Abstract
Employee performance appraisal is an essential component of corporate businesses. It is a very valuable human resource tool which elicits various employee attitudes and behaviors highlighting their strengths and weaknesses. How close they are towards helping the organization grow towards achievement of its objectives may be assessed. Deficiencies may then be rectified through various processes so that the available human capital is reinforced. Meanwhile efforts are taken to provide good job satisfaction alongside through methods to improve career prospects. This paper will search for relevant literature to find the different aspects studied by previous researchers on the subject. The methods of improving the appraisal tool to provide good outcomes will be considered. The relevance of research to practical application will be searched for. The role of employee appraisal in competitive advantage will be studied. Whether the recruitment process needs to consider the employee requirements is another subject to be considered. The role of employee participation in the designing of tools for employee appraisal will be looked into in the study. This is a causal cross- sectional study to observe how an employee appraisal affects his performance or the working of a growing organization, the appraisal tool being designed with employee participation.
Introduction
Performance appraisal is an essential component of corporate businesses. It is a very valuable human resource tool. Strengths of the employees may be assessed and aimed to be reinforced. Deficiencies may be identified and corrections like training provided. Progress is watched between appraisals, rewards are validated and promotions given where merited. Employees are developed into more competent ones apart from the measurement of their performance. Employee performance appraisal may be an ongoing process and future changes are to be observed. The aims are to ensure an improvement in individual and organizational performance. Employee performance appraisal is executed in both public and private concerns. The frequency with which it is repeated in an organization, the exhaustiveness of the procedure, the processes that are the outcomes, the changes in the organization and the change in the career of the employee are the different subjects of discussion. This study will be a causal study of cross-sectional nature, the respondents being employees of banks and airlines.
Literature Review
Performance appraisal is a favorite topic in personnel management circles (Gabris and Ihrke, 2001). It has been defined as “an ongoing process of identifying, measuring and developing human performance in organizations” (Glen, 1990, p.1). Systematic observation and accurate measurement are involved in the gathering of data. Changes in future performances are watched for (Glen, 1990). and not “an annual confrontation” (Roberts, 1998) Roberts has rightly said that performance appraisal is “one of the most controversial human resources management processes generating a range of views and emotions that run the gamut from blind advocacy to outright vilification” and eventually is a complex procedure(1998, p.1).
The employee appraisal is often described as a no-win situation where HR managers consider it their duty to inform their employees about their performance (Glen, 1990). The feedback component of the performance appraisal and suggestions for developmental change play the role of motivation triggers for job improvement (Glen, 1990). It also justifies a salary increase or bonus if the improvement is obvious. However the negative outcome can also be expected: a poor performance leads to denial of a rise in salary or a bonus. No doubt that more employees and managers do not look forward to it.
Employee behaviors were previously assessed by behaviorally anchored rating (Glen, 2990). Then performance objectives were delineated: risk, time and difficulty assessment where interpretative rigor was used. Now merit pay and pay-for-performance systems are implemented. However these hardly differentiated between the best and average performers (Glen, 1990). Performers were unhappy as they felt that their performance was not being recognized and they did not get a benefit befitting it. The employees began to doubt whether the goals were worthy of achievement. Another issue is that the appraisal causes one employee to be pitted against another, actually hindering the achievement of the organization which is the main objective of the appraisal (Glen, 1990). The appraisal rating is followed by several dejected and embittered employees who take some time to recover. Many organizations in Japan now resort to group appraisal where individuals are not pinpointed but it is more complex. Consultative decision-making is encouraged; trust and open communication is emphasized giving value to employee participation (Glen, 1990).
The relationship between the employee perceptions of performance appraisal, with employee burnout and experienced job satisfaction were studied in a county government by Gabris and Ihrke (2001). The study found that there was a moderate relationship between the three. Instrument validity, distributive justice and procedural justice were also considered along with. Work-related features which were negative where the employee was concerned appeared to work towards the burnout. Low job satisfaction and diminishing health are two problems which lead to high burnout. The fear of appraisal is another factor. The question arises as to whether frequent performance appraisals affect organizational health (Gabris and Ihrke, 2001).
It was found that simple trait-based instruments were designed for managerial objectives and were more interested in changing the behaviors of employees to suit those objectives. Features like loyalty, dependability, enthusiasm and team orientation were the expected behaviors (Gabris and Ihrke, 2001). The more sophisticated job-related performance appraisal instruments like the behavior observation scales measure effective and ineffective behaviors for specific jobs. Employees come to learn what behaviors obtain high performance appraisal scores: the manager actually controls the employees through the appraisals. Selection of employees for merit-pay is also through the appraisals. Techniques of appraisal are of three types: trait formats, management-by-objective (MBO) formats and behavioral system formats (Behavior Observation Scales) (Gabris and Ihrke, 2001). Trait formats cover specific personality traits. MBO formats evaluate the achievement by work-related goals. Behavioral system formats deal with the behaviors of employees which the organization deem important for achievement of organization goals. Each technique has strengths and weaknesses (Gabris and Ihrke, 2001).
Procedural justice was measured in Gabris’ study by using the model of Miceli and Lane. Appropriate fairness was to be ensured to the employees by using “ the six rules of consistency, suppression of bias, accuracy, correct ability, representation and ethics” (Gabris and Ihrke, 2001). Any injustice felt may be appealed against.
A resource –based perspective indicates that organizations gain competitive advantage by possessing value-creating resources and capabilities which others cannot imitate. “Technological supremacy, patent protections, economies of scale and scope, and favorable government regulations created are the usual perspectives or traditional forms which create value but they are all easily replicable (Jensen et al, 2007). Possessing a factor which cannot be easily replicated is what contributes to competitive advantage these days. The strategy should be to sustain competitive advantage over time. The High Performance Work System (HPWS) is a “progressive set of policies and practices” which develops into a sustained competitive advantage (Jensen et al, 2007, p.1). This HPWS and firm performance are closely linked. HPWS includes comprehensive recruitment and selection procedures, job design, training and participation programs. Candidate selection and employee appraisal need to be well organized so that the human capital turnout of the organization is the best in the field (Jensen et al, 2007).
Optimism of the employee is a positive psychological ability. Luthans (2002 as cited in Jensen et al, 2007, p.3). has defined positive organizational behavior as “the study and application of positively oriented human resource strengths and psychological capacities that can be measured, developed, and effectively managed for performance improvement in today’s workplace”. Employee appraisal can include an examination of this major strength. The study by Jensen et al indicated that self-reported optimism had significant links with performance outcomes and job satisfaction (Jensen et al, 2007).
Employee appraisal has been described as vital in recruitment and hiring of employees. It is equally significant in assessing them in deciding matters of transfer, layoff, termination and promotion (Thomas and Bretz, 1994). It is a tool for apprising employees of the expectations of the organization. The need for training the employees is also assessed by the appraisal. There is a debate however on whether the performance appraisal is really useful to the organization (Thomas and Bretz, 1994). The same opinion has been expressed by Roberts (1998) who questions the legitimacy of the performance appraisal. Some managers are of the opinion that appraisal creates problems; they would rather see the abolition of production standards and performance appraisals (Thomas and Bretz, 1994).
Design flaws could reduce the significance of the performance appraisal tools. (Thomas and Bretz, 1994). Managers who are responsible for the appraisals do not receive appropriate training for them and are never commended for accurate appraisals. Managers and employees both dislike appraisals. Negative messages are preferably not passed on by the managers to the employees just as employees hate to receive such messages. The employee’s career is affected by the negative messages. The non delivery of such messages may cause informal rewards to reach the managers. The managers are also affected if an employee gets a negative message as he would be found responsible for the selection of this person. This manager may prefer to avoid being candid and refrain from the negative appraisal of his employee to save his own skin. A gap has been noted between research and practice of performance appraisals (Thomas and Bretz, 1994). Managers are concerned about conducting the performance appraisal in fairness to the employees and usefulness to the organization. Researchers are more concerned about the cognitive aspects of the appraisal. The gap highlights the fact that research has not done enough for appraisal to be flawless.
The reasons for the appraisal requiring practical changes are many. The appraisal systems are designed by personnel specialists (Thomas and Bretz, 1994). Managers or employees do not participate in the designing, hence the flaws. Objective-based approaches are used in 70-80% of executives, managers and employees. Performance appraisal is not considered important by managers who do it; a study on American companies revealed interesting facts. Only 22% of Fortune 500 companies had managers who evaluated how well they did the appraisal. Training programs which taught the managers in conducting appraisal interviews were found in 90% companies. Appropriate instructions for using the forms had been given in 83%. Performance standards were set in 78%. Good performance was recognized in 66%. Rating errors were avoided in 56%. Most companies are more interested in the appraisal at the beginning. What the managers learn in recent days is not used.
Employees also received no training on how to use appraisal forms (Thomas and Bretz, 1994). The formal appeals process was allowed in 26% of organisations while 64% allowed informal appeals process. No appeals were allowed in 10%. Organizations were bothered about the issues of fairness in the procedure and results but hardly one-third conducted surveys to obtain the perceptions of fairness from the employees. The feedback was inappropriate and the appraisals were not being used for improving performance (Thomas and Bretz, 1994). Another surprising fact was that though research considered appraisal significant, it was not so by the respondents. “Communicating work expectations, improving performance, determining employee potential, counseling and developing employees were found to be the main developmental uses of appraisals by American companies (Thomas and Bretz, 1994). Layoffs or termination of work or transfers did not seem to be affected by appraisals.
Roberts has assessed performance appraisal as a ‘command and control device” (1998). He considered that employees were being made scape goats through performance appraisals which were inaccurate due to flaws in management and work process. Conflict and competition were also being triggered through the procedure. The performance appraisal was being used as a method to dominate over employees frightening them.
Companies need to have an appraisal system which is accurate and realistic. It would serve to control employee behavior and services and provide products of exceptional quality (Chu and Chen, 2007). Being a useful tool for organization to examine the previous performances of employees, strong action could improve their future performance. Control standards, measurement, and corrective actions are the three phases of a control system of an organization (Chu and Chen, 2007). The control standards are based on the organization goals or mission statement and rely on the performance appraisals. Measurement of the actual appraisal will be the second phase. The gap between the feedback and performance standards will provide the baseline for corrective actions (Chu and Chen, 2007).
Organizational politics is a topic that has been discussed by Shore and Strauss (2008). Behavior that appeared to be self-serving may cost the organization dear through the creation of problems for others and the organization. Two approaches to organization agenda have been identified: the rational and the political (Shore and Strauss, 2008). Assigning accurate ratings using objective criteria constitutes the goal of appraisal in the rational approach. Another incorrect but practiced method is to resort to the political approach whereby a “certain agenda using ambiguous standards which maximize the degree of discretion provided to the supervisor” is used (Shore and Strauss, 2008). It has been discovered by scholars that many indiscrete managers manipulate and do not accord an honest appraisal of employees. They are influenced by political motives. Higher scores may be given to prevent employee disappointment and conflict or pave the way for a favorite employee to secure promotion. Catano et al (2008) have also indicated the same problem. Managers who are uncomfortable about giving varying ratings and causing employees to react prefer to play it safe and give somewhat similar high ratings without discrimination to prevent employee mistrust (Catano et al, 2008). The cultural context could also influence performance appraisals; appraisal may be a little off-track due to wrong attitudes being considered. Assessment systems need to have the support of those undergoing the assessment. (Catano et al, 2008).
Performance appraisal may be used by an employee in litigation in case he appeals against his company for being discriminatory towards him. Appellate Court judges in the US are more concerned with fairness in the appraisal procedure than anything else (Lee et al, 2004).
Summary
Performance appraisal is a human resource challenge. Managers’ concerns do not have the same usefulness as research on performance appraisals have. Issues of fairness seem to be more important than the accuracy of ratings (Thomas and Bretz, 1994). Research has to be more realistic and needs to be done in organizations rather than in the lab. Employee participation is an essential component in the designing of appraisal tools. Training for employees and managers help to make the appraisal process more credible and the organization culture supportive. Frequent performance appraisals could affect organizational health (Gabris and Ihrke, 2001).
The appraisal serves the purpose of providing employees with feedback, controlling employee behavior and deciding individual merit (Gabris and Ihrke, 2001) or as a ‘command and control device” (Roberts, 1998). Roberts (1998) has indicated that rater bias, performance standards which are not conclusive, incomplete documentation, errors of heuristic and attributional nature and lack of training decrease the validity and reliability.
Traditionally competitive advantage is achieved through technological supremacy, patent protections, economies of scale and scope, and favorable government regulations but all these could be replicated (Jensen et al, 2007). A new strategy which cannot be replicated by which an organization can achieve maximum competitive advantage is the High Performance Work System. Candidate selection and employee appraisal in this HPWS need to be so well organized that the human capital turnout of the organization is the best in the field (Jensen et al, 2007). Positive psychological ability is an asset; it has links with performance outcomes and job satisfaction (Jensen et al, 2007).
Appraisal is a tool for apprising employees of the expectations of the organization (Thomas and Bretz,1994). A gap has been noted between research and practice of performance appraisals (Thomas and Bretz, 1994). Design flaws could reduce the significance of the performance appraisal tools. (Thomas and Bretz, 1994). Appraisals with negative messages may not be passed onto the employees by managers who are afraid of creating conflicts or affecting the life of the employee who may be laid off or terminated (Thomas and Bretz, 1994). Few managers are trained for making appraisals.
Companies need to have an appraisal system which is accurate and realistic (Chu and Chen, 2007). Appellate Court judges in the US are more concerned with fairness in the appraisal procedure than anything else in a litigation against an organization (Lee et al, 2004). Procedural justice and fairness are to be ensured (Gabris and Ihrke, 2001).
Employee participation appears to be the significant factor in the designing of appraisal tools. The results of the appraisal would be more acceptable to them in this situation. The managers too may have fewer qualms about passing on negative messages then. If corrective actions are taken following the appraisal, the employees would not mind the negative findings. They would hope to secure batter ratings the next time. Moreover they would understand the requirements of the organization with respect to goals of achievement. More commitment and loyalty could be expected.
Methodology
The method of study is cross-sectional and a causal study. A questionnaire will be distributed to employees at organizations that provide services (bank & airline). Also, an interview will be conducted with managers responsible for employee appraisal.
The questionnaire methodology has been selected as it happens to be the easiest to analyze in a research. It can be used for structured interviews, surveys whether written, internet or e-mail (Walonick, 1993). Questionnaires are cost-effective and easy to handle. The data analysis using a software for statistical analysis is also easier. More questions can be studied with this cost-effective method. The questionnaire methodology is familiar to all and thereby causes less anxiety. The face-to-face or telephone interviews are more intrusive and may disturb the respondent’s routine or precious time. The questionnaire may be completed during free time. One possible problem is that of poor writing skills of potential respondents: this is not expected here as the employees are educated. Interviewer bias is less: the respondent is not influenced by verbal or visual cues. However some responses may need clarification which a written questionnaire may not reveal (Walonick, 1993). This is another shortfall. Another disadvantage is that somebody else may respond and then the value of the answer is lost. Ten percent could have been answered by someone else.
The questionnaire method would be the best in this study as the respondents will be working people in the bank and airlines and the above mentioned points in favor are applicable. Before designing the questionnaire, the goals of study will be defined in writing (Walonick, 1993). Deciding which information would point to which answer would help in the decision of questions for the study. Peers in the department will be consulted before giving a final look to the questionnaire. A professional look will be provided by using desktop publishing. A short attractive but relevant title will be given to hold the interest of the employees.
Clear instructions on how to complete the questionnaire will be given. Questions will be framed so that answers are easily written. Longer simple questions usually get more information. Crucial words will be boldened or underlined. Ample space will be provided for all comments; lack of space should not restrict the answers. The first few questions will be easy to answer. Each following question will be having a continuous idea from the previous one. Anonymity and confidentiality will be assured. The questionnaire will be of a moderate length taking the respondents about twenty minutes to complete. A green color will be given to the questionnaire as researchers have found that this increases the appeal and thereby the response by 2% (Walonick, 1993). A self-addressed stamped envelope will be given as incentive. A cut-off deadline is not being provided but the week has been mentioned so that the questionnaires may come the same week or the following.
A pre-notification letter will be sent to the respondents. This is to increase the response. It will contain the reason for study, identify the sponsors, explain why the respondent has been selected and why the questionnaire is to be completed and how the results are to be used (Walonick, 1993).
Conclusion
The cover letter will be including the description of the study. The sponsors will be identified, the self-addressed stamped envelope will be included and an immediate response solicited. Respondents will be assured about the confidentiality and anonymity policy and a phone number they can call if necessary (Walonick, 1993). The covering letter will be personalized to increase the response rates.
A written consent will be obtained from the participants to be working within ethical considerations. The bank and airlines would also be requested for a blanket permission to have the employees as participants.
References:
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