Need for performance appraisal

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I. Contents of getting need for performance appraisal

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The reality is that the traditional performance appraisal as practiced in the majority of
organizations today is fundamentally flawed and incongruent with our values-based, visiondriven and collaborative work environments. There is compelling new research that shows
performance reviews actually dont improve performance, and may actually cause a decline in
performance. Also, performance reviews are tied to the Bell or Normal Curve, which is now
being seriously questioned.
Performance reviews have been around for ages, apparently as far back as third-century China,
but were popularized during the Industrial Revolution. Certainly by the l980s performance
appraisals in the form of GEs CEO Jack Welshs rank-and-yank system were widely used in
organizations.
New research (link is external) by psychologists at Kansas State University, Eastern Kentucky
University and Texas A&M University examined how people respond to negative feedback they
receive in performance reviews. Conventional wisdom is that people who are really motivated to
improve their performance would respond well to getting critical feedback in a performance
review. The research demonstrated this wisdom is wrong. Those employees who have a desire to
learn and growpresumably the best employeeswere significantly bothered by the negative
feedback they received. One of the authors of the study argues that if negative feedback has the
potential to discourage even the best performers, then managers need to be aware that what was
meant as praise doesnt get misconstrued as criticism.

These conclusions are echoed (link is external) by Stanford University Professor Bob Sutton
comments that doing performance evaluations well is like doing blood-letting wellit is a bad
practice that does more harm than good in all or nearly all cases. Sutton argues in his book, with
co-author, psychologist Jeffrey Pfeffer, Hard Facts, Dangerous Half-Truths And Total Nonsense
(link is external), performance rankings can lead to destructive internal competition, which can
make it tough to build a culture of knowledge sharing.In addition, there seems to be a selffulfilling prophecy at work, in which a person who receives a poor evaluation does even worse in
the subsequent rating period.
In an article published in The Psychological Bulletin (link is external), psychologists A. Kluger
and A. Denisi report completion of a meta-analysis of 607 studies of performance evaluations
and concluded that at least 30% of the performance reviews ended up in decreased employee
performance. Many specialists in the field have written about ineffective performance reviews.
Tom Coens and Mary Jenkins, in Abolishing Performance Appraisals: Why They Backfire and
What To Do Instead (link is external), cite studies that clearly show performance appraisals do
not work and suggest a replacement; and Aubrey Daniels, author of Oops! 13 Management
Practices That Waste Time and Money (link is external), argues that performance appraisals are
actually counter-productive. Daniels cites a study by the Society for Human Resource
Management that found 90% of performance appraisals are painful and dont work; and they
produce an extremely low percentage of top performers.
Brain research shows that when a persons status is threatenedwhich often happens in
performance reviews that contain constructive feedbackactivity diminishes in certain
regions of the brain. David Rock, author of Your Brain At Work (link is external), and director of
the Neuroleadership Institute, says that when that occurs, peoples fields of view actually
constrict, they can take in a narrow stream of data, and theres a restriction in creativity.
Performance reviews are tied to our belief in the Bell Curve, or normal curve a system first
developed by Abraham de Moivre in 1733. Its use moved from the observation of planets to the
use in population statistics in the 19th century and finally used in an evaluation of the
performance and intelligence of individuals.
Josh Bersin in his article (link is external)in Forbes on the myth of the Bell Curve says the curve
does not accurately reflect the way people perform. As a result, HR departments and business
leaders inadvertently create agonizing problems with employee performance and happiness.
Bersin cites how Microsoft has decided to disband its performance management process, --after
decades of use the company realized it was encouraging many of its top people to leave. Bersin
cites the research by Ernest OBoyle Jr. and Herman Aguinis who found that 94% of researchers,
entertainers, politicians and athletes did not follow a normal distribution but rather a Power
Law or long tail distribution, in which there are a small number of hyper high performers, a
large number of good performers, and a smaller number of low performers.

So what is the alternative to performance appraisal systems? If you want to develop the good
performers and hyper high performers, companies need to focus very heavily on collaboration,
professional development, coaching and empowering people to do great things, says Bersin.
Clearly, the annual performance review was designed for a work environment where control of
individual employee performance was a key function. In todays collaborative environment, that
perspective no longer makes sense. Some key questions that need to be answered are: Why are
we perpetuating a system that research (including recent brain research) shows is not only
ineffective, but counterproductive; and what are better processes to replace the performance
review?
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III. Performance appraisal methods

1. Essay Method
In this method the rater writes down the employee
description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.

2. Behaviorally Anchored Rating Scales

statements of effective and ineffective behaviors

determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages helps overcome rating
errors. Disadvantages Suffers from distortions
inherent in most rating techniques.

3. Rating Scale
Rating scales consists of several numerical scales
representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages Raters biases

4. Checklist method
Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages economy, ease of administration, limited
training required, standardization. Disadvantages Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

5.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
group.
Advantages of Ranking Method
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
employee.
Limitations of Ranking Method
The whole man is compared with another
whole man in this method. In practice, it is very difficult
to compare individuals possessing various individual
traits.
This method speaks only of the position where an
employee stands in his group. It does not test anything
about how much better or how much worse an employee
is when compared to another employee.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. Critical Incidents Method

The approach is focused on certain critical behaviors of

employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

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