Performance Appraisal: Development, Practice, and Usefulness

In this blog, the key elements of performance appraisal development and practice will
be identified and then discussions will be made on reasons why its usefulness is under debate.
Bratton and Gold (2012) describes performance appraisal as “a process that provides an
analysis of a person’s overall capabilities and potential, allowing informed decisions to be
made for a particular purpose.” It is a system that establishes objectives through which
individuals and teams can see their part in the organisation’s mission and strategy and
improves individual, team and collective organisational performance.

What is Performance Appraisal?

Performance Appraisal is not a new concept and can be dated back to the late 1700’s in
textile mills where there were ‘silent monitors’, and a major development in this topic was in
1895 where F. W. Taylor introduced the piece rate system. Over time performance appraisal
has become even more relevant for all organisations (Wiese and Buckley 1998). According to
CIPD (2020) in 1994, 39% of all organisations applied performance appraisal to all
employees and by 2009, that number had more than doubled to 81%. To 2015, where 10%-
20% of companies have abandoned appraisal and replaced it with regular development
feedback. Press (2019) suggests the major importance of regular feedback to companies and
states that providing regular feedback leads to a 14.9% lower turnover rate. Performance
appraisal or performance management has many purposes to an organisation and its success.
This system is in place to set targets for departments of an organisation and the individuals
within it, while also being in line with the overall vision and objectives of the organisation,
this will therefore communicate these overall objectives to employees. Another purpose is to
use review processes to communicate performance requirements and to identify training and
development and determine the level of reward. (Armstrong and Baron 2007).

Performance Appraisal in Practice

There are many schemes that are used to execute performance appraisal such as a rating scale
which is an appraisal form that lists several factors or traits that individuals are rated on
according to the extent to which they possess these qualities (Dessler et al. 2011). It is a very
popular scheme used and Landy and Farr (1976) reported that 89% of 196 police departments
in major metropolitan areas used supervisory ratings as the primary form of performance
measurement. This can be a very effective and easy way of gathering feedback and most
importantly it allows employees to be compared, which also can aid selection processes.
Another main scheme that is used within performance appraisal is BARS (Behaviourally
Anchored Rating Scale), which looks to assess what an employee does, their behaviours are
identified and matched up against categories and examples are provided. (Tziner et al. 2009).
Aggarwal and Thakur (2013) suggest that it is crucial that the job analysis is correct, but this
scheme helps remove some of the problems of differences between raters. Also, job
behaviours describe employee performance in a better way, there is also more acceptance due
to the participation and most importantly it is a more objective scheme.

Even though performance analysis has developed over time in importance to organisations,
its usefulness can be considered under debate, which is will now explore. Firstly, there is a lot
of potential for bias in performance ratings and that can be a major problem with appraisal
(CIPD 2020). Bias can be split into rater-centric, ratee-centric and system centric bias. Ratercentric bias is when the rater affects the bias such as the Crony effect which suggests that a
ratee receives a higher rating if the manger likes them (Sutton et al. 2013). Ratee-centric bias
is how the ratee affects the bias such as employees who challenge the status quo tend to have
lower ratings (Hung et al. 2012). Finally, system-centric bias stems from poorly designed
rating criteria leading to errors in judgement and there is a possibility for flawed procedures
or inaccurate rating scales. (Javidmehr and Ebrahimpour 2015).

Performance appraisal can also be deemed ineffective due to number of other reasons. It can
be considered an ‘unnatural act for managers’ (Lawler 1994) and this can therefore lead to ill
prepared appraisers that are poorly trained, meaning results aren’t very reliable. Subjectivity
is a problem that has already been addressed, Wright (1991) suggests that it is difficult to be
objective when the meaningful is not easily measured.

Pearce and Porter (1986) suggest that appraisals do not in fact improve employee attitude to
the appraisal systems or organisational commitment but decreases it for those receiving
satisfactory ratings, whereas the attitudes of those receiving higher appraisal ratings will
remain unchanged. Which suggest that potentially negative consequences can occur for those
performing at a satisfactory, but not outstanding level. Margerison (1976) explains how if an
employee is labelled as ‘average’ they may become demotivated and therefore can negatively
affect performance, which shows performance appraisal can be considered ineffective and
why its usefulness is under debate.

Usefulness

Regarding the previous schemes mentioned, their usefulness is also under debate. Firstly,
rating scales may end up being subjective and therefore affect outcome, also, each
characteristic is equally important in evaluation of the employee’s performance, this is
problematic as some traits are more important in certain roles. (Aggarwal and Thakur 2013).
Furthermore, there could be confusion due to the different use of scale between managers
which makes comparing difficult (Festinger 1954), and importantly regarding feedback, it
fails to provide sufficient information to enable employees to improve. (Kluger and DeNisi
1996). BARS can be considered very time consuming to generate and each job will require
creating separate scales. Also, behaviours are activity oriented rather than result oriented and
the independence of the scales may not be reliable or valid. (Aggarwal and Thakur 2013).

To Conclude

Overall, performance appraisal is a system that is continuing to grow more important to
organisational success. It allows for greater management control with greater transparency
and clarification to the workforce which can motivate workers and make them really feel a
part of the business, and this stimulates performance improvement (Aguinis 2009). However,
its usefulness is under debate due to numerous reasons including being too subjective and
bias and does not always lead to an improvement in employee performance, satisfaction, or
attitude toward the system. There is still room for improvement, and more research will lead
organisations in the right direction to improve performance appraisal.

References

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