14 pages
Word Count
4698 words
Course Code

Performance Appraisal

August 13, 2013
In some organizations performance appraisal (PA) and performance management systems
are treated as unnecesary or routine job. But the evaluation of of employees job
performance is vital human resources function and of critical importance to the
organization. In work organizations performance measurement typically takes place in the
form of formal performance appraisals, which measure worker performance in comparison
to certain predetermined standards. Performance appraisals serve many purposes for the
individual worker, for the workers supervisor and for whole organization. (Cleveland,
Murphy, and Williams, 1989).
For the Worker:
means of reinforcement
career advancement
information about work goal attainment
source of feedback to improve performance
For the Supervisor:
basis for making personnel decisions
assessment of workers goal attainment
opportunity to provide constructive feedback to workers
opportunity to interact with subordinates
For the Organization:
assessment of productivity of individuals and work units
validation of personnel selection and placement methods
means for recognizing and motivating workers
source of information for training needs
evaluation of the effectiveness of organizational interventions
Research has been done on numerous facets of performance appraisals (PA), including
psychometric issues, rater-ratee characteristics, cognitive processes, rater training, and
appraisal fairness (Bretz, Milkovich, and Read, 1992). How PAs are used has been shown
to influence rating behavior and outcomes (for example, Jawahar and Williams, 1997) and
to be an important predictor of employee attitudes toward their supervisor, the job, and the
appraisal process (Jordan and Nasis, 1992). In the Meyer, Kay, and French (1965) study,
for example, researchers proposed that conducting salary discussions during the annual
performance review interfered with the constructive discussion of plans for future
performance improvement and could lead to negative reactions. However, in the first
empirical test of the Meyer, Kay, and French study, salary discussion was found to have
either no impact or a slightly positive impact on employee attitudes (Prince and Lawler,
1986). Thus, how PAs are used has developed as an area of interest, yielding mixed results
and conclusions.
Previous research has relied on PA administrators (human resource managers, for example)
to provide information on how the appraisal is used (Cleveland, Murphy, and Williams,
1989). As suggested by Bretz, Milkovich, and Read (1992), these respondents may be
describing the PA system as intended instead of actual practice. An alternative approach is
to investigate the appraised individuals perceived PA use. If people perceive PA purposes
differently, as has been suggested , then attitudes may vary depending on that perception.
For example, how a PA is used may signal to employees their value to and future in the
Firms engage in the performance-evaluation process for numerous reasons. Managers may
conduct appraisals to affect employee behavior through the feedback process, or to justify
some sort of human resource management action (termination, transfer, promotion, etc.).
However, many other benefits may also accrue from the information yielded by the
appraisal. These benefits include increases in knowledge regarding the effectiveness of
selection and placement programs, training and development needs, budgeting; human
resource planning, and reward decisions.
One current problem which performance appraisal faces is that the term is often used
synonymously with that of "performance management". Yet performance management is
clearly more than a new name for performance appraisal ( Fletcher, 1992 ) defines
performance management as:
"an approach to creating a shared vision of the purpose and aims of the organisation,
helping each individual employee understand and recognise their part in contributing to
them, and in so doing manage and enhance the performance of both individuals and the
He suggests that the main building blocks of such an approach include:
development of the organizations mission statement and objectives;
enhancing communications within the organization so that employees are not only aware
of the objectives and the business plan, but can contribute to their formulation;
clarifying individual responsibilities and accountabilities;
defining and measuring individual performance;
implementing appropriate reward strategies.
In the literature, two typical PA uses were examinedevaluative and developmental. The
evaluative function includes the use of PA for salary administration, promotion decisions,
retention-termination decisions, recognition of individual performance, layoffs, and the
identification of poor performance. This is similar to Ostroffs (1993) conceptualization of
the administrative PA purpose. Cleveland, Murphy, and Williams (1989) contend that
evaluative functions all involve between-person decisions. Developmental functions
include the identification of individual training needs, providing performance feedback,
determining transfers and assignments, and the identification of individual strengths and
weaknesses. These are all proposed to encompass within-person decisions. Evaluative PA
use is going beyond salary discussion and instead defined to include determination of poor
performers, layoff and termination decisions, and promotion decisions. This is consistent
with Cleveland, Murphy, and Williamss (1989) representation of between-person uses and
Ostroffs (1993) administrative PA use category.
Many researchers believe that criticizing employees, as is often done in evaluations,
fosters defensiveness and rationalization, which usually results in nonconstructive
responses (Meyer, Kay, and French, 1965). Evaluation is a sensitive matter, often eliciting
negative psychological responses such as resistance, denial, aggression, or
discouragement, particularly if the assessment is negative. Thus high perceptions of
evaluative PA use may result in negative feelings about the appraisal.
Previous research on 360-degree feedback has found that ratees approve of these
appraisals when they are used for developmental purposes but are not as accepting when
they are used for evaluation (McEvoy, 1990). For example, although subordinate raters in
one study supported an upward feedback appraisal system for both developmental and
evaluative use, the managers (that is, ratees) reacted unfavorably to implementing the
appraisal system for evaluation (Ash, 1994). This lends further support to the contention
that ratee reactions may vary depending on the perceived PA use and also suggests that