Is Performance Appraisal Simply A Management Technique, Operating Under A Scientific Veneer, To Control Employees By Reinforcing Behavioral Norms It Considers To Be Desirable?

                                                              

 

Peter Engholm

Monash University, May 1998

 

 

 

ABSTRACT:

This essay looks at the statement that “Performance Appraisal is simply a management technique, operating under a scientific veneer, to control employees by reinforcing behavioral norms it considers to be desirable”, and critically discusses whether this can be said to be a valid statement, or whether Performance Appraisal includes other aspects that might better justify its use.

 

KEYWORDS:

Performance appraisal, management, control, HRM

 

FULL TEXT:

1. INTRODUCTION

The concept and existence of Performance Appraisal in today’s organisations have given rise to both strong advocates and opponents to its validity and use. The question whether the use of a Performance Appraisal system benefits organisations, is not just a matter of evaluating performance, which the title might suggest. Other factors, such as cost and time expenditures, ethical considerations, organisational culture, and management control also have to be taken into account.

This essay looks at the statement that “Performance Appraisal is simply a management technique, operating under a scientific veneer, to control employees by reinforcing behavioral norms it considers to be desirable”, and critically discusses whether this can be said to be a valid statement, or whether Performance Appraisal includes other aspects that might better justify its use.

This is done by looking at Performance Appraisal both in theory and practice. Results from surveys and reports will form the basis of the evidence for how Performance Appraisal mostly is used in organisations today, and the discussion gives answers to the above mentioned assertions about it. The essay also looks at both benefits and problems with Performance Appraisal, and possible alternatives to it if it is not considered an unquestionable asset to organisations. The conclusion sums up the main points of then discussion, and evaluates the validity of the statement.

2. THE PERFORMANCE APPRAISAL SYSTEM

2.1. Definition:

One problem with evaluating the use of Performance Appraisal is that different writers in the subject use different basic definitions to describe the theory of it. While Eckes (1994: p.57) describes Performance Appraisal as “the process by which an organisation establishes, measures, and evaluates an employee’s behaviour and accomplishments for a finite period of time”, Cleveland, Murphy & Williams (1989: p.150) goes a step further and describes it as an important tool of providing information for personnel decisions such as salary, promotions, employee development and training programs. Writers in favour of scrapping the Performance Appraisal system tend to use a more negative definition. Nickols (1997a), for example, describes it as a “carrot-and-stick” management system, indicating that it is all about control, flowing down an organisation’s hierarchical authority system.

Kramar, McGraw & Schuler (1997: p.356) probably give the most objective definition of Performance Appraisal, describing it as a formal, structured system of measuring, evaluating and influencing an employee’s job-related attributes, behaviors and outcomes to discover how productive the employee is. This information can then be used to work out solutions for how to make the employee more effective, motivated and productive in the future through methods such as (for example) training and development, and also be an important factor for determining salaries and rewards.

2.2. Performance Appraisal: A management technique?

A Performance Appraisal system may have different sources for gathering performance data, such as supervisors, peers, subordinates, self appraisal, customers and computer monitoring (Kramar, McGraw & Schuler, 1997: p.364). Managers can be appraised by their subordinates (known as upward or reverse appraisal), and vice versa. Customers to an organisation can appraise its employees, and the Board of Directors can be appraised by the shareholders of the company. There is no limit to who can be evaluated, and thus, Performance Appraisal in theory should not be considered strictly as a management tool, although it is likely to assume that initiatives of these kinds comes from the management. Lambert (1979: p.2), for example, is very keen to point out that Performance Appraisal is a completely integrated management system. But today - twenty years after his book was written - it is possible that a flexible organisation with a strong Performance Appraisal culture might have well developed appraisal procedures that allow its employees to take care of the whole process themselves, and use the data for their own training and development. In such a case, it would hardly be justified to state that Performance Appraisal is simply a management technique, as the statement above indicates.

It is often the case, though, that Performance Appraisal is linked with corporate planning. In these cases it is important that good information channels between managers and employees exist. In their discussion paper about Performance Management, The Department of Primary Industries & Energy (DPIE) (1997: part 2) depicts this relationship as “a cascading water-fountain - but don’t forget you need an efficient pump to get the water back to the top”, observing the importance of two-ways feedback in the organisation. The department also found that in most cases, Performance Appraisal is an inherent part of the business routine, modeled from the CEO down.

There are many different ways to obtain data in Performance Appraisal systems. According to Thomas & Bretz (1994: p.30), the dominant format for management and professional employee appraisal in large U.S. companies is management by objectives (MBO). Their report shows that at least 70 percent of the surveyed organisations use some kind of object based approaches for these groups of employees. Kramar, McGraw & Schuler (1997: p.375) also acknowledge the fact that MBO is the most popular method for evaluating managers in Australia. Nankervis & Penrose (1990: pp.75-78) agree with the addition that these findings apply not only for managers but for all employees, but is then often used in tandem with other scientifically developed techniques, such as rating scales and self-appraisal. According to him, the trend towards using MBO in conjunction with rating-scales may reflect the ongoing need to measure productivity, not only according to set objectives and goals (output), but also taking quantifiable aspects of performance into account.

These findings account for the conclusion that Performance Appraisal in practice is a management technique operating under a scientific veneer, as the initial statement suggests. Thomas & Bretz (1994: p.30) also notice that while employees often are expected and encouraged to participate in decisions relating to their work, they are rarely allowed any meaningful input into the Performance Appraisal system. It is the management, together with consultants and experts, that develop and introduce a Performance Appraisal system, even though many organisations, according to the DPIE report (1997: part 3), stress the need for all staff to feel ownership of and commitment to the appraisal process.

Whether Performance Appraisal is used to control employees and reinforce desired behaviours, is discussed in the next section, which focuses on why organisations use Performance Appraisal systems.

3. PERFORMANCE APPRAISAL IN PRACTICE

3.1. Is Performance Appraisal used to control employees?

The statement in the beginning of this essay implies that Performance Appraisal is used simply to control employees by reinforcing behavioral norms that the organisation considers desirable. In order to critically analyse that assumption, it is necessary to first define what is meant by ‘control’.

‘Control’ is an ambiguous word that can have both a positive and a negative meaning. If by ‘control’ is meant a strict, authoritative way to assure employees’ complete obedience and compliance with rules and norms, then it has a negative meaning, leaving little room for employee development and motivation. One example of this kind of reinforcement, which may be a way for an organisation to increase productivity and performance, but which also may create unmotivated, irresolute and less service-minded employees, is video surveillance in for example pubs and restaurants. These systems can be used as one part of a total Performance Appraisal system to ensure that employees act the way the organisation wants them to.

But ‘control’ can also have a more positive meaning in organisations. For an organisation to work effectively, it is necessary to have certain rules or/and a well-defined culture for employees to identify with and apply to. Hence, it is necessary for management to have a certain degree of control to ensure the productivity and effectiveness of the firm and the well-being of its employees. A Performance Appraisal system can help detect faults in the organisational systems and come with solutions to them. This does not necessary imply that it is all about control and behavior, although opponents, such as Fred Nickols (1997a) clearly believe that Performance Appraisal systems are a basic device for getting individuals to comply with the aims of management. Evidence that this is incorrect and that Performance Appraisal much is used as a positive mean of developing and promoting individuals (as well as keeping them productive), is shown later in the essay.

Butteriss & Albrecht (1979: pp.153-155) identifies “positive reinforcement” as the best method of changing behaviors, if this is necessary in an organisation. Kramar, McGraw & Schuler (1997: p.397) describe positive reinforcement as a method using rewards rather than punishments or threats to influence behaviour. A smile or a positive word from a manager when an employee shows a desirable behavior may result in that the behavior is repeated. Thus, it seems as a waste of time and money to use a Performance Appraisal system only to reinforce behavior.

So for what purposes are Performance Appraisals used in organisations?

3.2. Practical use of Performance Appraisal in organisations

Cleveland, Murphy & Williams (1989: pp.132-33) state that organisations use Performance Appraisal for a variety of reasons, with the information having greatest impact on salary administration, performance feedback, and the identification of employee strengths and weaknesses. In their conducted survey, they found that reinforcing authority structure (which probably is closest to the issue of controlling employees and reinforcing behaviors) only accounts for 16 percent, whilst determining training needs and identifying organisational development needs were much more valued by the surveyed organisations. Thomas & Bretz (1994: p.32) also acknowledge that the most frequent use is for employee development and administering merit pay. The report from the DPIE (1997) states that, according to its conducted survey, every organisation consulted focussed their performance appraisal process on rewarding the individual. Thus, evidence show a trend within Performance Appraisal systems towards making the individual employee feel as a valuable asset within the organisation, using rewards and training and development to emphasize the importance of having motivated employees to gain increased performance and productivity. The DPIE report (1997) also states that most of the private sector organisations use the appraisal process to identify successors to senior management positions.

In a recent article in the Australian Financial Review, Jay (1998: p.52) notices that Australian organisations more and more are discovering a need to help existing employees develop their personal career management skills. He argues that career management programs in organisation would have sizeable benefits for both individuals and employers, stating that when individuals understand what a particular organisation is doing due to changes occurring in the business environment, they can better assess how they can be useful for the organisation. This, in turn, would create more motivated, highly productive employees.

Findings from the above mentioned sources indicate that Performance Appraisal is not simply used for reinforcing desired behavior. The derived information from appraisal processes is used in a variety of ways, and mostly focuses on creating motivated, productive employees, allowing room for individual development in the absence of strict management control. This is in line with the theoretical definition by Kramer, McGraw & Schuler mentioned earlier on, hence being a much more valid description of the use of Performance Appraisal than that of the initial statement of which this essay is examining.

4. BENEFITS AND PROBLEMS WITH PERFORMANCE APPRAISAL

It has been shown that Performance Appraisal is widely used in organisations, and for what purposes. The question that immediately follows is whether Performance Appraisal solves the problems it is aimed to solve, and whether it is worth the cost and effort of maintenance.

Kramar, McGraw & Schuler (1997: p.393) identify some benefits with Performance Appraisals systems, arguing that they can identify gaps in performance and causes of performance deficiencies - hence, result in improving performance in an organisation. They also state that appraisals are increasingly been seen as a way of achieving organisational goals (Ibid. p.399). Eckes (1994: p.60) sees Performance Appraisals as necessary, and that such systems can generate many positives as long as they are “used as a learning tool rather than a sword or hammer”.

As mentioned, Performance Appraisal systems can provide a variety of valuable information for managers in their decision-makings, and employees can get feedback about their productivity level and effectiveness. However, it is hard to define whether the use of Performance Appraisal de facto increases productivity and effectiveness in companies. This has, along with other problems associated with the process, created many opponents to Performance Appraisals:

If you’re a change-minded senior executive looking for ways to improve performance, cut costs, or free up resources (…), you might give serious thought to scrapping your company’s performance appraisal system. It devours staggering, amount of time and energy, it depresses and demotivates people, it destroys trust and teamwork and, adding insult to injury, it delivers little demonstrable value at great cost. (Nickols, 1997a).

Fred Nickols is a profound opponent to Performance Appraisals. His main argument is summoned in the quote above, basically saying that performance will not improve, costs will increase more than benefits, and also that it depresses and unmotivates people. Nickols’ article “Don’t resign your company’s performance appraisal system, scrap it” is a complete condemnation of Performance Appraisal systems. Although plenty of organisations can show evidence of how Performance Appraisals have improved their situations, Nickols’ article illustrates that there is a need of continuous research into appraisal systems and that they can have negative impacts on organisations’ performance if they are not well planned and carried out. Kramar, McGraw & Schuler (1997: pp.382-88) draw up some aspects that need to be taken into special consideration when implementing a Performance Appraisal system. Maybe the most important one, is the relationship between superior and subordinates: For an appraisal system to work, superiors must know what their employees are doing and understand their work well enough to be able to appraise it, be trained for appraisal processes, use appropriate and well-designed standards (not allowing personal values, needs or biases to replace organisational goals), and be motivated to do the appraisal. According to the DPIE report (1997), a majority of organisations acknowledges that these are difficult aspects. The report states that “training about the process is easy….giving managers the skills to provide quality feedback is a different matter”.

Thomas & Bretz (1994: pp.33-34) suggest that organisations may get a more reliable Performance Appraisal system by getting employees more involved in the design of it, investing more in training raters to use it, making appraisal the responsibility of the ratee and not the rater, and using multiple raters to reduce the reliance on a single source.

It is also important with good and clear feedback of appraisal results. Greater interest is being shown in ‘360 degree feedback’ which can be defined as getting feedback from all parts involved in a certain process (subordinates, self, managers, customers, etc.) to enhance the potential for improvement (Kramar, McGraw & Schuler, 1997: p.399).

5. ALTERNATIVES TO PERFORMANCE APPRAISAL

It has been shown that for a Performance Appraisal system to be effective, it needs to be well designed and strongly connected to an organisation’s structure, strategy and culture. As some question-marks exist with the practice of Performance Appraisal, alternative systems have been developed such as Total Quality Management (TQM), which focuses on teams instead of only the individuals within organisations. As Eckes (1994: p.57) states it, TQM has an overriding focus on the organisation’s customers, processes and culture. Thus it can be said that TQM is taking a “step further” from Performance Appraisal, but is still make use of much of the processes used in Performance Appraisal.

Despite the positive impact Performance Appraisals may have on organisational objectives, Nickols (1997b) maintains his view that such systems are not necessary. According to him, “no manager worth his or her salt needs help in identifying or recognising those who contribute to the organisation”. Thus he argues that managers should be capable of dealing with their subordinates themselves in all aspects of appraisals. But it has been shown that personal values, biases and lack of education among managers may lead to unfair appraisals that, in turn, can turn out to be disastrous for the organisation. Nickols view is naïve and very generalised, and although he is touching on some interesting aspects, the overall condemnation of Performance Appraisal systems can not be taken too seriously.

6. CONCLUSION

This essay has shown that Performance Appraisal, in practice, is a managerial technique operating under a scientific veneer. It is managerial in the sense that appraisal systems mostly (but not necessarily) are planned, implemented and emphasized by the top management, and the way of obtaining data is mostly through scientific methods, such as MBO, rating-scales and self-appraisal.

It has also been shown that the majority of organisations using Performance Appraisal do not use it to control their employees by reinforcing behavioral norms they consider desirable. Instead, Performance Appraisal is used for evaluating employees to determine productivity levels, payment, rewards, promotions, and needs for training and development, as well as motivating employees and giving opportunities for personal career developments.

Evidence suggests a need for further research into Performance Appraisal systems, as some negative aspects of it may outweigh the positive effects. Some of these negative aspects include the influence of non-objective values and biases among raters, a high cost of implementation, and bad feedback resulting in sceptical and non-motivated employees. Some of the positive effects that can be gained by the use of Performance Appraisal systems include increased productivity, better motivated and educated workforce, and a strongly developed organisational culture.

All in all, Performance Appraisals can be a valuable asset to organisations - if it is used in the right way. The problem is that there is no clear definition of the ‘right way’, giving rise to alternative solutions to Performance Appraisals. Organisations will have to continue evaluating what system to use in their ongoing strive towards increased productivity and performance.

 

Any reproduction or distribution of this text is prohibited without express permission by the authors. Please contact peter@engholm.nu for permission or further information.

 

REFERENCES:

Butteriss, M. & Albrecht, K. (1979), New Management Tools, Englewood Cliffs, USA: Prentice-Hall Inc.

Cleveland, J.N., Murphy, K.R. & Williams, R.E. (1989), ”Multiple Uses of Performance Appraisal: Prevalence and Correlates”, Journal of Applied Psychology, Vol. 74, No. 1.

Eckes, G. (1994), ”Practical Alternatives to Performance Appraisals”, Quality Progress, November.

Jay, C., "Help to map career path", The Australian Financial Review, May 5 1998.

Kramar, R., McGraw, P. & Schuler, R. S. (1997), Human resource management in Australia, (3rd edition), Melbourne: Addison Wesley Longman Australia Pty.

Lambert, C. (1979), Field Sales Performance Appraisal, New York: John Wiley & Sons.

Nankervis, A.R. & Penrose, J. (1990), ”Performance Appraisal: Where Are We Now?”, Asia Pacific Human Resource Management, August.

Nickols, F. (1997a), "Don't redesign your company's performance appraisal system, scrap it!", (http://home.att.net/~nickols/scrap_it.htm), Assessed 15 May 1998.

Nickols, F. (1997b), "Now what? What to do after you scrap your performance appraisal system", (http://home.att.net/~nickols/now_what.htm), Assessed 15 May 1998.

The Performance Management Taskforce, Department of Primary Industries & Energy (1997), "Best Practice Performance Management", (http://www.psmpc.gov.au:80/about/spmonline/pmdpie.htm), May.

Thomas, S.L. & Bretz Jr., R.D. (1994), ”Research and Practice in Performance Appraisal: Evaluating Employee Performance in America’s Largest Companies”, SAM Advanced Management Journal, Spring.