THE UTILITY OF
EMPLOYEE PERFORMANCE APPRAISAL
John E. Chávez and Mario A. Rivera*
Employee performance appraisal is the method by which a supervisor provides ongoing feedback to subordinates about their performance, sets objectives for improvement, coaches employees, and produces a written evaluation of performance (Reeves and Torrez 1994). At its best, performance appraisal is an ongoing process of interaction with a focus on employee performance in the past, present, and future. Though performance appraisal has been around for some time, renewed interest in the public sector was facilitated by the passage of the Civil Service Reform Act of 1978, which required performance appraisal as one means to improve public sector productivity (Nigro and Nigro 1994).
Very few appraisal systems provide information that is useful for organizational planning. At best, a manager and the human resources department use the scores for short-term decisions involving the individual, such as merit pay increases. While organizations often use overall ratings for promotion decisions, such ratings are not likely to be valid. Promotion decisions are really selection decisions. Selection should be based on criteria that are specifically relevant to the position in question. Overall judgements are not measures of specific capabilities which might demonstrate that one is especially suited to carry out the specific demands of a particular job. When applied organizationally, a performance appraisal system can provide assessment data that will be useful for organizational planning and decision making, as well as for making individually centered decisions, such as merit pay increments (Sashkin 1986).
Goals of Performance Appraisal
There are several objectives of employee performance appraisal. By facilitating communication, conflict is reduced since the appraisal process enables management to communicate the goals and objectives of the organization, as well as the supervisors expectations, to the employee (Dresang 1991). In addition, the performance appraisal process provides the supervisor with both positive and negative feedback on employee performance. Performance appraisals can be used to determine if employees understand the scope and requirements of their work.
Performance appraisals can also be used to determine employee training needs and for planning employee development, both of which make for better employees and increased morale. Performance appraisal is also essential in the preparation of documentation for either promotions or discipline. Performance appraisals can be used to determine who will receive merit-based pay increases or corrective disciplinary action (Reeves and Torrez 1994).
There are two parts of performance appraisal, the process and the instrument. The process of performance appraisal involves regularly scheduled meetings, usually annual, between supervisor and subordinate, some preparation and discussion of employee performance, and documentation of this performance. The appraisal instrument that provides the documentation can take several forms. One of the most commonly used are rating scales, since they are considered by many to be easy to administer and inexpensive. Rating scales usually consider both the behavioral and technical competency of the employee. Checklists and narratives are also popular instruments. Checklists will rate an employee on outstanding, average, poor, etc. criteria of performance. Narratives are essay reports that make the supervisor write something about the employees performance.
It would be ideal for supervisors to appraise employees in a consistent and objective manner. However, distortion tendencies cause supervisors to be less than objective. For example, with the halo effect, an employee is perceived as being consistently excellent leading to inflated scores. On the other hand, the horns effect can cause a supervisor to perceive only the bad behavior of the employee while ignoring positive performance.
Evaluation standards can also be inconsistent. Each supervisor may have different interpretations of what is excellent, average, or poor performance. Furthermore, bad scores are often hard to justify and are perceived to cause more problems than they solve. Personal prejudice also plays a factor. Research has shown that there is a positive correlation between a supervisors attitude toward an employee and the subsequent rating. Increasing diversity in the workforce has made the performance appraisal process even more complex. Performance appraisal must also be understood within the context of society. In the increasingly litigious environment of work, the manner in which employees are appraised can have an impact on the outcome of any litigation (Employee Relations Today 1994).
Valid assessment of performance appraisal has proven to be an elusive goal. Objective tests, direct observation of performance, overall ratings of competence, and simulations have been tried and found lacking in one way or another. Objective test items are criticized as being unrealistic and therefore invalid. Direct observation tends to be very unreliable and thus invalid. Simulations and overall ratings of competence share both of these flaws to some extent (Kane 1992).
Although the quest for better measurement of individual job performance has generated considerable empirical research in industrial and organizational psychology, the feeling persists that a good job is not really being done in measuring job performance. The following research project investigated the effects of differences in both individual and systems characteristics on the accuracy of job performance measurements using rating of individual effectiveness in fulfilling job duties. The research involved 4 studies over a period of 13 months. Subjects included 134 graduate students, 8 human resources managers, and 201 undergraduate students. Results indicate that: (1) the purpose for which performance ratings are collected does not affect accuracy; (2) the quality of the instructions that accompany the rating form can affect rating accuracy; and (3) the use of performance standards on the rating form and their effect on rating accuracy depend on the method used to collect the performance ratings. In addition, rater motivation, acceptance, and confidence are related to rating accuracy. The investigation of the methodologies used to collect the accuracy data suggests the need for new methods on future studies of rating accuracy (Kavanagh 1989).
When conducting an appraisal, the appraiser should use description rather than evaluation. Evaluation, positive or negative, creates automatic blocks to effective communication. Even when feedback is descriptive and not judgmental, it can be far more helpful if it is also specific. A general description may not tell you how to correct your mistakes.
Most of the time, people do want feedback. The manner and form in which you give the feedback can affect whether the other person will accept and use it. Of course, there are times when giving feedback, even undesired feedback, is a matter of necessity and responsibility. Proper timing can make feedback especially useful. It is best to give your comments as soon as possible after you have observed behavior that merits it. This keeps the feedback in its proper context. One final general rule concerns the communication process itself. Feedback cannot be helpful if the other person does not hear it or misunderstands it. Check with the other person to ensure that you have been understood (Sashkin 1986). A good supervisor is one who realizes that good communication skills are learned through practice and repetition. Good intentions do not automatically result in good communication. If a person really wants to be a good communicator, it must be practiced daily (Reeves and Torrez 1994).
Emergent Techniques and Conclusions
The need for better performance appraisals has given incentive for new methods to better appraise employees. These include self-appraisal, peer-appraisal, employee appraisal of supervisors, and appraisal from outsiders. Self-appraisals are especially appropriate where the employee is working alone or possesses a rare skill. Moreover, the self-appraisals can force the individual to focus on what is expected in that job and clarify differences of opinion between the employee and the supervisor regarding job requirements, job performance, and developmental needs (Latham and Wexley 1986).
Peer-appraisals are the best single source of information from the standpoint of reliability and validity. They are not only a valid way for assessing present performance, but also an accurate predictor of future performance. The primary disadvantage of peer-appraisals is that they are limited to jobs where the peers frequently interact with one another on the job. Subordinate appraisals can facilitate team building where the supervisor and the subordinates discuss and resolve problems of mutual concern and thus build a positive work team. Subordinate appraisals can assist management in identifying individuals who are promotable because of their skill in managing people. A drawback of subordinate appraisals is that there is little knowledge regarding their reliability and validity. Appraisals from outsiders are of skeptical value unless the evaluations are based on first-hand observations (Latham and Wexley 1986).
In a variety of settings, procedures that permit predecision input by those affected by decisions have been found to have positive effects on fairness judgements, independent of the susceptibility of the decision. Results are reported of a laboratory investigation that examined the procedural and distributive fairness consequences of high and low input performance appraisal procedures to test whether some features commonly met in organizational contexts might limit these effects. In this study, 32 groups, each one composed of 3 male undergraduates, participated in a three-round competition in which groups either were or were not allowed to specify the relative importance to be given to two criteria used in appraising their performance. All groups received negative outcomes on each of the three rounds. A second experimental factor varied whether or not the group learned after losing round two that it could not possibly win round three. Measures of procedural and distributive fairness show that the high-input procedure led to judgements of greater procedural and distributive fairness across all three rounds. The input-based enhancement of fairness occurred regardless of whether some reward was possible (Paese, Lind, and Kanfer 1988).
Procedures should be implemented to solve a specific problem of concern to management rather than sold to them on the need for a new approach to performance appraisal. Once the appraisal system has been developed, a questionnaire should be designed for employees to complete anonymously as to their perceptions of the effectiveness with which their superiors are implementing the process. The questionnaire should focus on such things as the extent to which the supervisor is supportive of the employee, feedback is explicit, and specific goals are set. In order to maintain an appraisal system, there must be a significant level of upper-management support, middle-management must be rewarded for participating in and supporting the process, and the system/process must be installed on key fronts within an organization (Latham and Wexley 1986).
The nature of managerial work, organizational characteristics, and environmental demands frequently clash with performance appraisal systems to reduce the effectiveness of the process. This clash can be minimized to the extent that: (1) the appraisal system is designed by a representative sample of people who will use the appraisal; (2) behavioral observation scales are developed for individual jobs or job families; and (3) the appraisal process is rich in feedback for the appraiser and appraises. If a representative sample of people design the appraisal system, the system is likely to be understood and accepted by the organization. In addition, if behavioral observation scales are developed for individual jobs or job families, the system will be relevant to the jobs in question. Finally, if the appraisal process emphasizes two-way communication between the appraiser and appraises, appraisee satisfaction with the appraisal and, more importantly, the desire to demonstrate consistently those behaviors critical to fulfilling job requirements is increased (Latham and Wexley 1986).
There is no one best way to evaluate an employee. The instrument used and the frequency of the appraisal process will depend on the complexity of the environment and the resources at hand. Performance appraisals provide the most usefulness when they are credible. In order to be credible, the performance appraisal process must have the endorsement of both top management and employees. The appraisal should be designed by a representative sample of the people who will conduct and feedback as well as receive the results of appraisals. The appraisal information must be deep in feedback so that employees obtain a true picture of how well they are performing job responsibilities.
One major objective of performance appraisal is to increase the effectiveness of communication between superior and subordinate. The very processes of appraising the context of communication are critical. These are dependent upon many variables, including the power of the superior/subordinate relationship, the mutual understanding of their roles and work objectives, and their respective skills in expressing themselves and listening to each other. The appraisal form should not be a final judgement of one man by another, it is primarily the agenda for the discussion between appraiser and appraisee. As such, it should be the recorded basis for follow-up action. The primary aim of the appraiser should be to improve performance. Finality needs to be avoided at all costs, since any one written assessment must represent no more than an evaluation at a given point in time.
Many researchers paint a pessimistic future for performance appraisal. They believe that the movement toward objective measurement in performance appraisal, the use of multiple raters, in-depth training of raters, feedback, and setting goals represent an improvement over traditional approaches to appraisal. Still, they argue that these improvements may not be sufficient to overcome those contextual factors in organizations that reduce the effectiveness of performance appraisals. They believe that the nature of managerial work as well as organizational characteristics and environmental demands frequently clash with the internal structure of appraisal procedures. Researchers point out that few organizations, when administering merit pay systems, directly reinforce the appropriate conducting of appraisals. Further, because performing appraisals is seldom defined in organizations as critical to fulfilling the managerial role, managers are unlikely to expend much effort on appraisal. Higher management must emphasize the importance of performance appraisals to subordinates through examples and rewards (Latham and Wexley 1986).
Before effective appraisal is likely to become accepted in managing, its implications need to be thoroughly examined in the light of the current organizational climate. Top management itself must be absolutely clear about what it requires of performance appraisal and, once it knows, it must make its expectations clear. The usefulness of performance appraisal will be determined by its consequences, yet ultimately the responsibility for its success or failure must lie with the managers themselves.
* John Eric Chávez, MPA, is an advisor and analyst in the fields of public administration and planning, and specializes in personnel administration. Dr. Mario A. Rivera is Associate Professor in the School of Public Administration of The University of New Mexico. He has carried out extensive research and evaluation projects with government agencies and non-profit organizations. He is the author of the book Decision and Structure: U.S. Refugee Policy in the Mariel Crisis.
Dresang, D. 1991. Public Personnel Management and Public Policy. 2nd ed. New York: Longman.
Employee Relations Today. 21 (Summer 1994): 256-257.
Kane, M. 1992. The Validity of Assessments of Professional Competence. 30.
Kavanagh, M. 1989. Performance Rating Accuracy Improvement Through Changes in Individual and System Characteristics. New York: Research Foundation.
Latham, G. and K. Wexley. 1986. Increasing Productivity Through Performance Appraisal. Philippines: Addison-Wesley Publishing Company, Inc.
Nigro and Nigro. 1994. New Public Administration. New York: Linden and Wayne.
Paese, P., A. Lind, and R. Kanfer. 1988. Procedural Fairness and Work Group Responses to Performance Evaluation Systems. Social-Justice Research 2: 193-205.
Reeves, T. Z. and M. L. Torrez. 1994. Managing Human Resources. St. Paul, MN: West Publishing Company.
Sashkin, M. 1986. A Managers Guide To Performance Management. New York: AMA/American Publications Division.