Performance Appraisal Systems - Research Paper Example

Performance Appraisal Systems The existence of a highly competitive market structure of the present day demands that firms maximize their outputs at minimum costs. By optimizing the efficiency of labor firms will be able to achieve the objective of minimization of cost. For achieving maximum labor efficiency firms usually employ performance appraisal methods. There are different methods being adopted for appraising the employee performance. The performance appraisal is a formal programmed in any organization which is aimed not only to enhance the contribution of the organizational members in terms of their performance but also to spot the potential of the people for the individual and organizational development. Objectives Performance appraisal of employees resorted to by organizations has many objectives. Mohrman, Resnick-West and Lawler (1989) identify increase in motivation to perform effectively and to increase the self esteem of the employees as essential objectives of performance appraisal methods. They usually enable the organization to maintain a reliable record of the performance of each employee in order to determine the wage levels, incentives, salary increase, transfers and promotions. The performance appraisal methods also bring out the needs for training of employees at various levels in the organization. By studying his/her performance appraisal report the employee is able to improve upon his performance by rectifying the mistakes he/she might have committed earlier. Performance Appraisal Methods There are various methods usually employed by progressive organizations to make appraisals of employee performance. These can be divided into three different groups; (i) individual evaluation methods, (ii) multiple person evaluation methods, and (iii) other methods. Individual Evaluation Methods The individual evaluation methods are based on an assessment of the performance of the individual employees. It can take the form of (i) confidential reports, (ii) essay evaluation, (iii) critical incidents, (iv) checklists, (v) graphic rating scale, (vi) behaviorally anchored rating scales, (vii) forced choice method, and (viii) management by objectives (MBO) Confidential report form of employee appraisal is used mainly in government departments and organizations that are generated at the end of every year. The report is not data-based but merely represents the impressions of the superior about the subordinate. Since the report is mostly subjective the employee may not be sure of his strengths and weaknesses and is also not guided for rectifying his mistakes. Essay evaluation is a non-quantitative technique in which the rater is asked to prepare an essay based on the job knowledge and potential of the employee and the employee's understandings of the policies and programmers of the company. The attitude and perceptions of the employees are also taken into account while preparing the essay. This method has serious limitation of being a subjective one and sometimes the rater may be found to be poor in expressing his views correctly. Under critical incident technique the effective and ineffective behavior on the job of the employee is observed by the manager who prepares a list of incidents representing the poor or outstanding behavior of each employee. The manager periodically records the incidents and at the end of the rating period these incidents are summarized to evaluate the employee performance. This method is more suitable to assess the job of the supervisors rather than that of the employees at low levels. In the check list method a list of objective or descriptive statements about the employee behavior is included and the rater makes his observations on the employee performance by checking the particular trait of the behavior which he assessed the employee to possess and other traits are left blank. A variation of the method is to assign weights to different traits and summarize the assessment of the rater. One serious limitation of this method is that the rating is normally biased by the personal perceptions of the rater and moreover this method is expensive and time consuming. Graphic rating scale is the most popular method being used for assessing employee performance. In this method a printed form, (OpenLearningWorld) in which all the employee traits are listed as the basis of rating which are mostly the quantity and quality of work. The graphic rating method also suffers the disadvantage of being subjective. Forced choice method and management by objectives are the modern methods of assessments devised to eliminate the personal bias from the older methods of employee performance evaluation, Ways in Which Performance Appraisal System can be Successfully Introduced Brown (1989) insists that the appraisal systems should be designed in such a way that they are made congruent with individual and departmental contexts. There are fundamentally two approaches to the performance appraisal; the 'traditional approach' that recognizes the objective of overall organizational growth based on the past performance of the employees and the second is the 'developmental approach' which is forward looking and views the employees as individuals providing for their development through goal setting. Davis (2001) proposes a model of performance appraisal that takes into account achievement and evaluation of the employee performance. The purpose of performance appraisal has fundamentally been based on the historical performance of the employees and the performance is being reviewed in the light of the results achieved during the past period. The traditional approach serves the purpose of deciding on routine HR issues like promotions, separations, or transfers of employees in addition to salary increments. The traditional approach of performance appraisal has a serious flaw that it is mainly backward looking rather than forward. Another flaw with this approach is that since the employee performance is tied to the salary review of the employees it tends to block the creativity, meaningfulness, and comprehensive consideration of performance goals. The developmental approach to performance appraisal on the other hand is viewing the employees as individuals. This acts as a significant contributor to the development of employee motivation, professional development of the employees and effective HR planning of the organization. In addition to the meeting of the normal HR purposes of the traditional approach the developmental approach provides some additional purposes. This should result in providing the leadership qualities. Appraisal System Currently in Use in our Organization Presently our organization is following the system of individual performance based appraisal systems. However, no serious consideration is given by the top management to the appraisal system as an effective tool for the improvement in the efficiency of the individual employee. The appraisal is being treated more like an annual ritual, as there are no targets or goals fixed for the individual employees whose performance is being assessed. It is quite obvious that without establishing any goals it would difficult to assess the performance of someone. Thus although the participants were aware that the performance appraisal should be futuristic they were not in a position to confirm that the present system being followed by the organization contains any element that could promote the future development of the employees. Thus it can be said that to that extent the performance appraisal system in the organization is ineffective. A review of the appraisal form reveals that there are several clauses that are quite out of date and do not provide any meaningful contribution to the assessment of the performance of the employees. For instance the clause about the disciplinary action taken against the employees in the past finds a place in the appraisal form. The employee would have subsequently improved his/her performance and in that case the past deed is of no relevance and need not find a place in the appraisal form. Similarly there are too many requirements of signatures from various authorities at different levels which make the form unwieldy. In order to make the appraisal system effective the first step required is the collection of proper and detailed information which are relevant and valuable. A revamping of the appraisal form should enable this happen. Recommendations Henderson (1980) is of the view that planning, setting priorities and responsiveness to supervision should form the basis for performance appraisal systems. On a review of the various criteria being adopted by the organization it appears that there can be better knowledge areas that can be included in the performance appraisal system. The criteria presently existing are too general in nature and are not likely to bring out the strengths and weaknesses of the employees precisely in the performance appraisal. There can be better metrics included to appraisal the performance of the staff which should have a direct bearing on the individual goals fixed for the respective employees. In the place of the existing criteria which might have been fixed before a long period needs a revamp to cover the latest trends and knowledge. Some of the criteria that may be considered for inclusion are: Commercial judgment Knowledge on the organization's products Time management skills Skills in planning budgeting and forecasting Extent of knowledge and precision in reporting Communication skills with relevance to the latest information and communication technology Skills of delegating the responsibilities Meeting deadlines and commitments Creativity in the work Problem solving and decision making Ability to work in teams and team building capabilities Energy, determination and work output rate Steadiness under pressure Leadership qualities and integrity levels Adaptability to different situations Flexibility in nature Mobility Personal appearance and charismatic qualities Knowledge and exposure to corporate social responsibility and ethical standards By improving upon the criteria for assessment in the performance appraisal form the employee performance can be assessed to provide them the necessary training in the areas in which they really lack. To this extent the performance appraisal system can be made futuristic and purposeful. References Brown, R. D. (1988). Performance appraisal as a tool for staff development, No 43. San Francisco Jossey-Bass Davis, J. S. (2001). Approaches to performance appraisal in student affairs, College Student Affairs Journal, 21(1), 92-100 Henderson, R. I. (1984). Performance appraisal Reston, VA: Reston Publishing. Mohrman, A. M., Resnick-West, S. M., & Lawler III, E. E. (1989) Designing performance appraisal systems: Aligning appraisals and organizational realities San Francisco: Jossey-Bass. OpenLearningWorld. (n.d.). Mehods of Performance Apparisal. Retrieved December 15, 2008, from Open Learning World.com: http://www.openlearningworld.com/olw/courses/books/Performance%20and%20Potential%20Appraisal/Performance%20and%20Potential%20Appraisal/Methods%20of%20Performance%20Appraisal.html Read More