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Performance Appraisal: Tool For Employee Evaluation

Published by MBA Skool Team in Human Resources Articles category Last Updated: March 18, 2012Read time:

Performance Appraisal is a tool used in order for better utilization of the human resources present in the organization and help the managers better staff their firms. There are three main purposes of performance appraisal –

  1. Guide the employees where and how to improve their performance
  2. Set achievable and real goals for the employees
  3. Help the managers assess the effectiveness of the subordinates and take further decisions

Performance Appraisal

In the world of organization behavior and human resource management, performance appraisal began with the aim to serve as an assisting tool for deciding promotions, salaries, bonuses, etc. However, nowadays performance appraisal is more commonly used as a means of motivating the employee and guiding him to improve his performance. It helps maximize the effectiveness of the organization. It aims to determine the present and future value of the employee for the organization. His present value will be determined by his past performance, while his present potential will bear testimony to his future value.

Even if the performance appraisal program is planned and structured in the best possible way, the use of subjectivity as opposed to objectivity in carrying out performance appraisal, dilutes the overall effect that performance appraisal should have. Subjectivity here means a kind of error in evaluation which could be for reasons like bias, distortion due to emotions, etc. In other words, it involves a kind of prejudice for an employee and thus affects how his performance is rated. The six most common forms of bias, that happen in performance appraisal are –

  1. Cross-cultural: This kind of bias is a consequence of the expectations that the evaluator has from human behavior. This expectation, when clashes with the acts or beliefs of the employee being evaluated, causes a bias. For instance, people who regard the older generation with great respect, would rate an older employee higher than a younger employee. So, the cultural values that are inculcated into an individual in his life, reflect in the appraisals he or she does. For instance, a man born to look down upon women will score a woman subordinate as always lesser than men.
  2. Halo effect: This is caused by a personal prejudice or belief of a person which is not related to the job. Here, halo means the halo that lies on the head of the angels and as it is believed that the angels with the halo can do no wrong, this type of bias is also similar. This could be significant for people who are very close or intimate friends or arch rivals or fatal enemies of one another.
  3. Error of central tendency: When the appraisers don’t want to grade their employees as entirely effective or entirely ineffective. So he avoid going to the either extreme of the scale and puts all the employees at more or less near the center of the scale. In this way they aim to avoid any kind of conflict or requirement for an explanation.
  4. Strictness and leniency: This happens when the evaluator begins to believe in the universal good or the universal evil. So, he considers all his employees’ performance in the same light. It could also happen that the valuator wants his subordinates to take him to be very tough (strictness) or like him profusely (leniency).
  5. Recency effect: This kind of bias involves that no matter how much of good work an employee has done in the past, just one mistake in recent times, will have a negative impact on his appraisal. Similarly, no matter how many mistakes an employee has committed in the past and how serious they are, one good thing done now, and his appraisal will move towards the positive side. So, the recent acts of a person are taken into greater consideration than his past behavior.
  6. Personal prejudice: This could be a result of the evaluator’s personal likes, dislikes and beliefs of certain people. For instance, is the evaluator is biased against a particular race or class of people, he will rate them less. They would give people of their own race/class or the ones whom they hold in higher stead than theirs the higher score.
  7. Horn Error: This is the opposite of Halo Error. Here, an appraiser always regards his subordinates in the negative. It is like halo rests on the head of Angels, who can do no wrong; similarly, horns are on the heads of devils, who can do no right.
  8. Primacy error: This is a kind of error due to the bias or prejudice formed in the minds of the appraiser as a result of the first impression left by a subordinate. This could be either a positive or negative first impression, but whatever first impression has been formed stays for life as the image in the appraiser’s mind and all the performance appraisals done by that appraiser for that subordinate are seen in the same light and influenced by the first impression.

The existence of such subjective errors can have negative implications on the way firms organize and monitor their processes. A person may be terminated from his job for no fault at all. The opportunities to build healthy relationships within the organization also get reduced. It leads to more resentment among the employees and brings down motivation levels. They also lead to further causes if a feeling of revenge or getting back seeps in. The organization’s image gets threatened when the employees talk about it to the other people. Sometimes, employees in whose favour the bias has been are left out and that also leads to problems for the organization. De-motivation of employees who are genuine and good and yet under-appraised is something that every organization aims to avoid, because each employee is valuable for an organization and contributes to the achievements of the overall goals of the organization.

The major challenge to ward off subjectivity is the information advantage the supervisors have, and they are generally the appraisers. One thing that can be done is that all appraisers should be asked to maintain a performance diary for their subordinates. Each time a subordinate does something good or bad, beneficial or detrimental, it should be recorded by the appraiser in the diary. This helps because performance periods are generally a year long and it often happens that at the end of the year it is difficult to recall the good and bad deeds of the subordinates fully. The diary proves to be a means to showcase the true picture of the subordinates so the appraiser will resist from bringing in subjectivity.

There are other problems associated with performance appraisal, but the major concern nowadays is how to avoid subjectivity in performance appraisals. In order to avoid subjectivity, it is essential that the performance of an employee be appraised, not his personality or his thought process and ideology will is not related to the job he is performing. One thing that can be done in order to achieve this is that certain targets and objectives can be set for the employees mutually when the performance period begins. And at the end of the period, nearness to the achievement of that objective/target or its accomplishment can be evaluated. Standards of performance could be set down for non-subjective evaluation.

In this regard, the Charles Caldwell eight-step appraisal-discussion process, that is known as the “human touch”. The eight principles of this process are as follows –

  1. Control the environment
  2. State the purpose of the discussion
  3. Ask for the employee’s opinion
  4. Present your assessment
  5. Build on the employee’s strength
  6. Get the employee’s reaction to your assessment
  7. Set specific goals
  8. Close the discussion

Once this is over, following up on it is highly essential for motivation and progress. Then the interim progress on the decisions taken and the goals set is also important, so as that the expectations can be revised as per the situation’s requirement.

Thus, with organizations moving from the conventional modes and means to more modern, accommodating and boosting ones, performance appraisal becomes an essential part of the organization operation. More the subjectivity is kept away from the appraisals, the better it is for the organization.

This article has been authored by Bhavi Patel from IRMA.

Image: basketman / FreeDigitalPhotos.net

Views expressed in the article are personal. The articles are for educational & academic purpose only, and have been uploaded by the MBA Skool Team.

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