EFFECTIVE PERFORMANCE APPRAISAL
by Gregory D. Rankin and Brian H. Kleiner
California State University, USA
Introduction In conducting our research for this article, we discovered that the area of performance appraisal is one of the most complex and important issues currently faced by organisations in both the public and private sectors. In fact, the subject of "performance appraisal" has become something of a joke to most government employees. There is no shortage of approaches to performance appraisal — rating scales, objective-setting (e.g., MBO), critical incidents techniques, "behaviourally anchored rating scales" (BARS) and many others are currently in use. In the end, however, all have their imperfections, and the difficulty for those who must develop a performance appraisal system for their organisations is in deciding which approach seems most likely to meet all their objectives in their own particular circumstances. In the final analysis, there appears to be no one "best" method of performance appraisal — just as there is no one "best" leadership style. In spite of this fact, however, there are some elements which are common to all effective performance appraisal systems, regardless of the actual method(s) used in the system. These elements will be discussed shortly. However, before examining these common links, a brief overview of performance appraisal as it is currently practised in American organisations is in order.
Current Trends in Performance Appraisal
As previously noted, controversy over the "best" performance appraisal system continues. The dilemma was highlighted in the 19 May 1980 issue of Business Week where the editors concluded that managers want a system "that will pinpoint specific marginal behaviour that should be reinforced or discontinued, serve as a personnel development tool, provide a realistic assess ment of an employee's potential for advancement, and — a particularly hot issue in the 1980s — stand up in court as a valid defence in discrimination suits." Has the search for a "best" system affected what companies actually do in performance appraisal? A study conducted by Taylor and Zawacki in 1981 set out to answer this question by sending a mail questionnaire to 200 firms located throughout the United States — these companies were selected at random from the Fortune 1000. Eighty-four (42 per cent) were returned and used in the study. The size of respondent firms ranged from less than 1,000 employees (nine), 1,000-5,000 employees (63), and more than 5,000 employees (12). Non-respondent firms did not vary significantly in terms of size. This study, which duplicated a previous one conducted in 1976, asked what kind of performance appraisal system was used for management and blue-collar employees. It also asked for the interval between ratings, productivity and employee reaction to the appraisal system, anticipated changes and respondent satisfaction to the present system. While it is not
possible to go into all the detailed findings of this study, some of the most pertinent information is summarised below. ● While in 1976 43 per cent of the respondent firms had used a traditional performance appraisal system (e.g., forced distribution) and 57 per cent had used a collaborative system (e.g., MBO), in 1981 these figures had changed to 53 per cent and 47 per cent respectively. In other words, the proportion of companies using a traditional approach to performance appraisal had increased while the proportion of those using a collaborative approach had decreased. Several respondents provided written comments stating that they had changed to quantitative (i.e. traditional) systems in recent years in reaction to legal challenges to their previous collaborative system. In 1981, 39 of the 41 organisations using a traditional system used a graphic rating scale. Of the collaborative forms, 23 firms used MBO and 11 used a BARS system. The percentage of firms not satisfied with their...
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