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Performance appraisal based on
a forced distribution system:
its drawbacks and remedies
International Management Institute, Kolkata, India, and
Anil Kumar Ghosh
Theoretical Statistics and Mathematics Unit,
Indian Statistical Institute, Kolkata, India
on a FDS
Received 8 August 2011
Revised 29 January 2012
1 May 2012
Accepted 24 June 2012
Purpose – Performance appraisal based on a forced distribution system (FDS) is widely used in large corporate sectors around the globe. Though many researchers have pointed out several drawbacks in FDS, due to the absence of any suitable alternative, it has been (and continues to be) adopted by many industries over a long period of time. The purpose of this paper is to point out some serious limitations of this system and propose a simple modification to overcome these limitations. Design/methodology/approach – FDS determines the relative positions of the employees involved in similar work by comparing them against one another, and based on their performance, the employees receive different grades. Here the authors use the Likert’s scaling method to convert these grades into numerical scores, then these scores are used to estimate the average performance of each group of employees, which is referred to as the group index. Taking these group indices into consideration, the authors propose a modified performance score of each employee for their final evaluation. Efficiencies of the existing FDS and the proposed modified version are compared using a simple measure of rank correlation known as the Kendall’s tau-statistic. Findings – Extensive simulation studies show that the modified algorithm is uniformly better than the existing one over different schemes for allocations of employees to different projects, and depending on the allocation scheme, it can lead to substantial improvement. Originality/value – This paper can be considered as the first to mathematically demonstrate the problems lying in the appraisal system based on a forced distribution and the first that provides a simple but effective solution which can be adopted by the organizations using FDS for performance appraisal.
Keywords Performance appraisal, Statistical methods, Human resource management Paper type Research paper
Performance evaluation is regarded as one of the most powerful human resource practices ( Judges and Ferris, 1993; Murphy and Cleveland, 1995, p. 4). It provides a justification for human resource decision such as rewards, career planning, transfers, training, counselling, mentoring, termination, etc. Performance appraisal provides the employer an opportunity to communicate with the employees about the mission, strategy, vision, values and objectives of the organization, and it personalizes organizational strategy into individual performance criteria. It has been observed that employee motivations to perform, to develop capabilities and to improve future performance are influenced by the performance appraisal system (Landy et al., 1978; The authors thank the anonymous reviewer for providing several helpful comments and suggestions that led to substantial improvement of the article.
International Journal of Productivity
and Performance Management
Vol. 61 No. 8, 2012
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Kanfer, 1990). According to Saiyadain (1998), the basic purpose of performance appraisal is to judge the relative worth or ability of an individual employee in performing his/her tasks. If objectively done, appraisal can help to identify a better worker from a poor one.
Despite the importance of a performance evaluation system, extensive studies in this field have identified significant shortcomings in its...
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