Assessing Why Performance Appraisals Dont Work Commerce Essay

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Performance appraisals don't work - what does? This article is written by Susan Heathfield who is a management and organization development consultant and writer who founded her company, Heathfield Consulting Associates, in 1987. She has worked with more than 150 clients. She owns TechSmith Corporation, founded in 1988, which employs 160 people in multimedia software development.

Firstly we will see the performance appraisal and performance management system. To define performance appraisal is a process of finding the strengths and weakness of employees once a year and it lacks the ongoing feedback, whereas the performance management is a continuous process of identifying, measuring, developing the performance of individual and teams and aligning the performance with the strategic goals of the organization.

Every method of assessing the employees have positive and negative characteristic. The process of performance appraisal, as traditionally practiced, is fundamentally flawed. The traditional performance appraisal process treats employees as possessions of the company, fails to create a dialogue, and rarely results in positive employee development and progress. When the survey was conducted it was found that most of the managers hate to conduct the performance appraisal, secondly to fire employees.

The traditional performance appraisal process

In the performance appraisal process, the manager annually writes his or her opinions on the performance of a reporting staff member on a document supplied by the human resources (HR) department and in some organizations, the staff member is asked to fill out a self-review to share with the supervisor during the performance review meeting

Different methods used in traditional performance appraisals

ESSAY APPRAISAL METHOD:-This traditional form of appraisal involves a description of the performance of an employee by his superior. The description is an evaluation of the performance of any individual based on the facts and often includes examples and evidences to support the information. A major drawback of the method is the inseparability of the bias of the evaluator.

STRAIGHT RANKING METHOD:-This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation.

PAIRED COMPARISON:-A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings.

CRITICAL INCIDENTS METHODS:-In this method of Performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behavior as and when they occur.

FIELD REVIEW:-In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors' personal bias.

CHECKLIST METHOD:-The rater is given a checklist of the descriptions of the behaviour of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on- the- job performance of the employees.

GRAPHIC RATING SCALE:-In this method, an employee's quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on the job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory.

FORCED DISTRIBUTION:-To eliminate the element of bias from the rater's ratings, the evaluator is asked to distribute the employees in some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion

Limitations of performance appraisal methods are

If one appraiser is more lenient by nature, he may tend to give higher performance ratings to people under him. On the other hand, a severe appraiser may do just the opposite of the lenient appraiser.

When different methods are used to evaluate than its becomes difficult to get the accurate result for example If you use a 360 performance appraisal for one department and a basic performance review for another department, chances are the ratings will show a variety of results-and perhaps not accurate results.

Performance appraisal rating problems with comparison methods often occur because it's difficult to evaluate between two individuals as they will rank differently on different parameters. Furthermore, each individual has a different nature of job and responsibility, and the challenges in each job are different. Therefore, it becomes difficult to compare quantified performance results and also the inter-departmental comparisons are difficult to make because of an entirely different nature of work in each department.

Difficulties with Graphic Rating Methods are most graphic rating scales fail to pin-point specific instances or specific feedback about an employee's behavior, actions or overall attitude and performance. Secondly, the results may lack reliability because different appraisers will have a different view of the same thing. If the graphic scale rates employees on the basis of average, good and outstanding, the definition of "average" may tend to differ between different appraisers.

Managers avoid giving honest feedback, which defeats the purpose of the performance appraisal.

The staff member whose performance is under review often becomes defensive whenever his performance is rated below the level at which he personally perceives his contribution; the manager is viewed as punitive.

Disagreement between the employee and his or her manager about contribution and performance can create conflict that may go on for months.

It is harmful to employee performance development, damages workplace trust, undermines workplace harmony, and fails to encourage the best performance from employees

Performance Management

In a performance management system, feedback remains integral to successful practice. The feedback, however, becomes a discussion of both progress and personal and business goals. Both the staff person and his or her manager have an equivalent opportunity to bring information to the dialogue. Feedback is often obtained from peers, direct reporting staff, and customers to enhance mutual understanding of an individual's contribution and developmental needs. (This is commonly known as 360-degree feedback.)

Since performance management is continuous process it helps the employees to Clarify definitions of job, helps success criteria, Increase motivation to perform ,Increase self-esteem, Enhance self-insight and development; for managers to it helps to Communicate supervisors' views of performance more clearly, helps in better and more timely differentiation between good and poor performers and then employees become more competent.

Benefits of Performance management system

Helps you think about what results you really want. You're forced to be accountable, to "put a stake in the ground".

Depersonalizes issues. Supervisor's focus on behaviors and results, rather than personalities.

Validates expectations. In today's age of high expectations when organizations are striving to transform themselves and society, having measurable results can verify whether grand visions are realistic or not.

Helps ensure equitable treatment of employees because appraisals are based on results.

Optimizes operations in the organization because goals and results are more closely aligned.

Cultivates a change in perspective from activities to results.

Performance reviews are focused on contributions to the organizational goals, e.g., forms include the question "What organizational goal were contributed to and how?"

Supports ongoing communication, feedback and dialogue about organizational goals. Also supports communication between employee and supervisor.

Performance is seen as an ongoing process, rather than a one-time, snapshot event.

Provokes focus on the needs of customers, whether internal or external.

Cultivates a systems perspective, which is, focus on the relationships and exchanges between subsystems, e.g., departments, processes, teams and employees. Accordingly, personnel focus on patterns and themes in the organization, rather than specific events.

Continuing focus and analysis on results helps to correct several myths, e.g., "learning means results", "job satisfaction produces productivity", etc.

Produces specificity in commitments and resources.

Provides specificity for comparisons, direction and planning.

Redirects attention from bottom-up approaches (e.g., doing job descriptions, performance reviews, etc., first and then "rolling up" results to the top of the organization) to top-down approaches (e.g., ensuring all subsystem goals and results are aligned first with the organization's overall goals and results).

Effective Performance system

For an effective performance system some components must be eliminated such as Components to eliminate include:

Numeric ratings.

Forced ranking of employees across the organization.

Imposed goals and objectives.

The manager in a judge role with an appraisal document completely written prior to the meeting.

The annual meeting.

The tie between the performance appraisal and the employee raise.

Components to include in a performance management system are:

Schedule update and discussion meetings quarterly with each employee.

Make the performance development planning meetings interactive.

Negotiate and agree upon goals for both business development and employee development.

Keep any assignment or discussion of employee compensation completely separate from the performance-development planning meeting, which should focus on employee development and business development goals.


Performance management is better than performance appraisal. As Performance management focuses on actual results and on-the-job performance and also promotes team work as well as individual work. Performance management is an ongoing process which helps to continuous environment. Most performance appraisal systems focus on individual achievements and focus on results rather than methods, prompting employees to place individual goals over team goals, Performance appraisal system is conducted once a year which lacks ongoing feedback.