The Impact Of Performance Appraisal On Employee Performances Management Essay

Introduction

Establishing effective employee performance management systems is an important pre-requisite for the success of any organization. Since organizational success is closely linked with good employee performance, all organizations need to have an accurate measure on how each individual employee performs his or her assigned roles within the company (Jeerapaet, P. 2008).

According to Lawrence, P. (2004), performance appraisal programs are very important in every organization. What makes performance appraisal programs important is the vital role that it plays in the professional development of an organization’s employees. Since every organization has set goals and targets to achieve and the success of meeting these objectives relies on how well the employees perform their duties, the organization must indeed be truly concerned whether the employees are living up to the organization’s expectations of them.

Practically, the role that performance appraisal programs perform in the organization is monitoring the employee’s overall performance. Performance simply means the act of fulfilling, performing or completing a specific obligation. In work place, performance levels differ from one employee to another depending on his or her required duties and responsibilities. An employee is considered to have met the required performance expected of him by the company once he has managed to fulfill or put to completion all his assigned tasks and duties with excellence (Articles Base, 2008).

In the context of work performance, performance appraisal is defined as the process of valuating or assessing how well an employee accomplished his required tasks. Some definitions refer to performance appraisal as a defined, formal and structured interaction between a supervisor and his subordinate wherein the subordinate’s work performance is taken under a careful scrutiny and assessment of the supervisor with a special focus on determining the subordinate’s strengths and weaknesses and opportunities for improving the work performance (Articles Base, 2008).

According to Archer North & Associates (2010), the performance appraisal method originated from a simple method of justifying one’s income. It began as an indicator of whether or not the salary of an employee must be increased or decreased. Essentially, it began as a process that was closely linked with material outcomes.

However, as the system developed to include other use for such tools, it slowly increased its popularity of being an effective performance measurement tool. Nowadays, performance appraisal is already used by corporations widely to identify which among the employees deserve to be promoted, to gain salary increase and gain additional bonuses and company incentives. In the same way, performance appraisal results determine who among the non-performing employees need some counseling or in extreme cases, need to be decreased in pay (Archer North & Associates, 2010).

For many years now, the reliability, accuracy and use of performance appraisal has been plagued by certain controversies and issues. Derven, M. (1990) for instance, argues that the performance appraisal methodologies are prone to errors, biases and unjustified conclusion about an employee’s work performance.

Based on the previous studies conducted by Archer North & Associates (2010) results indicate, however, that employees have the tendency to positively view performance appraisal when the organization uses it as a means to reward their employees rather than to criticize them.

While truthful examination and communication about an employee’s performance is the responsibility of the supervisors in order to correct the work performance of their employees, studies did indicate that when work performance evaluation with employees is linked to an incentive and reward system, it positively affects the work performance of the employees (Archer North & Associates, 2010).

Nevertheless, the companies’ take on performance appraisal critically differs from one organization to another as well as from one type of employee to another. An expatriate for instance who works for a multinational enterprise may not view performance appraisal to be effective especially because of the fact that this employee came from another country, with a totally different culture and forms of employee assessment (Martin & Bartol, 2003).

Moreover, a home-office manager may also view performance appraisal on a negative note stating that the performance appraisal methodologies used by the company is flawed and biased. Given the differences in the views and opinions of each individual employee with regard to performance appraisal, there is a need for the organizations to identify its true impact whether it effectively motivates the employees or it causes the opposite to happen. Furthermore, there is a need to identify the most effective methods of facilitating performance appraisal depending on the type of employee like for instance on an expatriate and a home office manager (Martin & Bartol, 2003).

Objectives of the Study

This research paper entitled “The Impact of Performance Appraisal on Employee Performances- Expatriates and Home Office Managers” delves into the very sensitive topic on the true impact of performance appraisal on employees, specifically on expatriates and home office managers.

Given the fact that these two types of employees play equally vital roles in the organization, the company who possesses these types of employees must be very cautious in the way these employees view performance appraisal as their view may either result into a positive or a negative impact on their work performance.

In relation to the problem being presented, the aim of this paper is to address and answer the following objectives:

To identify the main effects of performance appraisal i.e., whether it produces functional or dysfunctional employees

To justify if performance appraisal produces functional employees or not

To justify if performance appraisal produces dysfunctional employees or not

To determine the proper and effective performance appraisal methodologies that organizations must adopt and use

To differentiate the performance appraisal methodologies between expatriates and home office managers

To enumerate the different problems and issues encountered by companies when appraising expatriates

Statement of the Problem

The issue on the effectiveness, validity and reliability of the performance appraisal method especially among expatriates and home office managers continue to pose challenges on the true impact of performance appraisal among employees.

Since certain factors need to be considered when evaluating the work performance of expatriates, differences in facilitating the performance appraisal methodology between the home office manager and the expatriate may create conflict between the two. Perceptions on the method being unbiased and flawed are most likely to spring up leading to either a positive or a negative impact of performance appraisal for the employees.

Given this dilemma, there is a need for the organization to devise the most effective performance appraisal system that would create the most positive impact on the employees, on the expatriates and home office managers alike. In order to achieve this aim, this paper needs to answer the following research questions:

What are the main effects of performance appraisal to the employees? What are the root causes of these effects?

Does performance appraisal produce functional employees? Why?

Does performance appraisal produce dysfunctional employees? Why?

What is the most effective performance appraisal methodology that organizations must adopt and use in order to create the most positive impact on the employees’ work performance?

What is the difference between the performance appraisal methodologies between expatriates and home office managers?

What are the different problems and issues encountered by companies when appraising expatriates?

How would you effectively address or avoid the different problems and issues encountered by companies when appraising expatriates?

Significance of the Study

This study deals with devising the most effective performance appraisal system that would create the most positive impact on the employees specifically on the expatriates and home office managers whose roles in the organization are equally vital.

Since there is a tendency for both the expatriates and home office managers to view performance appraisal as ineffective, flawed or unbiased, then there is a need to address these wrong perceptions by fixing and correcting the performance appraisal system being applied by organizations in order to avoid the issues and problems on the ineffectiveness of this system.

Today, the performance appraisal system proves to be the only widely accepted method of monitoring the employee’s work performance and if properly and effectively utilized by companies, it would prove to be an important source of information on how to most effectively motivate employees.

Related Literature

A. The Main Effects of Performance Appraisal to the Employees

In essence, performance appraisals have two direct effects on employees: one is positive and the other is negative. According to Bartolomei, K. (2004), the basic impacts of performance appraisal on employees can be positive. Generally, after an employee has been evaluated or appraised with good scores, they are motivated to perform or fulfill their job functions with increased enthusiasm, interest and focus. Since good employee performance appraisal connotes good feedback, this would automatically lead to increased performance and productivity among employees.

On the other hand, when the employees got a low score on their performance appraisal, they would normally feel demotivated and defocused at work. This is because when the employees feel unwanted and devalued at work, they automatically lose interest and motivation to get the work done (Bartolomei, K., 2004).

Based on the clear results or impacts of performance appraisal therefore, it all depends on the emphasis of the organization with regard to performance appraisal. When organizations utilize performance appraisal to focus on the weaknesses of their employees, then the employees would normally feel threatened and perceive performance appraisal as something negative, i.e., a form of punishment that is meant to correct their misdeeds at work. On the other hand, when the emphasis of performance appraisal is on the positive rewards of the employee after he/she has accomplished a particular work task, then the employees would automatically perceive performance appraisal as a form of a reward rather than a punishment which would translate to increased efficiency in work performance (Archer North & Associates, 2010).

The implication of this is therefore, that performance appraisal is by itself an effective method of measuring employee performance but its impact on the employees all depends on the organization’s purpose and emphasis of utilizing this method.

B. Performance Appraisal and Functional Employees

Haberman, T. (2009) states that performance appraisal indeed creates highly functional and effective employees if the method is used as a positive reward system. She further states that for performance appraisal to be effective, it should be used for the entire purpose of enhancing the quality of work of employees and not as a means to demotivate them.

One key to an effective performance appraisal system that produces highly functional employees is constant communication between the superior and the subordinate. Haberman, T. (2009) argues that the feedback system being applied through the performance appraisal should be conducted not merely once every quarter but on a regular and frequent basis. The supervisory task of bosses and supervisors is crucial even prior to the performance appraisal period as they should be the source of motivation, correction and work enhancement of employees on a day to day basis.

The author further suggests that in evaluating the effectiveness of the performance appraisal method in terms of producing highly effective and functional employees, the organization must also include the evaluation of the supervisors who execute this process. The performance appraisal method would obviously fail to be an effective measure of the employee’s work performance if the people who execute this method abuse or misuse the system. Furthermore, the performance appraisal method would fail to create highly productive and functional employees if the superiors utilize this method as a means to punish their misdeeds in the workplace (Haberman, T. 2009).

C. Performance Appraisal and Dysfunctional Employees

Mishinko (2004) states that performance appraisal may certainly produce dysfunctional employees if the system is used for purposes of destroying the employee’s reputation, degrading and criticizing him for purposes of putting him down. In a recent study performed by Archer North & Associates (2010), studies did indicate that constant negative feedback and poor scores from performance appraisal may negatively affect an employee’s attitude and performance towards work.

Since performance appraisal is directly linked to a person’s self-esteem, supervisors and managers must be very careful in utilizing this method as instead of creating highly functional employees, it may result to the opposite of creating highly dysfunctional employees. According to Mishinko (2004), when destructive criticism is applied in the performance appraisal system it would inevitably lead to angry, rebellious, and worse-performing employees as they would perceive themselves as undervalued and unwanted in the organization.

Aside from this, Archer North & Associates (2010) argues that biased performance appraisal also have much higher tendencies of poor employee performance, non-compliance to company rules and resistance to change from the employees. When the employees perceive that the company does not really need them, the tendency is for them to think of the next best means to take advantage of the company. Biased performance appraisal obviously leads to highly destructive and dysfunctional employees who have a track record of not delivering the company expectations of them.

D. The Effective Performance Appraisal System

Conducting effective and unbiased performance appraisal is an important requirement in every organization as this system serves as the means to check the overall work performance and efficiency of each individual employee in every organization.

According to Allan, P. (1994), effective performance appraisal systems are keys to an organization’s competitive advantage. This is primarily because it can be an effective source of accurate and reliable assessment on the work performance of every employee. Moreover, it is a source of valuable information such as employee’s feedback and means of motivating employees.

Nevertheless, Allan, P. (1994) suggests that there are a number of requirements that would need to be met in order for the performance appraisal system to be effective. First, the performance appraisal must be able to match the needs of the organization. It must perfectly be designed to address the organization’s needs in terms of its working culture, work environment, expectations on employees, and its standard of excellence when it comes to work performance. Second, the performance appraisal must contain concrete, specific and objective rating factors which achieve the aim of accuracy and reliability in measuring an employee’s work performance.

Third, an effective performance appraisal must not be biased in terms of age, gender, religion and race. It must contain truthful and highly-objective assessments on the employee’s work performance and must not contain discriminatory or prejudiced appraisals. Fourth, an effective performance appraisal must be uniform and standardized. The performance appraisal sheet used in one employee should be the same for all the other employees in order to avoid any biases and preferential treatment to certain employees (Allan, P. 1994).

Fifth, the performance appraisal system must include an appeals or review process to ensure the objectivity and accuracy of the evaluation conducted by a particular superior on a specific employee. Finally, performance appraisal evaluators must be qualified and trained in utilizing the system. They must be capable of giving fair, unbiased and appropriate feedback on the employees in order to effectively manage the system and meet the organization’s objectives (Allan, P. 1994).

E. The Performance Appraisal Method on Expatriates vs. Home Office Managers

According to Selmer, J. (1995), sending an employee outside the national borders of the country where the employee originally works for entails huge investments on the part of the company. Oftentimes even, the assignment takes from a period of three to over five years which implies that the investment allotted by the company on the overseas employee is a huge one. Hence, in order to ensure that higher returns on investment are achieved, the firm must design a differentiated and very tailor-specific performance appraisal in order to measure the expatriate’s work performance.

Selmer, J. (1995) states that normally, the performance appraisal designed for expatriate employees are patterned after the strategic goals of the headquarter-firm, which sent the employee on an overseas assignment. Aligning the expatriate’s performance appraisal to the firm’s strategic goals is vital as this normally involves a transfer of technologies and know-how, coordination between the headquarter-firm and its subsidiaries and innovation plans which the headquarter-firm wants to impart with the subsidiaries.

It is highly important that the expatriate’s performance appraisal be patterned after the headquarter-firm’s strategic goals in order to ensure that the employee is living up to the expectations and objectives of the firm which sent him. This is in contrast to the way performance appraisals are executed with home-office managers whose work performance are measured merely on the goals of the firm where he works for. Since home-office managers are not sent to work on the same firm on a different country, the home-office managers are evaluated solely on the basis of the goals, objectives and expectations of the firm which hired his services (Selmer, J., 1995).

Hence, the only difference between the performance appraisal conducted on expatriates and home-office managers is basically the overall design of the performance appraisal sheet. In the case of expatriates, the performance appraisal sheet is designed by the headquarter-firm for purposes of aligning the firm’s strategic goals with the employee’s work goals overseas while the performance appraisal sheet for home office managers is designed by the same firm who hired their services (Selmer, J., 1995).

The difference between the expatriates and home office managers’ performance appraisal is basically intended to address the fact that the standard design and purpose of performance appraisal in a specific firm may not adequately meet the requirements and needs in terms of measuring the work performance of the expatriates. Since the expatriate has a different goal and purpose to perform, his performance appraisal must be tweaked to suit the strategic goals of his own firm (Selmer, J., 1995).

F. Problems in Appraising Expatriates and the Means to Address these Issues

According to Selmer, J. (1995) one key issue that firms often face when it comes to appraising their expatriate employees is the difficulty in measuring the expatriate’s work performance especially when the headquarter-firm did not provide any performance appraisal sheet for the employee they sent to work overseas.

When this happens, the tendency is for the domestic firms to also apply the same domestic performance appraisal sheet the firm uses with its other employees, to measure the expatriate’s work performance. As a result, inaccurate and unreliable measures of the expatriate’s work competence and performance come out which do not really indicate the actual work performance output of the expatriate employee (Selmer, J., 1995).

Since many expatriates are improperly appraised or evaluated when it comes to their actual work performance, there is a need to establish the proper means of conducting performance appraisals among expatriate employees.

Ideally, the means of conducting performance appraisals among all employees must be uniform and standard. The rationale for this is in order to avoid the biases and preferential treatment to certain employees who may be regarded as “favorites” in the company. Nevertheless, there is an exemption to this rule as in certain cases, there is a need to also differentiate the performance appraisal of a certain employee in order to accurately and reliably measure the employee’s work performance. This only applies however to the case of an expatriate employee (Selmer, J., 1995).

Since the domestic performance appraisal used by the firm with its other employees does not clearly and accurately measure the work performance of an expatriate, then there is a need for the firm to differentiate the performance appraisal of expatriate employees. Preferably, the evaluator or the rater of the performance appraisal of expatriate employees must be two: one is a domestic-based superior who oversaw the expatriate’s work overseas and a headquarter-based superior who devised the performance appraisal of the employee and aligned it with the strategic goals of the headquarter-firm which sent him to work overseas (Selmer, J., 1995).

In order to add an unbiased and fair treatment with the expatriate’s work performance, the process must also involve a feedback system wherein the expatriate employee himself would be able to do self-appraisal or self-evaluation with regard to his own work performance. In this way, he would be able to affirm or contest the evaluation made to him by the evaluator.

Conclusion

Performance appraisal is one effective method and program that plays a highly-significant role in every organization. Its specific role in the professional development of an organization’s employees remains to be very vital, putting it at the core of every organization which aims to develop highly competent and professionally-skilled employees who will be the source of the company’s competitive advantage.

Since every organization has set goals and targets to achieve and the success of meeting these objectives relies on how well the employees perform their duties, the organization must indeed be truly concerned whether the employees are living up to the organization’s expectations of them. In order to accomplish this, the organization must set an effective performance appraisal management system that accurately and reliably measures the work performance of each individual employee within the organization.

Nevertheless, employees in every organization vary and so depending on the type of employee, the company must be able to conduct performance appraisal in a proper, fitting and effective way. For instance, in conducting an expatriate’s work performance, the firm must ensure that the expatriate’s work performance are aligned not on the strategic goals of the domestic company but on the goals of the headquarter firm who sent the employee on an overseas assignment. On the other hand, in appraising home office managers, the evaluation must solely be based on the goals, objectives and expectations of the domestic firm.

These, along with other principles in conducting effective performance appraisal must be at the core of every organization which thrives to flourish in this highly-competitive business environment.