Performance Appraisal

Conceptual Overview

Performance appraisal has its foundation in organizational behavior theories such as motivation and goalsetting theories, for which one can see the 2001 review by Fletcher and the 2006 review by DeNisi and Pritchard. In general, PA is comprised of three main steps. In the first, the line manager, together with the employee, defines the duties and the job standards expected in the performance of the job to ensure that all parties involve in the appraisal process have a clear understanding of the duties and performance standards. The next step is the conduct of the performance appraisal as the actual performance of the employee is compared with the performance standards previously determined in the first step. The final or feedback step is where the line manager provides feedback to the employee regarding performance and progress. Plans are then made for future developmental purposes. A central issue for PA is its effectiveness as the appraisal system. An effective PA system in an organization will bring improvement of individuals' or teams' performance and organizational effectiveness. The PA system involves both the content of PA (what is appraised) and the process of PA (who appraises and how PA is conducted).

Critical Commentary and Future Directions

Extant research addresses the effectiveness of PA from the supervisory perspective. Related issues include (1) the development and communication of appropriate dimensions and standards of performance and expectations; (2) the availability of trained and knowledgeable appraisers; (3) the use of timely, specific, accurate, understandable, and nonthreatening feedback; and (4) the trust that the supervisors have in their employees. Researchers also examine the common errors made by supervisors, which are likely to lead to ineffective PA systems. For example, a halo effect in appraisal (a favorable rating for all job duties based on good performance in just one job duty), central tendency (rating all employees close to the midpoint of scale irrespective of true performance), and judging overall effectiveness on the basis of recent experience only are some common errors, as Milkovich and Newman discussed in 2002.

Studies also identify elements affecting effectiveness of the PA system from the perspective of the employee. It has been argued by Levy and Williams in 2004 that whether the PA system leads to performance [Page 1234]improvement depends on workers' responses to appraisals within the social context. Research in the past focused on the accuracy of supervisory performance ratings and other limited measurement issues, but currently addresses social and motivation aspects of PA. Union involvement, management's political agenda, and employees' perception of organizational justice are all related to the process of the PA system as Nurse's 2005 piece and Brown and Heywood's 2005 contribution note.

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