PEOPLE RESOURCING

1. PEOPLE RESOURCING Chapter Fifteen Performance Appraisal

2. Performance appraisal is a process that seems to bring together all approaches to performance management. It also has a range of other organisational objectives: • raising morale • clarifying expectations and duties • improving upward and downward communication • reinforcing management control • helping validate selection decisions • providing information for HR planning activities • identifying development opportunities • improving workforce perception of organisational goals • providing information to aid promotion and redundancy selection • underpinning incentive reward schemes

3. The rise of performance appraisal • Performance appraisal became very widely used during the 1980s and 1990s. • Today, 87% of organisations from across all sectors operate some form of appraisal scheme. • Reasons for such popularity include: • the link to the adoption of individualised performance-related pay schemes – It should be noted, however, that only 43% of schemes formally link performance to payment • the requirements of the Investors in People (IiP) awards, and the development of organisation-wide competency frameworks • the need for organisations to respond to intensified competitive conditions and cope with accelerated change.

4. A recent development is the explicit linking of individual performance appraisals to defined organisational objectives. In this there is a dual purpose: • It focuses employee efforts on organisational priorities. • It helps to ensure that the process is owned by line managers. • Another recent development is the shift in focus to the developmental aspects of the process – hence the increase in terminology such as ‘personal development review’. • Over 70% of employers see their schemes as being primarily developmental in character.

5. Varieties The most typical incarnation involves the formal appraisal of an employee’s work performance over a set period of time by his or her immediate line manager. Two basic alternative approaches: Behavioural assessments The supervisor reaches a judgement about overall performance on the basis of his/her evaluation of the employee’s general conduct. This is often associated with a requirement for managers to consider performance against certain criteria already defined and determined elsewhere in the organisation. Typically, it requires the completion of a standard form. More sophisticated approaches involve competency frameworks.

6. Output-based assessments • These are used in situations where it is possible to appraise people on the basis of quantifiable data. Employees are set some form of target to work towards, against which they are later formally appraised. • Output-based assessments are used by 62% of UK organisations. • Advantages: • objectivity • clarity • where individuals are able to participate in goal-setting, significant motivational qualities.

7. Disadvantages of output-based assessments: • Such schemes are clearly unsuitable for jobs where there are few clear goals to achieve. • It becomes difficult to compare one employee’s performance with another’s. • In a fast-changing context it is not possible to set objectives for a year, or even six months.

8. Aims of appraisal • There are two main objectives – which are fundamentally incompatible due to the different ways in which they are perceived by employees: • evaluative – Appraisal with evaluative objectives results in a natural tendency to talk up the positive aspects of the employee’s performance, and not admit any development needs. • developmental – Appraisal with developmental objectives enables employees to discuss areas for improvement without fear of negative consequences.

9. Problems with personal appraisal • Specific practical problems: • Are particularly linked to unfair bias in assessment (similar to that seen in selection interviews) and lack of management preparation. • General practical problems: • Include the reluctance of managers to carry out the process, and the inevitably political nature of some appraisal decisions. • Theoretical problems: • Personal appraisal reinforces the significance of the supervisor– subordinate relationship. • Personal appraisal is inappropriate for knowledge-based organisations that have flatter hierarchies and a need to maximise flexibility. • Personal appraisal sits uneasily with the ethos of most professional groups (who expect autonomy, self-discipline and adherence to professional standards).

10. Legal and ethical issues • Redundancy selection–It is lawful to use appraisal ratings as one of several selection methods, provided the criteria used are fair, objective and verifiable by reference to documentary evidence. • Dismissals –Appraisal results can be used to support dismissal decisions. Paradoxically, positive appraisals are often produced by dismissed employees as part of an unfair dismissal claim. This shows how vital it is for managers to give an accurate assessment of positive and poor performance when completing appraisals. • Discrimination and equal value law– There can be problems where results are used as a basis/justification for promotion, pay decisions or selecting employees for new opportunities. • Natural justice–Care must be taken when drawing up policies, setting up systems and training appraisers to avoid any injustice (such as the advancement of particularly favoured individuals).

11. International differences Formal appraisal systems as discussed here are the product of Anglo-Saxon business cultures. They are less well established elsewhere, and would not necessarily sit well with employees with different cultural backgrounds and assumptions. In international organisations it is often difficult and unwise to introduce a single, global approach to employee appraisal. There is a need to be sensitive to local traditions, and permit managers in each country to operate the performance management system that is most appropriate to their populations.

12. Appraising a flexible workforce • Considerable consequences are arising from the increase in atypical work contracts: • Predicted increase in the use of output-based systems, due to decreased day-to-day contract between employees and their line managers • Reduction in the significance of appraisals as a management tool, due to the lack of emphasis on career progression for most employees in the peripheral categories.

13. A defence of performance appraisal • Inflated expectations – The arguments of critics all share a common assumption: that the practice should be judged on its ability to demonstrably motivate employees and enhance their performance. This is a tough test to set any single P&D intervention. • The activity is an effective tool of management control – formally setting someone a goal does greatly increase the chances that it will be achieved. • Performance appraisal is a very effective tool when part of a wider performance management system.

14. 360-degree appraisal • Also known as multi-rater feedback, this involves obtaining a more rounded perspective through the use of ratings from several sources: • the immediate supervisor • peers • subordinates • customers • the appraisee himself/herself (self-appraisal). • 360-degree appraisal is used by around 40% of major UK companies.

15. Problems: • Objectivity – Peers and subordinate ratings can be skewed in order to promote their own interests. • There is the potential for managerial reprisals against subordinates perceived to rated them poorly/reward for subordinates who give ‘false’ favourable ratings. • A range of problems can arise when managers, in a bid to gain high ratings, are tempted to take action that is popular but not necessarily right for the organisation. • Practical problems may arise associated with the delivery of feedback. • Initiatives are most successful where: • The process is used solely for developmental purposes. • There is complete confidentiality for the raters.

16. Practical matters Design of documentation: Self-appraisal should be a key feature of any well-designed system. Standard documentation has an important role to play here, because it gives employees a clear framework within which to assess their performance. Questions should be open-ended to form the basis for constructive discussion. Standard forms for appraisers tend to include sections that require formal scoring or rating, and also room for a general summary at the end (to finish on a high note).

17. Appraiser training: • It is generally agreed that a badly-done appraisal is worse than no appraisal at all. • Training courses should include an expression of: • the importance of objectivity and consistency • the need to avoid passing judgement on employee personality • the need to prepare thoroughly • the need to justify any negative comments with factual evidence • how to put employees at ease and encourage them to talk • the need to stress good aspects of performance as much, or more than, poorer aspects • the importance of a constructive approach, and of ending on a positive note.