Appraisal Systems: An Effective Tool Or A Waste Of Time

Appraisal Systems: An Effective Tool or a Waste of Time

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Human Resources 434

Professor XXXXX

May 1, 2005

Performance appraisal systems have many uses in the field of Human Resource Management. Some of the uses are selection for different positions, training, compensation and training and development. I am going to elaborate on some of these uses for performance appraisals to include career development and compensation. Hopefully by the end of this paper the reader will have an understanding of the many uses of appraisal systems and how the effective use of them can benefit organizations and individuals with career development. It is also my intention to give the reader a positive perspective on the use of a pay for performance appraisal system.

Mathis & Jackson, (1988) contend that there are two different types of appraisal systems, both equally important. These are systematic and informal appraisal systems. A systematic appraisal system is one that is set up by the organization's Human Resources Department and is at a fixed time period. This time period is usually once or twice a year and often coincides with the anniversary of the employee's starting date at the organization. In the military the formal appraisals are done on a monthly basis for soldiers in a non-leadership position and quarterly for those in a position of leadership. These appraisals are documented and are maintained in a personnel file on the employee. An informal appraisal system is the coaching and guidance that is given to an employee on a day to day basis. It is non-structured and is usually accomplished in the scope of the supervisor's and employees' daily tasks.

Formal performance appraisals are an integral part of an organization's management system. But according to an internet article authored by John Reh(n.d.) most organizations use them, but many of them think that it is a waste of time and is used simply as a check-the-box tool to appease the upper level managers (para.1-2). So why should we use performance appraisal systems? The reason is that when used correctly performance appraisal can be an effective tool in helping to guide and shape an individual's career.

According to Mathis & Jackson (1988) the goal of the appraisal should be to give the rated individual a guide to understand how they fit in the organization and how their performance is perceived by the rater. This encompasses communication of the results to the rated person and feedback (p.360). This is how the appraisal can help guide an individual, not simply by telling the individual what is wrong, but encouraging a 360 degree channel of communication between the rater and rated person.

The results obtained in the appraisal process through communication and feedback can be used as a tool in helping an employee with motivating employees and setting and achieving goals. The authors Latham & Wexley (1982) state that there are five basic steps to motivate employees. These steps are: define the employee's responsibilities, ensure the rater knows these responsibilities and knows how to effectively evaluate the employee, the rater needs to be involved with the employee in goal-setting, ensure that the goals are attainable, and empower employees to help in the decision making and problem solving process (pp 119-120). This can help motivate employees to take an interest in the goal setting process. Employees can further understand where they are in relationship to previously set goals by helping to describe the progress they have made and giving input into what needs to be done better to excel. If the appraisal is done in the right way it can be used as a reevaluation of previously set goals and help pave the road to achieving new goals.

According to an online source I recently read (Introduction to Performance Appraisal, n.d.) the appraisal system is also often used in managing the upward mobility of employees. It can be a key tool in deciding promotions, demotions, transfers, or rewards such as bonuses and promotions. The article also stated that there are two schools of thought on basing rewards and punishments on the results of appraisal systems. One school of thought is that appraisal systems should not be used for such decisions because the validity of the appraisal system might come into question. The author of the article states:

Rather than an opportunity for constructive review and encouragement, the reward-linked process is perceived as judgmental, punitive and harrowing. For example, how many people would gladly admit their work problems if, at the same time, they knew that their next pay rise or a much-wanted promotion was riding on an appraisal result? Very likely, in that situation, many people would deny or downplay their weaknesses.

This can indeed be true. This is why proper training to eliminate rater error and bias is a must which I will discuss further at a later point.

The other school of though is that appraisal systems should be used as an integral part of an organization's reward and compensation system. The advocates of this school of thought believe that appraisal systems can be used to ensure that the reward system is fair and just. They also believe that employees also advocate the use of the appraisal system for rewards and punishments so that they get a feeling that the appraisal is actually being used for furthering their career instead of being an obligatory measure (Introduction to Performance Appraisals, n.d.). I tend to agree with this school of thought. I believe that a well done appraisal can be used to determine employee rewards and punishments. The key is that the appraisal must be well done and communicated effectively, without bias, and little error. I am a firm believer in the Theory Y principle of motivation which is described by Robbins & Coulter (2005) as, "The assumption that employees are creative, enjoy work, seek responsibility, and can exercise self-direction" (p.394). In keeping with this theory it is my belief that given a proper, effective, and fair evaluation an employee is likely to seek responsibility for his or her actions and try to remedy any deficiencies noted. The employee should have a firm belief that his or her justification for rewards and/or punishments is within his or her control. This is a good argument for pay for performance systems. which I will explain.

A pay for performance system is a