This chapter will deal with the important elements of the performance appraisal process and some of the best practises that are consistent with successful use of performance appraisal.
The information to be provided will also describe a review of literature from scholars on the performance appraisal process describing the types and approaches to performance appraisal
Also this review will examine the main issues surrounding performance appraisals and will also examine the attitudes of employees to their jobs as a result of the appraisal feedbacks they get in their organisation.
2.2 PERFORMANCE APPRAISAL
Performance appraisal is a very important process in human resource management. It involves organizations rating their employees’ abilities to perform and also assessing their worth for organizational rewards. Different researchers have noted at different points of time that many employees are not satisfied with the performance appraisal systems that runs in their in their organisations.
Armstrong (1994) defines performance Appraisals as “a process designed with the intention of improving organisational individual performance”. Performance appraisal can be seen an system of performance management. Performance management can be described as a joint process that involves both the supervisor and the employee, who identify common goals, which correlate to the higher goals of the institution (Rogers (1995). Armstrong and Baron also defined performance management as a process that contributes to the effective management of individuals’ and teams in order to achieve great levels of organisational performance.
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Performance appraisal which could also be known as performance review, It’s a system of management that documents the achievements of an each employee with respect to targets set at an earlier time. It is documented at the end of a formal evaluation. During the evaluation period, the strengths and the weaknesses of the individual are reviewed based on the results from appraisal (Aguinis and Pierce,2008). It is important to understand that performance appraisal is one of the subsets of performance management in any organisation. Futhermore, performance appraisals provide a formal review of performance where both the employee and the manager can provide feedback as a result of the evaluation. (Pulakos, 2007). Also performance appraisal is not the sole responsibilty of the management but it should be used by employees as a tool to discover self development needs( Kirkpatrick, 2006).
Performance management is about harnessing the abilities and creativity of each employee. In order to get the most out of performance management, organizations need to put in place systems and methods which translate the goals of strategic management into individual performance terms. (Storey and Sisson, 1993). Also Performance management can be seen as a systematic approach to management which uses goals, measurement, feedback and recognition as a means of motivating people to achieve their goals(Henderson,2008) Futhermore, the literature shows that each firm has a distinctive performance management system that represents a core competencies required for the survival and sustainability for that particular organization and does not put emphasis on one single aspect.
2.2.1 TYPES OF PERFORMANCE APPRIASAL
Traditional Performance appraisal: In this type of appraisal, the manager sits down with an employee and discusses the performance of the past year. The discussion is based on the manager’s observation of the employee’s ability and performance with regards to what is in his job description. Furthermore, most traditional performance appraisal methods involve quantitative tools which are used to rate employees and are oriented to numerical or scalar ratings. However, most traditional appraisal forms make use of many rating categories and this could be unhealthy but as the complexity of jobs increases, the orientation to numbers
becomes more problematic because reducing the complexities of each individual’s contributions and competency to a letter or number is for a variety of reasons inadequate.
The self appraisal method is a method used in the appraisal process to encourage employees to take liability for their own performance. The employee is asked to assess his own achievements or failures during the past year. This method promotes self management and development. However, this method does not substitute for an assessment of the employees performance by the manager, but it may be used with or as a part of the appraisal process.
The function of self appraisals may be affected by the purpose of rating , but so many conflicting results have been reported. Recent field studies have concluded that when used for evaluative purposes, self appraisals were inclined to lenience bias, but this decreased when appraisals were expected to be certified (Werbel & Bedeian, 1988).
Furthermore, Margerison (1976) suggest that self assessment or appraisal is the only way to give a complete picture of the performance of the employee and to avoid a ‘criticise-defend scenario’. However it requires the employee to have a detailed and informed understanding of both the current and future needs of the job role and the organisational needs.
In an employee-initiated review system, the employees are informed that they can ask for a review from their manager. However, these reviews are not meant to replace a regular semiannual review, but to promote an attitude of self-management among workers and to makes critiques more honest. Organizations that make use of this type of review process conserve that it promotes consistent communication between staff and managers. However, critics note that it is dependent on the employees’ initiative, making it a less than ideal alternative for some workers with quiet, retiring personalities or confidence issues.
360 DEGREE FEEDBACK
This type of performance appraisal process suggest that feedback on an employee’s performance being provided by the manager, different people or departments who interact with an employee (peer evaluation), external customers, and the employee herself. It can also be seen as a method whereby an individual is assessed on their performance by people who are familiar with job specifications. This method of feedback involves employee-generated feedback on management performance (which is also known as upward appraisals).
The initiative behind 360 degree feedback is that employees benefit from feedback gathered from a wide range of sources which include peers, subordinates superiors etc. the process follows a procedure where competencies have been established and outlined. Employees are then requested to select six significant people who cover a range of respondents and those giving feedback use a rating scale. An example is mangers being assessed by their employees on people issues like communication while their peers are assessed on issues such as teamwork ( Roberts, 2001).
Furthermore, 360 degree feedback, also known as multi-level, multi-source feedback, is a very powerful and sensitive process. It can enhance the individual’s understanding of how their performance is viewed by their contemporaries and how it relates with their own view of their performance.
This is an approach to management where management and employees jointly set goals and objectives to achieve within a give period of time and at the end of that period, the two come together to evaluate the performance by the extent to which the objectives have been achieved. Examples include, Sales or profit target etc. According to Odiorne (1979), MBO is premised on the suggestion that establishing goals between managers and employees will achieve better results than random methods or just-in-time solutions. This style of performance management is considered a highly participatory management system, which allows employees to be active contributors in establishing directives for their performance and appraising their accomplishments. MBO does not necessarily have to work on its own; it can work in combination with other total management initiatives( Hunter and Rodgers, 1991). Manangment by objectives which was first outlined by Peter Drucker in his book( The Practice of Management) in 1954. It emphasises the principle of goal setting and feedback( Drucker, 1973).
2.2.1 Methods of Performance Appraisal
Most organisations have different approaches to performance appraisal. Winston and Creamer(1997) noted that performance appraisal in a lot of organization is an ongoing event which is done periodically. It is an activity that generally places emphasises on staff improvement and not salary adjustment which might be a form of reward or disciplinary action.
A) Behavior-Based Approaches -: This is the type of performance appraisal that uses specific performance factors to evaluate employees. This approach is further divided into the following:
i)Conventional Rating Scale: This rating scale uses a specific word or phrase to describe the extent to which certain behaviors are displayed .The characteristics of such behaviors are displayed in the job description. In a situation where there are no behavior descriptions, the supervisors work with other employees to determine behaviors that would be useful to determine appraisal setting.
ii) Behaviourally Anchored Scale :This approach occurs as a result of collaboration between the supervisors and other employees where broad categories of practice are identified. The measure of employee behavior is rated on a scale in relation to specific behaviors.
iii) The weighted checklist: This is another way of approaching behavior-based appraisal. In this method, employees are judged on a scale indicating the extent to which the statement accurately describes their performance according to a list of performance related statements that are weighted.
B) Results-Focused Approaches -: This is the type of approach that focuses on the result to be derived from the appraisal. Creamer and Janosik (in press) noted both advantages and disadvantages to results-based performance appraisal approaches. The advantage been, they produce short and long term results in achieving the performance and organizational objectives, and are generally perceived as fair, and also tend to generate high levels of commitment among the employees to the organization, and they encourage a high level of participation and are thus defensible. And the disadvantage been that, they can be overly results oriented and they are mostly inflexible. Before an organization can adopt this approach, the management must be of the view that the advantages outweigh disadvantages, for the approach to be incorporated.
C) Accountabilities and Measures approaches: This approach involves the supervisor and the other employees agreeing on accountability, fairness and performance factors and including such factors in the job description. Performance is then estimate for each factor to enable quantifiable measures for each factor. An Accountabilities and Measures outline can be created, with performance factor groups.
Although the case study of our research does not use a specific one out of these set of performance appraisal type since their performance appraisal is carried out quarterly but from our research, we discovered that the company tend to use more of the Result Based Approach. This is because the judge and employees based on the result he/she achieved from a project.
Motivation is a very important aspect of an organisation as it contributes to how well it performs. This ultimately has an effect on the organisations corporate objectives. This includes attainment of higher market share and profit maximisation as a result of an
individual’s performance. Processes that are used to motivate employees have an effect on their willingness to stay with the organisation. Appraisals are prevalent in many companies and are seen as a crucial ingredient in motivating employees; therefore it increases the importance of carrying out this study.
Motivation is at the centre of biological, cognitive and social regulation, and its importance lies in the consequences of the actions its promotes (Ryan and Deci, 2000). Motivation is of primary concern to anyone in a teaching or managerial position because it is what makes other people react. There are many different reasons that people are motivated to learn or perform requested tasks. These can be external rewards such as money or material rewards, or internal rewards such as inner satisfaction and gratification. They can also be to avoid negative consequences: people may obey orders which they do not necessarily agree with out of fear of retribution such as being excluded from certain opportunities or being shunned or physically harmed. Employee motivation is one of the strategies of managers to enhance effective job performance among workers in organizations. Motivation is a basic psychological process. Motivating is the management process of influencing behaviour based on the knowledge of what make people tick.(Luthans, 1998). Luthans (1998) asserts that motivation is the process that arouses, energizes, directs, and sustains behaviour and performance. That is, it is the process of stimulating people to action and toachieve a desired task. One way of stimulating people is to employ effective motivation, which makes workers more satisfied with and committed to their jobs. Money is not the only motivator. There are other incentives which can also serve as motivators.
The level of performance of employees relies not only on their actual skills but also on the level of motivation each person exhibits (Burney et al., 2007). Motivation is an inner drive or an external inducement to behave in some particular way, typically a way that will lead to rewards (Dessler,1978).
Over-achieving, talented employees are the driving force of all firms so it is essential that organization sstrive to motivate and hold on to the best employees (Harrington, 2003).
The quality of human resource management is a critical influence on the performance of the firm.Concern for strategic integration, commitment flexibility and quality, has called for attention for employees motivation and retention. Financial motivation has become the most concern in today’s organisation, and tying to Maslow’s basic needs, non-financial aspect only comes in when financial motivation has failed.
According to Greenberg and Baron (2003, 2000) definition of motivation could be divided into three main parts. The first part looks at arousal that deals with the drive, or energy behind individual (s)action. People turn to be guided by their interest in making a good impression on others, doing interesting work and being successful in what they do. The second part referring to the choice people make and the direction their behaviour takes. The last part deals with maintaining behaviour clearly defining how long people have to persist at attempting to meet their goals. Motivation can be intrinsic and extrinsic. Extrinsic motivation concerns behaviour influenced by obtaining external rewards (Hitt, Esser, & Marriott, 1992). Praise or positive feedback, money, and the absence of punishment are examples of extrinsic or external rewards (Deci, 1980).Intrinsic motivation is the motivation to do something simply for the pleasure of performing that particular activity (Hagedoorn and Van Yperen, 2003). Examples of intrinsic factors are interesting work, recognition, growth, and achievement. Several studies have found there to be a positive relationship between
intrinsic motivation and job performance as well as intrinsic motivation and job satisfaction (Linz,2003). This is significant to firms in today’s highly competitive business environment in that intrinsically motivated employees will perform better and, therefore, be more productive, and also because satisfied employees will remain loyal to their organization and feel no pressure or need to move to a different firm. Deci and Ryan (2000) conducted and replicated an experiment that showed the negative impact of monetary rewards on intrinsic motivation and performance.
2.3.1 Approaches/ Theories of Motivation
Theories of motivation can be classified as either representing content(needs) or a process appraoch to motivation. Content theories provides an understanding of what people value as work rewards, it attempts to identify the specific factors that motivate people. On the other hand, process theories give a more dyanmic approach and is more interested in understanding the process in which motives are developed rather than trying to profer a inactive analysis of needs. This part of the project discusses some well known content and process theories and it provides an indication of different needs that employees bring to the work place.( Beardwell et al,2004)
Taylor developed a method for structuring jobs that he called Scientific Management, he assumed that employees are economically motivated and work to earn as much money as they can and so he advocated for pay incentives. However, he believed that manager knew more about the works being performed than the workers themselves and presumed that the gain involve was what motivated everyone. Hence he believed that people could be expected to perform any kind of job as long as they were been payed enough.( Griffin).
Furthermore, though the role of money as a motivating factor cannot be ignored but the proponents of this view have failed to take into consideration other factors of motivation.
The Human Relations Approach
This approach assumed that employees want to feel useful and important, that they have strong social needs that are more important in motivating employees. This approach advises managers to make workers feel important and allow them a degree of self control in carrying out their duties. This involvement will result to an higher motivation to perform
There are several theories of motivation that have been developed to explain the processes by which individuals become actively engaged in chasing and achieving goals and objectives related to their personal, professional and social lives (Ramlall, 2004). Some of the theories that have been considered for the purpose of this research are:
Hertzberg identified the following true motivators as contributing to high morale and job satisfaction:
He also noted these ‘hygiene’ factors whose absence or inadequacy in a job produces poor performance and dissatisfaction:
Higher authority policy
Relationship with colleagues
Hertzberg’s research led him to the conclusion that the ‘hygiene’ factors were rarely high motivators. People tend to take fringe benefits and good working conditions for granted, but when they are removed they had a highly demotivating effect. A salary increase had a short-term motivating effect when it was felt to be deserved, but rarely did the effect last for long(Mullin, 2007).
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2.3.3 Victor Vroom’s Expectancy Theory
This theory explain the reason why a so many workers are not motivated on their jobs and merely do the necessary things to get their jobs done. It postulates that an employee is motivated to exert a high level of effort when he or she believes effort will lead to a good performance appraisal. In most organisations, employees expect that a good appraisal will lead to organisational rewards like a bonus, a salary increase or promotion; and the rewards will satisfy the individual’s personal goals. Therefore, low motivation at work can be caused by the fact that a employee believes that no matter how hard he works, his , the possibility that he would get a good appraisal is minimal. Most employees perceive the performance-reward relationship in their job as feeble; this is because organisations reward a lot of things besides just performance. Therefore, employees see the performance-reward relationship as weak and demotivating if salary is allocated on the basis of seniority, length of service.
The rewards also need to be tailored to individual employee needs. Unfortunately, many managers are limited to the rewards they can distribute, which make it difficult to personalise rewards. Also, some managers assume that all employees want the same thing, thus overlooking the motivational effects of differentiating rewards.( Griffin, 2007)
Furthermore, Expectancy Theory brings about an understanding of individual’s goals and the linkage between effort and performance, between performance and rewards, and between the rewards and individual goal satisfaction.
A performance management system only be succesful if the people working with it are sufficiently motivated . The formal performance management process could become a disguise, with both parties agreeing on a choice of action that involves the least amount of endeavour and inconvenience.
The challenge of motivating employees and even managers to take performance management seriously, and the similar task of the managers in encouraging their employees to approach the process in an open, honest way, should not be taken too . A jointly supportive network of motivational practices, training, easily understood systems and direction, conformance-checking and rewards is likely to be essential to ensure everyone’s involvement( Mullin, 2002).
This appraisal action is required not only prior to and during the commencement of the organisation’s formal performance management system, but also on an ongoing basis. The effort, resources and expense will therefore be significant. However, given that performance management is fundamental to any organisation’s activities, this commitment will be justified(Adeleye, 2009)
The link to pay
There is considerable evidence that administering performance-related pay systems absorbs much management time, while employees find such schemes difficult to understand and susceptible to bias. Despite this, performance-related pay is still very much in vogue and performance review is the main vehicle for linking pay and reward more closely to individual performance.
The schemes used by organisations in the study to link performance to pay varied widely in their transparency and simplicity – qualities shown to be crucial for a scheme’s effectiveness. However, the research found that the impact on staff motivation had more to do with the organisational context and the ability of individual managers to administer the scheme than with the type of scheme in use.
Interestingly, the satisfaction expressed by managers subject to the same performance review scheme varied between departments. One of the participants illustrates the key role of managers in delivering performance reviews: “Any system is only as good as the individuals operating it; some of my comments would have been very different with different line managers.”
Contrary to the philosophy behind performance-related pay schemes, reward is not the motivator for managers that it is supposed to be. As one respondent said: “A little money is always nice but it is not the driving force to doing a good job.” Satisfaction with performance review was highest among those managers who had received training and development for promotion or had been given increased responsibilities.
The report’s authors observe that employers who use pay as a lever both to control costs and to improve productivity should be concerned by the findings. performance review is seen to be fair only if goals and targets set are perceived to be reasonable, if managers are seen to be objective when assessing performance and if judgments of performance are consistent across the organisation.
2.4 WAYS BY WHICH PERFROMANCE APRAISAL MOTIVATES EMPLOYEES
Through Feedback: Giving feedback apart from assisting in task performance, also motivates people (Kluger and DeNisi, 1996). Employees in organisations frequently request for express a desire for feedback and the feedback made in appraisal provides the basis for such feedback, and thus contributes to motivation.
Appraisal and assessment increases motivation by facilitating fair distribution of rewards. Taylor et al. (1995) discovered that making clear the performance patterns, applying them constantly and giving people a fair hearing all impacted on employees attitude to appraisal.
Setting targets that are meant to improve on previous performance is also a way by which performance appraisal motivates employees.( Fletcher,2008).
2.5 FEEDBACK IN PERFORMANCE APPRAISAL SYSTEM
In performance appraisal one of the most important aspects of the program is when the employers communicate their performance ratings to the employees. Although some researchers like (Ammons 1956) claim that the feedback process in performance appraisal has little or no effect if the person is already performing on a high level or if the job is complex. The feedback delivery helps the organization in decision making, enhancing of productivity and effectiveness within the organization. It has been pointed out that the communication of feedback regarding the performance of employees and groups in an organization is an important part of any organization’s human resource system (Harackiewicz,Larson1986: Larson 1984).
The aim of any organization when conducting performance appraisal is to receive feedback and this feedback helps to maintain and direct employee behaviour to accomplishing the organizations goal and objective and also mating a high level of work to accomplish these goals.
On the part of the employees performance appraisal feedback serves as a means of satisfying the need for information on how employees are meeting up with their personal goals and as serves as a form of social measurement among their peers. Feedback serves as a basis for identifying discrepancies self and others’ performance and work goals (Carver, Scheier 1981) From both the organizations and employees point of view a performance appraisal feedback process can serve as a means of identifying the employee’s weakness and unidentified goals. Identification of these shortcomings can help the employees to increase their level of performance, redirect their efforts toward achieving both the organizational and personal goals, and also improve their relative standing to internal and external standards. This achievement is of great important to the organization however, performance appraisal feedback has not only leaded directly to the improvement of performance. Research has shown that the success of the feedback depends on a number of factors related to the acceptance of the feedback process which can include: the valence of the message(positive or negative) characteristic of the source(e.g. knowledge, credibility, familiarity of the job), and the recipient of the feedback and also the perceived relevance and accuracy of the feedback to employees performance and behaviour(Fisher , Taylor1979,Zuber ,Behson 1998).The level of acceptance of feedback is then expected to neither influence employees positively or negatively on the willingness to improve their work levels.
For any feedback within the organization to yield any positive result, the source of the feedback must be perceived by the recipient as being trustworthy, credible, reliable ,objective and properly motivated in other for feedback to be accepted.(Wyer, Budeshiem, Lambert, Swan 1994).On the other hand the degree of the feedback’s acceptance is greatly reduced when the source of the feedback is perceived as unreliable, untrustworthy or has having ulterior motives. When the feedback received from employee indicate that an employee has performed above the organizations standard, it is generally perceived that individual goals on subsequent work will be stable i.e. there is high motivation on the part of the employee to work. On the other hand when there are negative discrepancies between the employees’ goals and organizational goals, organizations attempt to reduce these discrepancies by increasing efforts of the employees. Invariably, individuals that receive negative feedback are more likely to put more effort to improve their performance than individuals than individuals that received a positive feedback. (Carver &Scheier1981, Pod
2.6 TYPES OF FEEDBACK
There are different types of feedback a delivered in a perfromance appraisal system. These feedback types mostly helps managers or subordinates to understanding the reactions employees have to performance appraisal . (Cuselle 1987).According to Ilegen
et al.’s feedback process model, (1979), the features of each feedback source combined with the form of feedback that best corresponds to each source’s characteristic should yield the greatest degree of acceptance of the feedback received.
According to (Parker 1996), Feedback was dichotomized into
team process and
Task outcome performance dimension
2.6.1Team process Performance Dimension
This process evaluates the behaviour representative of one team player style called the communicator. The main aim of the communicator it to facilitate the on time completion of task by the team and accomplishment of its goals, Other roles of the communicator includes active listening and involvement in the resolution of conflict within the team. The communicator also helps to create an informal and relaxed atmosphere among team members. This performance dimension evaluates and assesses employees’ behaviour while working together as a team in accomplishing a task. In this performance dimension, peer might be in the best position to give a more accurate and objective and more reliable performance rating on team process system.
2.6.2Task Outcome Performance Dimension
This other performance dimension evaluates the nature and content of the outcome of the tasks performed specifically in the terms of the quality and quantity of the final products produced by the employees. In the case of task outcome performance, the supervisor might be in the best position to judge behaviour or final outcome given the supervisor’s expertise is in the field and ability to judge the quality of task outcomes leading to a higher level of feedback acceptance by the employees.
2.7 THE FEEDBACK EFFECT ON EMPLOYEES.
Organisations have introduced the multi source appraisal and feedback programs in an attempt to increase the effectiveness of the performance appraisal system(Albright & Levy 1995).In the multi source appraisal program, employees receive evaluation and feedback from not only their supervisors but also from other sources such as peers, subordinates and even their customers. This form of performance appraisal came up as result of increasing number of responsibility and task for the supervisor and well as increasing number of subordinate. Another contributing factor to the effectiveness of this program is the continuous flattens of the hierarchy within the organization that might make it more difficult for supervisors to assess their subordinate. (Cascio 1995).
While some organizations are aware that their performance evaluation is multi sourced, some organizations are unaware of this fact. An appraisal program is considered multi sourced if more than one source in evaluating employees or considers all the sources
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