Defining Performance Appraisal

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Performance appraisal is the process of determining how well individuals are

meeting the work requirements of their jobs. Just as most organizations prepare

job descriptions to answer the question ‘‘What do people do?’’ most

organizations also prepare performance appraisals to answer the question

‘‘How well are people performing?’’ It is important to emphasize that performance

appraisals are properly viewed within the context of performance management,

23 which is the process of creating a work environment in which

people want to perform to their peak abilities and are encouraged to develop

themselves for the future. (See Exhibit 8-3.) Like so many terms in the HR field,

performance management can be a term in search of meaning and can refer

(variously) to after-the-fact performance appraisal, before-the-fact performance

planning, during-performance feedback, and the whole cycle of planning

for performance, identifying and knocking down performance barriers, providing

feedback during performance, and giving feedback upon the completion

of performance.

Performance appraisals are commonly used to justify pay raises, promotions,

and other employment decisions. They are also critically important for

SP&M, since few organizations will advance individuals into key positions

when they are not performing their present jobs adequately.

While a fixture of organizational life, employee performance appraisal has

not been immune to criticism. Indeed, it is rare to find managers who will

enthusiastically champion the performance appraisal practices of their organizations.

In recent years, appraisals have been increasingly prone to litigation.24

Moreover, appraisals have been attacked by no less than the late curmudgeonly

guru of Total Quality Management, W. Edwards Deming. Deming faulted

employee performance appraisal for two primary reasons. First, Deming

believed that performance appraisal leads to management by fear. Second,

appraisal ‘‘encourages short-term performance at the expense of long-term

planning.’’25 It prompts people to look good in the short run, with potentially

devastating long-term organizational effects.

The central point of Deming’s argument is that people live up to the expectations

that their superiors have for them. That is the Pygmalion effect, which

takes its name from the ancient artist who fell in love with his own sculpted

creation of the woman Galatea. The Pygmalion effect asserts that managers

who believe that their employees are performing effectively will create a selffulfilling

prophecy. The underlying assumption, then, is that the world is influenced

by viewers’ beliefs about it.

When performance appraisal is conducted in a highly critical manner, it

Exhibit 8-3. The Relationship Between Performance Management and

Performance Appraisal

Performance Management

(focuses on all aspects of the

work environment, work, and

worker that impact on

performance and can be past,

present, or future oriented)

Performance Appraisal

(usually focuses on past job

performance and is used to

make decisions on pay,

promotion, and other job

changes)

Performance management addresses this question: What is necessary to

encourage performance now and in the future?

Performance appraisal addresses this question: How well are people

performing their jobs?

has the potential to demotivate and demoralize people. Indeed, research evidence

indicates that performance appraisal interviews focusing on ‘‘what people

are doing wrong’’ can actually lead to worse performance.

How Should Performance Appraisal Be Linked to Succession Planning

and Management?

Despite harsh attacks from critics, performance appraisal is likely to remain a

fixture of organizational life. One reason is that, despite their flaws, written

appraisals based on job-related performance criteria are superior to informal,

highly subjective appraisals at a time when employees are increasingly prone

to litigate. In the absence of written forms and formal procedures, managers

do not cease appraising employees; rather, they simply do it in a less struc-

Assessing Present Work Requirements and Individual Job Performance 195

tured fashion. Worse yet, they may face no requirement to provide employees

with feedback—with the result that they can never improve. Indeed, few can

dispute that employees will not improve their performance—or develop in

line with succession plans—if they have received no timely, concrete, and specific

feedback on how they are doing or what they should do to improve.

While annual performance appraisals are no substitute for daily feedback, they

should be used together to help employees develop.26 Otherwise, the organization

will have no records of employee performance, other than the faulty

memories and unarticulated impressions of supervisors and other employees,

on which to base pay, promotion, transfer, or other decisions.

There are many approaches to performance appraisal, and much has been

written on the subject.27 (Different types of appraisals are summarized in Exhibit

8-4.) To be effective, however, performance appraisal should be based as

closely as possible on the work that employees do. Used in conjunction with

individual potential assessments—which compare individuals to future job assignment

possibilities or future competencies—they can be a powerful tool

for employee improvement and development. For that reason, the best appraisal

is one that examines employee performance point-by-point to present

responsibilities of the present competencies.

One way to do that is to begin with a position description. Employees

should then be appraised against each activity. In this way, the organization

can maintain precise and detailed records of employee performance in each

facet of the individual’s job; and the individual will receive specific feedback

about how well he or she is performing. The problem is that such appraisals

can be time-consuming to write and conduct. And, in the case of individuals

who are performing poorly, their immediate superiors must take the time to

explain what needs to be improved and how it should be improved. To save

time, some organizations attempt to develop simple, easy-to-fill-out appraisals

to ease the paperwork burden on supervisors. Unfortunately, the easier an

appraisal is to fill out, the less useful it is in providing feedback to employees.

To solve that problem, try developing free-form appraisals that use job

descriptions themselves—or competencies—as the basis for appraisal. (See Exhibit

8-5 for a worksheet to help prepare such an appraisal.) Another approach

is to develop appraisals so that they are geared to future improvement rather

than past performance. In that way, they are focused less on what employees

are doing wrong and more on what they can do right. If that approach is

followed consistently, it can provide useful information to employees about

what they should do to prepare themselves for the future—and qualify for

succession.

Creating Talent Pools: Techniques and Approaches

A talent pool is a group of workers who are being prepared for vertical or

horizontal advancement. Vertical advancement usually means promotion up

(text continues on page 199)

Exhibit 8-4. Approaches to Conducting Employee Performance Appraisal

Approach Focus Brief Description

Global Rating Focuses on the individu- The appraiser is asked to charal’s

overall job perform- acterize an individual’s overall

ance. job performance on a single

scale or in a single essay response.

Chief Advantage:

Appraisers can make responses

quickly.

Chief Disadvantage:

Performance is more complex

than a single rating can

indicate.

Trait Rating Focuses on traits related Appraisers are asked to charto

the individual’s per- acterize an individual’s job

formance. Examples of performance over a specific

traits might include ‘‘ini- time span using a series of

tiative’’ or ‘‘timeliness.’’ traits. Often, trait ratings are

scaled from ‘‘excellent’’

through ‘‘unacceptable.’’ The

appraiser is asked to check an

appropriate point on the scale.

However, traits can also be assessed

by an essay response in

which the appraiser is asked to

write a narrative about the individual’s

performance relative

to the trait.

Chief Advantage:

Appraisers can make responses

quickly.

Chief Disadvantage:

Traits can have different

meanings, so consistency of

rating and job-relatedness

of traits may be critical issues

to deal with.

Assessing Present Work Requirements and Individual Job Performance 197

Dimensions/ Focuses on each job ac- Think of a dimensional rating

Activity Rating tivity, duty, responsibility, as a ‘‘job description that has

or essential function. been given scales to assess

performance.’’ Appraisers are

asked to rate individual performance

on each job activity,

duty, responsibility, or essential

job function. Responses

may be provided by checking

a mark on a scale or by writing

an essay.

Chief Advantage:

This approach to appraisal

makes a deliberate effort to

tie performance appraisal to

job duties, thereby ensuring

job-relatedness.

Chief Disadvantage:

To work effectively, both appraiser

and performer must

agree in advance on the duties.

That means job descriptions

must be updated

regularly, and that can become

time-consuming.

Behaviorally Focuses on job behav- A BARS performance appraisal

Anchored iors—observable activ- typically consists of 5 to 10

Rating Scales ities—distinguishing vertical scales that are devel-

(BARS) exemplary from average oped through a critical inciperformers.

dent process to distinguish

effective from ineffective performance.

Each scale represents

actual performance. A

BARS rating system is often

compatible with a competency-

based approach.

Chief Advantage:

Since each BARS is tied directly

to job activities, this

approach to performance

(continues)

Exhibit 8-4. (continued)

Approach Focus Brief Description

appraisal enjoys high face

validity. It can also lead to

improved job performance

by clarifying for performers

exactly what behavior is desirable

and undesirable.

Chief Disadvantage:

To work effectively, BARS requires

considerable time

and effort to devise. That

can exceed the resources—

or commitment—

of many

organizations.

Management Focuses on the results of Before the appraisal period

by Objectives job performance rather begins, the appraiser and per-

(MBO) than processes to former jointly agree upon job

achieve results. results desired. At the end of

the appraisal period, the results

are compared to the objectives

established at the

outset of the appraisal period.

Chief Advantages:

The focus is on results rather

than on methods of achieving

them. Both appraiser

and performer are involved

in establishing performance

objectives.

Chief Disadvantages:

For the appraiser and performer

to reach agreement,

much time may be required.

Writing performance objectives

can turn the process

into a ‘‘paper mill.’’

Assessing Present Work Requirements and Individual Job Performance 199

Exhibit 8-5. A Worksheet for Developing an Employee Performance

Appraisal Linked to a Position Description

Directions: Use this worksheet to develop a ‘‘free-form’’ employee performance appraisal

that is based specifically on the position description. In the left column below,

indicate what the position description indicates are the duties, activities, responsibilities,

key result areas, competencies, or essential job functions. Then, in the right

column, indicate how performance in the position may be measured.

What are the position’s activities, How should performance be measured

duties, responsibilities? (List them from for each activity, duty, or responsibility?

an up-to-date position description.) (Indicate appropriate ways to measure

successful performance.)

the organization’s chain of command. Of course, in recent years, promotions

have been diminishing in number. Horizontal advancement usually means

that the individual’s competencies are enhanced so that he or she has a

broader scope of knowledge, skills, and abilities in keeping with the organization’s

direction or his or her occupation.

The use of talent pools is one reason that SP&M is different from replacement

planning. Instead of identifying only one or several backups for key positions,

as is common in replacement planning, the idea of talent pools is to

create as many backups as possible among people who are willing to develop

themselves. (Of course, there are cost-benefit implications to committing to

talent pools. Organizational leaders should not promise them if they are not

willing to pay for them.)

To create talent pools, organizations should possess competency models

by departments, job categories, hierarchical levels, or occupations. The competency

models may describe present competencies or desired future competencies.

Also important, as described in Chapter 4, are value statements that

indicate desired corporate values or desired ethical conduct.

Begin the process of creating a talent pool by clarifying targeted groups.

Answer such questions as these:

Who is included?

What is a talent pool? How many talent pools should exist in the organization?

When is each talent pool to be formed?

Where is each talent pool to be located? (What is its geographical

scope?)

Why is each talent pool desirable?

How will the talent pool be analyzed for current bench strength and

desired future bench strength, and how will the status of each talent

pool be tracked and assessed?

How will individuals in the talent pool be developed for the future?

There are as many ways to define talent pools as there are to define competency

models. In other words, it is possible to have talent pools by department,

by hierarchical level on the organization’s chain of command, by job category,

by region, by occupation, and by other means.

It is worth emphasizing that, if talent pools are formed, no one person

should be designated as a successor for a key position. Instead, the logic is

that all people in the talent pool will be developed in line with present and

future organizational and individual needs. To be effective, a talent pool

should be paired with competency models, appropriate performance management

practices to encourage individual development and performance, appropriate

potential assessment strategies, and appropriate developmental efforts.

When a vacancy occurs, the individuals compete. Instead of giving the job to

those with the longest time in position or those who are personal favorites of

immediate supervisors, individuals are then prepared to compete on the basis

of demonstrated track records in performing their work and developing themselves.