This essay reveals the effectiveness of performance appraisal on both the employers and employees. It dearth's the explicit knowledge of performance appraisal in the organisation. The main aim of this essay is to critically assess the key developments in practice of performance appraisal. The study is carried out by discussing the different types of performance appraisal applied in the recent developments in the organisation. Later, emphasising critically on the effectiveness of performance appraisal on both employers and employees. Reflecting the advantages and disadvantages of appraisal on employers and employees. Finally, in light of growing arguments and discussion, conclude whether performance appraisal is beneficial, or no, for employers and employees.
It is seen that performance appraisal is being common in most of the western countries. Survey in UK by the Chartered Institute of Personal and Development report the increase in performance appraisal system (Long 1986; Armstrong and Baron 1998; IPD 1999; CIPD 2005) cited in (Redman and Wilkinson, 2009). In recent years, there have been many innovations done in the performance appraisal system. Organisation use different types of performance appraisal system which include upward appraisal, 360 degree, customer appraisal, team based appraisal, competency appraisal and 'rank and yank' appraisal system.
Upward appraisal is recent addition to performance appraisal; it involves the employee rating their manager's performance via anonymous questionnaire. This process provides favourable and honest feedback on manager's performance. (Redman and Snape, 1992) says upward appraisal improves managerial effectiveness of work and leaderships in managers by providing appropriate feedback to the employees.
The 360 degree appraisal is growing and becoming more popular form of appraisal in the organisation. The 360 degree appraisal provides feedback from composite rating from peers, subordinates, supervisors and customers. Feedback answers are recorded from audio and videotape, while some organisation use online computerised data for gathering information. In 360 degree appraisal system, appraisers answers to open question which relates to managers strength, description of improving needs. (Toegat and Conger, 2003) has further reflected that 360 degree appraisal is edging away from a management development tool towards organisational role. It is suggested that with different raters 360 degree provides more accurate and meaningful feedback. Many organisations have gained advantages, it is also proved successful for managers at top level who are neglected in appraisal terms. However, there are some criticisms of 360 degree appraisal system, it is more effort bound, time consuming and cost involved is high. There is also a implicit expectation that ratings provided and feedback given will lead improvements and managers will change their behaviour.
Customer appraisal includes a range of variety for appraisal like telephone surveys, interviews with customers and postal surveys. The data collected from customers for appraising employees has variety of methods which include customer surveillance, techniques, mystery shopping and phantom. Surveillance techniques are used by managers to test the services. 'Mystery' or 'Phantom' shopping is more controversial as staff employed is by special agency which observes and keeps records of the services delivered. (Fuller and Smith, 1991) says that in many organisations the use of 'mystery' shopping is done to evaluate the performance of staff from data collected. Whereas, (Shing and Spence, 2002) says, data gathering methods may not be popular with employees. Employees feel that mystery shopping method shows lack of manager's trust in them. (Cook, 1993) say 'mystery' shopping should be used for rewarding employees for their better performances rather punishing them on their poor performances. He further emphasis and reflects on giving training to the poor and rewarding the higher ratings. In many organisations internal service level agreements are being established which helps to break down internal barriers. This internal service will help to provide internal customer and provide with deeper understanding of the roles of an employee and organisation.
In Team Based appraisal, interdependent teams work common, yet, performance appraisal is focused on individual. In some cases team allocate tasks, select new staff and set bonuses. In some organisations team based appraisal are seen on fairly basis and appraisal are even conducted by team members. There are two methods of team based appraisal. First, managers appraise team as a whole. Secondly, appraisals are made by individuals from each team and not by managers.
Competency based appraisal is the approach adopted by some organisation to develop integrated human resource strategy. (Connack, 1992) reflects competency as "human resource management big ideas". Competency based appraisal are basically targeted at managers. This appraisal is basically adopted by organisation for increased use of training and development, selection and reward appraisals. Competency based appraisal has number of benefits such as individual progress in the job, identifying scope for improvement. However, there is some problem related to this appraisal system, in which appraisal are at loss because of development and running cost involved if the appraisal objectives is not been achieved.
Ranking and Yanking appraisal is the old system of performance appraisal. It is also known as 'Rank and Yank' system after the nickname given by former Enron employees where it was first emerged. Organisations use this appraisal system to rank employees from top to bottom and then identify the poor performers. Organisation divide the appraisal according to the performance of employees by giving them the grade followed by A, B and C. Such appraisal system adopted by organisation is to basically know the poor performer in the organisation. In order, to improve them, training is given to lower level and top level employees are rewarded. Poor performers are given a chance to enhance themselves in ranking, but if they fail to, they may even have to leave. Sometimes this bottom performer of employees is even terminated, if they refuse to leave voluntarily. This whole procedure of appraisal applied by organisation is known as 'rank and yank'.
Performance appraisal is conducted in organisations for wide range of different purposes. All employees in the organisation are included in the performance appraisal system. Organisation use performance appraisal for clarifying and defining performance expectation, identify training and development needs , career counselling, succession planning, individual improvement, allocating financial rewards, determining promotion, motivating employees and achieving cultural change ( Bowles and Coates 1993; IRS 1999; IDS 2007 ).
Most employers are adopting 'hybrid form' of methods for performance appraisal and few organisations give a choice of methods, to employees in how they are appraised. The main advantage for the organisations to choose multiple methods is to find the reward and non-reward aspects of appraisal that they have implied. Mostly employers suggest the 'harder' forms of appraisal then the 'softer' appraisal system (Gill 1977; Long 1986; Armstrong and Baron 1998; IPD 1999; CIPD 2005) cited by (Redman and Wilkinson, 2009) .One advantage of the performance appraisal for employers is to improve the current performance of the employees in terms of allocating rewards, performance appraisal and promotion. Organisation also makes use of competitiveness method between employees performance by rewarding employees in terms of incentive schemes in short-term period.
However, there are criticism in performance appraisal system, employers at times are too ambitious and expect lot out of employees. Organisation on rewarding employees tend to look at the past performance of the employees rather looking on their future performance, this is termed as an analogy 'using rear view mirror to drive future performance' (Redman & Wilkinson 2009). Employers find appraisal as expensive system for the organisation and also a matter of conflict between appraised and appraiser. It is seen that organisation is driving the use of performance management for performance appraisals (IDS 2007). The advantage of the performance management to the employers is that it sets target working for individual employees and then setting the appraisal. However, performance management system had an adverse effect on managers because of the amount of work loaded. Many 'bottom line' employees were burden with unduly pressure and stresses.
Employees are motivated with appraisal in the organisation. Managers use this appraisal as a tool for highly motivating and controlling employees. Appraisal is essential for maintaining employee loyalty and commitment in order to manage employee performances directly (Bowles and Coates, 1993). Employee's critic that appraisal done in the organisation is more judgemental rather being based on their merits. Employee's critic that managers are also not good at conducting appraisal. The other disadvantage for employee appraisal is that, appraisal are mainly on 'gut feeling' and done by third party.
There are also political interference and manipulation in appraisal. Managers tend to play organisational tactic in performance rating (Snape et al. 1994). Sometimes these ratings are artificially manipulated just to show who the boss is, punish employees and even to 'scare' employees. However, (Murphy and Cleveland, 1991, 1995; Forgas and Gorge, 2001) says that researchers in the past paid more attention to errors in information processing and judgements making than to understanding what appraisers do well.
Employee's appraisal also seems to be an illusory one, as there are many inherent errors in the appraiser's path which includes Halo effect- employees are good at some skills but still manager's demand employees to be better at other. Doppelganger effect- rating is similar for both the appraiser and appraised. Crony effect- the relationship between appraiser and appraised is of friends. Veblen effect- in spite of efforts and hard work all employees will be rated lower. Impression effect- employees are appraised as per their behaviour even if they don't perform well.
Employees also critic that the major reasons, of them, not being appraised is because lack of managers self-efficacy, lack of appraisal experience and training, lack of appraisal context which include management concern, accountability, instrument adequacy, instrument sensitive and importance of appraisal (Marshall, 2008). This is further demonstrated with the example of two case studies carried in the organisation where first, nurse supervisors appraised a video recording of nurse performance and second, a field study in which nurses and their supervisors each independently completed their assessment of their appraisal review. Performance appraiser self-efficacy (PASE) was tested on large scale of nurses for the measurement of efficiency level of the appraisee. (PASE) included rating accuracy, appraiser and appraisee perception of effectiveness, effects of personal factors and organisational context. The results from both the studies show that the motivational variable of self-efficacy has a significant influence on the appraisal process. In first case, supervisors were confident about their capacity to complete the required tasks of performance appraisal and thus gave more accurate ratings. Whereas, in other case nurses were perceived being more effective by appraises and also had higher level of expectation with the appraises in regards the effectiveness of the appraisal. This research examined, the influence of personal and organisational variables and self-efficacy on appraisal accuracy and effectiveness. However, there was limitation in the appraiser appraisal system as the appraisal carried out by the nursing supervisors were not convincing to the appraiser (Marshall, 2008).
It can be concluded that performance appraisal is a growing organisational resource adopted by most of the organisations, but still the critics grow in the wildness of their attack. Performance appraisal has a wide role in the development of human resource practices. The study above show a wide range of method used to conduct performance appraisals, various developments in appraisal system and the effectiveness of appraisal on employers and employee. The appraisal strategy carried by employers had proved successful but has been shadowed by the criticism of being non effective for the employees. Indeed, it is said that employers who had adopted performance appraisal for longer period had to face problems (Bowles and Coates, 1993). Employers need to upgrade and renew appraisal systems that are compatible and suited by the working environment. However, performance appraisal has certainly proved non-effective for the employees, as some of the evidence above would suggest there are many growing concerns with its application.
