FANJOY & ASSOCIATES
First, let's be sure about what we mean by performance appraisal. W.R. Tracey
(1991) defines performance appraisal as a "systematic, periodic review and analysis
of employees' performance. (p.263) It's important to be clear about how performance
appraisal differs from performance management, i.e., "a means of maintaining and
improving work behaviour...daily, year-round..."(p. 263)
There are many acceptable definitions of both performance appraisal and
performance management, but the key difference to bear in mind is that performance
management is an ongoing process, while performance appraisal is one method often used by
management as part of an ongoing performance management scheme.
Performance appraisals are used for many purposes, including:
- deciding promotions
- determining transfers
- making termination decisions
- identifying training needs
- identifying skill and competency deficits
- providing employee feedback
- determining reward allocations
There are many types of performance appraisal. What follows
is a listing of only some of the more common traditional approaches to performance
appraisal approaches, together with general cautionary notes.
1) Global essay and rating system
This method has two
1.) The first variation of this
method involves a manager writing an essay about what they consider to be an overall
assessment of an employee's performance. It is important to note that nothing obligates
the manager to justify anything within their assessment.
2.) The second variation has the manager rating the employee
using a list of terms such as "above average; fair; or poor."
- The appraisal content is not necessarily job related. Managers
subjectively choose their evaluation criteria.
- The subjectivity of this method denies employees reliable
feedback about their performance.
- The lack of objectivity and assessment of relevant performance
criteria may hinder an employee's ability to improve job performance, and further hinders
the organization's potential to optimize employee capacity, consequently impeding overall
- T. Philp (1990) points out that an absence of objective
measures by which to determine performance levels is an invitation to tension-ridden
employee-employer relations, because employees and managers often hold diametric views
about 1) which performance inputs/ outputs ought to be evaluated, and (2) what
evaluative judgments ought to be made about those performance inputs/ outputs.
2) Trait Rating
At the center of this method is a
list of personality/ disposition traits to which the appraiser must assign a numerical
rating or a descriptive rating of adjectives. Traits may include items such as
cooperation, motivation, flexibility, and attitude.
- This approach assumes that one can define and rate traits
objectively, but in practice, traits are too broadly defined and so are the criteria for
evaluating each trait.
- Because the trait approach is unreliable and invalid, it is
highly questionable as to whether it is able to offer any useful information about
employee performance and development. Furthermore, because of its reliance on erroneous
assumptions, the trait method is likely to be de-motivating to employees and create tension
between employees and managers.
3) Peer ranking
In the peer ranking approach, the
manager is typically asked to assess the overall performance of an employee by ranking
them in relation to other employees.
attempted to deal with the inherent subjectivity of this method by using a
forced-ranking method, which meant distributing ratings so they conformed to a normal
distribution curve. But as T. Peters (1987) points out, this means creating a statistical
imperative to evaluate a pre-determined portion of employees as losers.
- Fairly obvious is the negative potential performance effects
of labelling an individual as a loser.
- Inherent in the ranking approach, is the pitting of one
employee against another, thus inhibiting the potential for a collaborative work
- The larger the number of employees a manager has to evaluate
and rank, the less likely there will be sufficient familiarity with each person's work to
adequately complete the ranking exercise.
4) Critical Incidents Approach
Critical incidents focus the
evaluator's attention on those behaviours that are key in making the difference between
executing a job effectively and executing it ineffectively.
The manager documents the employee's on-the-job behaviours; separates each
behaviour or incident as either unsatisfactory or satisfactory (or some analogous
classification scheme), and essentially compares the two categories of incidents,
concerned mostly with the higher pile.
The degree of objectivity can vary greatly depending on the
appraiser and what different appraisers view as critical incidents. Managers need to
ensure they have sufficient quantity and quality of employee observational opportunities.
Behaviourally based scales and behaviourally anchored rating
BARS use the constituents of
critical incidents and graphic rating scales (similar to trait rating except it measures
performance factors rather than personality factors).
BARS use careful job analysis to determine the behaviours required for a
particular job. The required behaviour patterns become "anchors" for a rating
scale. Concrete job behaviour is displayed from best to worst. For any particular job,
BARS involve identifying the complete range of relevant job behaviours, and a design of the
appropriate performance dimensions.
- BARS are complex and difficult scales to construct.
Organizations usually need an expert to coordinate the process as well as an individual
with statistical skills.
- It is not only costly to set up, but costly to maintain as
6) Objectives and goal-setting procedures
The principle behind this approach
is to compare expected performance with actual performance. This approach was devised as a
method of incorporating performance planning into performance appraisal. In essence, the
manager, or manager and employee decide which goals must be achieved by the employee. The
goals are connected to a time schedule, are specific and measurable, and become the
measure of the employee's performance. Typically, the goals are established at the
beginning of the appraisal period and measured at the end of the appraisal period.
- According to Peters (1987), Drucker proposed MBO as a method
of non-bureaucratic self-management, but the method has been debased over time because it
has become burdened by top-down forces.
Generally speaking, most, if not all, performance appraisal approaches have
some fault. R. Aguayo (1990), a Deming student, offers some of Deming's more common
criticisms of performance appraisals:
- Encourage everyone to try to outdo everyone else, thus
discouraging cooperative behaviour;
- Act as a major barrier to people experiencing joy in their
- Tend to be descriptive and do not help performance to improve;
- Artificially create winners and losers;
- Tend to be a measure of past performance instead of present
- Do not adequately tap internal motivation;
- Artificially separate individual performance from that of the
whole company; and
- Focus on the individual to the exclusion of the system in
which the individual operates.
Performance appraisals are not inherently evil. There are
useful purposes for them, and it is possible to effectively integrate performance
appraisal into an overall performance management system. The key is to have both
performance appraisal methods and performance management processes tailored to each
organization's needs - 'cookie cutter' approaches never have worked, and never will work.