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Avoiding common pitfalls in performance appraisal.

Appraisal of employee performance is one of the most widely used human resource management practices of American employers. The overwhelming majority of employers, whether private, public or not-for-profit, have some kind of performance appraisal system. Among the reasons usually advanced for the widespread adoption of performance appraisal is that it may be used to:

* Encourage supervisors to observe subordinates more closely and carefully, and to do a better job of coaching;

* Motivate employees by providing them with feedback on their performance;

* Provide information for improving employee work performance;

* Provide information for personnel decisions on pay, promotion, job assignments, training, layoffs, etc.;

* Identify employees with the potential for advancement;

* Give employees the opportunity to express their job expectations, ambitions, satisfactions and dissatisfactions;

* Provide documentation for possible legal challenges by disgruntled employees;

* Help the enterprise in its human resource planning; and

* Provide data for personnel research, e.g., validating employment tests, evaluating training programs.

Even though performance appraisal has many actual or potential benefits, it has nevertheless been frequently criticized and found wanting. Dissatisfaction with performance appraisal has been expressed by human resource management professionals, line managers responsible for appraisals, employees who are the subjects of appraisals, top managements of enterprises and judges rendering decisions in court cases involving appraisal of employee performance. Some critics have gone so far as to advocate doing away with employee appraisals altogether.

Why has performance appraisal been subjected to so much criticism? The answer lies in the failure of appraisals to deliver what has been expected of them. This failure may be attributable to two fundamental weaknesses that have often underlined appraisals: faulty design of appraisal systems and failures in system administration.

Weaknesses in system design

Performance appraisal systems are sometimes criticized for measuring or evaluating the wrong job behaviors or results, or for focusing on employees' personal characteristics rather than on job performance. In some cases, standards for evaluating employee performance are not related to the duties required of job incumbents; in others, the standards reflect relatively minor, incidental, or unimportant job duties, not the critical ones. Employees are not likely to be receptive to a system that is supposed to evaluate how well they are doing if, in fact, performance standards are not based on their actual work or fail to emphasize its really important aspects. Also, the standards may not keep up with changes in jobs and employees may be appraised on the basis of standards that are no longer relevant. Furthermore, all too frequently standards tend to focus on the person's personality or other characteristics, rather than on job performance.

To deal with the lack of job relatedness, a job analysis should be performed; courts have frowned on performance appraisal instruments that have not been based on job analysis. The human resource management staff of the organization in question is probably best equipped to carry out this task. The analysis should help develop performance standards that are job-specific and applicable to the job in question, not to jobs in general.

The analysis should reveal the most essential job duties and work behaviors, as well as those of lesser importance. It may also yield the knowledge, skills, abilities and other employee characteristics needed to perform the job. As far as possible, the standards should be concrete, objective and measurable.

The job analysis may already have been conducted in connection with some other human resource management functions such as employee selection. In such a case, a review of existing job information may be all that is needed. If no job analysis has been previously carried out or has not been done in recent years, it would be a good idea to do one.

It may not be necessary to conduct a full or extensive analysis to identify the job duties or work behaviors critical for successful job performance. In any event, sufficient information must be obtained about the job to determine exactly what incumbents are expected to do.

Information about job requirements should also be communicated to incumbents so that they may understand the basis on which they are to be appraised. It should also be understood that employees are to be evaluated only on factors over which they have control and not on those over which they have no say or which they cannot change.

To evaluate subordinates' performance, a manager must know how well they are doing their jobs. In many, if not most, cases it is important for managers to actually observe their subordinates on the job. Court rulings have indicated that if managers are to evaluate employee performance they should be in a position to observe their subordinates at work. Also, observation and recording of job performance requires certain skills that raters may not possess and that may require a good deal of time, a commodity that is usually in short supply for supervisors. The situation is generally worse for supervisors who are responsible for large numbers of people.

This weakness may be overcome, at least in part, if supervisors do their observations efficiently. Supervisors could be trained in techniques for observing employees systematically, not haphazardly, and in how to identify, sample and record work behaviors, especially critical ones, that will provide sufficient information on which to base appraisals. This does not mean that subordinates have to be supervised closely or continuously. But a supervisor should be able to demonstrate that a subordinate's appraisal was based on behaviors that the supervisor observed and that the supervisor could confidently state that the subordinate did or did not exhibit work behaviors that were required of him or her.

Supervisors understandably resent and resist time-consuming procedures and seemingly unnecessary forms and reports. The information asked of supervisors may be duplicated elsewhere or be of questionable value. Consequently, they may delay in completing the appraisals or give them short shrift. The system may be perceived as more of a hindrance than a help and may eventually die a slow death as the result of supervisory hostility, indifference or neglect.

This weakness is best dealt with at the time the system is being designed. It is probably no more difficult to design a simple system that is easy to administer and to live with than a complex one. A system that is easy to understand, that contains few procedural requirements and that calls for little in the way of paperwork will allow supervisors to do the really important things needed for an effective job of appraisal: observing behavior, evaluating it, giving employees feedback on how well they are doing and helping them to improve their performance. These should be the real aims of the system, not the completion of endless numbers of forms.

Weaknesses in system administration

All too often supervisors allow personal values or biases to influence appraisals of their subordinates. Conscious or subconscious factors may interfere with objectivity in appraisals. An appraisal may be affected by a subordinate's age, sex, race, national origin, political viewpoint or other irrelevant variables. A supervisor may take a personal dislike to some employees while employees similar in background or characteristics to the supervisor may be given more favorable appraisals.

This problem may seem intractable because biases are often deeply rooted. However, studies have shown that supervisors can be trained to reduce subjectivity and bias in appraisals. They can be trained to be aware of, and to be on guard against, personal values and biases that may influence appraisals unfairly. Use of role plays, workshops, cases and other experiential training activities can be effective in helping to heighten awareness of undesirable rating influences.

However, the training cannot be a one-time effort. Periodic retraining of supervisors and reinforcement by higher level managers of desired supervisory rating behaviors are also important components of a program to eliminate or at least to minimize biased appraisals. Higher level managers and the human resource management staff can also play useful roles by carefully monitoring appraisals to identify problem areas.

An employee's ratings may be influenced merely by virtue of being assigned to one supervisor or work unit rather than to another. Ideally, two employees who have the same duties and who perform equally well should receive the same performance rating even though they work for two different supervisors. Yet one may receive different ratings simply because one supervisor is generally more demanding (or more lenient) than the other. Some supervisors are tough and give relatively low ratings to all or almost all of their subordinates, while others give relatively high ratings to everyone.

In other situations, very competent employees who happen to work in units staffed by outstanding performers may be given relatively low ratings if their performance is compared with those of the outstanding members. Conversely, a very competent employee who is assigned to a group made up of mediocre or barely adequate performers would shine by comparison and might be accorded an outstanding rating.

In still other situations supervisors may not give deservedly high ratings to valued subordinates for fear of losing them through promotions or reassignments. Other supervisors, instead of putting their own interests ahead of the careers of their subordinates, may give them the ratings they have truly earned.

A variety of indicators may point to the existence of this weakness. The human resource management staff can audit appraisals to detect rating patterns and trends that could indicate where the problem might exist. For example, a question may be raised if employees who had consistently high (or low) ratings in their previous assignments are given dramatically lower (or higher) ratings when they are transferred to new but similar assignments. Higher managerial levels may also see signs of a problem in their reviews of appraisals prepared at lower levels. Evidence may also be obtained from employees who appeal their ratings to higher authority.

Solutions for dealing with this problem could include training supervisors to apply rating standards in a relatively uniform manner and to use the full range of rating categories when warranted. Another solution involves basing appraisals on whether or not an individual achieved pre-established results rather than on a comparison with the performance of others. The problem could also be addressed by structuring a supervisors' rewards to reflect their success in developing subordinates into valued employees for the organization (as manifested by subordinates' promotions or assignments to more challenging positions).

Supervisors sometimes give undeservedly high ratings to relatively ineffective subordinates in order to avoid antagonizing them. They are reluctant to give low ratings to poor performers because they must work with these people day in and day out and because they depend on their subordinates to get out the work.

Another reason for supervisory leniency in ratings is that salary increases are often keyed to performance appraisals. In situations where employees can receive pay increases only if they have satisfactory or superior ratings, a supervisor may feel obliged to give inflated appraisals because of a reluctance to deprive subordinates of what they perceive to be needed or well-earned raises. This practice is especially likely to be found in times of steep increases in the cost of living.

In addition to its impact on pay increases, supervisory leniency can be a critical factor in situations involving employees who have been discharged or denied promotion because of poor job performance. They may go to court claiming that they are the victims of discrimination or unfair treatment and that their performance has not been unsatisfactory. If the employees' supervisors have given undeservedly high ratings in their written appraisals rather than appropriately low ones, then the employer's position is weakened, thereby increasing the likelihood that the litigants will emerge victorious.

Evidence of leniency in ratings can be discovered through monitoring distributions of appraisals by the human resource management staff and through reviews of appraisals by alert higher level managers.

This weakness may be overcome through training of supervisors to demonstrate that lenient ratings could harm the employer in employment-at-will lawsuits, and that such ratings mislead subordinates and might hurt them in their careers. Focusing the training on proper application of performance standards and on use of the entire range of rating categories may also help curb supervisory tendencies toward leniency.

Another mechanism is to decouple review of performance ratings from granting of salary increases. If salary reviews and discussions of performance ratings are held at different times, supervisors may be more inclined to give low ratings for relatively poor performance and may feel less pressure to give high ratings that will support pay increases for subordinates.

In some situations, supervisors give all or almost all of their subordinates the same performance rating. Just about everyone is rated as "average" or "satisfactory" or "good" or some similar label that is used in the specific system. Cases have been reported in which 95 percent or more of the employees in an organization have received the same rating. Some of the reasons for this practice may be that supervisors simply do not want to take the time and effort needed to assign appropriate ratings, or they do not wish to offend less effective performers, or they may find it very difficult to differentiate among employees because of vague performance standards. Whatever the reason, failure to differentiate among levels of performance may cause a system to lose its credibility and its usefulness to the organization.

By analyzing appraisal records to detect trends and patterns in rating, the human resource management unit should be able to pinpoint this type of problem. Similarly, in their review of appraisals given by lower level managers, higher level ones may be able to discover identical or very similar ratings for groups of employees.

If analysis reveals that this problem stems from vague or unworkable performance standards, they should be revised to make them usable. If the problem is one of supervisory laziness, indifference or reluctance to offend subordinates, coaching by the appraisers' superiors may be the answer.

In some cases employees do not know what standards of performance are being used to evaluate them. Either the standards are not well defined by management or, if they are, employees are not told about them. Sometimes employees are told only in general terms what performance is expected of them. These practices are patently unfair to employees and are certainly not in the organization's own best interests. How can employees reasonably be expected to achieve levels of performance that are not clear or that have not been communicated to them? Under such circumstances it is no wonder that performance appraisal leaves employees disappointed, disgruntled, resentful and suspicious. Court decisions have also taken a dim view of performance appraisal systems that do not provide for informing employees of performance standards.

If employees who are the subjects of the appraisals are to get anything out of the process then they must be brought into it. They should know at the start of the rating period exactly what it is that they are expected to achieve. It is also highly desirable to give subordinates a voice in establishing their standards of performance.

Even if a performance appraisal system is well designed, the entire process may flounder if the appraisal interview is handled poorly or not conducted at all. The interview is of crucial importance because it is the point at which employees become acutely aware of the system. If handled well, the interview can leave the employee with a positive impression of the system and the employer. Through the interview employees can find out where they stand, can receive guidance to improve their performance, and can express how they feel about their jobs and the organization.

Most organizations do require the supervisor to discuss the appraisal with the employee or, at least, to show the completed appraisal form to the employee. But supervisors may not know how to conduct the interview, may not prepare adequately for it or may lack confidence. Interviews sometimes are perfunctory, with a supervisor only going through the motions of conducting them. Sometimes interviews are carried out hurriedly, thereby conveying the impression that they are a chore that a supervisor must perform, and something that is to be gotten over with quickly. Employees may be put on the defensive or may not even be given the opportunity to express their views. Other times, interviews are scheduled with little notice given to employees and with little or no indication as to how they might prepare for them.

Although conducting an appraisal interview may seem to be a daunting task, there are ways of helping supervisors to do an effective job. Formal training programs can be designed to provide instruction in preparing for the interview, practice in carrying it out and feedback (including videotapes of the interview) on how well the practice interview was handled. The training will have a greater likelihood of success if it features small group sessions that use experiential techniques such as role playing to give trainees ample opportunity to practice new behaviors and to be critiqued in a non-threatening environment. It is also desirable to provide periodic re-training to ensure that the learned skills have not atrophied through disuse.

It would also be beneficial to instruct subordinates to deal with the appraisal interview, including the purpose of the interview and what they can do to prepare for it. If an employee knows what to expect at the interview and is prepared for it, then the interview can be a constructive experience.


Performance appraisal is generally viewed as an important management function, which can supply information for managerial decisions. However, the complaints and criticisms that have been voiced about the process indicate that it frequently falls far short of its promise. Some of the dissatisfaction stems from flaws in the design of the appraisal system and some from the way it is administered. There are two types of suggestions for improvement of these weaknesses.

The first group features recommendations for offsetting weaknesses in system design. These suggestions include: when designing a performance appraisal system, be sure to keep it simple, with a minimum of procedural requirements and forms to be completed; use job analyses to determine relevant and realistic performance standards; and, build into the system provisions for preparing supervisors to observe employee behaviors. The other types of suggestions are recommendations for dealing with flaws in system administration.

These lists of suggestions are by no means comprehensive. Undoubtedly others could be proposed. However, if these suggestions are implemented, they can go a long way toward making performance appraisal a much more effective process and, consequently, a more valuable management tool.

Peter Allan is professor of management at the Pace University Graduate School of Business. He was formerly with the New York City Department of Personnel both as deputy city personnel director and director of research. He holds a Ph.D. degree from the New York University Graduate School of Business. His publications have appeared in Personnel Journal, Personnel Administrator, Public Personnel Management, Academy of Management Journal, Public Administration Review and Journal of Employment Counseling.


* Establish clear and objective performance standards to guide supervisors in making appraisals and to let subordinates know what is expected of them. To the degree possible, subordinates should be involved in establishing standards. Employee involvement will help ensure acceptability of the system.

* Train raters and ratees in the philosophy, purposes and procedures of the system.

* Provide raters with guidance in how to give appropriate and accurate ratings. Raters should be instructed to be aware of and to guard against biases, to apply performance standards uniformly, to use the full range of rating categories as warranted and to discuss expected standards of performance with subordinates in advance of the rating period. Such training may need to be repeated periodically.

* Encourage line management to coach raters in making appropriate performance appraisals and to reinforce desired rater behavior.

* Train raters in how to prepare for and how to conduct the appraisal interview. Refresher training will probably have to be conducted periodically because interviewing skills tend to be forgotten if they are not used.

* Give ratees guidance in preparing for the appraisal interview.

* Have supervisors conduct separate performance reviews and salary reviews.

* Require monitoring of the system by the human resource management staff, in cooperation with line management, to identify possible problem areas.
COPYRIGHT 1992 Institute of Industrial Engineers, Inc. (IIE)
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Human Resource Management
Author:Allan, Peter
Publication:Industrial Management
Date:Nov 1, 1992
Previous Article:A comprehensive view of roles for human resource managers in industry today.
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