Performance appraisal relates to the basic human tendency to make judgments about those one is working with, as well as about oneself. Performance appraisal dates back from to the Second World War. The roots of performance appraisal in the 20th century can be traced to Taylor's pioneering work on Time and Motion studies. Take a look at traditional and modern approaches to performance appraisal.
Performance appraisal traditional approach
In the beginning, performance appraisal began only as a simple method of income justification. It was used to decide whether salary or wage of an individual employee was justified or not. The process was firmly linked to the material outcome an employee will enjoy for good performance. If the employee's performance was less than expected, then a cut in the pay would follow. If the employee's performance was better than expected, a rise in pay would follow.
This process did not give any consideration to the developmental possibilities of the employee. A pay cut was the only impetus for an employee to either improve or continue to perform well. In many instances, this basic system of performance appraisal failed to achieve the intended results.
The traditional approach is also known as overall approach. This is primarily concerned with the overall organization and with the past performance of the employees only. Since the traditional emphasis was only on reward outcomes, it was progressively rejected. It was only in the 1950s that performance appraisal came to be recognized as a useful tool to motivate and develop the employee potential.
Performance appraisal modern approach
Nowadays, in many organizations, performance appraisal is used either directly or indirectly to help determine reward outcomes. The results of the performance appraisal help in identifying the better performing employee who should be paid more and rewarded with promotions and bonuses. Performance appraisal systems are more structured and formal between the subordinate and the supervisor.
Appraisal is conducted periodically, either annually or twice a year. The weaknesses and strengths and opportunities for improvement and skill development of the subordinate are discussed on a healthy platform. Poor performers are counseled to perform better. In extreme cases, demotion, dismissal or decrease of pay is resorted to. The modern approach to performance appraisal is a developmental approach. This recognizes employees as individuals and encompasses the goal setting process.
Performance appraisal controversy
Performance appraisal programmes have both strong advocates in its favor as well as strong adversaries. There are several researchers, management commentators and psychometricians who have expressed doubt about the validity and reliability of the performance appraisal process. There are others who view performance appraisal as the 'most crucial aspect of organizational life'. Between these two extremes, everybody endorses the use of performance appraisal although there are different opinions on how and when to apply it in an organization.
Linking appraisal to rewards
Several researches have reported that appraisees seem to have greater acceptance for the performance appraisal process and they feel more happy and satisfied if it is linked directly to rewards. The argument goes that evaluation of employees for reward purposes and frank communication about their performance with them are part of the basic responsibilities of the management.
Yet there is another strong group who feel that the human inclination to judge can cause serious motivational, ethical and legal problems at the workplace. They view the reward linked employee appraisal programme as judgmental, punitive and harrowing instead of constructive review and encouragement for the employee. But whatever the practical flaws may be, performance appraisal is the only process that is available to help the employer achieve a fair, decent and consistent reward outcomes.
Performance appraisal requisites
Performance appraisal process
Performance appraisal techniques
Essay appraisal: The appraiser is asked to write an essay on the employee's strengths, weaknesses and potentials. This technique is more valid and formal than complicated methods of appraisal. The biggest drawback in this method is that it is difficult to combine and compare the essays as it may touch upon various aspects of one's performance and qualifications. Another drawback is the variability of length and content in the essays.
Graphic rating scale: This method is both consistent and reliable. A person's quality and quantity of work is assessed in a graphic scale. A variety of factors are taken into consideration including his/her personal traits like cooperation and reliability. Although the graphic scale is widely used, it is under frequent controversy. But the graphic scale is more economical to develop and it is not complicated. Therefore it is easily acceptable by raters.
Forced choice rating: This technique is unbiased in comparison to other techniques. This also does not involve the intervention of a third party in appraisal. In this method, the raters are asked to choose from among groups of statements those that best fit the individual employee who is rated and those that least fit him/her. The statements are then weighed and scored the same way psychological tests are scored. This technique is limited to lower and middle management levels in companies as the levels of jobs are similar to make standard common forms with this group.
Field review: The field review is a group judgement technique and it tends to be fairer and more valid than individual ratings. Here a member of the personnel department meets with small groups of raters from each supervisory unit and goes over each employee's ratings with them. In this way, each rater conceives uniform standards, arrives at group consensus and identify areas of disagreement between inter raters. But it is time consuming and arduous.
Critical incident appraisal: This technique is appreciated by many employees and employers because it is natural and gives a supervisor actual factual incidents to discuss with the employee. In this method, supervisors are asked to keep a record on each employee and to record actual incidents of positive and negative behavior. The discussion between the supervisor and his subordinate deals with actual behavior and not on traits. Here the performance of the employee and not his personality gets criticized. The employee will specifically get to know how to perform differently if he wants to be rated higher the next time.
Work standards approach: In this technique the organizations set the daily work standards for the employees instead of asking the employees to set their own performance goals. This technique aims at improving productivity and makes possible an accurate and objective appraisal of work of employees and supervisors. Considerable amount of time is spent on observing the employees on the job, simplifying and improving the job where possible and arriving at realistic output standards. Different people are evaluated differently and it becomes difficult to rate them for comparison especially at the time of deciding promotions and salary increase.
Ranking methods: This method is useful when it becomes necessary to compare people who work for different supervisors, when there are several individual ratings an when appraisal forms are not particularly useful. This method is also employed to compare people in different units of an organization.
Assessment centers: In assessment centers, the assessment for future performance or potential of the employee is assessed in contrast to the past performance. Individuals from different departments are brought together and they spend two to three working days on group assignments similar to ones they will be handling if they were promoted. The pooled judgement of the observers leads to order of merit ranking on the participants.
Performance appraisal drawbacks