Over the last two years, Company X has experienced tremendous growth. Once a company of only 5 employees, there are now over 250 employees. As often happens with companies that grow quickly, Company X has maintained many of the processes that once worked well. Unfortunately, the company has outgrown many of these procedures. The current performance appraisal process is on of these procedures. Each department within the company utilizes its own appraisal process. The company has reached the point where a unified process is necessary.
Why Appraise Performance?
In order to develop a performance appraisal process, it is important to understand what purpose appraisals serve. Ever so often, the senior management of the company come together and outline the goals for the company over a specified time frame. Performance appraisals help employers and employees understand how well those goals are being met. The employer already knows whether a goal has been achieved, but may not understand how or why the results are the way they are. Just as important, individual employees need to understand how they have performed in regard to the company’s goals and the goals set for them personally (Dessler, 2008).
It may be the case that an employee is not performing to the standards set forth by the company. If this is the case, the performance appraisal offers an opportunity for the supervisor to clarify goals and standards and ensure the under-performing employee understands them. This is the time when a plan can be developed to improve the employee’s performance (Dessler, 2008). According to Del Jones (2001), Sun Microsystems recently gave its low performers 90 days to improve. Although this may seem unduly harsh, it is necessary to get low performers back up to standards, rather than letting them linger in dead-end positions within the company.
Finally, the appraisal process gives the employee and supervisor an opportunity to work on career planning. Once the supervisor understands the employees personal long-term goals, she can help design a plan to help further the employee’s goals (Dessler, 2008). This may be include recommending training options or even letting the employee assist in functional areas outside their normal responsibilities.
The Appraisal Process
There are three main steps in the appraisal process. First, it is important that the employee and supervisor understand the job definition. If there is disagreement on the responsibilities of the job, this must be settled before moving on to the next phase. After all, an employee can not be properly evaluated on responsibilities he didn’t know he had. The next step is the actual appraisal. In this step. the supervisor uses the selected appraisal tool to evaluate the employee’s performance relative to the standards already set. When the appraisal is complete, the supervisor will explain the results of the appraisal to the employee. This is a chance for the employee and supervisor to discuss the results and develop a plan of action if necessary (Dessler, 2008).
Company X’s preferred appraisal tool is management by objectives (MBO). MBO uses the goals set for the entire company to define objectives for individual performers. The supervisor and employee work together to define these objectives. Although this requires a bit of negotiation between the two to ensure that the objectives, the result is a list of objectives that both parties feel are attainable. It is important to make these goals clear and avoid ambiguity. The supervisor then periodically visits with the employee to evaluate the progress of each objective (Dessler, 2008).
The primary disadvantage of MBO is the amount of time required by the process. The setting and ongoing evaluation of objectives requires much more time from the supervisor than many of the other appraisal tools. Additionally, some employees are more stubborn than others when it comes to setting reasonable objectives. Working with these employees can be problematic since they may be forced to accept objectives they feel are unattainable (Dessler, 2008).
Other available appraisal tools include Graphic Rating Scale, Alternation Ranking, Paired Comparison, Forced Distribution, Critical Incident, and BARS. Each of these methods has its own list of advantages and disadvantages. In the final analysis, MBO is the most advantageous with the least amount of disadvantages (Dessler, 2008).
Supervisors will need to be trained in the performance appraisal process. Since each department at Company X currently maintains its own procedures, it’s likely that some supervisors will find this training more helpful than others. The first objective of appraisal training is to help supervisors recognize the various forms of rating errors, including the halo effect (rating in one area effects the outcome of another), leniency (the tendency to rate employees too high), and central tendency (avoiding both high and low marks). It is important for supervisors to recognize these tendencies, but they must also understand that these are not always errors (London, Mone, & Scott, 2004). For example, it may be the case that every member of a team is exceptional. These appraisals may display the classic symptoms of leniency, but they represent the current condition.
Many supervisors will also need to be trained in the art of appraisal interviewing. Some appraisal interviews are relatively easy. When an employee has received high marks, there is less chance of a negative response. For those appraisal interviews that have a high potential for negative reaction, the supervisor must be prepared to handle any situation. This training should include techniques that supervisors can use to make a rough appraisal go smoother. Finally, supervisors need to be trained in methods that will motivate employees to improve performance (Dessler, 2008).
Dessler, G. (2008). Human Resource Management. (11th ed.). Upper Saddle River, NJ: Pearson.
Jones, D. (2001). More firms cut workers ranked at bottom to make way for talent Rating systems trigger criticism, lawsuits as companies set sights on growing labor pool :[FINAL Edition]. USA TODAY, p. B.01. Retrieved February 5, 2009, from ProQuest National Newspapers Expanded database. (Document ID: 73440201).
London, M., Mone, E. M., Scott, K. C. (2004). Performance management and assessment: Methods for improved rater accuracy and employee goal setting. Human Resource Management, 43(4), 319-336. Retrieved February 5, 2009, from ABI/INFORM Global database. (Document ID: 750777771).