.I.T. Center for Advanced Educational Services.

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