LIMITATIONS OF PERFORMANCE APPRAISAL SYSTEM.
BY
SMART LEARNING WAY
CONTENTS
1.)Introduction
of Performance Appraisal System
2.)What
is a Performance Appraisal?
3.)What
is Performance Management?
4.)Definition
of Performance Appraisal System
5.)Objectives
of Performance Appraisal
6.)Process
of Performance Appraisal System
7.)Limitations
of Performance Appraisal System
8.)Case
Study
9.)Conclusion
10.)Bibliography
Introduction
of Performance Appraisal System
Performance Appraisal is the formal conclusion
to a performance management process at the end of a prescribed term. Prescribed terms may be any length but are usually a 12 month period.
The Performance Appraisal process involves an interview between a staff member and their manager where the objectives and deliverables for the staff member are reviewed, and an overall assessment of the staff member's performance is agreed.
It must be understood that a Performance Appraisal is only a component part of a Performance Management System. Many people confuse the two and interchange the terminology.
Performance
appraisal is a management tool which is helpful in motivating and effectively
utilizing human resources. Assessment of human potential is difficult, no
matter how well designed and appropriate the performance planning and appraisal
system is.
Management
cycle and is the process of assessing an employee’s performance in the current
position. Thus ‘Appraisal’ is an annual affair while performance ‘management’
is a year round activity. Appraisal focuses on ratings while ‘management’
focuses on the work , the stakeholders, service levels, productivity,
motivation effort and all such performance related variables.
The
performance appraisal system should:
1.)be correlated with the organizational
mission, philosophies and value system;
2.)cover assessment of performance as well as potential for development;
3.) take care of organizational as well as individual needs; and help in creating a clean environment by
2.)cover assessment of performance as well as potential for development;
3.) take care of organizational as well as individual needs; and help in creating a clean environment by
-
linking rewards with achievements,
- generating information for the growth of the employee as well as of the organization, and
- suggesting appropriate person-task matching and career plans.
- generating information for the growth of the employee as well as of the organization, and
- suggesting appropriate person-task matching and career plans.
Feedback
is an important component of performance appraisal. While positive feedback is
easily accepted, negative feedback often meets with resistance unless it is
objective, based on a credible source and given in a skilful manner.
What
is a Performance Appraisal?
A
performance appraisal is an evaluation of job performance over a period of
time. It is basically an annual report card on an employee and how they
performed over the prior year.
Unfortunately
not all performance appraisal processes are the same and some are designed to
not only fail, but to create a negative experience for both the employee and
the manager.
Performance
Appraisal is the formal, systematic assessment of how well employees perform
their jobs in relation to established
standards .
What
is Performance Management?
It
is a system which manages performance. Potgieter(Human Capital Magazine,
undated) says it sets performance objectives aligned to strategic and/or
operational plans It is the system for managing, leading, organising it and
controlling performance.
Performance
Appraisal is the tool used to assess how well a person completes their job – a
process which is part of the overall performance management system.
Definition
of Performance Appraisal System
1.)The
process by which a manager or consultant examines and evaluates an employee's
work behavior by comparing it with preset standards, documents the results of the comparison,
and uses the results to provide feedback
to the employee to show where improvements are needed and why.
2.)Performance
appraisals are employed to determine who needs what training, and who will be
promoted, demoted, retained, or fired.
3.)Performance
appraisal is the process of obtaining, analyzing and recording information
about the relative worth of an employee. The focus of the performance appraisal
is measuring and improving the actual performance of the employee and also the
future potential of the employee. Its aim is to measure what an employee does.
4.)According to Flippo, A prominent personality in the field of Human resources, "performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job."
5.)Performance
appraisal is a systematic way of reviewing and assessing the performance of an
employee during a given period of time and planning for his future.
6.)
Performance appraisal is defined by Wayne Cascio as “the systematic description
of employee’s job relevant, strength, weakness.”
Objectives
of Performance Appraisal
To
effect promotions based on competence and performance.
To
confirm the services of probationary employees
To
assess the Training and Development needs of employees
To
decide upon a pay rise
To
let the employees know where they stand in their performance
To
improve Communication
To determine whether HR programs like
Selection,Training and Transfers have been effective or not.
Process
of Performance Appraisal System
1.)Planning
Phase:
Set mutually agreed upon goals and guidelines
for employee evaluation. Determine the key objectives for measuring success in
the position and set developmental goals to encourage greater productivity and
results.
2.)Performance
Phase:
The
longest phase that allows the employee to meet goal and objectives, develop new
skills and track accomplishments or set backs in the system throughout the
process. Managers are reviewing performance and making notes as well.
3.)Assessment
Phase:
Employees
are given an opportunity near the end of the performance cycle to provide
feedback on the preset goals, competencies and objectives to deliver to their
manager. This is when the manager will document feedback on the employee
performance as well. The system allows senior managers to review all submitted
documentation and sign off before the actual review is complete.
4.)Review
Phase:
Manager
and employee sit down together to discuss the year in review. Reviews can be
presented online or printed and e-signature that the review took place can be
captured in the system to protect the organization if legal review should
occur.
How
can Performance Appraisal be used?
The
Performance Appraisal is usually used to identify:
1.)Development needs for the individual
1.)Development needs for the individual
2.)A
positioning of the staff member's performance for remuneration review
Limitations
of performance appraisal system
1.
Halo effect :-
In
this case the superior appraises the person on certain positive qualities only.
The negative traits are not considered. Such an appraisal will no give a true
picture about the employee. And in some cases employees who do not deserve
promotions may get it.
2.
Horn effect :-
In this case only the negative qualities of the employee are considered and based on this appraisal is done. This again will not help the organization because such appraisal may not present a true picture about the employee.
3.
Central tendency :-
In this case the superior gives an appraisal by giving central values. This prevents a really talented employee from getting promotions he deserves and some employees who do not deserve any thing may get promotion.
4.
Leniency and strictness :-
Some bosses are lenient in grading their employees while some are very strict. Employee who really deserves promotions may loose the opportunity due to strict bosses while those who may not deserve may get benefits due to lenient boss.
5.
Spill over effect :-
In this case the employee is judged +vely or –vely by the boss depending upon the past performance. Therefore although the employee may have improved performance, he may still not get the benefit.
6.
Fear of loosing subordinates and spoiling relations :-
Many
bosses do not wish to spoil their relations with their subordinates. Therefore
when they appraise the employee they may end up giving higher grades which are
not required. This is an injustice to really deserving employees.
7.
Goodwill and techniques to be used :-
Sometimes a very strict appraisal may affect the goodwill between senior and junior. Similarly when different departments in the same company use different methods of appraisal it becomes very difficult to compare employees.
8.Lack
Of Clarity:-
The
objective of performance appraisal is to evaluate and develop employees. An
organization should avoid using one appraisal system to achieve both
objectives. The particular system of the appraisal system should clarify before
it is designed and should be discussed with all managers and employees to gain
their commitment. Any performance appraisal system, however good the design, is
unlikely to succeed if the managers and employees are suspicious of its
objectives.
9. Appraisal Errors:-
These are as follows; Halo, Recency, Contrast
effects: the Halo effect occurs when a manager rates an employee high or low on
all teams, because of one characteristic. For instance; if an employee has few
absences, his manager might give him high rates in all other area of work.
The
recency effect happens when a rater gives greater weight to recent occurrence
when appraising an employee’s performance. This sort of effect is an
understandable rater’s error. It may not be easy for the manager to remember
all events that happened like for instance; six months ago.
Contrast
error occurs when employees are rated relatively to other employees rather than
to performance standards. For example; if everyone else in a group is doing
mediocre job, an employee performing somewhat better may be rated as excellent
because of the contrast effect.
10. Unequal Performance:-
Unequal Performance Standards People differ
from each other in the way they perceive things. What is good for some may be
bad for others. Therefore managers have different judgments in appraising their
employees. Managers’ attitudes to their employees differ, so different managers
will appraise the same people quite differently which could make appraisal
system subjective and manipulative.
11.
Cultural Factors:-
Culture
has profound impact on the appraisal system as it should be in consonance with
the organizational culture. A system based on the employee participation and
openness would be non-starter if the organizational culture is authoritarian
and non-participative in its approach to other employee related policies.
‘Readymade’ performance review system imported from other organization rarely
function satisfactorily. Their failure is partly due to culture differences.
Thus culture is a vital factor to look after.
12.
Time Consuming
It is recommended that a manager spend about an hour per employee writing performance appraisals and depending on the number of people being evaluated, it can take hours to write the department’s PA but also hours meeting with staff to review the PA. I’ve know managers who had 100 plus people to write PAs on.
13.
Discouragement
If the process is not a pleasant experience, it has the potential to discourage staff. The process needs to be one of encouragement, positive reinforcement and a celebration of a year’s worth of accomplishments. It is critical that managers document not only issues that need to be corrected, but also the positive things an employee does throughout the course of a year, and both should be discussed during a PA.
14.
Inconsistent Message
If a manager does not keep notes and accurate records of employee behavior, they may not be successful in sending a consistent message to the employee. We all struggle with memory with as busy as we all are so it is critical to document issues (both positive and negative) when it is fresh in our minds.
15.
Rater Biases
It is difficult to keep biases out of the PA process and it takes a very structured, objective process and a mature manager to remain unbiased through the process. this occurs when manager values distort the rating. Reasons for bias differ, for instance, religion, age,Gender, appearance or other arbitrary classifications. If a manager strongly dislikes a certain ethnic group, this will be negatively reflected in appraisal if the appraisal scheme is not properly designed.
16. The review is done in retrospect and is an
average of six months old so recollection of events is poor
17.
The opinions of staff and manager are often in opposition, causing
de-motivation
18.
The process is usually Manager driven and the staff member is expected to be
compliant in the interview
19.
The process usually involves the Manager giving their opinion and the staff
member having to defend the position, rather than a positive discussion
20.
There is no room for remedial action during the year
21.The
process is usually done in a rushed manner to meet a budget development process
and therefore loses its relevance to performance
22.If
not done appropriately, can be a negative experience.
23.Are
very time consuming, especially for a manager with many employees.
24.Are
based on human assessment and are subject to rater errors and biases.
25.If
not done right can be a complete waste of time.
26.Can
be stressful for all involved.
Case
Study
A
Sweet Employee Performance Appraisal System for Jelly Belly
To meet their strategic goals, Poulos and her team drew up a list of the criteria that a new system had to meet. Top on the list was ease of use. "We didn't want to end up with a system that is so complicated that the managers wouldn't use it," Poulos said. A new system also had to save time. Because employees were in multiple locations, it needed to be web-based for accessibility. And it had to be flexible, easily incorporating core competencies into different forms.
Jelly Belly's selection committee looked at products from different software vendors. "We eliminated right away those that were geared to very large companies and those that were not web-based," Poulos said. "We also eliminated those that offered too many options for customization. It's one thing to offer options, but another thing when the product requires so much customization that it becomes overwhelming."
Solution
The
committee selected Halogen Appraisal , a
web-based employee performance and talent management application from
Halogen Software. "We liked the way it looked, and we really liked the
user-friendliness of it. It's easy for the managers to use and it's
customizable without overwhelming them," Poulos said. After two days of
training by Halogen staff, four members of Jelly Belly's HR team set out to
train the company's supervisors on the new system. About 50 managers received a
crash course in using Halogen Appraisal, and then used it to complete
annual employee evaluations in May.
Jelly Belly's HR team is now customizing the software to include more relevant
competencies and to respond to comments
from managers and staff on the new system.
"The feedback has been really
positive, from both managers and employees as well. Some staff said this was
the best appraisal they've had," Poulos said, "They felt the
evaluations were fair and realistic, and supervisors had the scope to provide
more relevant and legitimate comments than they could before. Rather than just
clicking on a bunch of canned comments, they were accurately reviewing the
employee."
The new automated employee performance
appraisal system has completely formalized and organized Jelly Belly's employee
evaluation process. "It allows us to standardize competencies across job
classifications, add signature and comment sections to make our process more
interactive, and increase accessibility for remote managers," Brown said.
Under Jelly Belly's old system, employees conducting reviews started from scratch once a year with new performance journals . Halogen eAppraisal will let them log notes throughout the year and regularly update their on-line appraisals. Employees use one consistent employee evaluation form to add comments and to sign their appraisals.
Under Jelly Belly's old system, employees conducting reviews started from scratch once a year with new performance journals . Halogen eAppraisal will let them log notes throughout the year and regularly update their on-line appraisals. Employees use one consistent employee evaluation form to add comments and to sign their appraisals.
Results
The
web-based product helps remote and traveling managers maintain access to the
forms and the data they need to evaluate their staff. "In our old system,
a few folks in Chicago would have access to the system. But we have managers in
California with Chicago subordinates. It's important that they can share the
same forms across the board. And we have folks who are on the road a lot or are
working out of home offices, so having them be able to access this is a huge
point for us," Brown explained. Organizing and automating the appraisal
process results in performance appraisals that are more accurate and fair,
Brown noted. "This is important because, after all, an employee appraisal
is a legal document," he said.
The
new system is also helping Jelly Belly track training requirements and
development in its staff, Poulos added. "We've always had a separate
training manual. Now we can go in to the evaluations and more easily monitor
employees' skills development, see what training is needed by individuals and
check the due dates for training and renewal. That makes it much easier for us
to keep track," Poulos noted.
The new employee performance and talent management system has proven to be a big time-saver for Jelly Belly's HR team. "Since this year was the first time using the new system, it took us a little longer than it will next year. But the process was a whole lot faster," Poulos said. "It has already saved us a lot of time, and we got everybody's appraisals done in one shot." The new system is also helping Jelly Belly to better align employee goals with the company's business objectives. And for one of America's best-known candy companies, it doesn't get any sweeter than that.
The feedback has been really positive, from both managers and employees as well. Some staff said this was the best appraisal they've had .
-Margie Poulos, Manager of HR
The new employee performance and talent management system has proven to be a big time-saver for Jelly Belly's HR team. "Since this year was the first time using the new system, it took us a little longer than it will next year. But the process was a whole lot faster," Poulos said. "It has already saved us a lot of time, and we got everybody's appraisals done in one shot." The new system is also helping Jelly Belly to better align employee goals with the company's business objectives. And for one of America's best-known candy companies, it doesn't get any sweeter than that.
The feedback has been really positive, from both managers and employees as well. Some staff said this was the best appraisal they've had .
-Margie Poulos, Manager of HR
Conclusion
Finally
,a performance appraisal is only as good as the performance management, system
it is part of. If an organization merely does performance appraisals for
the sake of doing them, they are wasting their time. But if they
strategically incorporate performance management into their strategic plan to
implement business goals, they will provide a process to accomplish those
goals.
It is a powerful tool to calibrate, refine and
reward the performance of the employee.
It helps to analyze his achievements and
evaluate his contribution towards the achievements of the overall
organizational goals.
By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management's interest in the progress of the employees.
By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management's interest in the progress of the employees.
Performance appraisal may be conducted once in
every 6 months or once in a year. The basic idea of the appraisal is to
evaluate the performance of the employee, giving him a feed back. Identify
areas where improvement is required so that training can be provided. Give
incentives and bonus to encourage employees etc
Bibliography
1.)
Management of Performance Appraisal.
By
Monga, M. L. 1983.
Bombay: Himalaya Publishing House.
2.)
Performance Appraisal Theory and Practice.
By
Rao, T. V. 1985.
New Delhi: Vikas Publishing House.
3.)Make
performance appraisal relevant
Oberg, W. 1972.
Harvard Business Review
4.)A
Manager's Guide to Performance Appraisal.
Patten, T. H., Jr. 1982.
5.)
Human Resource Management
-C.B.Gupta
Sultanchand
& Sons
6.)Human
Resource &Personnal Management
K.Aswathappa
Tata
Mc Graw hill
7.)www.google.com
- www.appraisal-smart.com
-www.soft tech.com
-www.newmanglobal.biz
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