Effective Appraisal Methods Undertaken By Companies Commerce Essay

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With the increase of globalisation and new technologies of information and

communication, businesses are facing more challenges than before. Furthermore, people are moving from their own country to relocate elsewhere. This give more difficulties to businesses to understand not only their customers, but also their workforces as they are coming from different part of the world and might have different way of thinking and acting. An organisation is a group of people working together in order to achieve the goals and objective that have been set. Therefore managing those people effectively and efficiency must be a company primary focus.

This research is based on the type of performance appraisal that a company should be used in order to evaluate correctly its workforce. In order words, there are many different methods such as: 360 degree feedback systems, critical incidents, forced distribution, self-evaluation, essay evaluation, behavioural observation scales and management by objectives. These methods can be divided into two categories: past-oriented methods and future-oriented methods

Statement of the problem

Human Resource Management is the management of the human capital, workforce within an organisation. It has many functions which are: recruitment and selection, training and development, performance appraisals and employees promotion. M. Armstrong define it as: "a strategic and coherent approach to the management of an organisation's most values assets- the people working there who individually and collectively contribute to the achievement of its objectives" (G. Armstrong, 2006, P.3). As people make an organisation, it is important for managers to deal with their personnel enquiries effectively. Evaluate or conducting performance appraisal on employee is also very important and it is one of Human Resource Management functions. There are no standard performance evaluation methods; companies chose the method that satisfies their needs and requirement. A method is chosen according the nature and the culture of the business. Also it is important to say that each method have both advantages and disadvantages and must be analysed carefully before taken into practice.

Aims and objectives of the study

In order to carry out properly, accurately and normally this research, it is crucial and

important to point out it aims and objectives. The research aims are:

The first objective of this research is to underline the importance of performance

appraisal within an organization. Why Human Resource Managers conduct or evaluate their employees. What is the reason why employees should be evaluated after a certain period of time? What is the main purpose of employee evaluation? Is employee performance related to his/her pay? Or is it because the company just want to know who is performing very well and who is not? Also has the business notice that performance appraisal lead to a kind of motivation factor for its workforce? Because some employees would like to be rewarded whenever they think they are doing a good job.

The second objective of this research is to find out which performance appraisal

method is undertaken by PEABODY and why have they chosen that particular method

Thirdly, it is also essential to notice that performance appraisal do not only matter for

the organization but also influence employees. Therefore whenever a company evaluate their employees how do they do it? Which evaluation process to do take to appraise them? Are employees getting feedback on their performance?

Finally, what strategy is used by human resource manager for employees with good

and poor performance appraisal?


According to G. Dessler, performance appraisal can be defined as:

"the process of evaluating an employee's current and/or past performance relative to his or her performance standards." (G. Dessler, 2008, P.336). In other words, performance appraisal helps the management to identify and evaluate their employees' strengths and weaknesses. As result of conducting performance appraisal by an organization, managers will be able to adopt the best suitable motivation method. For example: if an employee feedback is positive, managers should motivate or reward him because they want him to keep having good performance in the future. M. Foot & C. Hook added: "Managers conduct performance appraisal for variety of reason such as: improve current performance, identify training needs, to award salary increases, to increase motivation [...]" (M. Foot & C. Hook, 2005 P.268). It can also be seen as a motivation factors when employees have the feedback on their appraisal. Managers should take different strategies with employees who have poor performance. For example they can be sent for training and development. But before doing so, the Human resource manager should identify the reason why they have poor performance. Figure 2 explains the steps and procedures to follow when dealing with poor performance. (S. Gilmore & S. William, 2009, P.247). Performance appraisal is directly link with employees training and development because when it has been conducted that an employer might be able to identify whether if their employees have to go for a training program or not. Additionally, some employees are paid depending on their performance especially those who work in the marketing department. Therefore, the company must carry out performance appraisal after a certain period of time. (G. Dessler, 2008, P.339). Furthermore, for a company to achieve their goals and objectives, each and every worker in the organization should achieve their own target.


There many different types of performance appraisal such as 360 degree appraisal, forced distribution method, self-appraisal, rating scales method, critical incident method, ranking method, essay method and management by objective.

360-Degree Feedback Systems

Armstrong stated: "360-degree feedback is also known as multi

source assessment, is a process in which someone's performance is assessed and feedback is given by number of people who may include their manager, subordinates, colleagues and customers" (Armstrong, 2009, P.644). This assessment method is done by different persons in order to reduce or eliminate judgmental decision and bias. As an employee performance needs to be looked in a wider aspect, internal assessment done by managers only will not be as accurate as possible. This method is useful when appraising employees who work in call centres, receptionists and customer service. Where pass the majority of their working time dealing the customer enquiries. It is also a combination of different sources of performance appraisal information to create many different evaluator or 360-degree appraisal and feedback system. Jobs are multifaceted, and different people see different things. As the name implies, 360-Degree feedback is intended to provide employees with as accurate a view of their performance. As all others methods of appraising worker's performance, this method has both advantages and disadvantages.


360-degree feedback has many advantages such as: firstly, it looks

at the employee performance from different point of view. It includes collecting multiple perspective of managers' performance by allowing employees to compare their own personal evaluation with others people point of view. (R. Noe et al, 2003, P.388). Secondly, Armstrong argued that it increases awareness by senior management that they too have development needs. Sometimes managers and board director believe that they know everything and therefore do not need to be appraised on their performance. (Armstrong, 2009, P.646). This frequently happens in organization where autocratic management style is adopted which stipule that managers are always right employees should always follow without any suggestions. Finally, feedback receive are more reliable and objective, therefore adequate actions can be undertaken. (Armstrong, 2009, P.646)


According to Armstrong, people are not always honest

and therefore wrong analysis can be made by managers. Also, people mind can change time to time. J. Ivancevich added that: providing constructive feedback require a plan and well-trained rater. And this is not typically found in organization. (J. Ivancevich, 2007, P.260). However some has strategies to make sure that 360 work as effectively as possible. For instance: "to encourage participation in its customer performance appraisal process, Xerox business services plant a tree for each customer who return a completed form". (Jackson et al, 2009 P. 334). The introduction of 360-degree feedback in place where pre-evaluation had not been conducted can be very dangerous. For instance: in place where there is low level of trust and high level of competition. When conducting your 360-degree, customers might not give their real opinion about an employee performance. Furthermore, this can also lead to an increase in bias. If an employee is assessed by customers who are friends and/or family, they might rate the employee according to their personal feeling rather than the employee's performance. Another disadvantage of 360-degree feedback is that, it does involve too much bureaucracy as everyone will be asked to assess the particular employee. Therefore this may require lots of time. Additionally, conducted performance appraisal is not enough but taking effective decision after having performance appraisal result is very important. Lack of feedback may de-motivate employees to take another one next time. Moreover, they need to know what are their strengths and weakness. This is the reason why some companies conduct self-assessment method of performance appraisal.

Forced Distribution

G. Dessler says: "The forced distribution method is similar to

grading on a curve; predetermined percentages of rates are placed in various performance categories". (G. Dessler, 2008, P.345). Most of the time, companies divide it into three where there is the first category w here company's best employees are placed, then the second category where the second best in located and finally the last category where usually poor performance is found.(Jackson et al, 2009 P. 335). Those who fall in the first group are encouraged continuing with great performance with some options available. Employees in the second group category are also encouraged to increase their potentiality in order to reach the top first group and can get some bonuses or promotion relative to their performance. But those in the group are not given any kind of bonuses. This is where the management will look at the various reasons why there is poor performance and may decide whether training needs to be undertaken or not. Some managers will give a warning if poor performance continues and others may even be harsher and fired. Jackson et al added: "In this method, the appraiser distributes employees across several categories of performance following a set rule about the distribution of rating that are permitted". (Jackson et al, P. 335)


Self-appraisal method is the form of performance appraisal technique where

employees appraise their own performance. Before adopting this method, HR manager should make sure that their employees understand their objectives and the criteria used for evaluation. (Mondy, 2008, P.251). This method prone the fact that only the employee is able to know what he/she does well and what he/she is lacking and need to be improved. J. Beardwell and T. Claydon added: "self-assessment is the only way to give a complete picture of the performance of the employees and to avoid a 'criticise-defend' scenario" (J. Beardwell & T. Claydon, 2007, P.512). Furthermore, this method require the employee to have a good knowledge of the job requirement and role so that he/she will easily identify the gap between what he is doing and what he is require to do.


In order to carry out the aim of this project, it is essential to build a very good research methodology. This will include the framework that will be used in order to answer the question. Knowing what the different types of performance appraisal are, research methodology will elaborate all the different methods that will be used to collect as much information as possible relating to the topic

Research Methods

The aim of the project is to find out what performance appraisal method should be undertaken by company to evaluate with effectiveness and accuracy their workforce, therefore qualitative and quantitative research will be useful to conduct the project efficiently.

Quantitative research is mostly used when question beginning by how many are often used. "Quantitative analysis deals with the numbers and uses mathematical operations to investigate the properties of data". (N. Walliman, 2006, P.113). As compared to qualitative research, quantitative researches develop technique that produce quantitative data and which can be classified easily.

Qualitative research on the other hand is a method which leads to the collection of qualitative data which are data that cannot be quantified. Qualitative research usually answer question such as: what do think about? What is your opinion about one particular product?

Qualitative research deals with feeling, attitudes, opinions and ideas. It is very difficult to analyse as people might change mind or opinion time to time. J. Creswell added by saying that: "qualitative research begins with assumptions. A worldview, the possible use of a theoretical lens, and the study of research problem inquiring into the meaning individuals or groups ascribe to a social or human problem." (J. Creswell, 2007, P.37)

Data collection

The data will be collected using many sources of data collection.

Secondary data collection such as: books, magazine, articles and academic journals will be used to gather much information as far as performance appraisal is concerned. Although secondary data are often books and journals, it is important to note that this source also entails non-written materials such as: voice and video recordings, pictures, drawings, films and television programmes. (M. Saunders et al, 2007, P.248). Any kind of secondary materials on performance appraisal and human resource management related to the research question will be used for the project.

Primary data collection such as: questionnaire, interviews and observation will be adopted to collect information. Those data are not available on books and are more reliable than secondary data. In order to collect primary data, questionnaire will be designed and given to one HR manager and two assistant at PEABODY. The questionnaire will carry some useful questions such as: are you conducting performance appraisal on your employees? What is the importance of doing it? Which performance appraisal method have you used or are you using at the moment? What are the reasons why that method was chosen? After appraising your employees do you give them feedback on their performance? What step or strategy do you adopt with poor performance and good performance employees?

Interviews will also be done to some workers in order to have an overall picture of the topic.

Data analysis

Data will be analysed by looking at the findings from all those different sources of data collection. Primary data analysis will be compared to the literature review in order to know if what is written in the books is followed by organisations. Findings might be presented as graph, diagrams or charts.
















Literature review

Research Methodology

Primary Data collection

Data analysis