Historical Background Of Performance Appraisal Management Essay

This chapter reviews literature based upon the research objectives and builds the foundation of a theoretical framework by answering the research questions. It begins with the historical background of performance appraisal, how the appraisal process was introduced. It then elaborates on the definition of performance appraisal and why it is conducted. This is followed by a literature review of the participants involved in the process and how the evaluation is conducted. It further seeks to examine the appraisal process in the Nigeria’s civil service and the challenges facing the system. Finally, the information generated will lead to the building of a conceptual model.

2.1.2 Historical Background of Performance Appraisal

Institutionalization of performance appraisal started as far back as the industrial revolution when it was used as a means of measuring organizational efficiency (Fandray, 2001). Wren (1994) affirmed that Performance appraisal was incepted when Robert Owen used wooden colored block to measure the achievement of employees working in the cotton Mills in Scotland at the close of work hours. During that era, it was utilized as a disciplinary mechanism for punishing poor performance (Kennedy & Dresser 2001). This resulted in the negative notation of the appraisal system which turned out to be despised by both the appraiser and the appraisee. As confirmed by Robert and Pregitzer (2007) “performance appraisal is a yearly rite of passage in organizations that triggers dread and apprehension in the most experienced, battle hardened manager”. The above quote summarizes the extent to which the appraisal process is disliked by the evaluators. Subsequently, organizations tried to refine the methods linking it to other administrative matters including reward, promotion, training and so forth, arguing that employees achievements should not only be measured but evaluated and managed (Kennedy & Dresser 2001). Despite the historical perspective, appraisal is both inevitable and universal. There has been several analysis and wide criticisms of the effectiveness and use of PA within the organizational context but up to recent times the issue is still being debated among scholars, academicians and professionals and NO system has been successful in meeting the desired goal.

2.1.2 Definition of Performance Appraisal

Performance appraisal is a means of measuring or assessing employees’ achievements within a stated period of time using reliable measurement criteria with the ultimate goal of providing information to superiors on how to improve employees’ effectiveness. There are tons and wide range of literature on performance appraisal. The term has been synonymous with performance management, performance review and performance evaluation. In the book “Strategic performance management” the author defined Performance appraisal as “a systematic & holistic process of work, planning, monitoring and measurement aimed at continuously improving the teams and individual employee’s contribution to achievement of organizational goals” (Akata, 2003). This depicts that performance appraisal is used as a means of establishing future goals, monitoring employees’ progress based on specified job description, and measuring performance, teamwork and achievements based on specified tasks that can be linked with organizational goals and objectives. Furthermore, performance appraisal is used to formally determine employees’ effectiveness and contribution (Ikramullah et al, 2011). In addition, Fletcher (2001) opined performance appraisal as a means by which organizations develop competency, improve employee motivation and achieve equitable allocation of resources. In essence, performance appraisal achieves multiple purposes from measurement to motivation and resource allocation. As noted by Cleveland, Murphy, and Williams (1989), performance appraisal systems can be used to motivate employees through remuneration, promotions, retrenchment, and the improvement of skills, competence and expertise. In addition, performance evaluation can be said to be a process of measuring employees contribution which turns out to be beneficial, both to the staff and the organization at large if carried out properly.

Moreover, Seidan, Sally and Jessica E. Sowa (2011) believed that the ultimate objective of any evaluation procedure is aligning individual goals and objectives with organizational objectives and priorities while individual performance should be reflected in how they contribute to organizational growth and development. According to Bassey, Esu and Inyang (2009), performance appraisal system is a means of investigating employee achievement over a certain period of time for achieving organizational goals. Consequently, performance appraisal is a means of knowledge sharing among subordinates and superiors to adequately measure the progress of the employee which will aid in making strategic human resource decisions.

In addition, Atiomo (2000) agrees with Fajana (1997) that performance appraisal is a method of assessing the human resource capabilities and skills and also to identify areas of improvement (Fajana, 1997; Atiomo, 2000; Obisi 2010). Atiomo (2000) noted that in order for performance appraisal to be effective there must be clear job description hence every individual needs to know what his role is in the organization. It can be deduced that performance appraisal is the process through which an organization collects individual’s data in terms of strengths and weaknesses in order to explore ones opportunities and potentials for development and growth while also determining future threats that can be harmful to one’s career and the organizational setting at large, which is subsequently communicated to the individual.

2.1.3 Objectives of performance appraisal

The primary aim of performance appraisal is to improve the effectiveness of an organization by assessing the impact of individuals employed in it (Cumming, 1972). Performance appraisal generally plays two dominant roles: judgmental and developmental (Cummings and Schwab, 1973; Daley, 2002; Condrey 2010). Although, these two categories are often seen as potentially conflicting, they both share the ultimate goal of enhancing productivity. As part of larger performance evaluation system, organizations conduct appraisals to serve the purpose of improving employee effectiveness (Denisi and Robert D. Pritchard 2006).

Development approaches focuses on within-person decisions, individual potentials and adding value to the employee rather than on his or her current skills and capabilities. The approach tends to link performance with training, development opportunities or potential extrinsic rewards. Unfortunately, even in the most objective appraisal system linking training to evaluation proved difficult (Daley, 2002). This approach aids the employee in knowing his capabilities and advice on how to explore his hidden abilities. Categorically speaking, the evaluator plays the role of a guidance and counselor. In essence, the organization needs to determine the benefits it can accrue from enhancing the employee’s hidden potentials. Hence it is important to consider the question of development for whom?

Judgmental approach focuses between-person decisions, pursuing the management system or command-and-control model of authority (Daley, 2002; Condrey 2010). The role is to measure performance for the purpose of making administrative decisions regarding promotions, rewards, merit pay, punishment and other uses such as test validation criteria. The supervisor plays the role of a judge and uses his authority to make decisions that will improve employee performance. Merit pay is appealing to most public organization as a means of cutting cost and improving productivity however, the practice is somewhat different (Lovrich, 1987; Perry, Patrakis, and Miller, 1989; Daley 2002). The reward structure imbedded in the approach even though it is essential has proved to be an important limitation among public sectors due to resource constraint and bureaucratic procedures.

In addition, feedback is very critical in the appraisal system because employees need to know the result of the evaluation. They hope to get responses on enhancing their performance from the appraisal process. There is also the desire for objective appraisal likewise any perceived unfairness and subjectivity can ultimately demotivate employees this can lead to potential conflict between individuals and organizations (Murphy and Cleveland 1995; Daley 2002; Condrey 2010).

There is also the desire of development and reward both by the organizations and the employees. Regrettably, one cannot go with the other, hence the achievement of development may hinder reward and vice versa. If individuals showcase an excellent performance, they may receive reward and miss out on the needed training that will boost their careers. Adversely, in order to develop employee potentials, organizations’ may miss out on rewarding excellent performance which can further motivate employees (Longenecker and Nykodym, 1996; Daley 2002).

Merging developmental and judgmental purposes may prove to be the best solution to an effective appraisal system. The supervisor needs to be a coach as well as a judge (Roberts, 2003). Where there is an ample degree of employee trust and loyalty, objective measurement criteria and participatory work force attitude, such a combine system can prove to be effective (Daley, 2002). However, due to the conflicting role of the two approaches, it may not be possible to merge judgment and development in one evaluation process (Daley, 2002; Denisi and Pritchard 2006). Intellectually, previous research has indicated that, the purpose of appraisal influences the supervisors’ decision in the evaluation process (Murphy and Cleveland, 1995; Bowman, 1999; Daley, 2002). Hence, even with the most objective appraisal criteria, the purpose for which an appraisal is to be conducted dictates the direction of the evaluation outcome.

2.1.4 Participants in performance appraisal

Conventionally, performance appraisal is conducted by direct supervisors because they are in the best position to monitor and assess their subordinates (Kondrasuk, Riley, & Hua, 1999; Daley, 2002; Kondrasuk, 2012). This method is widely used and estimated to occur in almost ninety percent of the cases (Daley, 2002). Performance appraisal is on one hand seen as a management system tool in establishing power and authority and on the other hand as a strategy to strengthen employee-supervisor relationship through good communication and knowledge sharing. In addition to the aforementioned method, Daley (2002) noted that an organization can employ the use of agency insiders (e.g., self-appraisal, peer review, subordinate appraisal, and multi raters) or the employment of outsiders (e.g., personnel staff, consultants, assessment centers, customers and clients).

The self-appraisal is an exceptionally useful technique whereby the employee assesses his or her own achievements since one knows the accurate information of the performance. Although questionable in a judgmental approach due to self bias and subjectivity but quiet useful in developmental appraisals (Murphy and Cleveland 1995; Daley, 2002). Self-appraisal provides the organization with direct information of employees’ apparent needs for enhancement which is very vital in a developmental setting. In essence, it is important to understand employees’ way of thinking when applying this method because they tend to think more of their potentials -what they can do rather than present performance-what they did (Daley, 2002).

Peer review approach employs several appraisers, whereby employees are appraised by their colleagues. Research indicates that evaluations from peers are just as precise as those conducted by the supervisors (Murphy and Cleveland 1995; Daley, 2002; Kondrasuk, 2012). For the reason that peers are more in contact with the employee, witness the day to day activities and observe behaviors that would be overlooked by a supervisor, the evaluation will tend to be more inclusive. Peer ratings often face subjective concerns because they are disliked by employees due to lack of adequate training and guidance in the process. Furthermore, there is often the fear of making a negative impact on individual careers and relationships.

Appraisal of supervisors and managers by subordinates creates enormous apprehension from both parties. This is as a result of its anti hierarchical status which tends to undermine authority patterns (Daley, 1992; Murphy and Cleveland, 1995; Daley, 2002; Condrey, 2012). The nature of the subordinate appraisal makes it’s very difficult to adopt and it’s rarely used by organizations even though; it is strongly recommended and advocated by some scholars. Subordinate appraisals can aid enhance the quality of the working environment and also provide mangers with relevant feedback that will improve their workforce attitude. It can also portray the organization as a participatory leadership structure whereby decisions are made from bottom-up not only top-bottom.

Furthermore, team management approach employs the use of multi raters. This is a collaboration of supervisors and managers from different units working together on an appraisal panel in order to reduce rater errors and also improve fairness and objectivity (Edwards, 1991; Daley, 2002; Condrey 2012). Team management encourages knowledge sharing about skills and competencies and also aids in relationship building which leads to cooperation and coordination. This method has the highest chance of integrating both judgmental and developmental approach within a single appraisal process. The role of coach, counseling and advocate can be performed by the direct supervisor while the judgment role carried out by other team managers (Daley, 2002).

Outsourcing of the appraisal process or participation of outsiders whereby experts are brought in to evaluate employee performance is an infrequent approach. Employees are evaluated based on their traits and characteristics which is basically a job analysis approach that can possibly lead to litigations (Mohrman, Resnick-West, and Lawler 1989; Daley, 2002; Condrey, 2012). In addition, clients or customers can also be incorporated in the appraisal process because they are the receivers of service hence they can provide adequate information about employee performance and relationship. This approach is more familiar in public organizations and can depict transparency and accountability.

The combination of supervisor, subordinate, peer and self-ratings are the basis of 360-degrees performance measures. This measure which seeks to provide a more balanced form of appraisal has lately ignited significant interest among public administrators and scholars. Similar to other techniques, 360-degree appraisal is only useful when focused on job-related components and is likely to be effective when employed for developmental purposes rather than into a judgmental system. Focusing on improving the value of employees, the impact of 360-degree feedback can be highly successful due to its participative technique (DeNisi and Kluger, 2000; Ghorpade, 2000).

In conclusion, if the participants are not adequately trained on the appraisal process, then there will be errors in the result. Evaluators often do not possess the necessary skills needed to conduct the appraisal (Vinson, 1996;Grote, 1996; Fletcher, 2001; Kondrasuk 2012). Hence most appraisals are not free from errors and it is not a surprise that the results tend to be less than ideal while the process most often than not fails to succeed.

2.1.6 Procedures for Evaluating Performance

A transparent and continuous process for evaluating employee would be much appreciated by individuals and the organization at large. The best and most widely acceptable standard of measuring performance is job-relatedness, which can be achieved in two ways-“enabling supervisors to discriminate between employees solely in terms of their job performance, and the organization must be able to prove or demonstrate the existence of that relationship” (Daley, 2002; Condrey 2012).

In addition, Marmora (1995) and Saltz (1996) noted that performance standards should be established at the initial stage of performance evaluation. The standard should then be subsequently communicated to both the evaluator and the employees in order for them to know what is expected of them to do. This is followed by the actual evaluation process, comparing of the result with the standard set, and giving feedback to the employee (Obisi, 2011). Daley (2002) & Condrey (2012) opined that reliable, practical and controllable criteria must be taken into account when selecting performance measures. Reliability in terms of generating consistent results; practical in terms of availability for users; and controllable in form of representing individual behaviors.

The effectiveness of all appraisal system is determined by the performance standards. Hence standards must be established according to individual job description which should be tied to organizational goals and objectives. Furthermore, these standards should be a written document which will make it legally binding and objective. Failure to align performance standards with organizational goals and objectives leads to misunderstandings, poor morale, lack of job satisfaction, ineffectiveness, and confusion (Daley, 2002; Condrey 2012).

Knowledge, skills and abilities, work ethics, personal traits or characteristics and results all can be used to assess performance (Milkovich and Boudreau, 1994). Even though, knowledge, skills and abilities are difficult and costly to measure due to the fact that they are inherent in an individual not specific to the job itself but they signify the minimum requirement needed for optimum job performance.

The two most objective performance appraisal instruments (management by objectives and behaviorally anchored scales) are layered with the foundation of behaviors and results (Murphy and Cleveland 1995; Daley, 2002; Condrey, 2012). Behavior is the manner in which individuals conduct themselves while performing on their jobs; results are the effect brought about by those conducts. The use of behavior is generally preferred in the public sector while the private sectors are result oriented (Daley, 2002).

Behaviors are mostly used in the public sector due to the nature of the organization which encourages and incorporates teamwork. Ultimately, organizational culture, organizational climate and nature of the job influence the direction of the appraisal procedure (Murphy and Cleveland, 1995; Daley, 2002; Condrey, 1994 & 2012).

On the contrary, performance appraisal systems tend to measure extreme performances accurately while failing to differentiate middle-range performance, hence individual behaviors may not be accurately evaluated (Gote, 196; Kondurasuk, 2011). Many appraisal systems are ineffective and highly unreliable due to rating errors (Roberts, 1998).

2.1.7 Techniques of Performance Appraisal

Performance appraisal research has primarily focused on perfecting the appraisal instrument and measurement issues which has led to the system being built around a central technique (Daley, 2000). Basically, there are two appraisal techniques- subjective based procedure which deals with observable acts and the objective based procedure which defines performance according to tasks and targets (Orpen & Christopher, 1997; Daley 2002). The type of technique used drives the appraisal process and contributes to organizational development.

Nevertheless, due to the inherent problems associated with the subjective techniques in terms of lack of communication, inter-rater differences, errors and inability to adequately explain to others the procedure of the appraisal, objective technique is most preferred. Hence, behaviorally anchored rating scales (BARS) and management by objective (MBO) approaches are most often used in place of subjective essays, graphic rating scales, forced choice checklist and forced distribution interpersonal comparison (Daley, 1997 & 2002).

Behaviorally Anchored Rating Scales: Behaviorally anchored rating scales are a modernized or extended version of the subjective graphic scale. They are an apparent attempt to transform the graphic rating scale into an objective appraisal in terms of level of performance and performance objectives. In other words, they are corrective measures for many of the subjective concerns that cloud the validity and hinder the use of graphic rating scales (Daley 2002; Condrey, 2010).

Even though BARS have received much attention in the private sector, they are also relevant to governmental settings because it is process-oriented rather than result-oriented. This is perhaps even more characteristics of public sector than private organizations. Teamwork and conditions of fragmented authority which are more likely to occur in government agencies are factors that inherent in the BARS approach to performance appraisal.

This technique specifies definite computable, quantifiable and observable job behavior on a range and the employee is rated on the basis of his/her behavior along the continuum. The scales combine elements of critical incident and graphic rating approach. In anchoring behaviors with specific examples BARS has two main options to choose from- behaviorally expected scales (BES) which represents managements judgment call as to what can be done and the behaviorally observed scales (BOS) which anchors its behaviors firmly in the reality of the situation (Latham and Wexley, 1994; Daley 2002; Condrey 2010).

Furthermore, the BARS represent a passive application of participatory leadership where employees are incorporated in decision making process. For the approach to work it must be accompanied by bureaucratic immunity and structural accommodation. Bureaucratic immunity prevents ordinary standards procedures and control process which can thwart change and success. Structural accommodation employs a high degree of autonomy in terms of decision making and resource allocation (Thompson, Hochwarter, and Mathys, 1997; Daley, 2002; Condrey, 2010).

Management by Objective Appraisal system:- The management by objective approach originated as a process whereby managers can transform their strategic plans into implementable action (Daley, 1992; 2002). In this approach, participation is central; goals and objectives are worked out based on mutual understanding. This enhances teamwork and relationship building among the supervisors and the employee. In addition, there is constant communication between the participants, prior notice is given before scheduling the evaluation process and at the end of the process “performance review or rating” is discussed and analyzed.

The MBO is a result-oriented and objective approach which often decentralizes power to lower-level decision makers and tailors each individual’s performance with job responsibilities. Employee participation in work-related decision making gives him/her a sense of belonging which increases performance and productivity. Furthermore, MBO is a means of setting precedence and resource allocation for achieving them. However, the public sector often works in ambiguity due to the political environment that dominates it. This has the potential to undermine the implementation of MBO in that sector. Hence, organizations resort to using the BARS format for those positions that involve numerous incumbents.

2.1.8 Appraisal Error

A number of studies have examined different variables and processes relating to the accuracy of performance ratings. The appraisal systems are only as good as the people who use them, even the most objective systems with all their advantages are just tools that guide us in decision making. There has been extensive literature which covered the topic of rater error in performance appraisal (Landy and Farr, 1980; Daley, 1992; Latham and Wexley, 1994; Murphy and Cleveland, 1995; Bowman, 1999; Daley, 2002; Condrey, 2010). There are various errors which can affect the objectivity of appraisal negatively.

Organizational error arises due to vague or misunderstood goals as result of inefficient communication channels (Dessler, 2000). Lack of clarity about goals will lead to the employees performing less than expected while managers will have unrealistic expectations in terms of what can be accomplished on the job. Furthermore, managers may have hidden agenda of exercising their powers and using the appraisal as a control mechanism or intimidation and harassment tool rather than encouraging productivity. Finally teamwork may be appraised individually. As a result, the performance appraisal can become part of organization’s overall management control system (Swiss, 1991; Longenecker and Nykodym, 1996; Daley, 2002; Condrey, 2010).

Structural error occurs due to inadequate supervisory training on the appraisal system which leads to unreliability and inconsistency. Recent research has examined the effect of “frame of reference” (FOR) training on rating results and methods. The main aim of FOR training is to train raters to share and use familiar conceptualizations of performance when making evaluations (Woehr 1994; Arvey & Murphy, 2012). The researchers concluded that FOR-trained raters typically proof to be more effective and provide substantially more precise ratings than do amateur raters. Similarly, the failure to establish realistic goals creates failure in the appraisal system. Objective appraisal can only be achieved if there are realistic goals to compare the result with. Furthermore, the appraisal process can be abused if employees are asked to match behaviors to limited, incomplete set of criteria or when the appraisal are adjusted to fit predetermined decisions. (Longenecker and Nykodym, 1996; Daley, 2002; Condrey, 2010).

In addition, performance appraisal depends highly on the skills of the appraiser, hence the genesis of rater error. Errors are committed when individuals are failed to be assessed based on their performance but rather compared to someone else’s performance, personal traits and characteristics. These contrast error approach suffer significant validity problems (Daley, 1992&2002; Condrey 2012). Daley (2002) further asserted that whenever responsibilities inherent in the job itself are substituted for a measure of incumbent’s job performance errors are committed. Dominance of one item in the evaluation process while ignoring critical factors also leads to unidimensional errors. One-dimensional error can be related to either substantive or mechanical concerns. Similarly, when a single good performance in one aspect of the job becomes the basis of overall assessment, an error known as the halo effect occurs while horns effect occurs when a negative incident overshadows the entire appraisal process (Murphy and Cleveland, 1995; Daley, 2002; Condrey, 2010).

Consequently, raters can also award everyone an average rating thereby exhibiting central-tendency error or awarding extremely good or bad ratings which exhibit restricted-range. This occurs partly due to perceive resentment by the supervisors or fear of de motivating employees from lower rating and when supervisors are required to justify high or low ratings (Murphy and Cleveland, 1995; Daley, 2002; Condrey, 2010).

Interpersonal biases can also occur due to the need to maintain harmonious relationship, worksite politics, external preferences vis-à-vis politics, religion, sex, ethnic preference, and race may introduce intentional distortions and manipulations into the appraisal process (Robinson, Fink and Allen, 1996).

2.2 CONCEPTUAL FRAMEWORK FOR IMPROVING PERFORMANCE APPRAISAL

Conceptual framework was developed based on relevant literatures of performance appraisal discussed. The model is based on the author’s understanding of what an effective appraisal system should comprise of. It provide basis for determining factors that will enhance employees performance and also supervisors objective appraisal. The framework is also consistent with relevant theories which emphasize individual characteristics, and both the internal and external characteristics of the organization, as drivers for performance improvement.

The proposed conceptual framework utilizes input and output approach. The input component comprises of five jobs dependent interrelated activities that will lead to improving the appraisal system. Civil servants performance is difficult to assess due to vague and complex goals which are hard to evaluate. Hence it is necessary for each government agency to set well articulated organizational goals which are realistic and attainable. These goals should be well internalize within the organization through campaigns, town hall meetings, pamphlets and constant reminder about the mission and vision of the agency. Subsequently, departmental and team goals should be tied to the pre-defined organizational goals. Furthermore, employees’ responsibilities should also be drawn and tied to the overall departmental and or team deliverables. They should be made to understand their roles and what is expected of them. These defined roles should be discussed between superior and subordinate in order to establish whether employee possess the required personal effectiveness and job skills to deliver the responsibilities. On the other hand, it will aid in establishing clearly defined tasks of each individual and quantifiable targets which can lead to time dependent delivery of assignments. This has the capacity to minimize the subjectivity associated with the current appraisal system in Nigeria.

Once responsibilities are agreed upon and resources are allocated for delivery of tasks and bridging skill gaps where necessary, results will be observed by the superior for a period of six months. At the end of this period, appraisal exercise that will lead to observe outcomes will be conducted. This will define and set the output component of this model into effect. As enumerated in previous sections, lack of training and skills of superiors on how to appraise subordinates is a key challenge impacting negatively on the credibility of the current appraisal system. Hence, supervisors should be trained on the appraisal process, how it should be conducted and for whom the system was designed. They should be made to understand the logic behind the process and the need for objective measurement to motivate employees, reward hard work, and excellence in service to increase organizational contribution to the sect oral performance. To enhance objectivity in the appraisal rating, measurement criteria should be established based on job description. This criterion should be communicated to the entire public servants and also incorporated in the organizational culture. By communicating the established criterion, employees will know what it is actually measured and how their performance will affect the evaluation outcomes.

At the appraisal stage, employees should be given chance to appraise themselves before their superior does. This is to give the superiors an insight into the employees’ perception about his personal development, skills and job delivery. Appraiser evaluation should then be conducted between the supervisor and employee in form of a discussion session. During this session, employee performance and future career plans should be discussed. Where inconsistencies are observed, the two parties should deliberate on the possible causes and remedies of such deficiencies thereby setting an action plan to bridge gaps for future development and training needs. This will also provide room for feedback on areas of improvement and also encourage performance. Conversely, if performance is adjudged to be excellent, reward should be administered to motivate performing staffs and encourage low performers. Depending on