Why Managerial Performance Appraisals Are Ineffective: Causes and Lessons

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Why managerial performance appraisals are ineffective: causes and lessons

Clinton O. Longenecker Graduate School of Management, The University of Toledo, Toledo, OH, USA

Claims that, in the quest for competitive advantage, modern organizations are making increasing demands on their change managers. Questions what organizations are doing to help managers develop the skills necessary to operate in a rapidly changing work environment. Suggests that systematic management development efforts at organizational level are vital to accelerate and sustain management change. Seeks to identify why managerial appraisals frequently fail and are ineffective as a management development tool. Proposes that, if an organization is going to rely heavily on the use of formal performance appraisals as a vehicle to foster managerial development (which many do) they had better employ an effective appraisal system.

Maybe it’s me but when I look at the process that a lot of organizations use to evaluate their managers I see an awful lot of problems that have a lot of negative consequences ... Hey, we all [managers] want to be evaluated fairly and in a meaningful way but we are not always so willing to do that for the managers that work for us ... It is a paradox for sure. (Observations of a Senior Manager – Fortune 500 Organization.)

Organizations around the world are currently caught up in a flurry of activities designed to enhance key performance variables such as productivity, quality, cost effectiveness, customer service and cycle-time reduction. To achieve improved results in these areas, organizations are employing a host of improvement strategies aimed at producing competitive advantage. These improvement initiatives frequently include re-engineering, technology upgrades, process redesign, employee empowerment efforts, value-added activity assessments, improved customer-supplier linkages and total quality management just to name a few. Organizations frequently state that “it is no longer business as usual” and that “our organization is recreating itself into a more competitive player in the marketplace”. In the midst of all of this change managers (at all levels) are being asked to: 1 do more with less; 2 move more quickly; 3 change their current paradigms and thought processes; 4 adopt a more progressive management style that places a greater emphasis on employee empowerment; and 5 develop new technical skills. There is no question that a role of a manager is changing rapidly in the world marketplace. This transformation is necessary to implement and support the myriad of organizational change efforts previously discussed. Yet, a very basic question must be asked, “What are organizations doing to help their managers develop the skills necessary to operate in this rapidly changing environment?” While much of the burden for management development falls squarely on the shoulders of individual managers, research has demon-

strated that systematic management development efforts at the organizational level are necessary and vital to accelerate and sustain management change. When organizations talk about the management development they frequently mention the practice of formal performance appraisal as a primary vehicle for management change. This tacit admission can be somewhat disquieting because of a growing body of both research and practice that suggests that managerial appraisals are all to often viewed as being ineffective[1]. Specifically, if an organization is going to rely heavily on the use of formal performance appraisals as a vehicle to foster managerial development (which many do) they had better employ an effective appraisal system. Formal appraisals have been found to be a potentially effective device for: 1 performance planning and goal setting; 2 providing performance feedback and coaching; 3 employee development, counselling and planning; and 4 linking performance to compensation and promotion decisions. Yet, these...
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