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'A literature review is a detailed and justified analysis and commentary of the merits and faults of the literature within a chosen area which demonstrates familiarity with what is already known about your research topic.' (Saunders et al, 2009, p. 590)
The literature reviewed in this chapter is significant to the research objectives and builds a theoretical foundation on which the research is based. Most of the literature reviewed for this research concentrates on the purpose of Performance Appraisal from the individual perspective, particularly focusing on measurement of individual performance, identifying training and allocating rewards. The chapter starts with an examination of performance, performance appraisal and performance management and the performance appraisal system.
As indicated in the background to the study LGPS has not been achieving desired and agreed results. In terms of output the school has been below average.
Armstrong (2006, p. 497) defines performance as 'a matter not only of what people achieve but how they achieve it' and Williams (2002) adds 'performance is something that people actually do and can be sealed in terms of each individual's proficiency. Performance consists of goal directed actions that are under the control of the individual, regardless of whether they are cognitive and motor or interpersonal.'
Both Armstrong's and William's definitions of performance clearly indicate that performance is more than about outputs or results, it is also pertains to the actions or behaviours displayed or illustrated to achieve results.
The LGPS has a need to manage performance as the Ministry of Education in its strategic plan has set benchmark standards in its drive for 'Quality Education For All'. Due to the issues with performance at LGPS "measurement" is an important concept. 'It is the basis for providing and generating feedback, it identifies where things are going well to provide the foundations for building further success, and it indicates where things are not going so well, so that corrective action can be taken' Armstrong (2006). Performance measurement has a vital role to identify and monitor progress against organizational goals and recognize opportunities for improvement. Armstrong's (2006) definition may help LGPS strongly as there is the view to identify weaknesses and strengths as well as opportunities for improvement and skills and development. It was stated by Marsdon (1999) that any performance appraisal system that did not consistently measure work performance accurately cannot be considered an effective one. Some employees may not know how or what is being measured or judged in their appraisal. In situations like this the appraisal system cannot be effective if the appraised does not know the criteria under which they have been appraised and judged. LGPS may need to consider how performance is measured at the school. The researcher is of the view that measurement may not be consistent. Armstrong (2006) identified the following as the criteria for assessing performance in the performance appraisal process:
"Achievements in relation to objectives
The level of knowledge and skills possessed and applied (competences);
Behaviour in the job as it affects performance (competencies);
The degree to which behaviour upholds the core values of the organisation;
Day to day effectiveness."
Performance agreements also play a pivotal role in measuring and managing performance also.
'They define expectations in the form of a role profile that sets out role requirements in terms of key result areas and competencies required for effective performance. It describes what individuals are expected to do but also indicates what support they will receive from their manager.'(Armstrong 2006, p. 504)
It is an agreement between the manager and the subordinate that can be used for establishing expectations, accountability and consequences for not meeting standard of excellence for a given period. According to Armstrong and Baron (1998) 'many organizations use SMART (Specific, Measurable, Agreed, Realistic, Time related) criteria to measure performance.
At LGPS the performance agreement is known as the syllabus which must be completed at the end of the school's year. The syllabus outlines what is required to be taught in each subject area for every class. The performance agreement at the school is viewed as a psychological contract between the principal and teachers. The concept of psychological contract is supported by the views of (Boxall and Purcell 2003) who state that 'it could be useful in analysing the quality of individual employment relationships within the firm.' Consequences or reprimand should follow if the performer does not deliver as agreed.
Two alternative ways of measuring performance are the competency based approach which is based on three stages; know how, know and know when (Rauls, 2001) and the balanced score card (Kaplan and Norton 1992).
Performance Appraisal and Performance Management
'People often confuse performance appraisal and performance management believing that they are one and the same.' (Bacal, 2004, p.5)
Armstrong (2006, p.500) outlines 'performance management is a continuous and much wider concept than performance appraisal, more comprehensive and more natural process of management that clarifies mutual expectations, emphasizes the support role of managers who are expected to act as coaches rather than judges, and focuses on the future.'
Performance management system is a method used to manage corporate performance. It takes into consideration the objectives of the organization therefore giving a holistic view of an employee's performance. On the other hand performance appraisal is an integral part of this system as it is essential to achieve the organization's desired outputs. Performance appraisal identifies and allocates responsibility to the appropriate persons with the corporation that can realize the organization's goals in the short and long terms. According to a CIPD (2005) survey performance appraisal is often the central pillar of the performance management process. It was discovered that 65% of organizations survey used individual annual performance appraisal and 27% twice yearly.
LGPS performance management system is known as Performance Management Appraisal Process (PMAP). During the school year different processes and systems including performance appraisal are carried out all which make up the performance management system of the school. The researcher is of the view that if the administration of the school does not fully understand the differences neither of the systems will be effective. The administration of the school should note that performance appraisal is the vehicle by which the organizational goals and objectives are translated into individual objectives (Fletcher 2004).
Armstrong (2006, p. 500) defines performance appraisal as 'the formal assessment and rating of individuals by their managers at, usually, an annual review meeting.' This view is expounded by Coens and Jenkins (2000, p. 14) add that 'performance appraisal is a mandated process in which, for a specified period of time, all or a group of employees' work performance, behaviours or traits are individually rated, judged or described by a person other than the rated employee and the results are kept by the organization.'
From the above definitions performance appraisal can be viewed as a structured and formal discussion between a superior and a subordinate that occurs at least annually in the form of an interview where the subordinate's performance for the period is reviewed. It generally reviews each employee's performance against agreed objectives.
The performance appraisal at LGPS is known as the "confidential report". The report is developed using a user friendly instrument (a form) which is filled out during the interview with the respective teachers by the principal.
One of the most important elements of an effective performance appraisal system is open and honest communication. These views are supported by Bacal (2004, p.5) argues that a manager should communicate about performance all year long. At LGPS the administrators can consider to share information about work progress, potential barriers and problems, and how the manager can help the employee.' (Bacal, 1999,p.69)
Purpose of Performance Appraisal
There are many views on the purpose of PA. Kleiner (1997) suggest 'the overall purpose of performance appraisal is to let an employee know how his or her performance compares with manager's expectations.' The manager's expectations are usually aligned to the goals of the organization and the appraisal provides the opportunity to view the employee's performance according to that of the organizational goals.
In Trinidad and Tobago according to the joint committee on standards for education evaluation (1998) 'performance appraisal is done in order to fulfil the requirements of state statutes, board and policy and union contracts.' According to this definition performance appraisal is conducted to meet legal requirements in Trinidad and Tobago and for documentation for Human Resource (HR) decisions.
Yonungcourt, Levia and Jones (2007) suggest that 'the common purpose of performance appraisal tends to be aimed at the measurement of individuals, and consider that this focus is insufficient.' Caruth and Humphreys (2008) add to this view point by suggesting 'it is a business imperative the performance appraisal system includes characteristics to meet the organizational needs and all its stakeholders.' An effective performance appraisal will identify if there are any performances which do not meet the criteria set out by the organization through evaluation and provide critical feedback for both the employer and employee via the feedback system.
On the other hand Murphy and Cleveland (1995) suggest 'a key purpose of performance appraisal is to determine pay and other financial compensation'. Performance appraisal can be used to reward staff for performing well if pay increases and or bonuses are tied to the performance appraisal process of the organization.
It can be concluded that the purpose of performance appraisal is to achieve the organization's goals, career development set employees' objectives, have a documented history of the employee's performance, evaluate individual performance against objectives, improve performance and reward employees.
All the views outlined are summed up by one of the best known classifications produced by McGregor (1987)
'Administration - Providing an orderly way of determining promotions, transfers and salary increases.
Informative - Supplying data to management on the performance of subordinates and to the individual on his or her performance.
Motivational - Creating a learning experience that motivates staff to develop themselves and improve their performance.'
The purpose identified in the literature is similar to those outlined in the PMAP System of LGPS which states "If the appraisal is to be effective, staff must see the process attempting to meet their needs otherwise the system will not work. Performance appraisal should result in benefits for the teacher, the administrators and the institution."
Although performance appraisal is increasingly considered one of the most important Human Resource practices (Boswell & Boudreau 2002) critics suggest that the process is inherently flawed. For instance, (Reid et. al., 2006) state that 'performance appraisal is not always an effective substitute for constructive feedback overtime by a manager.' No appraisal program can substitute for sound selection, placement and training programs. Effective performance appraisals do not just happen and organizations should not assume that managers know how to conduct them effectively. It is important that training is provided to introduce managers to the philosophy of performance appraisal at the organization.
Rating errors were also identified which can distort the validity of the performance appraisal process. Grint (1993), Furnham (1993) and (Bach 1998) identified the following as some of the most common types of rating errors:
Contrast error - A rating error that occurs when a rater allows an individual's prior performance or other recently evaluated individuals to affect the ratings given to an employee.
Central tendency - A rating tendency to give rates an average rating on each criterion.
Personal bias - The bias a rater has about individual characteristics, attitudes and backgrounds that influence a rating more than performance.
Halo effect - This occurs when the rater perceives one factor as having
There is much research which suggests that appraisal is not practiced well or welcomed in some cases. For instance Roberts and Pregitzer (2007) and Brown (2001) cited major problems in Towers Perrin Performance Appraisal practices both cited lack of training for managers particularly important.
Fletcher (1993) and Rees and Porter (2003) cites a study where respondents were dissatisfied and that a common problem is that schemes have too many objectives. Many organizations try to get too much from one appraisal scheme, and try to use one scheme to fulfil all three purposes. This is unlikely to work, and usually results in the scheme falling into disrepute. (Foot and Hook 2002). An effective performance appraisal is one that is strategically part of the performance management process and it benefits the employer, the employee and the organization itself. The researcher agrees with this view and it may be that at LGPS too much emphasis is placed on performance and little on training and development and rewards.
Armstrong (2006, p.509) states that 'performance reviews provide a focal point for the consideration of key performance and development issues and the review should be rooted in the reality of the employee's performance. It is concrete, not abstract and it allows managers and individuals to take a positive look together at how performance can become better in the future and how any problems in meeting performance standards and achieving objectives can be resolved.' It is an opportunity for managers to discuss with subordinates career objectives, assess training needs and if necessary a strategy can be created to maximize career potential.
The performance review meeting
The aim of the performance review meeting is for the parties involved to meet a mutual agreement about the development of an employee's performance and if required, any areas for improvement including how much improvements are to be achieved.
They are be prepared, work with a clear structure, create the right atmosphere, provide good feedback, use time productively, use praise, let individuals do most of the talking, invite self - assessment, discuss performance not personality, encourage analysis of performance, don't deliver unexpected criticisms and agree measurable objectives and a plan of action.'
According to (Armstrong, 2006, p. 510) there are twelve golden rules for conducting a performance review meeting.
The appraisal interview should be conducted in an open and non threatening manner to help reduce anxiety or doubt appraises may have (Harrison & Goulding 1997). The manager and subordinate should have a constructive congenial relationship as trust between both parties is a important factor. This is even more important when there seems to be a reluctance or inability to collate objective information to inform the appraisal process (Piggott - Irvine 2003). Performance appraisals tend to place great emphasis on the authority and power of the supervisor which may be damaging in organizations which strive at participative organizational culture.
There are different methods that can be used to assess performance. A wide range of methods are used to conduct performance appraisals, from the simplest of ranking schemes, to complex competency and or behavioural anchored rating schemes (Snape, Redman & Bamber 1994). LGPS uses the ranking method which according to Nel et al (2001, p. 524) 'ranking involve the ordering of individuals according to overall merit or selected performance factors, from the best to the worst performer.' With the rating scale each employee trait or characteristic is rated on a bipolar scale that usually have several points ranging from "poor" to "excellent". The rating scale used at LGPS is numerical ranging from "1 to 5".
Exceptional alike in personality, capacity and performance
2 - Very Good
A very able and effective officer
3 - Good
An efficient officer
4 - Fair
Performs duties moderately
5 - Unsatisfactory
Definitely not up to the duties of the grade
A problem that may arise with appraisal ratings is that it can recoil when communicated to employees. Sometimes negative feedback may demotivate an employee who feels that they were performing well and thus cause them to perform worse. When conducting appraisals the principal may need to take this matter into consideration. This sentiment is echoed by Ashton (1999) who says 'it is human nature that employees themselves generally do not want to hear bad news, especially about themselves'.
Fairness of the system is considered important. In a research by Cook and Crossman (2004) it was suggested that the perceived fairness of the system contributes to overall perception of fairness. When employees perceive that their performance appraisal is fair, they are more likely to commit to it, and the decisions that flow from it. The principal of the school may adopt this method to increase the overall view of fairness at the school. There are other studies on appraisal fairness especially with the appropriateness of rating systems. For instance a study Henderson (1984) suggested that 'almost all employees are extremely wary of performance ratings.' Performance appraisal demands too much of employees. It can be time consuming for both the appraiser and appraise. The principal and vice principal at LGPS has a total of twenty eight (28) appraisals to complete together at the year end. This can take away alot of time from other responsibilities as it can take hours meeting with one person to review their performance appraisal. Also a study by Harrison and Goulding (1997) revealed that 'subjectivity can be a problem where appraisers and appraises are colleagues, also managers may be uncomfortable with criticising staff they work closely with, and a tendency towards centralised ratings could apply'. Some managers fear that negative feedback may discourage subordinates or lead to confrontations and repercussions and thus their ratings tend to clump excessively around the middle of the scale. Bacal (1999) supports this view as he states that 'managers tend to avoid confrontation by scoring generously' and Rees and Porter (2003) stated 'giving criticism in a constructive way can be a very delicate subject'. A further research by Armstrong and Murlis 1998 and Brumbach 2003 suggest that the ratings system can be perceived as a dishonest annual ritual.
Performance appraisals are quite important to organizations but has several pitfalls especially those of human error which can occur in every performance appraisal system. Managers may bring their own biases and subjective notion to the appraisal process. The appraisers at LGPS may need to look strategically how the process is conducted and ensure that the goals of the performance appraisal are tied to the strategic initiatives of the school.
An alternative to the traditional feedback mechanism is the 360 degree feedback.
Outcomes of the system
Improving Performance / Training and Development
An effective performance appraisal system can be a positive way to identify developmental opportunities and can be an important part of succession planning. Rogers (1999) suggests that one of the key components of performance appraisal is solving problems; that is improving performance. The performance appraisal process provides an ample opportunity for a manager and subordinate to recognize and agree upon individual training and developmental needs.
Rees and Porter (2003) suggest that care needs to be taken in establishing realistic priorities and to recognise the potential conflict between individual and organizational needs.
In order for training and development to be successful the administrators may need to identify with individuals of the organization and not the organization itself. Establishing or implementing organizational directed goals instead of individual directed goals can cause mishaps.
The use of performance appraisal basically entails trying to reward employees for their past work, while hoping that the incentive of a good reward will encourage other employees also to strive to work harder in the future. In recent years many organizations have sought to motivate their employees by linking rewards, using a system like performance related pay, to excellent performance at work. ( Foot and Hook 2002)
Performance Related Pay (PRP) is best described 'as the explicit link of financial reward to individual, group or company performance (Armstrong and Murlis 1991). This is pay which is linked to the employee's performance of their duties. The current LGPS performance appraisal system is linked to pay. Based on the results of each teacher's performance appraisal they receive an increment depending on their salary range.
There are different thoughts concerning PRP.
According to Stiffler (2006, p. 106) 'without a link between individual measures of performance and appropriate rewards for achieving success, there is no effective way to steer an organisation. Establishing a means of rewarding high performance can assist in retaining the most industrious staff. Kirkpatrick (2006, p.6) is of the opinion 'that managers need to give workers encouragement in order to perform'. Employees are likely to focus on what they need to do to improve if this is directly linked to pay. Armstrong and Murlis(1996, p.28-29) states 'it is widely believed that money is the best motivation.' . With money all the necessities including luxuries can be bought for living as well as enjoying life. This is the sole reason why money attracts people, exhibiting its noble character of being a great motivator at work places.
"Rewards are clearly lined and proportionate to effort and results
Clear, fair and understood criteria are used to judge performance
Clear and meaningful targets are set
Employees and managers can easily monitor performance against targets
The reward scheme is properly designed, implemented and maintained
The scheme is designed to ensure individuals cannot receive inflated awards unrelated to their performance
Employees are involved in the development and operation of the scheme" (Rogers 1999)
The following is a list of criteria which were critical to successfully linking appraisal to financial rewards.
There is much research on the subject of appraisal leading to pay. Research by Simmons (2002) uncovered strong opposition from respondents in the Higher Education (HE) and Further Education (FE) sectors linking appraisal to pay, citing divisive criteria and the impact on teams performance in particular. Marsden and French (1998) undertook research at the Inland Revenue on the impact of an appraisal scheme linked to performance related pay. They found that the scheme had the general effect of reducing motivation and teamwork. Money trivializes work, which for many professional employees should be its own reward. Happy motivated employees who clearly know what is expected of them and who are given the opportunity to learn and grow in their careers are much likely to make long term commitments to their place of work. There is no requirement of motivating them by money.
Miller (2006,p.43) 'managers should not assume that money is the ultimate incentive for performance.' There are other ways to motivate employees such as recognition, fringe benefits, appreciation, job security, culture and personal growth. Williams (2002) endorses this view and suggested formal commendations and awards, favourable mention in the company publications, freedom concerning job duties and or hours, increased responsibility and more involvement in setting goals as non financial rewards for employees.
Motivation and job satisfaction
Performance appraisal can have a fundamental effect on levels of employee motivation both positively and negatively. Poon's (2004) detailed research into this area concluded that manipulation of ratings or inconsistent ratings did have an effect on job satisfaction. However, a well developed and executed performance appraisal system can have a positive impact as it is human nature for one to have recognition. The power of social recognition stands out as an incentive since one will prefer a negative recognition than none at all. An effective performance appraisal highlights to an employee that the organization is genuinely interested in their personal performance and development. This tends to motivate an employee as there is a sense of worth, commitment and belonging. Increased motivation results in increased morale and output.
According to Armstrong (2001), motivation is concerned with the factors that influence people to behave in certain ways. Herzberg, Mausner, and Snyderman (1957) identified two types of motivation (intrinsic and extrinisic) which we still recognise today.
Intrinsic motivation - the self -generated factors that influence people to behave in a particular way or to move in a particular direction. These factors include responsibility, autonomy, scope to use and develop skills and abilities, interesting and challenging work opportunities for advancement.
Extrinsic motivation - what is done to or for people to motivate them. This includes rewards, such as increased pay, praise, or promotion, and punishment, such as disciplinary action, withholding pay or criticism.
Armstrong (2001) elaborates as follows:
Influential Theories of Motivation
Instrumentality theory, which argues that rewards or punishments (carrots and sticks) serve as a means of ensuring that people behave or act in desired ways.
Content theory, which focuses on the content of motivation. It states that motivation is essentially about taking action to satisfy needs and identifies the main needs that influence behaviour (Maslow 1954; Herzberg, 1957).
Process theory, which focuses on the psychological processes which affect motivation, by reference to expectations (Vroom 1964) goals (Latham and Locke 1979) and perceptions of equity (Adams, 1965).
As Armstrong(2001) stipulated, several theories of motivation have been accepted in literature
Armstrong and Murlis (1996, p. 29) are of the opinion that 'reward processes are more likely to improve motivation, performance and commitment if they are operated fairly and rewards are equitable in the sense that they are commensurate with the value of the job and of the person to the organisation.'
It is part of human nature to feel aggrieved when employees are not recognised or rewarded sufficiently for good performance. Nel (1997 p. 214) points out that a grievance is defined as an occurrence, situation or condition that justifies the individual lodging a complaint. This definition applies well at the school as it is viewed from the point of an employee being aggrieved after a performance appraisal process.