Performance appraisal as a positive part of the performance management process has come a very long way in the history of human resource management. Performance appraisal is one of the central pillars of performance management which is directly related to the organizational performance and have a direct and significant impact on it.
Performance appraisal has been, and is still the strength of performance management,. The main focus of this work is centred on: Assessing critically how the formal appraisal system can contribute to the performance management process Identifying and explaining a range of methods of appraisal, considering their objectives and limitations Explaining how an appraisal system can be successfully introduced and maintained within an organisation Analysing an appraisal system in an organisation
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In carrying out this work, the researcher discovered that there is a strong relationship between performance appraisal and performance management, it can affect the organizational performance both positively and negatively, and should be dealt with care and expert knowledge and experience. 1. 1 Definitions (a. ) Performance management Armstrong and Baron (2005) defined it as “a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance”. (b. Performance appraisal “It is a process that brings together all the different approaches to the management of Performance” Taylor (2005). 2. Contributions of The Formal Appraisal System to The Performance Management Process In establishing the contribution of the formal appraisal system to the management process, Price, (2004) emphasised that enthusiasts for performance assessment argue that it serves a key integrating role within organisation’s human resources processes by contributing these to performance management process: a.
Motivation and Satisfaction Performance appraisal can have a profound effect on levels of employee motivation and satisfaction. Performance appraisal provides employees with recognition for their work efforts. The existence of an appraisal program indicates to an employee that the organization is genuinely interested in their individual performance and development. The strength and prevalence of this natural human desire for individual recognition should not be overlooked. Regular performance appraisal, at least, is a good start. . Training and Development Performance appraisal offers an excellent opportunity for a supervisor and subordinate to recognize and agree upon individual training and development needs. During the discussion of an employee’s work performance, the presence or absence of work skills can become very obvious. From the point of view of the organization as a whole, consolidated appraisal data can form a picture of the overall demand for training. This data may be analysed by variables such as sex, department, etc.
In this respect, performance appraisal can provide a regular and efficient training needs audit for the entire organization. c. Recruitment and Induction Appraisal data can be used to monitor the success of the organization’s recruitment and induction practices. Appraisal data can also be used to monitor the effectiveness of changes in recruitment strategies. By following the yearly data related to new hires, it is possible to assess whether the general quality of the workforce is improving, staying steady, or declining. . Employee Evaluation Noticeably, often understated or even denied, evaluation as a legitimate and major objective of performance appraisal. Though many people still recoil from the idea that organizations have a clear right to conduct such evaluations of performance. To them, the explicit process of judgement can be dehumanizing and demoralizing and a source of anxiety and distress to employees, but performance appraisal is the process of examining and evaluating the performance of an individual.
In summary, the formal performance appraisal gives feedback to employees to improve subsequent performance; identifies employee training needs; documents criteria used to allocate organizational rewards; forms a basis for personnel decisions-salary increases, disciplinary actions, etc. ; provides the opportunity for organizational diagnosis and development; facilitates communication between employee and administrator; validates selection techniques and human resource policies to meet equal employment opportunity requirements.
It is been said by some that appraisal cannot serve the needs of evaluation and development at the same time. it must be one or the other. The researcher believe there must be an acceptable middle ground, where the need to evaluate employees objectively, and the need to encourage and develop them, can be balanced. Sources: CIPD (2008), Armstrong and Baron (2005), Fletcher (2004), Gillen (2007), Houldsworth and Jirasinghe (2006), Torrington, Hall and Taylor (2008), Halogen software 6/05/2008, Price (2004), Martin, and Jackson (2005),Taylor (2005)
The researcher note that no system performs hundred percent excellently. Armstrong and Baron (2005) supported this that “performance appraisal is like a double edged sword for an organisation. Although it has many benefits for the organisation, various studies have also revealed that performance appraisals have the equal probability of having a bad impact on the organizational as well as the employee performance”. 3. Methods of Appraisal In this topic, the researcher would discuss the traditional method as well as modern method of performance appraisal, and their objectives and limitations. . 1 Traditional Methods of Performance Appraisal (a. ) Essay Appraisal Method It describes the performance of an employee by his superior. The description is an evaluation of the performance of any individual based on the facts and evidences to support the information. This method is not bias-free. (b. ) Straight Ranking Method This is one of the oldest and simplest techniques of performance appraisal. the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation. (c. ) Paired Comparison
A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings. (d. ) Critical Incidents Method Evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behaviour when they occur. (e. ) Field Review
Senior member of the HR department or a training officer discusses and interviews the supervisors to rate their respective subordinates. It is a very time consuming method, but this method helps to reduce the superiors’ personal bias. (f. ) Checklist Method The appraiser is given a checklist of the descriptions of the behaviour of the employees on job. The checklist contains a list of statements on the basis of which the appraiser describes the on the job performance of the employees. (g. ) Graphic Rating Scales Employees quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait.
The factors taken into consideration include both the personal characteristics and characteristics related to the on-the-job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory. (h. ) Forced Distribution To eliminate the element of bias from the ratings, evaluator is asked to distribute the employees into some fixed categories of ratings like a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion. 3. 1. 1 Objectives of Traditional-Method Appraisal
To Make payroll and compensation decisions To reduce the grievances of the employees. To Promote, demote and transfer To review the previous performance of the employees over a given period of time. To judge the performance of the organization as a whole by the past performances of its employees. 3. 1. 2 Limitations of Traditional-Method Appraisal “In order to make traditional appraisal system effective and successful, an organization comes across various challenges and problems,” Houldsworth and Jirasinghe (2006). The main challenges involved in the performance appraisal process are: a) Determining the evaluation criteria is one of the biggest problems faced by the top management. (b) Create a rating instrument may lack purpose of the performance appraisal process which is to judge the performance of the employees rather than the employee. (c) Lack of competence of the raters or the evaluators may hinder accuracy. (d) Errors in rating and evaluation based on the personal bias may creep in the appraisal process. (e) Resistance – the appraisal process may face resistance from the employees and the trade unions for the fear of negative ratings. 3. 2 Modern-Method a. ) Assessment Centres Generally, employees are given an assignment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and job-related characteristics. Major competencies are judged in assessment centres. Assessment centres are also an effective way to determine the training and development needs of the targeted employees. (b. ) Behaviourally Anchored Ratings Scales It is a relatively new technique which combines the graphic rating scale and critical incidents method.
It consists of predetermined critical areas of job performance or sets of behavioural statements describing important job performance qualities as good or bad. In this method, an employee’s actual job behaviour is judged against the desired behaviour by recording and comparing the behaviour with BARS. Developing and practicing BARS requires expert knowledge. (c. ) Human Resources Accounting Method Human resources are valuable assets for every organization. Human resource accounting method tries to find the relative worth of these assets in the terms of money.
In this method the performance of the employees is judged in terms of cost and contribution of the employees. The difference between the cost and the contribution will be the performance of the employees. (d. ) 360-Degree-Performance-Appraisal Method It is the most comprehensive appraisal where the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job. (See appendix 1). It is effectively used across the globe for performance appraisals.
It has four integral components which are self appraisal, superior’s appraisal, subordinate’s appraisal and peer appraisal. (e. ) Management By Objectives(MBO) Method It is the process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed. Some of the important features and advantages of MBO are: Motivation, The focus is on future rather than on past, better communication and coordination, Clarity of goals.
MBO brought the concept of SMART goals which means Specific, Measurable, Achievable, Realistic, and Time bound. 3. 2. 1 Objectives of Modern-Method Appraisal Enhance teamwork and collaboration among different departments and functions Building customer skills among frontline or service-oriented employees Communicating behaviours consistent with new organizational values or principles Developing consulting skills among traditional human resources personnel Aligning middle manager behaviour with corporate strategy promoting a shared global mindset Changing the behaviour of senior leadership
Assessing development needs for future leaders Creating a more positive and empowering work group climate 3. 2. 2 Limitations Of Modern-Method of Appraisal Organization does not have access to individual information
Does not link in with other HR systems and so may not be followed up adequately- participant may choose to ignore feedback Respondents may be less honest knowing that the information is fed back to the organization as well as the individual Participant may feel more threatened by the feedback and less open to the messages contained within it Feedback is treated as absolute truth rather than individual perception Feedback may be less honest as respondents know that their ratings will have a direct impact on pay Participant can feel threatened by the feedback and is more likely to dispute any negative messages Less focus on development and change Feedback may be less honest as respondents know that their ratings will have a direct impact on the selection decision Feedback may not bring about significant change unless supported by additional change initiatives Can be costly when used with large numbers of people. The processes are time-consuming. Sources: CIPD (2008), Armstrong and Baron (2005), Fletcher (2004), Gillen (2007), Houldsworth and Jirasinghe (2006), Torrington, Hall and Taylor (2008), Halogen software 6/05/2008, Price (2004), Martin, and Jackson (2005),Taylor (2005)
Essentially, determining the best appraisal method depends upon the objectives of the system. A combination of the methods is usually superior to any one method. The real success of performance appraisal does not lie in the method or form used; it depends upon the manager’s human relations skills. None of these methods is mutually exclusive. All of these performance assessment methods can be used in conjunction with others in the list, depending on situation and organizational policy. Where any of these processes is used, the manager must keep a written record, and must ensure agreed actions are followed up. The notes of all review situations can then be referred to at the formal appraisal. 4.
Introduction and Maintenance of Appraisal System within an Organisation This topic is divided into two sub-headings which are the introduction and maintenance of appraisal system within an organisation. The researcher discussed them differently and sequentially. 4. 1 Introduction of appraisal system The essentials of an effective introduction of performance appraisal system are as follows: (a) Standards / Goals – the standards set should be clear, easy to understand, achievable, motivating, time bound and measurable. (b) Practical and simple format – The appraisal format should be simple, clear, fair and objective. (c) Evaluation technique – An appropriate evaluation technique should be selected. he appraisal system should be performance based and uniform. The criteria for evaluation should be based on observable and measurable characteristics of the employee behaviour. (d) Communication – The desired behaviour or the expected results should be communicated to the employees as well as the evaluators. Open communication system motivates the employees to actively participate in the appraisal process. (e) Feedback – The purpose of the feedback should be developmental rather than judgmental. (f) Personal Bias – the evaluators should be trained to carry out the processes of appraisals without personal bias and effectively. 4. 2 Maintenance of appraisal system
In maintaining the appraisal system, the performance review meeting should not be strictly formal nor should it be completely informal in nature; the employee and the appraiser both should be prepared to discuss and figure out the future goals and training needs; they should be mentally prepared for constructive feedback; collect as many evidences to support your point as possible like the monthly, quarterly progress reports; and review of progress on tasks and activities in relation to the employee’s performance plan. Sources: CIPD (2008), Armstrong and Baron (2005), Fletcher (2004), Gillen (2007), Houldsworth and Jirasinghe (2006), Torrington, Hall and Taylor (2008), Halogen software 6/05/2008, Price (2004), Martin, and Jackson (2005),Taylor (2005) 5. Diagnosis Of Appraisal System of Mofas Shipping Line (Nigeria) Limited
Mofas Shipping Line is a one of the best shipping companies in Nigeria. As at 2004 it employed 125 employees worked in different departments and levels. The appraisal exercise at the bank takes place once in every year in September. The performance assessment system used in Mofas is a traditional performance appraisal method. Annually, in the month of June, all employees in Mofas are Assessment form by the personnel department. The form is designed to consists a list of questions range from inter-personal relationships, adaptability and reliability, job knowledge. the staff are required to fill and returned the form back at a specified date to department office.
On getting to the department, each line manger rates his/her subordinates and return the completed appraisal form on the assigned date to the next line of management who is the head of the department for final recommendation as regard promotion or additional training for skill development. This contains the rating and comment of the line manager about the employee performance for the past twelve months. The line managers arranged meeting, at the meeting the completed appraisal form is given back to the employee. Opportunity is given to him/her to make a comment about the line managers view of his/her performance. Finally, human resources department collated and processed the appraisal forms, and ultimately released final results.
Expectedly, most line managers in this organisation are uncomfortable with this exercise based on their inability to handle the emotional responses that often arise when the appraisal ratings are less impressive than employees expected. On several cases, the result from ratings made many employee loose interested in their job. Since the importance of this exercise to Mofas is promotion of employees, many of the employee have lost confidence in the exercise because of the line managers attitude as regard unfair result from the assessments. The line managers are biased and many staff employees were not promoted for years while some were constantly promoted.
Essentially, on the matters of fairness and reward, Armstrong and Murlis (1991) established it that for reward to be equal to employee, they must satisfy three basic requirements which are: that reward should bear a direct relation to the effort the payment should follow immediately or soon after the effort that the method of evaluation should be fair, simple and easily be understood. Summarily, in the case of Mofas, the appraisal system used is just a ritual exercise where fairness is not recognised, reward are not equal to performance and recommendation are rarely followed. Emphatically, effectiveness and efficiency are not incorporated into the performance appraisal system used by Mofas Shipping Line (Nigeria) limited. References: CIPD (2008) Performance management: an overview. Journal, 2nd ed.
London: Chartered Institute of Personnel and Development http://www. cipd. co. uk/subjects/perfmangmt/appfdbck/perfapp. htm? IsSrchRes=118/05/08 Armstrong, M. and Baron, A. (2005) Managing performance: performance management in action. London: Chartered Institute of Personnel and Development. Fletcher, C. (2004) Appraisal and feedback: making performance review work. 3rd ed. London: Chartered Institute of Personnel and Development. Gillen, T. (2007) Performance management and appraisal. 2nd ed. CIPD toolkit. London: Chartered Institute of Personnel and Development. Houldsworth, E. and Jirasinghe, D. (2006) Managing and measuring employee performance. London: Kogan Page. Torrington, D. , Hall, L. nd Taylor, S. (2008) Human Resources Management. 7th ed. England: Pearson education. Halogen software 360-Degree Feedback Overview http://www. vmci. nl/doc/360_Degree_Feedback_Overview. pdf 16/05/2008 Price, A. (2004) Human Resources Management in a Business Context. Second ed. London: Thomson. Martin, M. and Jackson, T. (2005)Personnel Practice. 4th ed. London: Chartered Institute of Personnel and Development. Taylor, S. (2005) People Resourcing. 3rd ed. London: Chartered Institute of Personnel and Development. Armstrong, M. and Murlis, H. (1991) Reward Management: A handbook of remuneration strategy and practice. 2nd ed. London, IPM and Kogan Page.