There are three fundamental questions every business organization must consider. The first is how are the employees doing? The second is why? The third is what should the employees be doing? In this of advancement of technology and rapid obsolescence of knowledge, every business organization must continuously assess the performance of its most important asset and determine what needs to be done to improve their performance. The effective assessment and evaluation of employee performance is one of the goals of performance appraisals.
Early studies conducted by companies reveal that performance appraisals may serve as an effective motivating strategy to boost employee performance. This conclusion was reached after these companies noticed that employees with the same skills, abilities, educational background who are generally given the same compensation package perform differently at work. Some perform very well, while some were performing poorly. As a result, the emphasis for reward was gradually replaced by other motivational tools.
One of them is performance appraisals. Some managers however find performance appraisals as one of their most difficult function. (Linda Gravett p. 1) They fail to realize that the managers have been doing this function for a long time even at the time they were still supervisors. As a human resource management function, performance appraisal has started only in the 20th Century. However, the essence of performance appraisals which is judging the work of employees has been practiced by employers and managers since time immemorial.
According to Shannon Burger (2006) it is a basic human tendency to make judgments about those one is working with, as well as about oneself. ”(Burger p. 11) Recently, however, some practitioners in the field of Human Resource Management that and Human Resource Managers are questioning the effectiveness of the performance appraisal System as an effective motivational strategy. A research on this issue shows that about 80 percent of companies in the United States use annual performance reviews of some kind. Yet 85 percent of these firms are dissatisfied with employee appraisals.
Also, surveys conducted by Mercer and Wyatt consulting firms report that a majority of the firms are currently experiencing problems with their performance appraisal. (Chalmer E. Labig Jr. & Tan Yew Chye, p. 1) On the other hand, some are in favor of the continuation of the performance appraisal systems in company arguing that the performance appraisals help motivate and change the behavior of employees. It helps in measuring the performance of every employee and his effectiveness on the job.
It also is a good mechanism by which the employers may provide feedback to their employees on their performance. This research paper seeks to determine whether performance appraisals indeed can motivate the employees and help result to a change in their behavior and attitude toward their work. This research paper proceeds on the theory that performance appraisals are effective in motivating the employees and that any misconception on the nature of performance appraisals stem from a lack of understanding on the part of the managers and supervisors on how to effectively perform this function.
Performance Appraisals: The Two Sides One of the most often reasons why performance appraisals are criticized is its lack of objectivity of the Human Resource Manager or the person conducting the performance appraisal. The idea behind performance appraisal is that it is intended to evaluate work performance based on pre-set goals and objectives. The problem with this is that human factor always comes in the way of producing an objective and accurate performance appraisals. It is always possible that the person conducting the evaluation may rate the employee on the basis of his personal opinion.
As a result, it is feared that the evaluator may make a mistake which have a serious impact not only on the present salary of the employee but also on his performance. In response to this objection, it is common knowledge that no human resource function is perfect and is 100% objective. Human Resource Management in essence is about people who are very complex and have different skills, motivations, character and personalities. Unlike the other managerial functions which deal with other company resources that are predictable and controllable, Human Resource Management function deal with unique individuals.
It is to be expected that emotions will become part and parcel of the performance of their functions. The important role of managers now is to become aware of their own biases and prejudices and make sure that this does not interfere with their important function of measuring employee performance. The Halo Effect is anther most commonly raised argument against performance appraisals. This means that the person who conducts the evaluation has the natural tendency to rate an employee high in one particular area simply because the subject rated high in other areas.
Thus, an employee who may have the excellent technical skills but low on customer relations may still get a high mark in customer relations because of the evaluator may give more emphasis on technical knowhow of the employee under the Halo effect. In addition, some people also object to performance appraisal because of the Horns effect. The Horns effect is the opposite of the Halo effect which is the tendency of the appraiser to rate the employee low because the employee rated low in some aspects of his job.
Thus, if an employee is not good in one aspect of his job such as customer relations, if the person conducting the evaluation considers such function as his more important then it is highly possible that he may get a lower rating for his other function even if he may be excellent in these other functions. In answer to the second argument, it is always to be borne in mind that when a company conducts performance appraisal of its employees it is to be expected that the company only had the best interest of the employees and the company in mind.
Every company desires to know the strengths of its employees and their weaknesses. Weaknesses must be identified so that the employees can be given the proper training. No company would purposely do anything that will prevent them from attaining this objective. Thus, there is no reason for the employees to feel that the person conducting the evaluation will purposely do any act that will lead to the failure of the performance appraisal. After providing counter arguments to the objections against Performance Appraisal, we now turn to the reason why Performance Appraisal can change human behavior.
An ideal performance appraisal has two basic elements: a) the evaluation system and b) the feedback system. (Margaret J. Palmer, 2007, Ch. 1) The first element of performance appraisal is the evaluation of employee performance. Here, the person conducting the evaluation seeks to find out whether the performance level of the employees is at par with what is expected of them. In case the performance is below what is expected there is what is known as the performance gap.
Those who are determined to be performing below what is expected of them are required to undergo training which is in essence a good thing also since the employee will be able to learn more about his job. For those who performed well in the appraisal, it can also be used to determine which among the employees are entitled to promotion, pay increases and bonuses. (Tznier, p. 282) Performance Appraisal is therefore very important since it can be used as basis prior to any action that may be done by the company.
According to Richard Rudman (2003), Expectancy theory tells us that, if people want more pay and believe that working harder will get it for them, they will work harder and perform better. (Rudman p. 173) The second element of performance appraisal is the feedback which in essence is the opportunity for the employees to hear from their superiors how well or how poorly they are doing from work. In most companies this is the only time where the employees can actually know from their superior what the latter thinks of their performance.
According to Manuel London (2003), “feedback is an important part of the education process…It helps newcomers learn the ropes, midcareer employees to improve performance and to consider opportunities for development, and late career employees to maintain their productivity. Managers are an important source of feedback because they establish perform objectives and provide rewards for attaining those objectives. ” (London p. 11) A positive feedback from his superiors will help boost the morale and confidence of the employee in performing his functions.
It may also help in defining the career path of the employee. On the other hand, negative feedbacks from his superiors will help identify the particular areas where the employee needs to be trained. This will help in the improvement of the skills and knowledge of the employee. Conclusion Based on the arguments for and against performance appraisals, it is clear that the objections against it are mainly because of the employee’s lack of understanding of the very nature of performance appraisals and the role this play in maintaining the company’s competitive edge.
I am in favor of the conduct of performance appraisals in business organizations. It is effective in changing employee behavior. It helps boost employee morale and helps help open up channels of communication between the employer and the employee. The most important role of performance appraisal is actually the communication between the management and the employees. Proper communication to the employees of the conduct of the performance appraisal helps strengthen and improve their working relationship.