Employee Performance Appraisal System

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Abstract

This report covers the definition of employee performance appraisal systems, through a short history of where it started. The importance of replacing the traditional methods with the modern methods of appraisal is discussed. There are various methods that an organization can apply to evaluate the employees’ performance. The commonly used methods in companies are discussed, focusing on their limitations and advantages. These methods are then compared and contrasted with the effective theories of employees’ evaluation. Most of the time, employees undergo an interview as part of the evaluation. The major steps of such interviews are covered in this report. Mostly, managers are evaluated differently from the casual laborers; the difference in their evaluation is mentioned in this paper. Currently, companies are going for a 360-degree employee performance appraisal system, hence its contents are also discussed. The report is concluded with conclusions and recommendations to companies regarding the issue of appraisal.

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Introduction

Performance appraisal systems were initiated in the past, as a way of justifying employees’ income. Managers and supervisors used this system, to test whether what employees received as compensation equals their input. In most organizations, the whole process was linked to material outcomes. Whenever the performance of a certain employee was found below the ideal, a reduction in his or her salary would be done automatically (Kler, 2006). On the other hand, in case their performance was found above the average, the supervisor would raise their salary accordingly. To some extent, companies would get the results that they expected, but at times, they failed to give the desired results. It was evident that, within a company, different people with equal abilities could receive the same amounts of salary, but their performances and motivation are different.

Several empirical studies confirmed such observations. Salary is an important aspect of any employee, but it is not the only factor that is meant to motivate an employee. Other factors determine how employees would perform their duties (Trever, 2004). There are some important issues such as morale and self-esteem, which influence the life of an employee greatly within an organization. However, the traditional beliefs of reward outcomes were completely rejected. In the late 1950s companies and individuals, started taking the appraisal systems as a way of motivating employees. This is how it is taken even today by organizations and individuals, as a model of motivating employees.

Currently, the term performance appraisal defines the formal structure applied by a company to ensure a smooth interaction between the management and the junior employees. This is mostly conducted annually or semi-annually, whereby the working performance of the employees is scrutinized and discussed by everyone in the organization (Bilbor, 2009). The major theme of conducting this exercise is to determine various weaknesses and strengths of the employees, and how to venture into the newly found opportunities.

Methods of evaluation applicable in companies

In modern society, there are more than ten performance appraisal methods that a company or an individual can apply. It depends on the nature of the company, in deciding on the appraisal method to use. Some companies have a history of so many years, using the same performance appraisal method (Bukkur & Tarnder, 2007). Some companies make use of one or more methods when conducting this crucial evaluation of their employees. Some of the methods that are to be applied in organizations and individuals include:

Job results

In most cases, the results received after performing a certain duty are enough information that can be used to base the appraise performance. The employer compares the results of an employee with some set performance standards; this standard is mostly also related to the working performances of other employees within an organization. This method is mostly applicable when employees are undertaking duties that have measurable results (Meamor, 2009). The job result method would involve both the quality and quantity of the work done, for instance, the volume of sales of dollars per day. In case, such information is not obtainable from the records of an employee, it is the duty of the evaluators to use a system that incorporates the employees’ behaviors or personalities. For highly valuable jobs, result appraisal is preferable to consider the behaviors of an individual. For instance, in managerial positions, this method would apply best, as it would be hard to define the most appropriate behaviors to act as the standard measures. Other aspects that make this method applicable are aspects such as turnover, profitability, and the level of production within an organization.

Essay method

This method is whereby the evaluator or the supervisor writes a report concerning the employee’s performance about job characteristics and its results. The main subject of writing such an essay is either to justify a salary of an employee, recommend for promotion, or when about to conclude certain decisions within the organization (Kleenor & Gregor, 2009). Rarely essay method is also applied when an organization is undertaking developmental steps. This method is faced with several challenges, as it does not have some set standards through which the evaluator can compare his notes. It is an open-ended method lacking a good structure; hence the evaluator can practice discriminatory aspects. When writing an essay concerning a certain employee, the evaluator may decide to favor some employees over others. The validity of this method is questionable because the essay does not bring out the real image of the employee or the job position as it is required.

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Ranking

When an evaluator decides to apply this method of appraisal, he or she compares one employee to another. The employees are ordered in a way related to their colleagues. This method results in all employees being assessed, unlike other methods, where only specific judgments are imposed on certain job contents. The ranking method leads to a situation whereby, all employees within an organization are ranked from the best to the worst. At times, the evaluator may rank them from the most effective to the least effective with regards to a given responsibility. The only limitation to this method is that employees can only be ranked who work under the same group category. It would be hard for the evaluator to rank employees from different groups. In addition, despite how well a certain group performs its duties best; there must be the best employee and the worst within that group (Bukkur & Tarnder, 2007). Most employers have shown interest in this method, as it is a good way of differentiating among employees.

Forced Distribution

This method applies a certain rationale of comparing the subordinates. Every employee must follow under a certain category. Forced distribution has the added advantage of considering more than one side of job performance. This aspect places this method at a more competitive edge than the rest. In several instances, a manager or a supervisor may receive a request from the top management to rate the employees following a certain rationale. For instance, he may be told that out of 15 employees to place two of them in the lowest category, three of them into the below-average level, six of them in the average level, two above averages, and the last two in the highest level (Meamor, 2009). The forced systems may vary, whereby the supervisor may be advised to place the employees in only three categories such as at the top, middle, and bottom levels. This method is also a preferred one, as it can be used to eradicate rating errors. On the other hand, it is also not very perfect because it imposes some form of discrimination among employees who have the same job performance. For instance, in situations where all employees in a group are performing well, this method dictates that every level must have some employees, starting from the top to the bottom. In an organization where there are small working groups and most all with high abilities, they tend to reject this method.

Graphic Rating

It is a method that is among the best among various companies. This method requires an evaluator to make use of a scale to record the level of degree that a certain employee, demonstrates in terms of character, behavior, or performance information. Graphic rating encompasses several scales, such that each relates to a certain job or performance information dimension (Bohlander & Snell, 2009). The most used aspects of an employee include knowledge, commitments, and most importantly the quality of work. Every scale has a variety of scale points that entail from high to low, good or poor, best to worst, etc. In most cases, the scales have ratings from five to seven, although they are adjustable. There are some guiding rules for aiding the rating scales, for instance, there should be a well-defined performance aspect.

Another rule that should be applied is that scales should be based on behaviors, such that an evaluator can support all points with clear objectives. When conducted properly, this method gives the organization several advantages. For instance, there is the provision of standardization of job content that allows effective comparison of employees. There is also an easier way of using development with relatively low application costs. The best of all advantages of this method is that there is a high percentage of acceptances from both the evaluator and the employees within an organization. The only major shortcoming of using this method is that it is prone to rating errors, which may lead to imperfect appraisals.

Mixed standard Scales

This is a recent method that is considered as an improvement of rating scales. This method contains some statements representing good, average, or poor performance. In total, this method contains nine of such statements, in the level of good, there are three statements, average the same, as well as the poor (Bukkur & Tarnder, 2007). The main responsibility of the evaluator is to specify whether an employee matches the statement, is above the statement, or is below the statement. These methods help a great deal in reducing the evaluator’s errors, as the statements would give the results of the most effective or ineffective performer.

Behavioral Checklist

This is a system that makes use of a written form, which contains some declaration of whether the behaviors of an individual are effective or ineffective. The behaviors tested here are directly related to behaviors that are likely to affect the employees’ job specifications. This method is suitable in any organization, as it is based on employee development through their behaviors and performance results (Meamor, 2009). The behavioral checklist is specific to a certain employee and does not employ comparative aspects. Its main advantage is that the evaluator’s major responsibility is to describe the employees’ behavior rather than evaluate him or her. The describing nature of this method makes it to be acceptable to most of the employees. The only disadvantage associated with this evaluation method is that it is costly to make it effective, due to the construction of the needed instruments.

Management by objectives

This method implies setting goals and objectives for every employee, this is followed by a close discussion of his or her progress towards achieving these objectives. This method creates a good opportunity for employees to express the weaknesses and hardships that they may be encountering within the organization. This method is made possible if its six main steps are followed effectively. The first step is setting the organization’s goals and objectives; this is followed by setting the departmental goals (Meamor, 2009). The third step is discussing and allocating the departmental goals to the relevant people. Once every individual realizes his or her expected duties, it is advisable to let them know the expected outcome from them.

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The fifth step is reviewing and measuring the results, by comparing the actual performance of every employee with what is expected from him or her. The final step is to provide management with feedback concerning every employee. This entails some discussion between the employees and their supervisors concerning their progress and the hardships encountered (Bohlander & Snell, 2009). At times, it might not be the fault of the employees to fail in achieving their goals, but the problem may be the management. On several occasions, employees are seen given some responsibilities but the resources to handle those tasks are limited. When ending up the process of management by objectives, employees are given a good chance to state such incidences that may be drawing them backward.

Finding and Analysis

Most of the methods of performance appraisal discussed above have some similarities and differences, with what is considered as effective performance appraisal. For instance, the job results method has got many similarities with other effective methods of performance of appraisal. The method uses an individual’s performance result rather than the behaviors that lack some set standards. The essay method has many contrasts about what is referred to as the real system of performance appraisal. As mentioned above, the evaluator may apply discrimination to some employees; which is against the policies of most organizations. An aspect of favoring some employees may be realized through this method (Bukkur & Tarnder, 2007). Forced distributions also have some contrasting ideas with effective performance appraisal in that the evaluator is forced to fit every employee at a certain level. This may not be necessarily effective, as employees may be having the same workability, but due to obeying the set rules, some are ranked at the top and others at the bottom.

Employee evaluation interview

This is a step of performance appraisal, whereby the employee takes some time with his or her manager to discuss some sensitive issues concerning the jobs. Several issues are put in place, hence opening a chance for an employee to give their views and perception, and for the manager to state his or her stand (Lussier, 2008). During such interviews, managers in question should put the employee at ease, to enable him or her to express his views. The manager or the supervisor involved states clearly how the employee and the entire organization would benefit from an open interview. He then explains all the areas that will be covered during the period of the interview.

The most important part of the interview is when the manager asks evaluation questions that bring about answers of every aspect in each area. Another important part is for the manager to give a clear description of the job function, and how it contributes positively to the development of various departments and the entire organization. Towards the end of the interview, the manager asks the employee whether he or she has any questions or something he would like some clarifications about. This part opens an opportunity for the employee to give his or her views and ask for clarifications of the areas that seem hard or challenging in his or her duties. After all the employees, questions are answered the manager closes the interview.

Difference between performance appraisal of managers and that of casual workers

An organization must conduct a performance appraisal of every level of employees. All employees have a common goal within an organization; hence they are all important in one way or another. Appraising the performance of managers is a very crucial process, though it tends to be very difficult within the organization. Most of the work done by the manager can not be quantified; hence it is qualitative. Managers are concerned with leading their teams, supervising, planning, and showing the rest a way forward (Bohlander & Snell, 2009).

The main difference between their appraisal and that of casual workers is that theirs is done qualitatively, while that of casual workers is done quantitatively. The output of the casual workers in terms of quantity is the one used by evaluators when doing performance appraisals (Lussier, 2008). All in all, whether qualitative or quantitative, all are destined to achieve the company’s set goals and objectives. This does not imply that quality is not checked in the output of casual workers, it is also very important, as quality should be applied in every step made within an organization. Quality input would lead to quality output.

360-degree performance appraisal

This is a system used by some organizations to appraise the employees’ performance, and it is marked by employees receiving confidential and unspecified feedback from people surrounding their environment. These people may include employees’ supervisors, colleagues, or direct reports. Approximately ten to twelve people fill out an unspecified online feedback form that contains questions concerning a broad coverage of workplace major issues (Lussier, 2008). These questions are rated on a rating scale, as well as requests raters to give written comments about their observations.

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This system is a powerful one, as it helps individuals to expand their skills, improve, and above all develop their interpersonal skills. This is attained by the fact that the company takes its time to collect information from several people, concerning an employee. The organization gets different views from people such as the employees’ boss, clients, or from direct reports.

The 360-degree appraisal system is better than the traditional methods, as most of them are one-sided. Through this system, an organization can receive an honest and objective outcome concerning the employees (Meamor, 2009). The main advantage associated with 360 systems of performance appraisal is that every employee in an organization gets a chance to understand how others view him or her.

360-degree performance appraisal system can take any of the following ways. The management may decide to use the peer-to-peer employee performance appraisal. This is whereby, employees at the same working level within an organization rate one another (Bohlander & Snell, 2009). This is a better option as co-workers know each other’s capabilities very well. Self-assessment is another version, whereby employees are given a chance to evaluate themselves. This is considered effective when combined with any other version, as employees would favor themselves. Down to top performance evaluation version is also mostly used, whereby an employee is assessed by his or her subordinates. These are considered as people who interact daily, and they know each other well. The most common and effective version is a top-down evaluation, whereby employees are evaluated by their managers or supervisors.

Conclusion

In conclusion, several methods apply to conducting employees’ performance appraisals. Some methods have proofed to be better than others. This is determined by the limitations imposed by each in achieving the required objective (Lussier, 2008). The use of traditional methods seems to be outdated by the current and modern methods that are available in today’s business world. The preference of which method to apply in the process depends on the management, and at times, the will of the employees. Employees are supposed to be airing their views as this process is mainly meant for them, for the benefit of the entire organization. The application of 360-degree performance appraisal has come with many advantages, hence replacing some methods in the market.

The aspect of incorporating several individuals to give their views is very fair to every employee within an organization. Failing to have such an exercise once or twice per year within an organization may be a sign of downfall (Bohlander & Snell, 2009). Through evaluation, companies are capable of coming up with several decisions that are relied upon to ensure the growth of the organization. A company is capable of deciding what is profitable, and what needs to be replaced or to be upgraded. Through such exercises, a company is sure of continuity in the market, as it would be possible for it to define its strengths, weaknesses, and venture into new opportunities.

Recommendations

There are several key points that any organization should undertake while performing employee appraisal systems. Any company should make us of the sound system, and a formal, structured way, of approaching the employees. The system chosen should be consistent and capable of treating everyone fairly. The use of casual approaches may result in some conflict within an organization (Bacal, 2006). The use of some set standards would ensure that everyone is treated in the right manner, without any sign of discrimination. Companies would make a great move forward if they can only avoid the issue of managing employees, and concentrate more on assisting them to develop their competencies.

A company should come up with a key job performance dimension, which should act as the set standard to be applied when conducting a performance appraisal. It may not sound wise for any company to rely on single-person observations and conclusions. Involving multiple sources of information when conducting performance appraisals is crucial, as it would ensure the reliability and trustworthiness of the information provided. The process of performance evaluation contains several steps, and this is the responsibility of the company to ensure that all steps are followed, and are capable of providing reliable information (Kirkpatrick, 2006). All the tools to be used in the process are supposed to be accurate and reliable, to ensure the output is also of quality. There is nothing that should be less than the usual five steps that are followed; gathering information, doing the evaluation, deciding, documentation, and finally providing employees with the feedback. There are some things that a company should emphasize on like concentrating much on the strengths, and the needs for development as explained by the employees.

References

  1. Bacal, R. (2006). How to manage performance: 24 Lessons for improving performance. New York: McGraw-Hill Professional.
  2. Bilbor, M. (2009). Methods of employee performance appraisal. New York: Cengage Learning.
  3. Bohlander, G., & Snell, S. (2009). Managing Human Resources. Michigan: Cengage Learning.
  4. Bukkur, M., & Tarnder, Z. (2007). Effective ways of employee performance evaluation. New Delhi: New Delhi University Press.
  5. Kirkpatrick, D. (2006). Improving employee performance through appraisal and coaching. New York: AMACOM.
  6. Kleenor, B., & Gregor, S. (2009). How to effectively evaluate your employees. Minnesota: Cenngage Learning.
  7. Kler, B. (2006). Employees performance appraisal. Michigan: Cengage Learning.
  8. Lussier, R. (2008). Management Fundamentals: Concepts, Applications, Skill Development. New York: Cengage Learning.
  9. Meamor, D. (2009). Five Keys points for evaluating employees performance. Beijing: Cengage Learning.
  10. Trever, M. (2004). Management policies. New York: Routledge.

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