Designing An Appraisal Process Commerce Essay

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Appraisal period is the duration of time during which an employee's work performance is scrutinize in order to make a formal report of it.

Performance management is the complete method of watching an employee's work in relation to job necessity over a period of time and then developing an appraisal of it. Information obtained from the method may be feedback with the help of an appraisal interview to decide the significance of personal and work-group performance to organisational purposes, get better the usefulness of unit and make better the work performance of employees.

Crafting an appraisal program poses a number of questions, which need answers. They are:

Whose performance is to be assessed?

Who are the appraisers?

What should be evaluated?

When to appraise?

What problems are encountered?

How to solve the problems?

What methods of appraisal are to be used?

Whose performance should be assessed?

Noticeably the answer is going to be employees. When we say employees, it is personals or the whole teams. The appraisee can be described as the personal, work group, division or organisation.

All Sidmak staff, including the Chief Executive Officer, is appraised, making it a comprehensive method. This also takes in all part time staff. Bach (2000) declares the development in the growth of performance appraisal to cover a big proportion of the employees. Most of the cases in Sidmak, the line managers are the appraiser apart from the Chief Executive Officer who is appraised by the chairman. The basis is that the line manager is best positioned to carry out appraisals because of the quantity of contact and greater knowledge and skills (Fletcher 1999).

Who are the appraisers?

Appraisers can be direct superiors, professionals from the human resource department, inferiors, peers, committees, clients, self-appraisals or a combination thereof.

What should be evaluated?

One of the steps in crafting an appraisal program is to formatting the evaluation criteria. It is clear that the criteria should be associated to the work. The criteria for measuring performance can be:

Quality & quantity


Cost efficiency

Need for supervision

Interpersonal collision

improvement & creativity

Problem examination

Customer direction

Market direction

Entrepreneurial drive

Negotiation skills etc

This is not a comprehensive list, but a number of other parameters too can be added depending on profession requirements and organisational requests.

When to appraise/rate?

The most common rating plans are semi-annual and annual. New employees are rated more often than older ones. Some practices call for ratings:

Annually as per company carry out

After first 6 months of employment

Upon promotion or within 3 months after promotion

When the job occupied has been reevaluated up

Upon particular request, as when the employee's salary is under the average pay

What are the problems related to performance appraisal?

A complete performance appraisal is ready when the assessment is free from prejudices and idiosyncrasies of the surveyor. There are many issues of appraisal that show the way to failure of the system.

Negative attitude toward performance appraisal:

There is a big population of supervisors who are unpleasant and tough or indifferent to the performance appraisal methods and/or do it badly if they do it at all.

Hostility from the appraiser:

The appraiser responds indifferently to the appraising method because he thinks that it is a waste of time. At times they believe that the system has nothing to do with their own requirements and it lives to nourish the personnel database.

Hostility from the appraisee:

Hostility from the employee at the receiving end occurs because they believe Performance Appraisal is just another system in the hands of the managers to exercise their control and organise privileges. They think that the data composed will make the most of as evidence against them. In some situations appraisee even have a belief that the result of the performance assessment is programmed by the management or their superiors and the procedure is done only as a formality, due to which appraisee do not have interest in the complete appraisal process.

Halo error:

Under this sort of error, one marked features or latest accomplishment or failure of the appraisee (either favourable or unfavourable) may be acceptable to govern the appraisal for the complete year.

Logical error:

This is a dangerous drawback for the unproven appraiser. He is very frequently liable to arrive at comparable evaluations in respect of qualities that look logically related.

Constant error:

When two appraisers pace an appraisee their ratings may be distinctive. One may demonstrate reliable humanity by giving him lofty scores, the other my steadily rate him by giving little scores.

Central tendency:

It is also known as "Average Ratings". Here, the appraiser looks after to keep away from giving honest views to the question asked or the appraiser is in uncertainty or he has not enough information or he simply wants to play secure and don't annoy anyone.

Mirror-image error or projection error:

This mistake happens when an appraiser anticipates his own qualities, skills, and values in an appraisee. The appraiser may wrongly think that if the appraisee is good he has to be similar him (appraiser) because the appraiser judges himself as the standard.

Contrast error:

This mistake happens in the sequencing of marks. If manager performers are ranked first, average performers are ranked down, if inferior performers come first, the average performers will be ranked more up.

Biases of position, sex, race, religion and nationality:

There is a trend to rank the occupant at a senior position more positively than the person in a lower place. Similarly marking can be partial founded on sex, religion and nationality too.

Lack of skill in conducting appraisal discussion:

Carrying out Performance Appraisal discussions need assured skills and training.

How to solve the appraiser's problems?

The most excellent way to conquer the problem is to give training to the appraiser. Training can assist get better the appraisal method to the amount that distortion occurring due to appraiser mistakes such as halo, leniency, central tendency and bias are minimized.

Factors that help to improve accuracy:

The appraiser has gone under the process and is well-known with behaviors to be appraised.

The appraiser has standard actions calling for progress and expansion.

The appraiser has a checklist to get hold of the evaluation on job-related information

The appraiser is concerned of individual biases and is eager to take charge to decrease their effects.

Rating gains by appraisers of one unit or organisation are reviewed and evaluated with those by other appraisers.

The appraiser concentrates on performance associated behaviours over which he has enhance power than on other aspects of assessment.

Higher stages of management are detained accountable for evaluating all ratings.

Factors that may lower accuracy:

The appraiser ranks only when administrative acts are considered.

The appraiser is not capable to state herself/himself honestly and explicitly.

Appraisal systems, procedures and instruments fail to hold the appraiser.

The appraiser is uninformed of causes of ranking errors.

The appraiser has to rank the individuals on factors that are weakly defined.

Techniques/methods of appraisal to be used?

There are different kinds of methods for measuring the quality of an employee. Each kind of methods has its own advantages and disadvantages. The earlier build up methods, which are still being used, are Traditional Methods that are non-transparent in nature, while other new methods are transparent in nature. All of the procedure has its own design of appraisal form.

Other sources of feedback

Research on the success of 360 degree appraisal is inconsistent. The precursor of Sidmak, experimented with 360 degree appraisal, but it is not now part of the official procedure. Mabey (2001) accomplished that the quantity of practical research on the impact of 360 degree appraisal is very little, in spite of increasing popularity and fame. Williams (2002) increases concerns about 360 degree feedback, citing that it carry with it ethical, logical, political and resource problems, and has the aptitude to do extra damage than good. Armstrong and Baron (1998) quote research by a variety of organisations where expanded feedback on behaviour of persons against a list of main competencies has improved development plans. Kline and Sulsky (2009) recmmended that it has been recognised for some time that performance feedback from various resources has been exposed to guide to more consistent ratings and better performance developments. However, in the same research they quote Love (1991) stating that equal rankings are highly undependable.

Self appraisal

Survey verification collected by Williams (2002) recommends that use of it is increasingly gradually. There is very small observed evidence to recommend it is having any effect, and this is an area valuable of further examination in organisations where it does take place. Atwater (1998) recognised some of the possible benefits of self appraisal, below, but fell short of evaluating their value.

Increases employees awareness of fairness of the procedures

Decreases potential for personal bias by giving further rating

Gives a useful means to increase communication in the procedures

Helps to make clear differences of belief about performance requirements

Increases loyalty to development plans and new aims.

Rees and Porter (2003) advise self appraisal can have a part in prearranged feedback, as people can be their own harshest opponent.

Frequency of performance review and feedback

Even as performance management is a nonstop process, appraisals are broken up activities (Rao 2004). Most organisations have at least an annual evaluation. Salh (1990) recommends that regular reviews are needed to ensure growth is being made on development objectives. Sidmak needs a formal annual review with a fewer formal six monthly review. This is supported up by monthly casual one to one session between manager and staff member.

Training and guidelines

A significant element of building up an effective performance scheme is training for those individuals engaged as raters (Boice and Kleiner 1997). Evans (1991) recommends that training should slot in coaching and counseling, conflict determination, setting performance norms, connecting the system to pay and giving employee feedback. Williams (2002) also recommends training being included into any scheme to make sure it is used time after time and effectively. Pigott-Irvine (2003) quotes research that recommends training for carrying out appraisal should include all elements, such as values, purpose, objective setting, observation skills, interviewing and report writing. Rees and Porter (2003) also quote the requirement for training of use of the scheme to be included, covering the main skills appraisers want. Training for employees should also be measured (Williams 2002). Farr (1993) notices the need for the requirement of training to be given to employees to get feedback in a non-defensive way. Bretz, Milkovich and Read (1992) also recommend that a lack of training of appraises may grounds discrepancies between expected and real performance of the procedures, and related satisfaction. Overall, training should add the success of the Performance Appraisal system and guide to greater organisational success (Cook and Crossman 2004). There is no proper training process Sidmak appraisers or appraises, and this is measured as a big weakness.

The performance appraisal interview

The appraisal interview should be held in an open and none threatening way to help decrease nervousness or doubt appraises may have (Harrison & Goulding 1997). Faith between appraiser and appraise is an essential issue. Performance appraisal could be observed as another form of management control (Bach 1998). This is yet more important when there appears a lack of enthusiasm or inability to assemble objective information to notify the appraisal process (Pigott-Irvine 2003). There is no necessity or mention within the Sidmak to gather and arrange evidence of performance. Groundwork is also measured important. Finding time to assume appraisal can be difficult, mainly in organisation such as Sidmak, where the speed of work is anxious. However, where appraisal is going good, it is often because management has accorded it suitable priority (Pigott-Irvine 2003).

Sidmak is missing in what could be enclosed in an appraisal interview. This literature review discloses a whole host of problems that could/should be covered in the interview. Redman and Wilkinson (2001) quoted research of the practice of performance appraisal. The reason of setting out this table below is to demonstrate the variety of topics discussed and exposed in the research.

Range of issues covered in appraisals


Achievement of work objectives

Future work objectives

Personality or behaviour

Skills and competencies

Training and Development needs

Career aspirations

Pay or benefits

Job difficulties

How you might improve your performance

How your supervisor might help you improve your performance

Personal or domestic circumstances

Source: Redman and Wilkinson 2001

What is appraised?

Definitions of Performance Management previous quote the requirement to line up individual and organisational goals. It is only when the principle of the organisation are decided, and activities and products are clear and calculated, can there be competent use of resources (Flynn and Strehl 1996). Armstrong and Baron (1998) explain how many organisations now use SMART criteria (specific, measurable, agreed, realistic and time related) for performance measurement. It is not at all times done good. Rogers (1999) brings to light that setting objectives and goals remain the primary activity of performance appraisal, but in practice is badly carried out, with very small regard for ensuring that organisation and personal objectives are united as closely as possible. Of more concern is that no-one, apart from appraiser and appraise, is assessing the appropriateness and possibility of aims set. Setting aims which are idealistic and not appropriate may decrease a staff member's personal dedication. Transparency of role is also vital, and could be researched through the process. If people do not know what is predicted of them, there is a good chance that their behaviour will not play the game to expectations (Youngcourt, Leiva & Jones 2007). Simmons (2002) quoted research on appraisal in universities which recommended that their appraisal was not mainly successful in increasing precision of job responsibilities.

Many organisations are traveling towards inclusion of ability depth. Competencies are significant issues which contribute to high levels of personal performance and therefore organisational efficiency (Armstrong 1999) and so there must be a well built relation to the competencies staff have and their skills to achieve their set objectives. Provisions for employee competencies that are essential could be usefully included into appraisal systems (Rees and Porter 2003). Fletcher (1993) in an overview of appraisal method, take notice of an increasing number of organisations using competency related appraisal joint with a result-oriented appraisal, which he accomplished was a positive way forward. Redman and Wilkinson (2001) recommend that the appraisal of competencies has a number of benefits, most importantly; being clever to direct employees towards areas where there is possibility for behaviour. Some of the competencies measured are place out in the table below.

Examples of competencies measure

Competency area


Business thinking

Business awareness

Problem solving

Working with colleagues

Team working

Building relationships

Developing self and others

Inspiring people

Building confidence

Persuading and influencing

Communicating and presenting

Achieving Goals

Delivering results

Improving performance

Rating systems and fairness

The ranking system for Sidmak staff is basic. Staffs are considered to have either exceeded objectives (rating 1) met objectives (rating 2) or missed objectives (rating 3). The below table sets out the definitions:

An objective exceeded is equal to rating 1 and the definition is:

To score an overall Objectives Exceeded rating it is likely that there is significant evidence of consistently high performance across all the areas of work covered by the objectives.

Sometimes this may be easy to quantify. For example if an objective was achieved much easier than timescale at a reduced cost and with an enhanced result.

It is also likely that an 'exceeded' rating will also mean that the individual achieved despite significant difficulties. For example, there may have been unforeseen difficulties that the individual overcame in order to maintain progress.

An objective met is equal to rating 2 and the definition is:

To score an overall 'Objective Met' rating it is likely that evidence of achievement covers all the work areas for which objectives were set. This would reflect meeting all objectives.

In some situations an objective may have ceased to apply owing to circumstances beyond the individual's control. In such instances you should consider evidence of other performance achievements during the year which ought to be included in the review.

An objective missed is equal to rating 3 and the definition is:

The 'Objectives Missed' rating is likely to apply when there is evidence of under performance across the work areas for which objectives were set, provided the individual can be held personally accountable for the lack of result.

Care is needed here. For example, in the management of projects with high levels of complexity, it is necessary to identify the elements for which the individual is accountable, especially if the project has a mix of interrelated activities and involves many people.

Fairness of the system is considered important. Research by Cook and Crossman (2004) suggested that the perceived fairness of the system itself contributes to overall perception of fairness. The issue of accuracy is performance assessment is a problematic one (Atwater and Yammarino 1997). Many studies on performance appraisal focus on the fairness/appropriateness of rating systems. Earlier research by Henderson (1984) suggested that almost all employees are extremely wary of performance ratings. Later work by Harrison and Goulding (1997) revealed results of research into ratings within libraries. Their work suggested that subjectivity can be a problem where appraisers and appraises are colleagues. They further suggest that managers may be uncomfortable with criticizing staff they work closely with, and a tendency towards centralized rating could apply. Giving criticism in a constructive way can be a very delicate subject (Rees and Porter 2003). Bascal (1999) argues that managers tend to avoid confrontation by scoring generously. More recent research suggests that the ratings system can be perceived as a dishonest annual ritual. Employees themselves generally do not want to hear bad news, especially about themselves (Ashford 1999).

Performance, Pay and Development

The outcome of the appraisal is either in the form of reward by way of increase in pay, additional bonus or incentive and/or promotion, or by way of not affecting any increase in pay, denying promotion etc. This gives emergence to the concept of Performance Related Pay (PRP).

Performance related pay is not an easy option. Before embarking on its introduction the following factors should be taken into account.

Matching the culture:

Successful PRP schemes need to match the culture and core values of the organization. It is only by understanding and working with the culture that it is possible to develop schemes.

Linking PRP to the Performance Management process:

The focus when relating pay to performance needs to be one of the issues which emerge from the business planning process such as profitability, productivity, cost control, research initiatives, product and market development and generally increasing stakeholder value.

Balancing performance measures:

The performance measures used as a basis for rating must include a balanced mix of both input factors (skills and competences) and output factors (performance and contribution). The assessment upon which pay decisions are made should be based not only on performance in achieving objectives, contribution to organizational success and the levels of skill and competence achieved, but also on the degree to which the behavior of individuals support corporate values in such areas as teamwork, total quality management, customer services, innovation, etc.


PRP arrangements should allow for some flexibility in the criteria for reward and the method of payment.


Poor PRP schemes can produce a lot of single-minded individuals. The importance of teamwork should be recognized in structuring the scheme and in defining critical success factors and performance indicators. Individuals should be aware that achieving their targets at the expense of others is not considered competent performance.

Avoiding short-termism:

To avoid the danger of PRP focusing attention on short-term results at the expense of more important longer-term objectives, long-term as well as short-term goals should be set wherever appropriate and short-term objectives should be discussed in their overall context.

Involvement in the design process:

The design of PRP schemes is usually an iterative process- trying and testing ideas on measures and structure with those who will eventually be involved in the scheme. It is also a valuable learning process, which can throw up fundamental strategic and business issues. Those due to participate in the scheme should have an input into agreeing critical success factors and performance indicators both for themselves and the organization.

Getting the message across:

PRP provides a very powerful form of communication. To get the right messages across, the following question will have to be dealt with:

Assess reasons for PRP

Why do we want to introduce PRP?

What, realistically do we expect to get out of it?

Assess readiness for PRP

Is PRP right for our culture?

Do we have the performance management and other processes in place required for successful PRP?

Are the attitudes of management and other employees in favour of PRP? (An attitude survey can be conducted to established opinions).

Do the people concerned with managing PRP have the required skills and resources?

Is PRP likely to make a significant enough impact on performance to justify the costs of developing, introducing and operating the scheme?

Decide whether or not to introduce PRP

Does the result of the above assessment indicate that PRP is right for the organisation?

If no, what are the alternatives? There are many. Consider performance related team pay, organisation-wide profit sharing or profit related pay plans, gain sharing, the use of incentive or bonus schemes, concentrating more on the motivational aspects of performance management, job re-design to increase motivation, performance-related training more intensive management coaching and training to improve leadership abilities, process re-engineering to improve organisational performance and productivity.

Brief, consult and involve employees

How should employees be informed of the organisation's objectives and intensions concerning the introduction of PRP?

How do we minimize concern about PRP through this briefing process?

To what extent and how should we consult and involve employees?

Design scheme

What criteria should be used to determine PRP awards? It can be an appropriate mix of:

Input criteria related to the skills and knowledge brought to bear on fulfilling role responsibilities

Process criteria related to the behavioural competencies used successfully in achieving results

Output performance indicators related to the achievement of objectives and meeting performance requirements as set out in statements of principal accountabilities or main tasks

Outcome contribution indicators which measure how outputs contribute to the achievement of team, departmental and organisational objectives and how the behaviour of individuals support corporate values

To what extent will it be possible to define the criteria in the key jobs for which PRP will operate?

Are performance measures available for these criteria, which will enable fair and consistent assessment to be made?

What form of rating system should be used?

How are we going to ensure that ratings are fair and consistent?

What are our policies should be on the size of payments in relation to performance, contribution, skill and competence?

What should our policies to be on the rate of progression and any limits to progression within pay ranges?

Does the organisation want to make provision for performance related lump sum bonuses for special achievement or sustained high level performance at the top of a range?

Should PRP reviews be separated in time from performance reviews conducted as part of the performance management process?

What rating, pay increase and budget guidelines are going to be issued to managers implementing PRP in their departments?

Should performance matrices be used? If so, how should they be constructed?

How PRP will be monitored and its effectiveness be evaluated?

How the cost of PRP would be controlled?

What is the program for developing and introducing PRP?

Brief and train

How the organisation is going to brief and train line managers on the PRP scheme?

How the organisation is going to brief employees in general on PRP so that they understand how it will operate and how they will benefit?


How the process should be started? Even after due care some unforeseeable problem will arise. It is often advisable to start with a pilot scheme, probably at management level so that they understand the principles, benefits and problem before applying PRP to the people for whom they are responsible.

How to monitor the introductory stages? It is essential to keep closely in touch with how things are going so that problems can be anticipated or dealt with swiftly when they arise.


Have clear objectives been established for the scheme the progress towards which can be measured and evaluated?

How to carry out a continuing monitoring and evaluation process?

Who is responsible for evaluation and taking any corrective action that may be required?

What points should be covered?

Evaluating performance related pay

It is essential to evaluate the acceptability and cost effectiveness of PRP. The following questions should be answered.

To what extent have the defined objectives of PRP been achieved?

How much have been paid out under the scheme?

What differentials have emerged between high/average performers over, say, 2-3 years?

What measurable benefits has PRP produced in the shape of improved organisational, team and individual performance?

How do managers regard PRP? Do they, for example, believe that it is operating fairly?

To what extent have rewards been linked to key and measurable areas of performance? Are rewards meeting people's expectations?

Does performance management processed provide adequate support for PRP?

Does the organisation want to retain PRP in its present form? If not, what are the alternatives?

Performance related pay (PRP) in practice

There is no doubt the system of PRP must be made to fit the culture of the organization. This either means that the existing culture can be receptive to the competitive and individual elements of PRP or the culture has to be changed. PRP can be used as part of the change process but, on its own, it is unlikely to be powerful enough to prove successful.

Performance related pay (PRP) - a judgment?

Does Performance Related Pay work? Most experience in the United States is that greater use of performance pay results in improved organizational performance as measured by return on capital employed, particularly when applied to managerial pay. In the United Kingdom, the few studies have been largely negative or inconclusive.

Finally, all research has confirmed that employees regard positively the concept of PRP but deny quite strongly that it acts as a motivator for them in practice, and are mostly critical of the resulting procedural and distributive justice. It can be concluded that employees may work harder, in a more focused way and get better results through a PRP system which is under printed by a robust performance management scheme but employees may do this through a mixture of necessity and fear, rather than a genuine desire to do so.