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In any organization performance appraisal is a unique and important part of human resource management in organizations. Performance appraisal systems are used to understand human capital needs, advantages and disadvantages while evaluating their set skills to specific tasks and job responsibilities. This review shall analyse the how performance appraisals come to play in the working environment. The meaning of performance appraisal shall be discussed and a background to performance appraisal given while, undertaking a review on literature that pertains to it. Performance appraisal system can be seen as balancing the goals of both employer and the employee, in a way that the importance of the system is not compromised and the aim and objectives of the firms are achieved and employees comfortable.
Performance appraisal system as an approach of evaluating subordinates by setting short term goals and ways of monitoring performance. (McGregor, 1972). Caution should be taken not to take performance appraisal as an entity, as it feeds into the larger concept in relation to other activities and should not be addressed as performance management in itself. Performance appraisal has increased in scope and practice and in the form performance management is seen to become a more strategic approach to involving human resource activities and business policies. There are a lot of perceptions on performance appraisal. DeVries et al., (1981) refers to performance appraisal as the procedure that aids an institution in determining an employee's behaviour and accomplishments over a specific period of time. Performance appraisal in institutions is aimed at the future and it is developmental to both employee and employers. Beer (1981) defined performance appraisal as performance expectation, identifying training and development needs, career counselling, succession planning improving individual and to determine promotion. Marchington and Wilkinson (1996) describe it as a cyclical process: determining performance expectations; supporting performance; reviewing and appraising performance; and, finally, managing performance standards. Performance appraisal has advanced beyond measurement of performance and rating the performance of employees in the organisation to focusing on social and motivational aspects of the employees by the employers in the appraisal process (Gletcher, 2001).Performance appraisal has become a standard practice in many institutions during the past years. Grint (1993), back in the days, performance appraisal was a measure of past performance of employees in the organization over a period of time past. It served as justification for employee salaries, determining rewards, it was not training and development oriented. Increase in emoluments or reduction were determined by it. Performance appraisal process as a function of three interacting system: organizational context, the appraiser information system and behaviour system to appraise (Redman and Wilkinson, 2009), also changes experienced in payment systems in years past has influenced the growth and development of performance appraisal systems to achieve an integrated reward system. The growth of performance appraisals has been associated with the introduction of performance and merit based pay. Performance appraisal is a system designed with dual process outcome, one is the evaluation of the employee and the other is the decision making in regards to the employee. The aim of evaluation is to identify and analyze the gap between the employee's actual performance and that which is expected or required in the organization. Performance appraisal is argued to constrain the ability of appraisal process to produce accurate and unbiased reliable assessment of individual behaviour and performance (Gletcher, 2001). Performance appraisal system is a way of managing individual performance, particularly in managerial and professional work (Gallie et al., 1998). The upward appraisal involves the employee rating their manager's performance via an anonymous questionnaire. Anonymity limits the potential for managerial retribution or what is termed the get even factor of upward appraisal. Upward appraisal improve managerial effectiveness and leadership through make you better feedback and increased employee voice and empowerment (Redman and Wilkinson, 2006). Because of the use of multiple ratters, upward appraisal is seen as been robust to legal challenge of performance judgements and career threatening. Grint (1993) states that honest opinions of subordinates look more like the barbs on a whale harpoon than a gentle and constructive nudges. Competency-based appraisal is a system of appraisal where the capability of an employee is assessed. This is done to target at the managers in an organization, but lately non managers have also been involved in this process. It directs an employee to areas that needs to be worked upon for better results. Sparrow (1994), states that competency helps concentrate the appraisal process on the key area of performance and effectiveness and provides a language for feedback on performance. One consequence of the competency based appraisal system is that organisations attempt to use competency approach to develop an integrated human resource strategy. (Johnson et al., 1993). Performance can be accurately assed by measuring the performance of larger units within an organisation than an individual. (Landy and Farr, 1983). The 360 performance feedback can be used to make performance more effective, but it is not normally easy as it has a lot of flaws. The idea is about the increments in expansion and recruitment of classical performance appraisal concept in which employees are sometimes rated on their judgement initiative and leadership. (Garavan et al., 1997). The 360 feedback is time consuming and is subject to conflicting roles in the organisation. Tznier, et. al., (2000), identifies organizations undertaking performance appraisal for administrative reasons and also for developmental reasons. It is a tool used to assess how well persons complete their jobs. Anderson (2002) states that development and evaluation in an organisation is completely dependent on the intent of the performance appraisal process as established by the individuals who establish and administer the performance appraisal system. Appraisals in which both the employers and employees agreed upon to be fair and appropriate is normally occasioned by resultant increase in the productivity of the organization (Churchill et al., 1985). Performance appraisal helps in making individuals aware of what is expected of them, and how best to achieve these objectives in the firm. Performance appraisal leads to an increase in training and development activities in the organisation, it offers a supervisor and a subordinate the opportunity to recognize and agree upon individual training and development needs. Performance appraisal creates room for the need of training more pressing and relevant linking it clearly to performance outcomes and future career aspirations. Performance appraisal is used to monitor the success of the organisation recruitment and induction practices. It can also be used to monitor the effectiveness of recruitment strategies in the organisation. Performance appraisal provides employees with recognition for their effort; the power of social recognition has been note devaluating employee performance has long been of interest to researchers and practitioners (Avery & Murphy, 1998, Bernardin & Beatty, 1984, and Hyde, 2001). Despite the benefits of performance appraisal, its effectiveness to employers and the organisation in general terms of job productivity and alignment to strategic objectives has its limitations. Performance appraisal accuracy and performance appraisal effectiveness is highly dependent on the performance appraisal system in the organization (Anderson, 2002). Critics of performance appraisal blame the failure on managers tagging them as "not naturally good at conducting performance appraisal" (Redman and Wilkinson, 2009). According to Lee, (1995) Performance appraisal effectiveness refers to the accuracy of performance observations and ratings as well as the ability of the performance process to improve the ratee's future performance. In order to understand the effectiveness of the performance appraisal system, it is important to look at the performance appraisal interview and that involved. For those involved with human resource development, the performance appraisal interview is widely regarded as one of the main instruments for identifying, training and developing needs at the individual level. Indeed, Armstrong and Baron (1998, p. 8) in the performance appraisal interview, the supervisor and the employee are the only people involved, supervisor perception and employee perception will influence the effectiveness of the system, if the supervisor places importance or high value on the interview, it is likely the performance appraisal will be accurate, and if the supervisor does not place high importance on the interview, the opposite happens. Here, motivation here plays a vital role because if the supervisor is not motivated then the interview will be ineffective. There is a widely held view that performance appraisal is politically manipulated. Politics are inherent in the very contextual fabric of organizations (Ferris et al., 1996). Snape et al., (1994) states that managers frequently play games with performance ratings; they sometimes manipulate ratings as a means to satisfy personal goals and to accommodate contextual demands or to suit various ends. Sometimes it is used as a means of punishment for rebellious employees. Redman and Wilkinson, (2009). On the other hand, a poor performer may be given excellent ratings so they will be promoted and posted out of the department, this will reflect favourably on the manager been responsible for such a high performing team. This will be argued that it lacks credibility because the method can be fabricated.
The major problems of objectivity based appraisal system as identified by Kessler and Purcell (1992) is that the failure of achieving a balance between maintenance and innovator objectives; and the inflexibility to redefine objectives as circumstances change during appraisal. Performance appraisals process affords management the opportunity to inform employees of the importance of their roles and responsibilities to the organization and how their performance will be measured, thus mitigating the possibility of roles stress among employees (Eulburg et al 1988).
In conclusion, performance appraisal is an integral part of any organisation human management. Performance appraisal varies from organisation to organisation. Despite its numerous benefits, its effectiveness is limited in implementation. Bias should be eliminated, and the process of the evaluation as well as the job done by an individual is to be evaluated and not the personality himself. Evaluation criteria should be improved to maximize the benefits available to organisations that conduct effective performance appraisal systems. Martin and Bartol, (1998) suggested that performance appraisal should be done more frequently either semi-annually or quarterly accompanied by a substantial feedback process designed to feed into the strategic direction and organisational objectives. According to Ilgen et al., (1979), an organization's performance appraisal system can be a practical tool for employee motivation and development when employees perceive their performance appraisals as accurate and fair. The effective use of performance appraisal encourages trust in an organisation, commitment, enhanced output, customer satisfaction, and decline in conflict (Mayers and Hayes, 1999). Performance appraisals when done effectively can lead to the maximization of value.