Performance Appraisal

This is another aspect (step) in the process of staffing. It is the process of identifying, measuring and developing human performance in the organization. Most managers find performance appraisal quite a difficult activity. It is not always easy to judge subordinates performance accurately and it is even more difficult to convey the judgement to the subordinates in an amicable manner.

The performance appraisal may be either formal or informal.

Informal appraisal is the continuous process of feeding back to subordinates information about how well they are doing their work and it is usually on a day to day basis.

Formal (systematic) appraisal occurs after given time periods e.g. yearly or half yearly and it aims to rate the employees' performance, to identify those employees that deserve a raise or promotion and those who require further training. Formal appraisal has four basic purposes:

    1.  It lets subordinates know formally how their current performance is being rated.
    2.  It identifies those subordinates who deserve merit rises.
    3.  It locates those subordinates who require additional training.
4.  It plays an important role in identifying those subordinates who are candidates for promotions.

Formal appraisal can be effected by: a superior rating a subordinate, a group of superiors rating a subordinate, subordinates rating bosses, or a group of peers rating a colleague.

The four basic purposes of appraisal seem to suggest that compensation and performance improvement are the main reasons for appraisal but there are other reasons for appraisal.

•    To provide feedback to employees in terms of quality and quantity of job performance without which employees have less knowledge of how well they are doing on the job and how they might improve.
•    Appraisals are important for making important personnel decisions e.g. transfers, demotions, promotions, discipline and separations. Because of their very sensitive consequences these decisions must be made on adequate information.
•    Appraisals form the basis of organizational reward systems particularly merit based compensation plans.
•    Appraisals suggest areas in which employees training and development are most needed. If employee appraisals consistently point to problem areas programs can be developed to remedy the situation.
•    Performance appraisals can be a self development indicator where individuals learn about their strengths and weaknesses as seen by other people.

Errors that could occur during appraisal

1. Central tendency error—superiors have been found to rate most of their employees within a narrow range. The rater fails to distinguish significant differences between group members and lumps everyone together in an average or above average category.
2. Strictness/Leniency error—some superiors may be by nature overly strict or overly lenient and this biases the appraisal activity.
3. Halo effect—this exists where the rater assigns the same rating to each factor being evaluated for an individual e.g. if he rates an employee above average on promptness he may have the tendency to rate him above average on all other factors and thus fail to identify the weak/strong points.
4. Recency error—in an annual evaluation a supervisor may give undue emphasis to performance during the past 2 or 3 months and ignore performance levels prior to this. This leads to uneven performance as well as contributing to the "playing the game" attitude where employees relax in the initial months and then work very hard just before the evaluation period.

5. Personal biases—personal biases can exist in the form of racialism, sex, background etc. An evaluater may have preconceived ideas about people of a certain sex, age or race and thus evaluate them in the light of his preconceived opinions. Here also the effects of stereotypes come into play during evaluation.

Techniques of performance appraisal

(a)    Graphic rating—assessing performance by a graph or a line representing the range of a personal trait or dimension of the job.
(b)    Behavioural rating—assessing performance by specific description of work behaviour.
(c)    Work standards approach—comparing actual performance with present standards.
(d)    Essay—writing a commentary discussing an individuals strengths and weaknesses.
(e)    Management by objectives—setting of future objectives and action plans jointly by subordinates and superiors and then measuring outcomes against goals.
(f)    Ranking method—involves ranking of employees in one department or work unit ranging from the best to the worst performer based on overall contribution to the organization.