Literature Review

I. Rationale Performance appraisals are one of the most important requirements for successful business and human resource policy (Kressler, 2003). Rewarding and promoting effective performance in organizations, as well as identifying ineffective performers for developmental programs or other personnel actions, are essential to effective to human resource management (Pulakos, 2003). The ability to conduct performance appraisals relies on the ability to assess an employees performance in a fair and accurate manner. Evaluating employee performance is a difficult task. Once the supervisor understands the nature of the job and the sources of information, the information needs to be collected in a systematic way, provided as feedback, and integrated into the organizations performance management process for use in making compensation, job placement, and training decisions and assignments (London, 2003). After a review of literature, a performance appraisal model will be described in detail. The model discussed is an example of a performance appraisal system that can be implemented in a large institution of higher education, within the Student Affairs division. The model can be applied to tope level, middle-level and lower level employees. Evaluation instruments (forms) are provided to assist you with implementation the appraisal system. II. Introduction

Performance evaluations have been conducted since the times of Aristotle (Landy,Zedeck, Cleveland, 1983). The earliest formal employee performance evaluation program is thought to have originated in the United States military establishment shortly after the birth of the republic (Lopez, 1968). The measurement of an employees performance allows for rational administrative decisions at the individual employee level. It also provides for the raw data for the evaluation of the effectiveness of such personnel- system components and processes as recruiting policies, training programs, selection rules, promotional strategies, and reward allocations (Landy,Zedeck, Cleveland, 1983). In addition, it provides the foundation for behaviorally based employee counseling. In the counseling setting, performance information provides the vehicle for increasing satisfaction, commitment, and motivation of the employee. Performance measurement allows the organization to tell the employee something about their rates of growth, their competencies, and their potentials. There is little disagreement that if well done, performance measurements and feedback can play a valuable role in effecting the grand compromise between the needs of the individual and the needs of the organization (Landy, Zedeck, Cleveland, 1983).

III. Purpose

Performance appraisals should focus on three objectives: performance, not personalities; valid, concrete, relevant issues, rather than subjective emotions and feelings; reaching

agreement on what the employee is going to improve in his performance and what you are going to do (McKirchy, 1998). Both the supervisor and employee should recognize that a strong relationship exists between training and performance evaluation (Barr, 1993). Each employee should be allowed to participate in periodic sessions to review performance and clarify expectations. Both the supervisor and the employee should recognize these sessions as constructive occasions for two-way communication. Sessions should be scheduled ahead of time in a comfortable setting and should include opportunities for self-assessment as well as supervisor feedback. These sessions will be particularly important for new employees who will benefit from early identification of performance problems. Once these observations have been shared, the supervisor and employee should develop a mutual understanding about areas for improvement, problems that need to be corrected, and additional responsibilities that might be undertaken. When the goals are identified, a plan for their achievement should be developed. The plan may call for resources or support from other staff members in order to meet desired outcomes. In some cases, the plan might involve additional training. The supervisor should keep in contact with the employee to assure the training experiences are producing desired impact (Barr, 1993). A portion of the process should be devoted to an examination of potential opportunities to pursue advancement of acceptance of more complex responsibilities. The employee development goals should be recognized as legitimate, and plans should be made to reach the goals through developmental experiences or education (Barr, 1993). Encouraging development is not only a supervisor's professional responsibility, but it also motivates an employee to pursue additional commitments. In addition, the pursuit of these objectives will also improve the prospect that current employees will be qualified as candidates when positions become available. This approach not only motivates current performance but also assists the recruitment of current employees as qualified candidates for future positions (Barr, 1993). How to arrive? Reasons why need to be done Benefits of productive performance appraisals. - Employee learns of his or her own strengths in addition to weaknesses. - New goals and objectives are agreed upon. - Employee is an active participant in the evaluation process. - The relationship between supervisor and employees is taken to an adult-to-adult level. - Work teams may be restructured for maximum efficiency. Employee renews his or her interest in being a part of the organization now and in the future. - Training needs are identified. - Time is devoted to discussing quality of work without regard to money issues. - Supervisor becomes more comfortable in reviewing the performance of employees. - Employees feel that they are taken seriously as individuals and that the supervisor is truly concerned about their needs and goals. (Randi, Toler, Sachs, 1992). IV. Pitfalls to Avoid When conducting performance appraisals on any level, it is important to keep in mind the common pitfalls to avoid. These pitfalls may include but are not limited to:

1. Bias/Prejudice. Race, religion, education, family background, age, and/or sex. 2. Trait assessment. Too much attention to characteristics that have nothing to do with the job and are difficult to measure. 3. Over-emphasis on favorable or unfavorable performance of one or two tasks which could lead to an unbalanced evaluation of the overall contribution.

4.

Relying

on

impressions

rather

than

facts.

5. Holding the employee responsible for the impact of factors beyond his/her control. 6. Failure to provide each employee with an opportunity for advance preparation (Maddux, 1993).

V.

Legal

Implications

Any performance appraisal system used to make employment decisions about a member of a protected class (i.e. Based on age, race, religion, gender, or national origin) must be a valid system (an accurate measure of performance associated with job requirements). Otherwise, it can be challenged in the courts based on Title VII of the 1964 Civil Rights Act, the Civil Rights Act of 1991 and the Age Discrimination in Employment Act of 1975 (London, 2003). Uniform Guidelines on Employee Selection 1978 is the controlling federal law in the area of performance appraisals. The Equal Employment Opportunity Commission (EEOC) requires that any measurement used to differentiate between employees must be valid and fairly administered. The Americans with Disabilities Act (ADA) suggests that performance appraisals for people with disabilities for people with disabilities will not be conducted any differently than those for other employees. Another important aspect to consider is the employees right to privacy. Employees must have complete access to their personnel files, but others should have controlled access. The records should be accurate, relevant, and current. VI. Rewards

Effective reward systems are often hard to establish when creating performance appraisals. The question of how specific the reward, when the reward should be given, and how to reward group efforts can be a tricky subject to master. Our advice on this is to keep it simple. It is important to have an established reward system. However, rewards can be as simple as more autonomy on the job, praise for progress, additional professional development funding, and vacation time. The important aspect to remember when establishing reward systems is to be consistent. If two employees are being evaluated in the same way, their reward opportunities should reflect their evaluation outcomes.

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PERFORMANCE APPRAISAL LITERATURE REVIEW

The amount of research regarding the topic Performance Appraisal is so vast. The topic is literally not new; it is as old as the formation of the organizations. Before the early 1980s, majority of theoretical studies emphasized on revamping the rating system within the organization. The actions were a great thing to reduce the chaotic of employees performance appraisal (Feldman, 1981). With the passage of the time the methods and rating system among the employees got enhanced and received an immense appreciation and attentions of the managers. Behavioral Observation Scale (BOS) is one of the best techniques utilized by the managers to arte the employees. The dilemma was on the peak in the 1960s and 1970s. In the same period couple of new innovated rating scales were introduced, which was Behaviorally Anchored Rating Scale (BARS) and the Mixed Standard Scale (MSS). The innovations were dominant one which condensed the errors and improved the observation skills from the performance appraisal practice. According to the research of Arvey and Murphy (1998), there were hundreds of thousands of researches had been taken place between the periods of 1950 to 1980, which merely focused on the different types of rating scales. Landy and Farr (1980) reviewed and researched the methods of performance appraisal in totally a different manner, in which they understand the rater and process in an organizational context. Other Performance appraisal reports include the rater characteristics in their report like race, gender and likeability. After the year 1980 the biasness among the performance appraisal system occurred outrageously and appraisal had been granted on the favoritism or race and gender basis rather examined the knowledge, skills and style of the work of the employee. The accuracy criteria among the performance appraisal system clutched its grip in the start of the 1980s, where the researches were emphasized on common psychometric biases which include the diversified rating errors like leniency, central tendency and halo, which were termed as rating errors in the appraisal method. It has been observed that the bias free appraisals were inevitably true or more

precisely we can say more accurate, but the concept was totally refused by the research of Hulin in 1982. According to them the biasfree appraisals were not necessarily accurate (Murphy & Balzer, 1989). Researches which had been done in the year 1980 were found the most dominating one which contributed the appraisal system in a great deal. The researches of the1980 also helped out to clarify some presumed assumptions regarding the performance appraisal, just like the work of Murphy (1982). Research has included the measure of employee attitudes towards the system of performance appraisal and its acceptance (Roberts, 1990). Bernardian and Beatty (1984), suggested in their research that behavioral and attitudinal kinds of measure ultimately prove to be better anticipator as compared with the traditional psychometric variables, which we have declared earlier as well, like leniency, halo and discriminability. A Performance Appraisal system is totally ineffective in practice due to the dearth of approval from the end users (Roberts, 1990). According to a number of researchers, the enhanced and upgraded performance appraisal procedure and method will enhance the satisfaction level of the employees and definitely will improve the process of goal setting within the organization.

References Palmer, J.K. and Feldman, Jack M, Accountability and Need for Cognition Effects on Contrast, Halo, and Accuracy in Performance Ratings, Journal of Psychology, 139 (2), 2005, 119-137

F. J. Landy, And Farr, J. L. Performance Rating, Psychological Bulletin, 87, 1980, 72-107

reviewing the literature that when a proper system is in place, a performance appraisal can assist an organization in controlling employees. In his article Performance Appraisal-Lets Quit Appraising and Begin Reviewing, Baches (1988) states, the sole intent of every performance appraisal system should be to improve performance, to provide feedback on quality of performance and then review progress on the desired improvement of performance (p.204). Other authors have stated that in general, conducting formal evaluations is one way of laying down a line of communications between employees and supervisors. If conducted properly the organization benefits from this performance appraisal exchange. The literature suggests that performance appraisals should have clear goals set forth for its use. In his book, Essentials of Organizational Behaviour, Stephen P.Robbins (1994) states, Performance appraisals serve a number of purposes in organizations. First, management uses appraisals for general personnel decisions such as promotions, rewards, transfers, and terminations. Second, appraisals identify training and development needs, not only for individual employees, but also the organization as a whole. Third, performance appraisals can be used to validate selection and development programs. Fourth, appraisals provide feedback to the employees on how the organization views their performance (p.228). Most organizations must use the best standards that apply to them. The organizational needs must be clearly stated so that the appraisal program can be designed to meet the needs. The two primary objectives of a well functioning performance appraisal system should be: To formally measure the performance of the individual employee and to provide information on how well the system is designed and working. The formal measures of performance are used as feedback to the employee and used by others in management for making personnel decisions such as promotions and work assignments. The information provided by the performance reviews of many subordinates should be used 13

Collectively to modify the inputs of the performance appraisal system in an attempt to improve its efficiency (Baker, 1988, p.26). Goals and objectives are methods by which job expectations can be measured. Managers must be able to clearly explain the differences between goals and standards to their employees so that both parties know how they will be used during the appraisal process (Maddux, 1987, p.169). A goal is a statement of expected results in the performance appraisal process. Goals can describe: (1) conditions that will exist at the end of a period, (2) the time frame required for the desired results and (3) the resources required to achieve the results. Goals should be established with employee participation and designed to reflect their abilities and training(Maddux, 1987, p.170). This setting of goals and objectives is important because employees may not understand that their current behaviour is not producing desired results. In establishing goals with employees it is important to remember that the goals must be obtainable by the employee. The performance appraisal can be the most powerful tool a manager has to enhance a subordinates productivity. Conversely, the performance appraisal system can stir strong feeling and conflict in the work place (Baker, 1988, p.59). Advantages and Disadvantages of Performance Appraisals In reviewing the literature there was considerable articles that encouraged the use of performance appraisals. Most authors felt that the leadership of the fire service needs to embrace the concept of employee evaluations. The difference of opinion was to the exact method of how to accomplish the appraisal. In his article Succession Planning, Coleman (1988) states, The performance evaluation system utilized by a fire fighting agency should include an assessment of a candidates potential for promotion (p.24). This feeling was common among the articles reviewed. Another 14

Sentiment expressed was the commitment to the department and its employees. Good leaders have strong interest in personal and professional development of their people. They encourage their personnel to push beyond their limitations and give their personal best (Reynolds, 1999, p.10). You must consciously study your co-workers and get a feel for where they are coming from. Are they shy and retiring or are they brash and bold? Each will require a slightly different supervisory style (Carter, 1988, p.19). This theme of obligation to the organization was one that was consistent in the literature review. Most authors felt that the benefits of even a week performance appraisal system would outweigh the disadvantages. The most effective managerial tool that can be employed by the fire officer to increase discipline is not punitive action, but counselling and training (Coleman, 1989, p.20). In his article the bottomup performance appraisal, Hymes (1996) states Four skill areas are required for effective organizational performance: motivation, time management, decisionmaking and communications. The first three cannot be accomplished without good communication skills (p.109). This theme of coaching was common and strongly recommended by most authors. The setting up of an appraisal system that allows for employee feedback and interaction was desirable. A healthy organization would assist gifted personnel to find their way to a function that enables them to contribute to an organization (Thorp, 1999, p.7). Some of the problems with performance appraisals that were pointed out involved lack of standards and clear direction. Without knowledge of the standards and a proper assessment program, employees are likely to perceive unfairness, subjectivity and bias in the evaluation (Carter, 1988, p.19). One way to avoid rater bias is to use a rating system based on a specific observable behaviour and scored using symbols rather than numbers (Booth, 1983, p.38). In addition, to these areas of concern in his book Appraising managers as managers, Koontz (1971) 15

writes, It has been widely held by scholars of management and practicing managers that appraisal should be separated from considerations of compensation(p.174). The feeling here is that bias would affect the pay of employees and if a particular supervisor holds a grudge against an individual, the employee could be harmed. In addition, some supervisors may gloss over the process because they feel that it would be too difficult to decide to take away or deny employees additional pay. One thing for sure is that most authors felt that clear guidelines should be followed when institutionalizing a performance appraisal system. The previous appraisal system used ambiguous words such as good, poor, and inadequate, without performance definitions to clarify the distinctions between the levels. Each of us would define these terms differently (Paulsgrove, 1990, p.58). The previous quote summarized the feelings of authors in many of the articles. Many fire departments have abandoned the appraisal system because they found that the appraisals were too subjective. In summary, the majority of articles felt that most of these problems could be overcome by using a consensus process between management and the unions prior to implementing a performance appraisal system. We strongly encourage the use of goal-oriented performance appraisal systems.

These systems have the manager and subordinate agree on objectives at the beginning of the appraisal period, and then evaluate progress towards meeting these objectives throughout the period (Joseph & Susan Berk, 1991, p.75). The fact that most programs fail is usually due to two problems: 1. The lack of training in rating employees and 2. Inappropriate criteria and methods for evaluating have been implemented. Supervisors should be trained in performance management, then prepare their employees for the process (Moravec, 1995, p.81).