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People (an organisation's greatest asset) and systems are the backbone of an effective performance management; these cannot be separated for things to go well, they go hand-in-hand. An effective Performance Management (PM) System will integrate functions that would enable decision makers take appropriate decisions that would bring about improvement to the services rendered by the organisation. PM systems also support employees' performance improvement and development.
EVALUATION OF AUTHORS' FINDINGS IN CHANGES IN DESIGN, IMPLEMENTATION AND EFFECTIVENESS OF PERFORMANCE MANAGEMENT SYSTEM
In design, organisations are making use of combination of different types of performance review mechanisms which they have specially designed to suit their organisational needs. These designs are made to incorporate all employees and with conscious efforts, employee goals are linked to organisational goals, Nankervis, R. A., & Compton, R. L. (2006, p. 89).
One of the principles of Performance Management is to "translate corporate goals into individual, team, department and divisional goals" Armstrong, M., (2003, p. 479). It is advisable that organisational goals and employee goals are aligned with the business strategies of organisations for effectiveness.
Findings from the research conducted showed that discussions between supervisors and employees are still widely used by most organisations. This aspect of PM system of appraisal has come to stay.
Implementation and Effectiveness of Performance Management Systems
To be effective, a PM system must be dynamic and focus on the critical success factors of the business. The use of the balanced scorecard (BSC) helps to have a 'balanced' view by making use of a variety of performance measures. The strategic elements of using BSC helps users to have a better well put together plan which is a major difference from earlier studies although only a quarter of the respondents are currently making use of BSC. Nankervis, R. A., & Compton, R. L. (2006, p. 90).
According to Rheem, (1996) cited by Nankervis, R. A., & Compton, R. L. (2006, p. 84). 'The use of an effective PM system is most likely to result in better financial performance. The effective use of PM systems is of benefit to both employees and their organisations.
ANALYSIS OF THE AUTHORS' CLAIMS IN RELATION TO:
Satisfaction Level - According to the authors, 69% of the respondents were generally satisfied with the current PM system in use in their organisations, and we can equally see from the conclusion that there has been further deterioration in the satisfaction level since earlier studies. It was suggested that future PM systems should incorporate: "alignment, integration, commitment, collaboration, feedback, outcomes and user-friendliness" Nankervis, R. A., & Compton, R. L. (2006, p. 100).
Training of Users - The study shows that 69% of the organisations used for the survey organise training for users, we are made to know that most of the trained are actually managers and supervisors. (ibid, p. 93) It was mentioned in the conclusion that there has been a decline in the training of system users. (ibid, p. 100) It is important that all users including employees need to be trained to make the system effective.
Employees Involvement with PM Systems -
The appraisal of employees is an important aspect of the PM system but has been a source of dissatisfaction for appraisers and appraisees alike because of the numerous shortcomings associated with the system. Allan, (1994) According to the findings, many of the respondents are considering making future changes to their current systems to accommodate more prominent use of 360 degree/multi-rater feedback, upward appraisal (subordinate appraising the supervisor), team members appraising other members of the team, Nankervis, R. A., & Compton, R. L. (2006, p. 93).
There is still a lot of improvement necessary for the PM system; from the research findings, some improvements were noticed since the earlier studies and at the same time there have been further declines in the training of system users and active involvement of employees in carrying out self performance reviews and peers performance review leading to dissatisfaction. (ibid, 100) Is this really a case of two steps forward, and one step backward?
Allan, P. (1994), 'Designing and implementing an effective performance appraisal system' [Online] Available from:
http://www.allbusiness.com/human-resources/workforce-management/479508-1.html (Accessed: 8 September, 2010)
Armstrong, M., (2003), 'A Handbook of Human Resource Management Practice', 9th Edition Kogan Page
Nankervis, R. A., & Compton, R. L. (2006) 'Performance management: theory in practice?' Asia Pacific Journal of Human Resources, 44 (1), pp. 83-101.
and 360 degree (or multi-rater) Armstrong, (2003, p. 490)
Dilanthi Amaratunga, David Baldry, Marjan Sarshar, (2001) "Process improvement through performance measurement: the balanced scorecard methodology", Work Study, Vol. 50 Iss: 5, pp.179 - 189
One of the hallmarks of leading-edge organisations - be they public or private - has been the successful application of performance measurement to gain insight into, and make judgements about, the organisation, and the effectiveness and efficiency of its programmes, processes, and people. The balanced scorecard (BSC) is a widely used management framework for the measurement of organisational performance. The BSC concept suggests that the state of processes of an organisation can be best assessed by taking a "balanced" view across a range of performance measures. This article seeks to offer an insight into the BSC, the key features of the concept and issues that must be addressed in its implementation as a process improvement technique. Further, it identifies the BSC methodology as a means of deploying strategic direction, communicating expectations, and measuring progress towards agreed objectives.
Performance management systems need to be dynamic and reinforce the kinds of performance critical to your business success.
The practice of management
Â By Peter F. Drucker, (1954)
Improving Employee Acceptance Toward Performance Appraisal and Merit Pay Systems
The Role of Leadership Credibility
Gerald T. Gabris
NORTHERN ILLINOIS UNIVERSITY
Douglas M. Ihrke
doi: 10.1177/0734371X0002000104 Review of Public Personnel Administration January 2000 vol. 20 no. 1 41-53
Designing and implementing an effective performance appraisal system.
By Allan, Peter, (1994)
Appraisal of employee performance is one of the most important responsibilities of managers. Yet performance appraisals have been the source of considerable dissatisfaction for both managers and employees because of the many shortcomings that have plagued appraisal systems. Drawing on research, experience and court rulings, this paper offers 13 tips for establishing an effective performance appraisal system. Some of the tips cover the design of a system and others its administration.
Performance appraisal systems are the butt of many jokes and the source of considerable dissatisfaction. Here are some examples of complaints that have been voiced about performance appraisals:
* "Performance appraisals are a waste of time - nobody ever looks at them anyway."
* "The things I get rated on are different from what I do on the job."
* "Pay raises aren't really based on your job rating - what counts is who you know, not what you know or do."
* "I can't get a good rating because I'm a woman - only the men get the good ratings."
* "I wish I could complain to somebody about the low rating my boss gave me."
While performance appraisals are often condemned, they nevertheless can be an important source of information needed by managers to make decisions on matters such as:
* granting pay increases based on job performance
* improving employees' work performance
* selecting, assigning and terminating employees
* identifying employees with potential for advancement
* planning for future human resource needs (Murphy & Cleveland, 1991).
Further, an effective performance appraisal system can play a crucial role in an organization's efforts to gain competitive advantage. For example, effective performance appraisals can provide accurate assessments of employee productivity and quality of work and can motivate employees to higher levels of performance by giving the employees helpful feedback. Also, trends in the nation's work force indicate that, increasingly, it is being made up of larger and larger numbers of women, ethnic minorities and the disabled. This increasing work force diversity makes it more important than ever that a performance appraisal system be nondiscriminatory, that is, that it be focused on the truly essential features of the job and be based on clear and measurable performance criteria. In addition, the growing use of teams in organizations and the resulting emphasis on team management requires employers to think carefully about how they assess and reward employee performance.
Since performance appraisal has the potential for benefiting the enterprise, what might be done to overcome the weaknesses of many appraisals? Are there any hints for developing and administering an effective performance appraisal system? Some tips may be drawn from experience, research and the limited number of rulings that courts have issued on performance appraisal.
From these sources 13 suggestions for establishing an effective system can be identified. They deal with both system design and implementation.
Suggestions for Effective Performance Appraisal
1. The Appraisal System Should Be Tailored to the Specific Needs of the Organization
The performance appraisal system should be designed to fit the specific requirements of the organization. It may be tempting to adopt, without modification, a system which reportedly has been used successfully by another organization. Or outside consultants may seek to install a system with which they are familiar or may have installed elsewhere. The trouble and expense of developing a system from scratch would thereby be eliminated.
However, what works well for one enterprise may be inappropriate for another even though the two organizations may appear to be similar. The organizations may have different cultures, operate in different environments, use different technologies, or differ in other crucial respects. This does not mean that an organization may not adopt a system or elements of a system demonstrated to have been effective elsewhere. What is required is that the system be examined in light of the organization's specific needs and then adapted to satisfy them.
A company typically follows some strategy or strategies, tailored to its specific situation, to achieve its various goals. The company needs to ensure that the activities of its divisions, departments, other units and individual employees are aligned with and contribute to the firm's strategies and goals. Strategies are implemented by identifying the results and behaviors needed to carry out the strategies. The performance appraisal process contributes to strategy implementation by developing performance measurement and feedback systems that will maximize employee performance. Performance appraisal is linked to strategy by setting down at the beginning of a fiscal year or other evaluation period, the results, and the types and levels of performance that must be achieved if company goals are to be met (Noe, Hollenbeck, Gerhart & Wright, 1994).
2. Rating Factors Should Be as Objective and Concrete as Possible
Like other management functions, performance appraisal cannot be truly or completely objective. Some degree of judgment is required in all appraisal systems just as it is in other management areas. Appraisal cannot simply be a mechanical process that calls for the application of a mathematical formula.
Nevertheless, employers should still seek to maximize the degree of objectivity in performance appraisals, and to eliminate as much as possible the use of subjective factors, such as traits, which have long been regarded as unreliable bases for evaluation. Factors such as initiative, dependability and cooperativeness have been deemed to be less desirable than performance measures such as costs and output. The courts have tended to take a dim view of appraisals used for promotion, pay and termination decisions that relied on subjective and vague criteria. Rather, judges have leaned towards objective, concrete and observable factors. Courts have indicated that supervisors would be hard put to make valid and consistent appraisals using subjective criteria that do not provide useful guidelines for appraisers (Noe, Hollenbeck, Gerhart & Wright, 1994).
But it has not been only the courts that have expressed dissatisfaction with subjective rating factors. One need only think of the appraisal interview in which the rater tells the subordinate: "You don't have initiative and you've been uncooperative." The hapless subordinate is likely to look at the rater in stupefied surprise and then become angry if the rater cannot give specific examples as to when and where the subordinate exhibited unmotivated and uncooperative behavior.
However, dimensions such as initiative and dependability may be useful and appropriate if they can be expressed in terms of behaviors. If a rater can demonstrate, in terms of employee behavior or work results, how and when the employee lacked a particular quality, then the appraisal will be more meaningful to the employee and more likely to be accepted. Traits can be useful, provided they are described as work behaviors or results and are developed as part of a rating scale to guide supervisors in their appraisals. Expressed in this way, traits can provide the bases for fruitful discussions with subordinates during the appraisal interview.
3. Appraisals Should Be Free of Bias
Performance ratings should not be influenced by race, sex, age or other irrelevant factors. Unconscious or conscious prejudices toward subordinates may affect supervisors' appraisals. In either case, biases are detrimental and costly, both to the employee and the employer. Court decisions and government laws and regulations have made it abundantly clear that personnel actions which discriminate unfairly are unlawful (Burchett & De Meuse, 1985; Cascio & Bernardin, 1981).
While prejudices are often deep-rooted, employers can, through explicit policy declarations, punishment of unacceptable supervisory behavior, and training, help to counteract these biases. Furthermore, good faith efforts by employers to deal with discriminatory behavior are likely to be viewed favorably by government enforcement agencies and the courts (Field & Holley, 1982).
4. Procedures and Administration Should Be Uniform
A system's procedures and its administration should be standardized and uniform in their application. This is especially important if information generated by the appraisals is to be used to compare employees. Even if the information is not used for employee comparisons, the system must still be applied uniformly to all. If it is not, the system will be seen as unfair and as giving preferential treatment to some employees and not to others. Favoritism, whether actual or perceived, will lead to employee cynicism about the system and will probably affect its acceptability.
Periodic training of raters, issuance of clear instructions and definitions of terms used in appraisals, and close monitoring of the system will help promote uniform, standardized administration (Feild & Holley, 1982).
5. The System Should Be Easy to Operate
The system must be easy to administer and managers should be able to use it without undue effort. There should not be too many forms to complete; nor should they be burdensome to fill out. The system should not interfere with on-going operations. If the system proves too much of a burden for managers, they may see it as an imposition on their normal work activities.
Ease of administration should be a factor to consider when designing a system. Potential problems for users should be anticipated and dealt with. In designing a system, involvement of its users would be helpful in identifying potential trouble spots and in considering practical aspects of administration.
A pilot run or tryout of the system should be conducted before it is implemented organization-wide. A trial run in one part of the organization would help identify problems and iron out rough spots (Allan & Rosenberg, 1981).
6. The System's Results Should Be Used in Decisions
If nothing comes of performance appraisals, if they are merely recorded and placed in personnel files never to be referred to again, the system will be perceived as a useless exercise, as mere paperwork. Managers will tend to place a low priority on the system or ignore it altogether. In time it will lose whatever credibility it may have had.
For a system to be taken seriously it must be useful to line management. Using appraisals as a basis for rewards, promotions, work assignments, employee developmental activities, punishments and other personnel decisions will demonstrate the importance and credibility of the system (Allan & Rosenberg, 1981).
7. The System Should Provide a Review or Appeals Process
To help ensure fairness in appraisal, some type of review and/or appeal mechanism should be established. Providing a safety valve may reduce complaints and is likely to help strengthen employee confidence in the system. It may also enhance the public image of the organization. Furthermore, courts have indicated that they favor systems which include review of ratings by upper-level personnel and an appeals procedure that permits employees to express disagreement with their ratings and that notifies employees of their right of appeal (Barrett & Kernan, 1987).
Reviews of appraisals may be conducted automatically by superiors one or two levels above the rating supervisor. Appeals can be forwarded to higher-level managers or to the human resource management department. If the matter is not resolved at this stage, provision may be made for appeal to either a panel of high-level managers or a single adjudicator or ombudsman empowered to hear and decide employee appeals.
No matter what the specific procedure is, it must be publicized to all employees. Furthermore, managers must be knowledgeable about the appeals process and how it works. They should be trained to deal with employee complaints and, when possible, to resolve them to prevent their escalation into more serious problems.
8. The System Should Be Acceptable to Users
Lack of user acceptance may well undermine a system. One way to increase acceptance is to involve users in developing the system. Participation of employees, whether managerial or nonmanagerial, has been shown repeatedly to be an important factor in bringing about acceptance of change. Employee involvement can also be beneficial in identifying possible problems or weaknesses in a system and in coming up with suggestions for improvement (Allan & Rosenberg, 1981).
Performance standards are more likely to be accepted by the ratees if they are involved in developing them. Even if they are not involved in developing the standards, employees should certainly be told prior to the start of the rating period exactly what performance is expected of them.
Providing periodic feedback on performance also is likely to promote acceptance of the system by ratees. Notifying them of performance shortcomings when they occur and giving ratees the opportunity to correct weaknesses reduce the possibility of surprises and resentment at the time of the annual performance review.
9. The System Should Be Economical to Operate
In addition to the costs of developing the system (such as the time and salaries of human resource department staff, line managers, and possibly outside consultants), there are costs of installation (including orientation and training program administration, salaries of system administrators), and costs of operating the system (including processing and maintaining records by human resource department staff, time of line managers and subordinates). If these costs impose an unreasonable financial burden, top management may well decide to scuttle the system. Careful planning of the system and close monitoring of expenses will help prevent costs from getting out of control (Mohrman, Resnick-West & Lawler, 1989).
10. Performance Ratings Should Be Documented
The ratings given to ratees should be substantiated by the raters and the ratings must be put in writing. The reasons for appraisals and specific instances of inadequate performance should be recorded in writing. Although the requirement of written justifications may seem like onerous paperwork, it is prudent, in the light of court rulings, to have in employees' personnel records not only their appraisals but the reasons for them.
Careful written documentation of performance may prove important for an employer in case employees file suit alleging that the employer discriminated against them on the basis of race, sex, or age in making promotions or awarding merit pay increases. Documentation may also be crucial in the event employees who have been discharged sue on the grounds they were let go without good cause (Barrett & Kernan, 1987; Kleiman & Durham, 1981).
Requiring raters to document their ratings may provide other benefits such as motivating raters to give greater thought to their appraisals. Supplying written guidelines or instructions to raters to help them arrive at their ratings will strengthen the documentation and probably be viewed favorably by the courts (Fisher, Schoenfeldt & Shaw, 1993).
11. Raters Should Be Trained and Qualified
Although training is suggested for some of the other suggestions, it is sufficiently important to be singled out as a separate requirement for other purposes. Experience and research tell us that for performance appraisal to succeed, raters must be trained in the philosophy of the system, how it fits in with the organization's goals and strategies, how it will help managers, and the actual mechanics of the system, including how to use the rating forms. Raters must be helped to develop skills for observing and recording employees' behavior and for giving them appropriate feedback. Training that uses role playing, behavior modeling through films and videotapes, and discussion is likely to be more effective than training which relies on lectures. In addition, the training should be bolstered by issuing written guidelines to which supervisors could refer (Sashkin, 1981).
When a system is being introduced, training should take place as close to the date of implementation as possible; if given too far in advance, the training may be forgotten. Furthermore, the training cannot be conducted only once and expected to be effective forever. Periodic retraining is needed to reinforce what was learned initially; otherwise skills may atrophy and interest and commitment decline (Allan & Rosenberg, 1981).
12. The System Should Provide for Monitoring and Evaluation
It is probably impossible to design a performance appraisal system that will work perfectly when it is initially installed. Some provision needs to be made not only to identify weaknesses in the design, but also to ensure that the system is being installed properly and is operating according to plan.
When installing a new system enough time should be allowed for it to take hold. Many months or even years may sometimes be required, depending on the number of people covered, the climate of the organization and other factors. A new system cannot merely be announced and then be expected to succeed immediately and without any hitches. Careful preparation and follow up are required.
Monitoring of the system should be continued after it has been operational for a while to identify weaknesses and areas for improvement in system design and administration, including deletion of some features and addition of others. Users of the system are a major source of information on how well it is working. Interviews with top management, raters and ratees can reveal areas of satisfaction or dissatisfaction. Additional information may be obtained by examining records to identify problems, e.g., rating errors, forms filled out improperly, appraisals not completed on time, etc. (Mathis & Jackson, 1994).
13. Top Management Should Clearly Support the System
It may seem obvious to say that top management must strongly support the performance appraisal system and be firmly committed to seeing it succeed. Experience indicates that such support is perhaps the most important requirement for success. Without strong top management backing, the system, no matter how well designed, is doomed to fail. And top management cannot give only lip service to the system and cannot be perceived as lukewarm in its support. Supervisors and subordinates alike can sense when management is not really interested in a system and are quick to take their cue from the top (Schuler & Huber, 1993).
Top management must demonstrate clearly and unequivocally, through words and actions, that it is behind the system and is determined to see it succeed. Management's commitment may be manifested through strong policy statements backed by incentives that reward managers who help make the system a success and by penalties for those who are uncooperative or obstructive. In addition, management's declaration of support cannot be a onetime event. There must be periodic reminders of management's endorsement of the system. Experience has shown that systems that started out promisingly because of initial top management support subsequently failed when the support waned.
Furthermore, the system must be seen as top management's, not as a project of the human resource management department. And it must be viewed as an integral part of the organization's on-going management system rather than as a mere appendage without purpose or effect.
Contemporary Examples of Effective Performance Appraisal
Many organizations have recognized the importance of designing and implementing an effective performance appraisal system. Different approaches have been developed in response to organizations' specific needs and circumstances. Following are some examples of effective systems:
* Metropolitan Property and Casualty Company of Warwick, Rhode Island decided to revise its performance appraisal system in order to align it more closely with the company's objectives and strategy. To begin the process, the company established focus groups to review and evaluate the existing system. Using the information gathered from the focus groups and from a survey of what other firms were doing, an employee-management team created a new performance evaluation system. Under the new system, at the beginning of each year, top management reviews its organizational goals and strategies with all employees. Then each employee develops a personalized achievement plan stating what the employee expects to achieve during the year and including personal action plans and effectiveness indicators. Then the employee reviews the proposed plan with the supervisor. During the year the employee meets at various times with the supervisor to assess performance and, at the end of the year, employees are recognized for their achievements. An employee who established an ambitious plan but who didn't fully achieve it may receive greater recognition than someone who exceeded a more modest plan (Schuler & Huber, 1993).
* Ensoniq Corporation, a small manufacturer of electronic musical instruments, recently implemented a Total Quality Management (TQM) system. Under its TQM approach, the company believes that the purpose of performance measurement and review is to provide a dialogue between the employee and supervisor aimed at improving the employee's performance. Employee reviews occur every four months and are based on both qualitative and quantitative measures. Employees also receive immediate and direct feedback from the system through statistical quality control methods. If an employee fails to meet either qualitative or quantitative standards an investigation is launched. If the employee is found responsible for the performance deficiency, training, counseling or reassignment may result. If the deficiency is due to faulty equipment or defective supplies, these are deemed to be beyond the employee's direct control, and improvement efforts are directed toward correcting them (Noe, Hollenbeck, Gerhart & Wright, 1994).
* Digital Equipment Corporation, a large manufacturer of computer equipment, redesigned its manufacturing plants around a team-based concept, whereby work teams are in charge of managing themselves. These teams use a participatory performance appraisal system that can include input from self-appraisals and ratings from peers. The typical performance appraisal process takes approximately two to four weeks. Digital believes that the process has a number of advantages. Because team members have opportunities to observe one another the ratings tend to be more accurate than traditional supervisory evaluations. Also, the process provides timely feedback to employees (Noe, Hollenbeck, Gerhart & Wright, 1994).
* At Pepsico, the performance appraisal process for managers includes an annual performance review between a superior and each of his or her subordinate managers, focusing on what a manager actually did during the year to make a big difference in the business; on whether, for example, the manager's sales target was achieved or a successful new product commercial was developed. The emphasis is on outcomes; on results, not personality traits, personal appearance or other subjective factors (Dumaine, 1989).
* American Cyanamid Company employed a 10-category forced distribution performance appraisal which required managers to place a pre-specified percentage of their subordinates into each category. The categories ranged from "outstanding" to "needs improvement". Research scientists being evaluated under the system believed it to be arbitrary, leading to considerable resentment and frustration. Managers felt obligated to dwell on trivial shortcomings to justify putting the required number of employees in the category labeled "needs improvement." The company installed a new system with only three categories ("exceptional", "good", and "unacceptable"), specific objectives mutually agreed upon by research scientists and their managers, and employee involvement in the process. Unlike the old system, the new plan did not call for any recommended distribution of ratings. Both the scientists and their managers expressed increased satisfaction with the new system (Gellerman & Hodgson, 1988).
* At Bank of America, considerable emphasis is placed on communication between manager and subordinate in each phase of the performance evaluation process. First, a unit manager works closely with subordinates to develop their performance goals based on the goals of the unit. The goals focus on outcomes, are specific and measurable, and provide target dates for achieving the goals. Second, the manager observes and talks with each subordinate, providing feedback and assessments of performance during periodic meetings. Third, a subordinate is evaluated formally once a year. In the evaluation interview the manager rates the subordinate's performance during the year, documents the evaluation on an appropriate form and reviews and summarizes the results with the subordinate. Both individuals discuss the subordinate's strengths and suggested performance improvements. The employee signs and dates the evaluation form and may write comments on the back. Subordinates who disagree with their evaluations may appeal to the Personnel Relations Department (Milkovich & Boudreau, 1991).
* Xerox Corporation's Reprographic Business Group, which produces the company's copiers, had a performance appraisal system that included annual appraisals, during which employees documented their accomplishments, and managers assigned a numerical overall rating ranging from 1 (lowest) to 5 (highest) that determined merit pay increases. Surveys of employees and managers revealed extreme dissatisfaction with the system. One major complaint was that 95% of the ratings were "3"s or "4"s (on the five-point scale). In addition, appraisal discussions had become unpleasant situations for managers and employees alike because the discussions focused almost entirely on the overall rating and consequent merit increase. Xerox decided to address these concerns with the system. A task force was formed to design a new performance appraisal system. To help develop the new system the task force used surveys to obtain input from employees and managers. Key features of the new system included: annual employee objectives set by the manager and employee; interim reviews every six months by manager and employee of the employee's progress toward the objectives; a final written narrative appraisal at year-end; no overall numerical ratings; focus on employee coaching and development; and merit increase decisions made one to two months after the six month review, with increases based on performance toward objectives. Videotapes of model appraisal interviews were used to train managers in how to conduct appraisals. A letter from the president accompanied a videotape that explained the problems of the old system and the operation of the new one. Managers and employees were surveyed after the first year of operation of the new system to learn how it was working and what changes, if any, were needed. In the survey, people expressed satisfaction with the system, with three-quarters indicating they understood the system and that the appraisal's were fair (Mathis & Jackson, 1994).
Throughout the preceding discussion of the 13 suggestions for an effective performance appraisal system, references have been made to the impact of court decisions on performance appraisal. While there have been relatively few court rulings they can be expected to increase, especially in view of the growing number of challenges to the employment-at-will doctrine. Because of the potential costs of unjust dismissal litigation, an organization should be aware of what courts have held to be elements of a legally defensible performance appraisal system. Reviews of court cases suggest that a performance appraisal system would be more likely to withstand a legal challenge if the following guidelines were adhered to in developing and implementing the system: the system should be based on a thorough job analysis that identifies the important duties or elements of job performance; the system should be based on behaviors or results, not vague or ambiguous employee traits or characteristics; the performance raters should be trained in how to use the system, including proper use of the rating forms (raters should not simply be given materials and left to interpret how to conduct appraisals); the raters should observe the ratees performing their work; the appraisals and their rationale should be carefully documented by the raters; the appraisals should be reviewed by higher-level managers or human resource managers; there should be a formal appeal mechanism or system providing an avenue of appeal to employees who are dissatisfied with their evaluations; and performance counseling, guidance and/or training should be provided to help poor performers improve their performance (Fisher, Schoenfeldt & Shaw, 1993; Milkovich & Boudreau, 1991; and Noe, Hollenbeck, Gerhart & Wright, 1994).
Thirteen suggestions for designing and implementing an effective performance appraisal system and some contemporary practical applications of these suggestions have been offered. Some suggestions cover the design of a system and others its administration. Some have been drawn from experience and research while others have been based on court decisions involving employee appraisals. Unquestionably, other hints for an effective performance appraisal system may be offered, but adhering to these 13 will take the organization a long way toward establishing a successful system.