Performance Appraisal Literature Review

by aanchal123 (student)

University Degree Business and Administrative studies

LITERATURE REVIEW

Performance appraisal is a key human resource management function which is viewed as a subset of performance management. Rao (2005, p.336) opines that “performance appraisal is a method of evaluating the behavior of employees in the work spot, normally including both the quantitative and qualitative aspects of job performance”. Dessler (2008, p.336) views performance appraisal as any “procedure that entails setting work standards, assessing employees actual performance relative to those standards, and providing feedback to the employees with the aim of motivating him/her to eliminate performance deficiencies or to continue to perform above par”. The aims of appraisal according to Fajana (2002) are three folds: appraisal entails historical review of employees‟ performance; it is a means for distributing rewards as well as a means for determining training and development needs.

Manoharan, Muralidharan and Deshmukh (2009) posit that performance appraisal (PA) is an important management tool to assess employees‟ efficiency in the workplace, and may be defined as a structured formal interaction between a subordinate and supervisor that usually takes the form of a periodic review which could be annual or semiannual to evaluate work performance. Performance appraisal is intended to engage, align, and coalesce individual and group effort to continually improve overall organisational mission accomplishment (Grubb, 2007). It provides a basis for identifying and correcting disparities in performance. Systematically, performance appraisal reviews each employees work performance with a view to discovering the strengths and weaknesses of individuals and to identify opportunities for future skills improvement and development. Performance appraisal is a systematic way of evaluating a workers performance and his potential for development. This continuing performance and periodic evaluation helps in retraining, promotional and retaining policies.

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According to Fajana (2002), performance appraisal could be formal or informal. Formal appraisal is more orderly, systematic, planned and periodical, in which separate documents exist for the formal appraisal and this is usually recorded. Whereas, informal appraisal entails subordinates performance assessment in the normal course of work and day – to -- day relationship. Formal appraisal occurs when the contact between manager and employee is formalised, in which case a system is established to report supervisory impressions and observations of employee performance. This could be annually or semi-annually. Informal appraisal is conducted whenever a superior and subordinate feel it is necessary. This evaluation is communicated through conversation on the job or by on-the-spot examination of a particular piece of work (Peretomode & Peretomode, 2001). According to McGregor (1957), the formal performance appraisal plans are designed to meet the following organisational and individual needs: They provide systematic judgments’ to back up salary increments, transfer, promotions, demotions or termination. Appraisal let subordinates know where they stand and needed changes that are required in their behavior , attitudes, skills or job knowledge.

A sound performance appraisal system can be useful in improving employees‟ job performance, encouraging employees to express their views or to seek clarification on job duties and serving as a key input for administering a formal organisational reward and punishment systems. For performance appraisal system to be effective, it must have the following characteristics: it must be free of bias, the evaluator or rater must be objective and the method of appraisal must be fair consistent and equitable. Since performance appraisal is conducted by human beings, it is subjected to a number of errors, biases, weaknesses and pitfalls. According to Noe, Hollenbeck, Gerhart and Wright (2004), performance appraisal has been bedevilled by a lot of errors such as: Halo effect: This involves the rater giving the employee superlative or impressive rating on one factor and then using this to influence positively rating on all other factors. That is first impression is the last impression. Horns effect: This is the opposite of the halo effect. This is a rating error that occurs when the rater responds to one negative aspect by rating the employee low in other aspects. Strictness error: This is a rating error committed when the rater consistently gives employees very low ratings. Leniency error: Some raters are by nature too liberal, while others tend to be lenient in their rating of employees. Recency error: This is a tendency of many evaluators to give much more weight to the recent behaviors’ of the employees than past behavior . Central tendency: It is the most commonly found error. It is the tendency of most raters to give average ratings to all employees. This may be due to the fact that a very high rating or a very low rating could invite questions, criticisms or explanations. It could also be due to the fact that the rater lacks sufficient knowledge about the employees job performance. Errors of variable standards: This results from the use of different standards of performance in the course of rating employees‟ performance. Miscellaneous biases: There may be some built – in biases in the minds of the rater, based upon his/her own perception of things. For instance, a German subordinate may be rated higher because of the raters belief that all German people are quality–oriented people. Other biases may be based on the grounds of race, sex, appearance, religion, country of origin, favouritism and nepotism. In view of the aforementioned pitfalls, many workers have perceived performance appraisal in a negative light.

Source:

Ikemefuna C.O, Chidi C.O(2012),” Workers’Perception of Performance Appraisal”, International Journal of Human Resource Studies, Vol.2, No.3.