A of Performance Appraisal Practices nad Policy Options. A Case Study on a Local Nightclub - The Plug - Literature review Example

? A Review of Performance Appraisal Practices and Policy Options: A Case Study on a Local Nightclub and Events Management Company - The Plug. Institution: Instructor: Course Code: Date Introduction In today’s ever dynamic and highly competitive business environment, most organizations are increasingly leveraging their human resources as a source of innovativeness and competitiveness. An effective, valid, strong and accurate appraisal system for rating the performance of employees is indispensable in ensuring effective functioning of the performance management system and helping the organization attain competitive advantage ((Kuvaas, 2006:506; Boachie-Mensah & Seidu, 2012; Abdulakadir, Isaika, and Adedoyin, 2012:124). The outcome of the appraisal process, the accuracy of employee ratings as well as perceived effectiveness of the appraisal process is critical as such inputs are often used by organizations to make various decisions in promotion and compensation, administrative, and training and development. Performance appraisal systems also make it possible for employees to understand their capability development and their performance, and in this sense keep employee morale high and improve organizational health. This is possible through an effective and fair appraisal system (Boachie-Mensah and Seidu, 2012). Various research studies have explored performance Appraisal systems and the need for such systems to work effectively in organizations. This section reviews literature on performance appraisal practices and policy options by looking at main approaches in performance appraisal, objectives of performance appraisal programs, issues surrounding performance appraisal systems, the managerial role and employee perceptions in performance appraisal, and performance appraisal practices in the entertainment / nightlife industry. Background of Performance Appraisal Performance Appraisal has been in existence since the industrial revolution where it was used a means of monitoring organizational output (Fandray, 2001). However during the earlier days, it was used more as a negative procedure than a positive one. It was often linked to punishment and reactivity to poor performance (Kennedy & Dresser, 2001). This implies that the performance appraisal focused on punishment of employees for poor performance as a way of motivating the employees to performance highly. However, overtime the performance appraisal has continually evolved over the years. Kennedy and Dresser (2001:8) note that, as years passed organizations gradually refined their performance measurement techniques that focused on improving performance, with the trend focusing more on a move towards rewards than punishment. In the past three decades, researchers and practitioners have vigorously and critically analysed and examined the effectiveness of how various performance appraisals are used within different organisational contexts (Kondrasuk, 2011). Though there have been a wide array of studies on effectiveness of performance appraisal system, no consensus has yet been reached concerning what type of performance appraisal universally best meets the desired objectives of various organisational contexts. This implies that different performance appraisal systems are suitable for different organisational contexts. Definition of Performance Appraisal and main approaches Various scholars have defined performance appraisal in a number of ways. Armstrong (2006:450) defined it as steps involved in assessing the performance of employees, recording such performance and providing feedback to the employees. It is a formal employee monitoring system (Cardy & Dobbins, 1994; Ikramullah, et al, 2012: 144), which often involves evaluation of employees performance based on the opinions and judgments of supervisors, workers, managers, peers and subordinates (Jackson & Schuler, 2003:455). On the other hand, Nath (2011:648) defines it as formal procedures employed in evaluating employee’s contributions, possibilities and potentials within an organization. This definition is strengthened with Kondrasuk’s (2011) view of performance appraisal where he defines it from three dimensions. First, it is an instrument used to assess the job performance of employees, second it is a procedure where the assessment of job performance of an employee is done and feedback given to the employee and thirdly it is a system that sets the performance expectations of the employees against their actual performance and hence providing feedback to the employee concerning the meeting of the set expectations and providing recommendations in ways in which such expectations and objectives can be met at a future date (pp. 63). Through such performance appraisals, employees competence can be improved, their performance enhanced and their rewards effectively distributed (Fletcher, 2001:473). Irrespective of the different approaches in definition by different scholars, what remains a common factor is the essence of evaluating the performance of employees through various methods and using such results to improve the growth potential of the employees and to judge the worth of employees to get a promotion or providing the basis for the transfer or termination of employees. It in essence distinguishes between inefficient and efficient employees. Over the recent past, performance appraisal methods have evolved from simpler methods to more complex and efficient appraisal methods. For instance the Simpler Narrative Essay methods (Smith, Hornsby & Shirmeyer, 1996) have grown into more advance performance appraisal methods over the past two decades. Such include Graphic Rating Scale methods or the Adjective Rating Scale methods, behaviourally Anchored Rating Scale and the Management-By-Objectives (MBO) method (Saqib, et al, 2012: 1058). The rating scale methods rate certain behaviours and performance descriptions to employees, while the MBO measures actual performance against the performance targets that had been set for the employees. These methods can be categorized either as Top-Down Appraisal where the appraisal is done by the immediate supervisor of an employee, or 360-degree appraisal where the appraisal is carried out by supervisors and also other involved people ranging from subordinates, peers, suppliers, and customers (Saqib, et al, 2012:1058). These methods enable an effective assessment of the employees’ contribution to an organization. The objectives of performance Appraisal and Practices While earlier research studies mainly showed the objectives of performance appraisal systems from the perspective of the organisation (Boice and Kleiner, 1997), later ones especially over the past fifteen years have focused on a more balance view where performance appraisal is developed to include benefits for both the appraised and the appraise (Fletcher, 2006; Youngcourt, Leiva and Jones, 2007). The balanced view both focuses on performance appraisal as key to performance management and to attainment of organisational goals, and also focus on performance appraisal as the key to employee development and rewarding (Mooney, 2009:23). Performance appraisals are often instituted to serve a wide array of objectives. Notably, such objectives include enhancing the productivity and performance of employees (Cardy & Dobbins, 1994), to enhance the employees’ skills (Cook & Crossman, 2004), to help in making critical administrative decisions such as employee retention, selection policy, promotion and even termination, as well as administrative decisions such as employee feedbacks, employee training and development (Boswell and Boudreau, 2002). It also aims to improve areas where employees have lower performances hence help in improving the employees’ performance (Ikramullah, et al, 2012:144). Such objectives imply that the performance appraisal system aims at assessing the degree to which various factors impact the performance of employees in an organisation and also enhances the mechanism by which efficient and non efficient employees can be easily identifies within an organisation as well as the means by which the efficient and capable employees are rewarded (Armstrong, 2006). Aside from the above mentioned objectives, performance appraisal also enhances the optimisation and effective planning of an organisation’s human resource to help in attaining organisational goals and to help in developing sound organisational programmes and policies with regard to placement, selection, discipline, training promotion, workforce planning and control (Armstrong, 2006). Ikramullah, et al (2012:144) document four core objectives of performance appraisal: for reward decisions, for employee development purposes, for performance maintenance and for documentation of employees’ performance and actions. Doleh and Weir (2007) acknowledges that performance appraisals have a significant impact on these core objectives. The different objectives of performance appraisal impact the motivation of how employee rating will be made. For instance, if the purpose of performance appraisal is for development purposes, the appraisers may be lenient. When the purpose is for making salary decision or promotion rewards, the appraisers are often more strict in their appraisals (Boswell and Boudreau, 2002). In addition, when used for development objectives, there was a more positive attitude with regard to appraisals both for the appraiser and the appraisee (Ikramullah, 2012: 145). This implies therefore that the different key objectives that an appraisal focuses on impact the outcome of such appraisal. In essence, identifying the core purpose and objective of appraising employees at a given time is critical in ensuring an effective outcome based on the outcomes. Key Issues and Themes Performance appraisal is a key component of the performance management function of the human resource department. As noted above the growth of the performance appraisal system has mainly been due to the drive for efficient and effective operations within an organisation. Performance appraisal has mainly been the focus of research attention within performance management since its inception. Bretz and Milkovich (1992:) elucidate that key themes during the 1980s and 1990s performance appraisal research mainly focused on rater training, appraisal formats and sources, effects of rating errors, the characteristics of the rater and ratee, cognitive issues, and appraisal feedback and the employee’s response to the feedback. In addition, during the 90s, key research themes mainly included motivational aspects of the appraisal process where performance was linked to rewards (Prowse & Prowse, 2010). For instance, less motivated appraisers would used a less thorough appraisal process that motivated appraisers and hence may end up with less accurate performance ratings (Harris, 1994). In addition, the 1990s saw the rise in 360 degrees feedback appraisal type which provided feedback to employees on how they have performance (Agbola, Hemans, & Abena, 2011:83). However, in their research Smither, et al (2005) found that the extent to which such feedback improved employee performance was insubstantial. Over the past ten years, the performance appraisal research has mainly focused and incorporated various social and cultural contexts within which research appraisal is carried out Levy and Williams (2004). Indeed Peretz and Fried (2012:454) and Varma, Pichler, and Srinivas (2005:2040) have found evidence that point to the fact that key issues that are put into consideration in contemporary performance appraisals includes social context and how culture impacts appraisals and underlying perceived procedural justice in the process, and expectations and equity in the process. Such findings not only imply that performance appraisal is impacted by different contextual setting and different cultures, but that also a newer appraisals are emerging that are more focused on employee development, organisational excellence, social context focused as well as one that is culturally sensitive. This focus on the social contexts within which performance appraisal is carried out has brought to attention the appraisee’s reaction to the appraisal process and outcome, and to the feedback given in the appraisal process (Agbola, Hemans, & Abena, 2011:83). This, Wood and Marshall (2008) finds to be significant in providing accurate results. In his empirical research he finds that appraisals are more effective as different emotions in response both to the appraisal process and outcome and to the feedbacks are combined in the performance appraisal components. For instance, Chen, Wu and Leung (2009) found that appraises reactions to the appraisal process were positive when appraisals are mainly used for development purposes that when they are used for evaluative and reward purposes. Furthermore, another key issue that has gained attention in performance appraisal research is the impact of the nature of communication to how employees perceive the performance appraisal process (Agbola, Hemans, & Abena, 2011:83). For instance, Piccolo et al and Burton, Sablynski, and Sekiguchi (cited in Agbola, Hemans, & Abena, 2011:83) in their research work find that employees with a higher quality communication relationship with the management and their leaders have a strong reaction as to the perceived fairness of the appraisal process. Rosen, Harris and Kacmar (2011) however found that where there was a low quality communication relationship between employees and their leaders, there was a much stronger negative reaction to appraisals in the case of employee perception of performance relative to working conditions. Another key issue in performance appraisal research has been the move towards internet technology based performance appraisal (Agbola, Hemans, & Abena, 2011:84). Most performance appraisal systems have turned to online resources to ensure a more effective performance appraisal. Indeed Neary (2002) points out to the advantages of an online performance appraisal system and notes that such systems enable linking of performance information overtime to develop a diagnostic trend, helps in the monitoring of appraisers timely completion of appraisals as well as increasing the accessibility of important appraisal information that may be required. Such online system also helps in generation of accurate reports that are crucial in human resource decision making. Various studies have noted that rating using online resources is more effective than traditional offline resources (Neary, 2002; Payne, et al, 2009; Kavanagh & Thite, 2008). For instance, Payne, et al 2009) noted that employees reacted more positively to online appraisal system than to the paper and pencil approaches in the appraisal process. This implies that employee would most readily undertake an online appraisal of performance and view these to be more accountable than they would offline appraisals. Another significant factor has been the theoretical underpinnings of performance appraisal studies. Recent research studies have pointed to the lack of a strong theoretical development in performance appraisal studies (Prowse & Prowse, 2009; Claus & Briscoe, 2009). For instance, Prowse & Prowse (2009) in their review of three decades of research on performance appraisal studies found that there was a lack on concrete “theoretical development” in performance appraisal studies (pp. 69). The lack of theoretical development has mainly been attributed to lack of effective ways to evaluate how well performance appraisal systems work (Landry, Lamari, and Amara, 2003). Agbola, Hemans, and Abena, 2011:84) tried to resolve this problem by developing a theoretical framework for analysing performance appraisals within an organisation. This theoretical framework is the foundation upon which this research is based. From Agbola, Hemans, and Abena’s (2011) theoretical framework for evaluating performance appraisal systems in an organisation, five key components that determine how effective an appraisal system include the nature of the system, how implementation is carried out in the appraisal process, communication effectiveness within the appraisal system, appraisal data usage, and employee perception of how useful and fair the appraisal system is. These are as elaborated below: Nature of the Appraisal system: An effective appraisal system is one which is backed by an appraisal policy. Such policy form the basis upon which performance objectives are specified and ways of measuring performance as well as assessing competency are agreed and arrived upon (Agbola, Hemans, & Abena, 2011:84). In Schuler’s (2003) assessment, core components of appraisal systems include a reliable and valid appraisal instrument and job analysis that shows standards for evaluating performance in that job. Hence, an effective appraisal system should use effective, reliable and valid appraisal instruments that provide useful information needed to make critical HR decisions with regard to a given job category. Such appraisal system also needs to be aligned to the organisation’s goals, objectives and core strategy (Armstrong, 2006). Both individual and team objectives need be linked to the organisational goals in a manner that there is clear understanding as to what is expected from different people within the organisation (Agbola, Hemans, & Abena, 2011:85). In essence, an effective appraisal system is one which is linked to the organisation’s overall goals. Implementation in appraisal process: The implementation involves actually translating the appraisal system into practise. Various scholars have identified key elements that are crucial in the implementation of the appraisal process (Cole, 2007; Agbola, Hemans, & Abena, 2011; Armstrong and Baron, 2005). Most of these scholars agree that effective implementation need to begin with the setting of performance standards that specifies the targets to be attained by the employees (Hodgetts and Hegar, 2008:387). Notably, lack of performance objectives or standards impact appraisals negatively as it exposes it to subjective judgements on performance (Dressler, 2000). To this end, the set targets and objectives need to be job related and need to be challenging as well as within reasonable limits. There has however been a wide array of views as to who sets the performance targets and objectives. While some scholars such as Tznier, Joanis and Murphy (2000:187) believe it is the developers of the appraisal system (management) that set targets to be met, others such as Mullins (2005: 789) and Agbola, Hemans, and Abena (2011) note that is it more efficient when employees also take part in setting of targets and objectives as this would motivate them in attaining the set targets. Depending on the goals of the organisations, targets set can therefore be either set by the management, or through the joint efforts of management and the employees. Another factor in implementation of appraisal system is monitoring of performance (Moorman & Wells, 2003). Indeed Mullin (2005) acknowledges that the appraisal process needs to be a continuous process rather than a once in a time event. In this way can shortfalls in performance be identified and promptly rectified. Furthermore, how the actual performance is evaluated and measured is critical in the implementation process. Armstrong (2006:506) notes that it is important that performance need be measured based on what the performance outcome is compared to the expected outcome. In this, there is a difference between performance output and performance outcome. While the output can be measured quantifiably, the outcome can be measured both in quantitatively as well as qualitatively. Such performance outcomes can then be compared against set standards to determine how well the employees are meeting their set goals and the weaknesses and strength that need to be worked on. In addition, whether an appraisal is evaluative or developmental is critical. Evaluative appraisal have been noted to elicit institutional competitiveness as well as negative employee perceptions which reduce employee satisfaction with the appraisal process as well as create a negative relationship between co-workers in an organisation (Dressler, 2011). Agbola, Hemans, and Abena (2011: 86) note that pursuing developmental performance appraisal is more effective in evaluating performance and crucial both in motivating employees as well as planning future appraisals within an organisation. Finally, management support in the implementation process of the appraisal is important and critical in how effective the process turns out (Agbola, Hemans, and Abena, 2011). This implies that for appraisals to be effective, it is imperative that the appraisal process be supported in all levels of the organisation from the top to the bottom in order to ensure involvement and cooperation of all employees in an ongoing basis. Communication effectiveness within the appraisal system: Effective communication is central to an effective performance appraisal. This is because communication is imperative for information sharing especially in view of the fact that performance appraisal involves interaction which requires effective communication (Gordon & Steward, 2009:475). It also creates a feeling of involvement within the appraisal system where the appraisal can only be deemed as fair and effective as long as the objectives and targets expected from employees have been carefully communicated (Agbola, Hemans, & Abena, 2011:86). Such communication should involve developmental interview and performance feedback in the appraisal. Indeed Armstrong (2006) argues that feedback to the employees need always be based on evidence and be presented in a non-judgemental manner but rather in a way that meant to address appropriate actions that need be taken. This implies that the appraisal feedback would seek to identify weaknesses that need to be minimised while strengths and skills that need to be further upgraded. In conducting appraisal interviews, effective communication enables meaningful information and mutual understanding of the value of information provided (Gordon & Stewart, 2009:482). This implies that all parties involved need to adopt a collaborative approach in appraisal rather than a positional one. Communication is in essence critical for enabling an effective appraisal process as it determines the interaction and relationship between participants and as it also influences the perception that employees hold concerning how fair, useful and open the appraisal process is. Appraisal data usage: The data gathered from the appraisal process provide the basis upon which key decisions in an organisation are made. Abdulakadir, Isaika, and Adedoyin (2012) note that since the performance appraisal system determines the future of an employee in a firm, ensuring that it is accurate and fair is essential. How information from the performance appraisal is handled is important as such information from the appraisal system impacts the employee’s motivation, self image, career opportunities, promotion, commitments, and rewards. Furthermore, the information gathered is mainly used to identify poor performance and effective employees in their jobs. Chen, Wu and Leung (2009:90) note that using performance appraisal data for development reasons help in developing committed relationships within an organisation’s workforce, hence enabling the employees to engage in cooperative behaviours within the organisation. Such data are also the basis upon which training and development decisions are made from. Besides this, the appraisal data provides important data for rewards decisions. Prowse and Prowse (2009) note that for organisations which follow pay for performance schemes, appraisal is crucial in decision making with such scheme working under the assumption that an increase in financial reward and individual effort increases performance levels. In fact recent research studies have shown that employees are motivated by rewards to perform higher and to put more efforts (Rosen, Harris and Kacmar, 2011:832) Employee perceptions of performance appraisal Though performance appraisals are among the most critical processes within human resource practice, they tend to generate dissatisfaction among employees where it is often views as unfair, inaccurate and political (Shrivastava and Purang, 2011:632). Perceptions on the fairness and justice of the appraisal system have grown to be one of the most critical issues that managers and organisations face (Narcisse, and Harcourt, 2008). The key concerns on fairness of the appraisal system mainly arise from the procedures that are used to conduct the appraisal (procedural fairness), the evaluation of the outcomes of the appraisal process (distributive fairness), and the manner in which such outcomes and procedures are communicated by the authority or the managers (interpersonal fairness) (Vasset, Marnburg, and Furunes, 2010: 31). These three, procedural fairness, interpersonal fairness and distributive fairness are the core facets of ‘organisational justice’ which also defines the very essence of fairness within the workplace. Employees view in the appraisal process is critical since they are the ones who are often being rated in such appraisals. Roberts (2003) emphasises the significance of the employees’ participation in the appraisal process as it is critical in building motivation and trust in the system. Notably, employee participation is crucial to any appraisal system that is deemed ethical and fair. Indeed Pettijohn et al (2001) contends that employees’ perceptions of the fairness of the appraisal system also impacts and reflects on the employee’s organisational commitment and job satisfaction. Such appraisal systems can actually be used to improve an employee’s organisational commitment, work motivation and job satisfaction (Boachie-Mensah and Seidu, 2012:75). Research shows that the best criterion to evaluate the suitability of an appraisal system that is in place is to look at the reactions of the employees with regard to the appraisal system and process (Keeping and Levy, 2000). Keeping and Levy (2000) claim that appraisal systems which are deemed ineffective would be viewed by employees as invalid, inaccurate, and unfair. In measuring the effectiveness of an appraisal system, it is critical that employees’ assessments of the system and their perceptions of rating accuracy be also taken into consideration among other factors (Boachie-Mensah and Seidu, 2012:76). This implies that how employees view the appraisal system is critical in how well such system will perform. Organization Problems in conducting performance appraisals Kondrasuk (2011: 63) noted that it is easier to find problems with conducting performance appraisal than it is in finding suggestion in ways such appraisals can be improved. Organisations face various problems when it comes to conducting performance appraisals. Kondrasuk (2010) categorises such problems into four categories. These four categories of problems that organisations face with regard to performance appraisals are: problems with the purpose of the appraisals, problems with the appraisees and appraisers, problems with what is to be measured and how it is measured, and problems with the appraisal system and process. These four categories of problems are as elucidated below: Problems with the goals of the appraisal: It is generally accepted that the two core purposes of an appraisal are for administrative and for development purposes (Fletcher, 2006). While the developmental purpose gives the appraiser a guidance role as they mainly focus on identifying areas employees are weak and strong at and finding ways that these can be improved, the administrative purpose mainly focuses on employee rewards. Trying to attain both goals can be conflicting to an appraisal. It can be challenging taking the role of counsellor or coach as well as a judge in an employee’s performance. In addition, inconsistency in perceptions from the evaluator concerning the purpose of the appraisal can derail the whole purpose of the appraisal and the appraisal outcome may not be effective enough in making critical human resource decisions within the organisation (Kondrasuk, 2011: 64). Problems with the appraisees and appraisers: The two key people involved in performance appraisal are the appraisers and appraisees. Research over the years has shown that the core problem with the appraisal system and process is the lack of complete integration of the process and system within the organisation. Often with lack of commitment in the manner the appraisals are carried out, so do the appraisers also not take seriously the appraisals (Fletcher, 2006). Notably, when appraisals are used as mechanisms of domination, control and power, their effectiveness may deteriorate (Kondrasuk, 2011; Kondrasuk, 2010). In addition, those involved in the appraisal process may not have sufficient skills to carry out the appraisal. For instance, the appraisers may not receive enough training before conducting and appraisal which may result to inconsistent and ineffective results (Gray, 2002: 15; Fletcher, 2001: 483). Furthermore the appraisal process may be subject to the appraiser’s personal bias such as leniency, favouritism, recency effects, horns or halo effect, primacy or even the Hawthorn bias (Kondrasuk, 2011:65; Gray, 2002). Subjectivity and favouritism plays a crucial role where underserved appraisals are concerned. An appraiser may be biased to give positive appraisals to employees either because they like them, they want to avoid having to deal with difficult employees over bad appraisals or the personalities and mood predispositions impact the results of the appraisal (Fletcher, 2001; Gray, 2002:16). Either way, the results would be biased. The appraisees’ perceptions are another problem that may derail appraisals within an organisation. How employees perceive the appraisal process and system, and their expectations of the outcome of such appraisals may act as inhibitors on how successful such the appraisals are. When the appraisals do not meet the expectations of those appraised in being fair and effective, the appraisees tend to refuse the outcomes of the appraisal (Gray, 2002; Kondrasuk, 2011: 65). This is especially in instances where there is no effective communication among the evaluators and the evaluatees such as communication on the performance criteria. Problems with what is to be measured and how it is measured: Another problem that organisations face with concern to performance appraisal concerns instruments of measurement to be used and what is measured. For appraisals to be effective, the goals of individual employees should work towards meeting the overall organisational goals. However, the assessment tools tend to encounter problems with what to measure and it should be measured (Dressler, 2011). What is to be measured may include different factors such as quality, quantity, timeliness, competencies or attainment of goals. It is imperative that in designing an appraisal system, what needs to be measured should be clearly incorporated an defined especially taking into account that measuring the performance of an employee can be a difficult task especially in some service professions such as nursing (Kondrasuk, 2011: 66). This implies that factors to be measure incorporate also behaviours, traits and results. With regard to how they are measured, there are a number of tools by which performance can be measured. Such include narratives, critical incidents, electronic monitoring or BOS which are used to assess behaviours, ranking, forced distributions or graphic rating scales which measure traits and Management-By-Objectives which measure the outcomes or results. Though the most commonly used technique is management by objectives, choosing the right technique for measuring performance in a given situation can be challenging or problematic (Kondrasuk, 2011: 66). Organisations therefore are faced with such problems in different given contexts. Problems with the appraisal system and process: The key problem within the appraisal process or system is lack of complete integration of the system throughout the organisation from the top to the bottom (Russell and Russell, 2011:42). This mainly has been attributed to lack of resources that are provided by an organisation to adequately and effectively institute the appraisal process (Kondrasuk, 2011: 67). Moreover, the type of assessments used in an organisation may not be comparable across the organisation (Fletcher, 2001), and may not be even fit into existing administrative and development systems, or even existing job descriptions within an organisation (Kondrasuk, 2010). Another key challenge is that the appraisals may not be given enough time for them to be completed to be effective. In such cases, the outcome attained may not be efficient. Roberts (1998:315) notes that most performance appraisal systems have low reliability rating which is critical when it comes to measuring the efficacy of the appraisal. Furthermore, other objectives, relate to when an appraisal is to be scheduled, yearly, or quarterly, whether all employees are to be appraised at the same time or different times, when new objectives are to be incorporated within a system and what to do with the information derived from the appraisal process. Where the results of an appraisal are not effectively and properly implemented, the appraisal serves no purpose (Fletcher, 2006; Kondrasuk, 2011: 68). Managerial Role Managers within an organisation play an important role in performance appraisal. Research shows that the developers and evaluators of appraisal within an organisation are mainly the management of an organisation. It is the management that sets the objectives that a business and employees need to meet and further evaluate such achievements against actual attained performance (Boachie-Mensah and Seidu, 2012). This therefore implies that managers have a crucial role in developing fair appraisal systems, encouraging employee participation in the process, setting achievable goals and ensuring a fair evaluation of employees’ performances. However, in cases where the managers are the raters of employee performance, managers’ judgement in rating may be clouded by a variety of factors which would make the appraisal ineffective. When appraisals are used as mechanisms of domination, control and power, their effectiveness may deteriorate (Kondrasuk, 2011; Kondrasuk, 2010). Furthermore the appraisal process may be subject to the appraiser’s personal bias such as leniency, favouritism, recency effects, horns or halo effect, primacy or even the Hawthorn bias (Kondrasuk, 2011:65; Gray, 2002). Subjectivity and favouritism plays a crucial role where underserved appraisals are concerned. An appraiser may be biased to give positive appraisals to employees either because they like them, they want to avoid having to deal with difficult employees over bad appraisals or the personalities and mood predispositions impact the results of the appraisal (Fletcher, 2001; Gray, 2002:16). Either way, the results would be biased. With such potential biases, managers have a crucial maintaining the integrity of the appraisal system and ensuring that the data arrived at are put into effective good use that would ensure productivity of the employees. Existing Research in the Entertainment / nightlife industry The nightlife industry plays a crucial role in modern life, within this industry being a critical part in modern entertainment as well as a critical source of employment. Research on performance appraisal within the nightlife and entertainment industry is scarce with most of the researched areas mainly touching on the tourism and hospitality sectors of the entertainment industry. Notable performance issues that are often appraised within the nightlife and entertainment industry include absence of customer complaints (24%), efficiency in operations (16%), cost control (36%), and employee motivations and feedbacks (5%) (Lee-Rose and Pryce, 2010: 95). A key challenge of the entertainment industry, most notably the nightlife industry is effectively conducting employee performance appraisals in manner that the employees are motivated to enhance the quality of the service provided to customers. While the appraisal system is crucial for operations within the entertainment and hospitality industry, few recreation joints have made performance appraisal the core of the business. Mulvaney, McKinney and Grodsky (2008:126) in their research study designed a pay for performance appraisal system specially designed for recreation businesses. The core factor in this system is the significance of employee participation within system as it is the employees who ensure that the customers have a good time. In their research, Mulvaney, McKinney and Grodsky (2008) likened the recreation business performance appraisal system to hospitality or hotel appraisal system as the employees’ performance mainly has to deal with ensuring that customers prefer the business as the place of enjoyment. Law and Tam (2008) note that an effective appraisal system for hotel operations needs to be completely open, and vouched for by both the appraisers and the appraisees as this is critical in ensuring employee motivation which is also important in service oriented businesses. Within the hospitality and entertainment industry the core purposes of the appraisal process goes far beyond administrative reasons such as promotion or salary, it is crucial as it highlights the key strengths of employees that can be strategically employed in such businesses to ensure higher quality services, and also ensures motivation of the employees who come into contact with the customers (Huang, Lee, and Lee, 2012; Law and Tam, 2008; Mulvaney, McKinney and Grodsky, 2008). An appraisal system that is viewed as wholesome, fair and unbiased, has the potential of motivating employees to be the best they can be. Though research studies on performance appraisal within the entertainment, tourism and hospitality sectors are rife, none so far has focused on the entertainment joints and clubs. The closest research to a recreation join is Law and Tam’s(2008) research which mainly looked at performance appraisals in a recreation park. This research study seeks to fill this gap in knowledge. The study seeks to explore and study the performance Appraisal Practices and Policy Options using the case study of a Local Nightclub and Events Management Company - The Plug. Conclusion This section of the research paper sought to review existing literature on performance appraisal, and existing literature on performance appraisal in the nightlife and entertainment industry. From the review, it can be noted that existing literature on performance appraisal practises and policies are abound. The core issues that have been addressed in literature mainly involves the significance of employee participation in performance appraisal process, especially in view of the argument that how effective an appraisal is depends on how employee view such appraisals. Within the entertainment and nightlife industry, scant research exists, and within the night club business, no research on performance appraisal has yet been noted. 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