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The performance appraisal
Appraising employee performance demands a considerable investment of the business' time, energy and money. In many instances pay increases, bonuses and promotions hinge on the outcome of a performance review. Because of this, organizations should ensure their appraisal systems and processes are beyond reproach. However, a great deal of research strongly indicates that this is not the case.
The benefits of quality appraisal processes have been known for many years. [1] Boice and Kleiner (1997), for example, argue that effective appraisals play an integral role in building a motivated and committed workforce. Conversely, poorly developed and administered appraisals result in diminished levels of employee satisfaction ([4] Ducharme et al. , 2005), demoralization and poor teamwork ([5] Harrington, 1998).
Appraising employee performance is important. Most private sector organizations remunerate on pay-for-performance, so differentiating good and poor performers is necessary to pay employees fairly according to policy. It is not the concept but the management of performance appraisals that is the problem and current approaches to managing performance appraisals are largely lacking in integrity and validity ([2] Cook, 1995).
Seven appraisal problems
This paper condenses the findings of a literature review on performance appraisals of over 300 articles published between 1980 and 2010. The review discovered seven common and persistent failures of performance appraisals that undermine their value and reliability. The seven problems are:
Direct bias.
Indirect bias.
Competency.
Devolution.
Authoritarianism.
Informal, incidental and ongoing appraising.
Information collection.
Direct bias
All people have biases. Research shows that biases often influence the supposedly objective ratings a manager gives an employee during an appraisal. Biases can be about favored or disliked employees or influenced by how a manager feels about the employee's political, religious, social, family or cultural views. Numerous studies have shown managers give better ratings to those employees most like themselves.
Indirect bias
Organizations use corporate values, symbols, rules, dress codes, rewards, ceremonies and many other things to communicate what kind of people they most prize. Organizations also have their own social, cultural and political environments in which employees can assimilate or revolt. Evidence shows that these factors influence how managers perceive performance; they often judge performance against environmental compliance irrespective of actual performance.
Competency
Only some organizations train managers on how to conduct...