Performance appraisal has been one of the most
debated management practices for several decades. It has generated a
wide variety of viewpoints. The thrust of performance evaluation
appraises employee's performance and concentrates on the entire spectrum
of performance management and improvement strategies. These include
employee performance improvement, performance development, and training,
cross training, challenging assignments, 360-degree feedback and regular
performance feedback. This article discusses different issues related
with performance appraisal, such as organization culture, performance
related pay, the assessment of performance, and the use of standards and
gives recommendations to overcome these problems. In the end, results of
a performance evaluation survey conducted.
The culture of the organization affects appraisal
relationships to a great extent. The only possible way for
organizations, to minimize the possible conflict among appraisal
objectives, is to emphasize on climate setting that will facilitate
achieving the objectives that an appraisal system intends to achieve.
Thus what needs to be done is to encourage managerial styles that will
lead to openness and frankness in relationships as a condition for
establishing an effective performance appraisal system. Pakistani
companies need to realize that the relationship between organization
culture and performance appraisal system is a two-way process implying
that they can successfully use their performance appraisal system to
bring about cultural change.
APPRAISERS' JUDGMENT PROBLEMS
Appraisal requires one person i.e. the appraiser to
make an objective assessment of another person's performance. One of the
major problems in appraisal is perception, and this is a fact that
appraiser's personal perception tends to be a major influence on actual
grades awarded. Appraisal is supposed to be objective and accurate; the
reality is that when a manager evaluates people, he starts thinking
about its impact on his relationship with the guy and his future in the
organization. Many managers deliberately distort and manipulate
appraisals for political purposes. The degree of openness and trust
between manager and subordinate is a huge factor in determining the
accuracy of the appraisal. How useful the appraisal process is will
depend heavily on the commitment of top management, training, open
discussions, and rewarding the efforts of managers to do effective
Another problem is that whereas most jobs are multi
tasks, appraisers are frequently influenced by only or two critical
aspects of the job. A common mistake made by most appraisers is that
they tend to rate employees according to some recent significant
achievement. Experience suggests that such a grading is likely not to be
realistic. Yet another problem related to appraisers' judgment is
similarity error i.e. giving people credit for behaviour they see in
themselves. Last but not the least appraisers are known to fit the data.
It means determining the grade to be awarded before the appraisal
interview takes place. During the interview the appraiser 'fits' the
data to the preconceived grade.
Various studies suggest that training should be given
to appraisers and this should be an ongoing process not a matter for few
hours. The training and retaining process needs constant debugging of
the process in order to make the process of appraisal reflect reality
than partial reality tinged with a good dose of fantasy.
USE OF STANDARDS
Establish straightforward, honest criteria that tell
people exactly what they must do to achieve particular results. Too
often organizations fail to have criteria beyond the judgment of a
manager. If they have criteria, they fail to share them with employees.
Both of these make up a recipe for disaster. While organizations are
unlikely to eliminate the judgment of the manager as part of the
criteria mix anytime soon, the impact of his or her opinion should be
minimized, where possible.
PERFORMANCE RELATED PAY
"Pay-for-performance" philosophy is a
keystone of organizations' compensation system. Such a system requires
solid grounding in a clear and documented link between performance and
salary increases. Unfortunately, the link between individual performance
and pay is frequently nonexistent — "merit" pay is a hollow
concept in this regard. Several factors get in the way of
materialization of the pay for performance idea:
* First, the
annual salary change based on performance is usually a small percentage
and is thus insignificant for most employees.
appear unwilling to differentiate among their subordinates
performance-related pay is only one element in the staff management
system and cannot make up serious deficiencies elsewhere.
In order to overcome these problems an organization
1) Review its
current system (linking performance with reward systems)
2) Use of
performance measurement tool that differentiates individual performance.
3) Exercise a
decision-making tool — designing a strategy that fits with business
PERFORMANCE EVALUATION OF PAKISTANI COMPANIES
A research team has conducted a survey in performance
evaluation of 57 companies working in Pakistan and analyzed what is
being practiced over here.
The result says that 65% companies are practicing
performance evaluation formally whereas 31% are doing it informally and
8% have mentioned other ways of doing performance evaluation such as ICP.
Analysis also shows that 7 out of 19 i.e. only 36.8%
companies having life of organization less than 10 years are using
informal method of performance evaluation and are small or medium size
organizations. Whereas out of the remaining 38 companies, which have age
more than 10 years, 37 (97%) are using formal method for evaluating
Only 24% companies are using 360 Evaluation. Most
companies are using Rating Method and Annual Confidential Report (ACR).
Organizations have to go for 360 Evaluation as it gives more objective
result to organizations than others methods of Evaluation.
Furthermore the survey asked a question from all the
organizations regarding problems faced by them in performance
evaluation. But only 7 organizations identify problems out of 57
companies and they mentioned following problems: Delegation of
authority, evaluation by senior only, correct reporting and cross
matching with objectives, communication problem, fixation of quota to
evaluate your employee's performance or to give reward, a criterion for
ranking is not specific and biasness.
Performance evaluation is intended to assess
employees' performance and reward them according to it. It is also a
very important tool for providing feedback to employees so that they can
improve upon their performance. It is influenced, directly or
indirectly, by several factors. The culture of an organization should
support transparency, openness, and frankness in order to facilitate the
process of performance evaluation. Some of the problems faced by
Pakistani companies in carrying out performance evaluation are lack of
360 degrees feedback, need for standardization of performance
measurement criteria, lack of employee involvement in the process, and
personal biases of appraisers. To overcome these issues organizations
have to review their whole system objectively and revamp performance
evaluation strategy by laying down specific criteria that links with
their business policy.