THE USE OF PERFORMANCE APPRAISALS BY HUMAN RESOURCE DEPARTMENTS IN THE WORKPLACE

Shayne Rotte

In this paper I will be discussing the use of Performance Appraisals by HR Departments. I will aim to discuss their advantages and disadvantages, as well as discussing which Behavioural Theories can be linked to their use and their rise in popularity in the workplace in recent years. However, in order to understand this, we need to understand a number of other factors first. First of all, what is the definition of the HR or Human Resources Department of a Company? This Department can be said to be; Devoted to providing effective policies, procedures, and people-friendly guidelines and support within companies. Additionally, the human resource function serves to make sure that the company mission, vision, values or guiding principles, the company metrics, and the factors that keep the company guided toward success are optimized.1 What became known as HR was the area or function within an Organisation that had the responsibility of deciding which strategies or policies were to be used to further the Organisation related to the management of the human resources, or the employees. The term HR is, in itself, quite new, first used in the 1960's, when humanity took a shift as human rights came to a brighter light during the Vietnam Era2. It originated in Companies and Organisations that had moved towards welfare management, dealing with providing employees with welfare services which may not necessarily be directly connected to their job, and/or scientific management, or Taylorism, the aim of which was to increase efficiency and decrease waste in the workplace. These slowly allowed for a new, increasingly administrative management activity to emerge, which soon became known as Personnel Function, and then more commonly as Human Resources, and reflected the adoption of a more quantitative as well as strategic approach to workforce management, demanded by corporate management to gain a competitive advantage, utilizing limited skilled and highly skilled workers.3 One effective policy or procedure used by HR Departments to ensure a companys route to success is through Performance Appraisals. These are used to motivate employees by providing them with feedback, both positive and negative, on their progress in an organisation, and thereby aid the employees professional development. They can then be used by Organisations to decide the destination of Bonuses, Pay rises and in some cases termination of an employees ties with said Organisation. It is a concept that was defined by De Vries et al. (1991) as; The process which allows firms to measure and consequently evaluate an employees achievements and behaviour over a certain period of time. The basic purpose of using performance appraisal techniques within an organization is to align the employees efforts with the overall objective of the firm.4 Performance Appraisals are useful to HR, and therefore to the Organisation, because they increase the reliability of Staff selection and assessment procedures and policies through its objective, systematic and regular evaluation of staff performances. This then allows the Organisation to assess the potential, both present and future, of staff, and will also dictate the training needed by said staff. This leads to an efficient use of the (Human) resources available to the organisation, and allows the management to improve its manpower planning and decision making. Because Performance Appraisals act as tools for promotions, pay rises, career planning, training and development, the staff of the organisation are more motivated to improve and grow, both personally and professionally. Other advantages also include more obvious benefits, such as allowing management to see an employees performance over a period of time, and then allowing management to sit down with the employee to discuss the positives and negatives of their performance, while clarifying any issues that might arise. This, in turn, provides the employee with feedback about their performance, how they achieved, or how close they came to achieving, their goals. However, the Performance Appraisal system, as with any system, is not perfect, and therefore not without its disadvantages. It can be incredibly time consuming, as it is recommended that managers take roughly an hour per employee when compiling performance appraisals, so therefore, if a manager has a lot of people in his/her team, it can take hours to write and then hours to meet with each individual team/staff member in
1 2 3 4 http://humanresources.about.com/od/glossaryh/f/hr_department.htm http://en.wikipedia.org/wiki/Human_resources http://en.wikipedia.org/wiki/Human_resources http://university-essays.tripod.com/performance_appraisal_performance_management.html

order to review said PA's. A PA can also be a negative experience, if done incorrectly. This can discourage employees from really wanting to take part in the process, as it needs to be one that encourages and celebrates the work achieved during a set period of time, and provides the employee with positive reinforcement. A manager needs to have documented both issues that need to be addressed, and the positive things that employees have done during that period of time. If a manger does not keep notes on every single member of the team he/she is apprising, they might find it increasingly difficult to send out a consistent message to the team. It is also very difficult to have an objective PA, as biases, be they of the Manager or the employee, will play their part, as an unfortunate result of human nature, and it would take a very mature manager to deliver a perfectly unbiased PA. Other times, PA's can be made up of Feedback Forms, which only give out Quantitative or Qualitative Data. These forms, often used in performance appraisals, use either one or the other, but not both. Quantitative appraisals will concentrate on the numbers, for example, how many projects were completed, how many were on time, did the employee reach his/her targets? These questions, while important, do not paint the whole picture. Qualitative appraisals concentrate on the completion of personal or professional goals, with the story of how the employee used opportunities, presented during the completion of these goals, to lead by example or implement the values of the organisation. Only by listening to the stories of things that have happened since the previous PA and looking at the numbers for the same period together will you be able to form a clearer picture of the employees value to the organisation. So now we ask ourselves, which parts of which Behavioural Theories can be appropriately linked to performance appraisals? The Michigan Studies, based on interviews with managers and employees in the 1940's, led to the Michigan Continuum, which allowed for the fact that managers can be either people or task-focused. The appropriate part for performance appraisals is people-focused, or employee orientated. This is because the Studies indicate that People-focused managers will pay close attention to their employees working relationships, will encourage the participation of the employees in the decision-making process, and will do what they can to create job satisfaction for their subordinates. This will allow the managers to focus on the qualitative area of the appraisals process. The Ohio State Studies, researched during the late 1940's, arrived at the same conclusion as the Michigan Studies, in so far as there are two styles of leadership, Consideration Leadership and Initiating Structure Leadership.. Consideration Leadership is the more informal of the two styles, and considers such things as employee feelings, employee well-being, encouraging employee participation through communication, and most importantly, providing feedback on employee performance, while the Initiating Structure style is the more formal approach and covers such areas as planning, organising, controlling, allocating tasks and work processes in general. These are both relevant to performance appraisals as a manager, ideally, would have a mix of the qualities required by both in order to provide the employee with a concise and accurate report of the previous periods performance, while providing encouragement and feedback on areas to improve in, and planning ahead for the next period. Another part of the Ohio State Studies is the Leadership Grid, introduced by Blake and Mouton in 1962; is a simple tool for leaders to assess their own style of working what they do and how do they act and behave with their subordinates. Leadership Grid....has since been revised several times and extensively used for leadership assessment and development across the world. Leadership grid has its genesis in style approach to leadership study.5 According to the Leadership Grid, a manager who would be able to provide employees with fair and effective appraisals would be somewhere between Middle-of-the-road management, where compromise is king and managers have concern for employees while involving them in the decision making process, and Team management, where there is a high emphasis on the importance of the employee and on production and managers believe that concern for both employees and tasks can go hand in hand. The most obvious Behavioural Theory that can be linked to PA's is McGregors Theory Y. This theory assumes that
5 http://www.alagse.com/leadership/l9.php

employees may be ambitious and self-motivated and exercise self-control. It is believed that employees enjoy their mental and physical work duties....to them work is as natural as play. They possess the ability for creative problem solving, but their talents are underused in most organizations. Given the proper conditions, theory Y managers believe that employees will learn to seek out and accept responsibility and to exercise selfcontrol and self-direction in accomplishing objectives to which they are committed.6 McGregor based his theories on Maslows Hierarchy of Needs, specifically, to Maslows Higher Order theory, which connects higher level needs to worker motivation. McGregor believed his Theory Y allowed companies to harness the motivational energy of its employees. Because work comes naturally, he says, people will be self-directed to achieve the goals set for them, and will seek out responsibility which they are capable of handling because creativity and ingenuity are common in our population. In fact McGregor wrote in a 1957 Harvard Business Review article that Effective development of managers does not include coercing them (no matter how benevolently) into acceptance of the goals of the enterprise, nor does it mean manipulating their behaviour to suit organizational needs. Rather, it calls for creating a relationship within which a man can take responsibility for developing his own potentialities, plan for himself, and learn from putting his plans into action.7 In conclusion, Performance Appraisals can be either good or bad for an organisation. If done properly, with the correct aims, PA's can help organisations and their employees move forward. If done incorrectly, they can have a negative effect on employee performance. In order to take full advantage of the performance appraisals, the goal in designing such systems should be congruent to the overall aim and visions of the company....valuable organizational objectives are served with the help of performance appraisals.8 Performance Appraisals take into account a number of different Behavioural Theories. The Michigan and Ohio State Studies both call for different styles of leadership that are essentially employee orientated. McGregors, the man credited with being the reason we use the term 'human resources' instead of personnel department. The idea that people are assets was unheard of before McGregor."9, Theory Y is probably the most influential of these when talking about PA's, as he put a direct correlation between employee motivation and organisational performance. Finally a performance appraisal is only as good as the performance management system it is part of. If an organization merely does performance appraisals for the sake of doing them, they are wasting their time. But if they strategically incorporate performance management into their strategic plan to implement business goals, they will provide a process to accomplish those goals.10

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http://en.wikipedia.org/wiki/Theory_X_and_theory_Y http://www.adeak.com/2011/02/where-did-performance-appraisals-come-from/ http://university-essays.tripod.com/performance_appraisal_performance_management.html http://en.wikipedia.org/wiki/Theory_X_and_theory_Y http://www.zeromillion.com/business/advantages-and-disadvantages-of-performance-appraisals.html