The Purpose of Performance Appraisals

The four objectives of performance appraisal are:

Assessment of performance

The organisation must be able to discern between those whose performance is effectively contributing to the achievement of the organisation’s objectives, and those who are not.

Reward

Those who are performing well want to be recognised and rewarded for their efforts. Outstanding performers should be identified and rewarded accordingly otherwise further outstanding performance may wane due to declining motivation.

Development

It is the role of performance appraisal to assist the employee to develop to achieve optimum performance and to remove blocks to improved performance.

Feedback

Communicating clear, specific expectations and giving both positive and constructive feedback are essential parts of performance appraisal.

BENEFITS OF PERFORMANCE APPRAISALS

A performance appraisal process provides numerous benefits for the appraiser, appraisee and the organisation as a whole.

For the Appraisee:

• Recognition for good work performance provides a sense of confidence, self-worth, job satisfaction, commitment and motivation for continued improvement
• Provides opportunity to re-assess work goals and discussion of what has worked well and what needs improvement
• Opportunity to provide reasons for potential underperformance and discuss development points for improvement
• Ability to air any grievances or speak about problems in the workplace
• Opportunity to discuss career goals and future progression
• Builds trust and facilitates relationship growth with manager through open discussion.

For the Appraiser:

• Opportunity to gain insight into individual jobs and work teams
• Opportunity to align individual, team, group and organisational goals and objectives and communicate that to each
• Opportunity to hear potential grievances or issues to be investigated as mentioned by employees
• Improved decision making ability
• Identification of development points, training needs and forecasting for future
• Increased job satisfaction, motivation and self-worth
• Improved group performance
• Opportunity to clarify expectations of individuals and teams, re-assess work goals and discuss what has worked well and what needs improvement
• Improved quality of relationships with subordinates.

For the Organisation:

• Fosters a culture where staff are valued and there is commitment to continuous improvement
• Staff are more aware of organisational goals and values and can see how their contribution affects organisational success on a larger scale, building sense of commitment
• Better employee relationships with managers creates a sense of cohesions and belonging
• Managers are more in touch with individual jobs, teams and groups
• Identification of training needs and opportunities for improvement at all levels (often discovered through consultation with employees)
• Encourages managers to hone their leadership, motivation and communication skills, making them more valuable to organisation and creates a sense of job satisfaction.

POTENTIAL DRAWBACKS OF PERFORMANCE APPRAISALS

A performance appraisal process can have a number of potential drawbacks for the appraiser, appraisee and the organisation as a whole. Despite having a sophisticated performance management system in place, the success or failure of a performance appraisal process will largely hinge upon the validity and reliability of the judgements made by the appraiser. Oftentimes, this can be influenced by managers’ personal bias and attitude towards the appraisal process generally. Both of these factors can disrupt the accuracy of performance appraisal information. Some common issues are:

Management attitude
If managers are not committed to the performance appraisal process, this can have a significant impact on the outcomes. Common attitude problems include; not taking the process seriously, seeing the process as a routine activity or merely “ticking the boxes”, reluctance to tell employees face-to-face about underperformance and failure to see how the process will benefit on-the-ground work activities and organisational performance.

Halo effect
Where the overall appraisal of an employee is influenced by the perceived presence of one desirable quality, work behavior or achievement and can skew the rater’s ability to rate the employee objectively.

Horns effect
The reverse of the ‘halo effect’, whereby the overall appraisal of an employee is influenced by the perceived presence of one negative quality, work behavior or achievement and can skew the rater’s ability to rate the employee objectively.

Central tendency
Where a rater grades every employees performance in a similar way, such as ‘acceptable’ or ‘meeting objectives’ and fails to distinguish between high performers and low performers. The tendency to rate all employees similarly can arise due to the lack of opportunity to observe employee behavior and/or a rater’s unwillingness to explain high or low ratings and create more work for themselves.

Relationship effect
Where a rater’s ability to accurately appraise an employees’ performance is affected by the nature of the relationship they share and the length of time they have worked together. Whether the personal relationship between rater and employee is positive or negative, both have the potential to affect the objective judgment of the rater and can be an unreliable evaluation.

Leniency or strictness bias
Where a manager distorts appraisal accuracy by repeatedly rating employees as high or low despite actual performance. Rationales for higher ratings include; wanting to protect an employee from receiving a negative rating or permanent blemish on record, wanting to avoid an uncomfortable conversation and feeling sorry for those whose performance was unsatisfactory due to personal issues. Rationales for lower ratings include; wanting to encourage the employee to resign, to create evidence of underperformance to assist in disciplinary and termination procedures and/or to assert dominance and control over an unruly employee.

Prejudice/bias/stereotypes
Where a manager holds a personal prejudice (positive or negative) towards a particular type of person (be it nationality, gender, age, personality trait, occupation type or anything else) and allows this bias to cloud their judgment and ability to objectively appraise their performance. This can often be unconscious and difficult to identify unless a complaint is made against a manager.
For more information, please refer to our Information sheet – Legal considerations.

Recency effect
Where a manager is only able to recount instances of good or bad performance based on what is most fresh in their minds. This distorts the accuracy of an appraisal as often employees make a concerted effort to improve their performance in anticipation of the performance review process being undertaken.