Performance appraisal

Transcription

1 Chapter 7 Performance appraisal

2 Introduction Major changes in performance appraisal over last two decades. Driven by organisational change rather than theoretical advances. Downsizing, decentralising, delayering, TQM, BPR, culture change, knowledge management and competency. Changes in payment system, e.g. integrated reward systems, PRP.

3 Introduction (Continued) Inappropriate to expect appraisal schemes operating 10 years ago to be effective today. New developments stimulated innovation in appraisal. Use in new organisations and occupational groups. New forms of appraisal have emerged. Old forms have been revised.

4 Development of performance appraisal Long history of informal performance appraisal. Shorter but significant history of formal performance appraisal. Staple element of HR practioners role. Academic research in occupational psychology Improve effectiveness and accuracy. Less known about appraisal as organisational change lever and managerial control tool. Many studies on use of performance appraisal. Debatable how much influence research has on use of appraisal. Gap between research and practice. Managerial indifference/limited relevance to practioner.

5 Practice of performance appraisal How widespread is performance appraisal? Performance appraisal has become more widespread in western countries. Virtually universally present in large/medium US enterprises. Increasing coverage in the UK. More common in other non-western countries, e.g. China, India and Japan. Prominent in UK financial services and public sector. Deployment increasingly across organisational hierarchies. Employee coverage in public sector less than in private sector, reflecting relative infancy of such schemes. Performance appraisal is strongly linked to expectations of job tenure (Addison and Belfield, 2008).

6 Practice of performance appraisal (Continued) How is appraisal conducted? Wide range of methods. Simple ranking schemes, objective and standard systems, competency based systems, behaviourally anchored systems. Schemes tend to reflect managerial beliefs, resources available, expertise. Small organisations tend to adopt simple schemes. Large organisations may use more sophisticated schemes. Most employers use only one type of scheme. Some use multiple systems. This may be to separate reward and non-reward aspects, different parts of the organisation, different occupational groups.

7 Practice of performance appraisal (Continued) What is appraisal used for? It is used for a wide range of purposes Clarify and define performance expectations Identify training and development needs Career counselling Succession planning Motivating employees Cultural change Determining promotion Allocating financial rewards Improving employee performance Facilitating communication and involvement Controlling employees.

8 Practice of performance appraisal (Continued) What is appraisal used for? More judgemental/ harder systems on increase while soft approach is declining. Shift away from career planning/identifying potential towards allocating rewards/improving performance. Broad demands upon appraisal systems. Wide use helps integrate HRM areas into coherent package. Criticism that performance appraisal systems are too ambitious. Blunt instrument that tries to do too much (Boudreaux, 1994). Conflicting purposes Using rearview mirror to drive future performance Rewards and training needs incompatibility. Often one element of broader performance management system.

9 Performance management Performance management is a US import. Systems and attitudes which help organisations to plan, delegate and assess the operation of their services (LGMB, 1994). A textbook system : Shared vision of organisations objectives Individual performance targets Regular formal review of progress Review identifies training, development and rewards Evaluation of process and improvements made. Connect objectives of organisations to employees worktargets Objective setting and formal appraisal. Trend away from standalone appraisal to performance management.

10 Performance management (Continued) Growing critique of performance management systems Encouraging managerial short-termism Prescriptive/one best way but neglect important variables Questionable ownership and commitment from line managers Pressure and stress for workers Little support that performance management improves performance.

11 Performance appraisal as managerial control Performance appraisal more important tool in motivating and controlling workforce. Maintaining employee loyalty and committment. Reinforce corporate values and attitudes. Important strategic instrument in the control process. Social, attitudinal and trait attributes. Subjective measures, e.g. flexibility, loyalty, etc. Potential for managerial control. Managers are not immune to performance appraisal. Poor performing managers may be culled.

12 Recent developments in performance appraisal Upward appraisal Relatively new in UK More common in US Involves employees rating their managers performance Anonymous questionnaires Benefits Improved managerial effectiveness Employee voice and empowerment In tune with delayered organisations Robust to legal challange Lack of managerial enthusiasm Low uptake in UK.

13 Recent developments in performance appraisal (Continued) 360 degree appraisal Becoming established form of appraisal in UK Origins in 1970 s US army All encompassing direction of feedback Composite ratings from peers, subordinates, supervisors, customers Anonymous survey, structured questionnaires, online systems Also unstructured forms of appraisal.

14 Recent developments in performance 360 degree appraisal appraisal (Continued) Experimentation in linking 360 degree appraisal to reward Concerns 360 degree appraisal is being overstretched Often suggested provides more accurate feedback Useful for management development Effort, time and cost involved is great Is the data accurate and meaningful?

15 Recent developments in performance appraisal (Continued) Customer appraisal Performance standards based upon customer care indicators Hard and soft measures The use of service guarantees Customer data gathered by variety of methods Customer surveys Surveillance techniques Mystery shopping Such methods may not be popular with staff View mystery shoppers as spies Use of internal service level agreements e.g. Best value in public sector Help break down internal barriers.

16 Recent developments in performance appraisal (Continued) Team based appraisal Interdependent work teams common Appraisal often focused on individual Sometimes work teams allocate tasks, select new staff and set bonuses In such cases, may be appropriate to conduct team appraisal Managers may appraise team as a whole Individual appraisals made of each team member but not by management (anonymous peer review).

17 Recent developments in performance appraisal (Continued) Competency based appraisal Competency based approach to develop integrated HR strategy. Increased use for training and development, selection and reward. Linking appraisal to competency frameworks This may provide a number of benefits Analysing individual progress Identifying improvement opportunities Feedback on performance problems How well it is done. Development and running costs may be high.

18 Problems of appraisal Appraisal often a disliked managerial activity. Rarely in the history of business can such a system have promised so much and delivered so little (Grint, 1993). Criticisms: Expensive Causes conflict Limited value Dysfunctional Distorting effects (halo, crony, impression, Veblen, Doppelganger). Is appraisal doomed?

19 Why does appraisal not work? Managers not good at conducting appraisals or trained. Political manipulation/ subjective problems. Legal challenges to personality and trait systems. Difficulties with subjective schemes as well. Focus on short-term rather than long-term Challenging to achieve equitable ratings. Actions of employee may account for little of the variability in the outcomes measured. Potential for de-motivation especially if linked to reward. Excessive paper work/bureaucratic exercise/ go through the motions /lack of follow-up. Compatibility with TQM, e.g. Deming. Disempowering employees.

20 Conclusion Performance appraisal is wide spread Wide spread criticisms New developments may ameliorate some of the problems Important role in HR practice But performance appraisal practice can be problematic Many concerns with this application Need to upgrade and renew systems that are compatible with new business environments.