Performance appraisal
Performance appraisal application and evaluation
Executive summary
Yuan Li is a human resource manager of a Chinese IT company in Beijing. This company has a set of integrated human resource strategies, especially an advanced performance appraisal system. They have used performance appraisal for about five years and developed a well organized system. They do performance appraisal monthly. Every May and November, the performance appraisal may affect individual’s promotion and salary change. They use self-assessments, peer or superiors assessments as well as multi-level and multi-source assessments. The appraisal meeting will be hold after all participants finishing evaluation forms and interviews. Both appraisers and appraisees have to sign their names after the appraisal meeting, which indicates the agreement has been reached. By analysis all of policies and procedures of performance appraisal of Yuan’s company based on related theories, some weaknesses and mistakes have been found. In order to improve the quality of their appraisal, they may modify their aims of appraisal to meet employees’ requirements more, try upward appraisal as one source of 360 degree appraisal, involve other participants to attend appraisal meetings and discuss together to find out whether the employee should be promoted or not. Meanwhile, the company may change monthly reviews to bi-monthly reviews and decide the promotion and salary change in the first month of the second quarter and the forth quarter. Moreover, the company may design some appraisal training, monitoring and measuring programmes to improve effects of performance appraisal.
Introduction
Yuan Li is a human resource manager of a Chinese IT company in Beijing. This company is an international IT company which has more than 300 employees and owns a set of relative integrated human resource policies. It has a separated human resource department and about 8 people working for this department. At the same time, two experts, who come from a professional human resource management company working for international companies specifically, work at their company for any human resource queries and problems everyday. This company has a series of up-to-date human resource management strategies and operates well. Yuan talked about procedures and policies of performance appraisal of her company during the interview. According to Yuan, they have processed performance appraisal
smoothly for more than five years and do performance appraisal every month currently. They have kept their talents by these policies and achieved more profits for the company. In the interview, Yuan described their policies, procedures and activities of performance appraisal in detail.
Policies description
Performance appraisal of this company is processed every month from this year. And it was annual three years ago and quarterly within last three years. There are two aims of appraisal in this company. In terms of individuals, they have chance to find weaknesses and mistakes and inspire themselves to do harder and better. In terms of company, it helps to understand current working status and performance of employees clearly. If mangers find any leak or deficiency by appraisal, they will act to modify immediately. Performance appraisal is linked to salaries, rewards and promotion in this company. However, only May and Novembers’appraisals are directly relative with these three items. Other month’s appraisals, comparatively, are mainly for performance evaluation and documentation. In this company, managers and peers do appraisal for subordinates. Meanwhile, people who are working in other departments or teams and consumers also have responsibilities to do appraisals for employees. It is a 360 degree feedback system. Although peers, internal and external consumers and managers do appraisal together, only managers, HR and financial people have the right to decide any change of salary and promotion. Whereas, financial and HR people do not take part in performance appraisal.
Procedures description
The procedures of performance appraisal in this company mainly include three steps:
The first step: appraisees and appraisers receive evaluation forms separately from HR people.
- For appraisees, it is a self-assessment questionnaire including self work performance evaluation, the scale of company culture understanding, the scale of corporation with other departments and other teams’ members, the development plan and schedule for the future. At the same time, they are also asked to hand in reports and statistics of profits of their work in that month.
- Appraisers, comparatively, are superiors of appraisees. If this time’s appraisal is related to promotion or change of salary, internal and external consumers and top managers attend as well. Appraisers receive evaluation forms which focus on the work performance, work
attitudes, team work spirits and monthly work reports and statistics and the possibility of future development. If it is an appraisal in May or November, consumers, other department s’collaborators and peers also need to give out their opinions. However, they are only interviewed by HR people or managers.
The second step: after finishing evaluation forms and interviews, an appraisal meeting should be prepared. Generally speaking, monthly appraisal meetings include only superiors and subordinates. They will go though both two evaluation forms and communicate the difference. During this process, superiors point out weaknesses, advantages and improvement of subordinates. On the other hand, if subordinates do not agree with superiors’ opinions, they had right to express their own thinking and discuss with their superiors. The purpose of appraisal meeting is to reach the agreement of the performance appraisals. After the meeting, appraisers and appraisees have to sign their names on both two evaluation forms. Moreover, if the appraisal meeting is related with promotion or salary change, top managers will attend as well. Top managers are listeners in the meeting. They usually understand the work performance of appraisees by this meeting and make the final decision with superiors as well as financial and HR people.
The final step: about two weeks after appraisal meetings, appraisees will receive formal performance evaluation that record all of conclusions in appraisal meetings. They are evidences for their further development and possibilities of promotion or salary raising. And in May or November’s appraisal, appraisees will receive final decision whether they will be promoted or not or whether their salary will be raised or not.
Theoretical concepts
According to Boxall and Purcell, “performance appraisal (PA) systems are formal methods of planning and evaluating employees performance which involve employees interviewing (typically annually)” (2003:144). Determining the organization’s objectives is the first steps in developing an effective performance evaluation system (Boice & Kleiner, 1997:197). After that, organizations have to design an appraisal system, which includes sources of performance appraisal, the frequency and documentation of performance appraisal. Moreover, organizations may prepare some training programmes for both appraisers and appraisees and develop some monitoring and measuring programmes for maintenance. It is a standard process of performance appraisal. Based on this standard, policies and procedures of performance appraisal of Yuan’s company will be evaluated in the following parts.
Performance appraisal policies and procedures analysis
Aims of performance appraisal
Aims clarification is the very first step of PA. Increasing organizational effectiveness and productivity is the overall purpose of performance appraisals (Spinks, Wells & Meche, 1999:94). According to Fletcher, other key aims of appraisal are “making reward decisions, improving performance, motivating staff, succession planning and identifying potential, promoting manager-subordinate dialogue and formal assessment of unsatisfactory performance”(1993:5). The aims of Yuan’s company are helping employees to find weaknesses and mistakes and motivating employees. On the other hand, the company also rely on performance appraisal to understand attitudes and work performance of individuals and make rewards and promotion decision. Actually, performance appraisal should not only work for company, it also works for employees. It means that using performance reviews, company will clearly understand what employees really need, what kinds of training should be provided to employees and whether some extra rewards should give to some special employees? Performance appraisal is not only a tool for organizations to evaluate staff, it also an approach to know how to care staff. In other words, staff can use it to deliver their requirements.
Performance appraisal systems designing
Appraisal systems designing is a difficult task and easy to bring many problems. To design a good PA system, organizations should clarify participants, the frequency, the documentation and methodology of PA. According to Katsanis and Pitta, there are various sources of performance evaluation. The most frequently used appraisal sources are supervisors, peers and self-evaluation (1999:464). Self-appraisal is main source of PA. Self-appraisal could be defined as “a process in which individuals review their own performance, using a structured approach, as the basis of discussions with their managers in review meetings”(Armstrong, 2000:87). Self-appraisal has numerous advantages, such as engendering more commitment, reducing defensiveness by encouraging the appraisees to review their own performance and encouraging appraisees to think about their own performance and development needs spontaneously (Fletcher, 1993:55). Yuan’s company uses self-appraisal to identify the individual’s performance as well. Even self-review is an effective and advantageous tool for PA, there still is some weakness such as subjectivity and limitation. Therefore, self-appraisal can not be used individually. The other source is peers or superiors appraisal. Under this method, appraisers usually are managers or peers of appraisees. They are in positions to give
a unique insight into an individuals’work contribution. Self-appraisals and appraisal by superiors are most usual way to do performance appraisal. In Yuan’s company, these two kinds of source are used in monthly appraisal (except May and November). Other sources of PA are multi-level and multi-source appraisals, in other words, 360 degree appraisal. According to Dalessio, a 360 degree appraisal could be defined as “evaluations gathered about a target participant from two or more rating sources, including self, supervisor, peers, direct reports, internal customers, external customers and vendors or suppliers” (1998:278). Generally speaking, a 360 degree appraisal is more comprehensive, objective, reliable and broader perspective than other sources. However, it also has many disadvantages such as wasting cost and human resource as well as too much bureaucracy. Yuan’s company avoids drawbacks and reinforces advantages of the 360 degree appraisal by doing it only two times per year and only when they need to do final decisions for promotion or salary changes. Whereas, they do not involve vendors and direct reports in the 360 degree appraisal, which made the whole process not complete. Katsanis and Pitta provided several recommendations for performance appraisal system designing, such as gaining support of both human resources and top management; using qualitative versus quantitative criteria; making sure the performance appraisal system is not dated; attempting to eliminate internal boundary spanning by creating direct reporting relationships where possible (1999:465). Although Yuan’s company involve HR people into the final decision stage, they have not really involved into the appraisal process. And top managers only attend the meetings that promotion or salary change will be decided. Moreover, financial people also have rights to decide the promotion and salary change even they totally have no relativity with the performance appraisal. It made the PA process useless for employees and increased the bureaucracy. The good aspects of policies of Yuan’s company are qualitative and quantitative criteria using and keeping systems updated.
After collecting feedback from various channels, an appraisal meeting should be hold accordingly. An appraisal meeting “provides an opportunity for a frank, open, but non-threatening discussion about the individual’s performance and development needs; give the individual a chance to discuss her/his aspirations and any work problems and focus the attention of both the individual and the manager on objectives and plans for the future”(Armstrong, 2000:80). Reviews meetings are conclusions for appraisal process and treat get final agreement as the purpose. Appraisees and appraisers are compulsory attendees of appraisal meetings. They should exchange their opinions and feedback about the work
performance of appraisees, discuss every item then get the agreement finally. At the end of the meeting, both appraisees and appraisers should sign their names on the performance appraisal evaluation forms. Yuan’s company have done it well. The meetings often are prepared by managers carefully. During the meeting, the subordinates always receive encourage and suggestion from their superiors. However, they have never involved other source into meetings, such as peers, external and internal customers. Even in May and Novembers’360 degree source appraisal meetings, direct superiors, subordinates and top managers are only attendees. It affects the objectivity and transparency of appraisal meetings.
The administration of performance appraisal
In Boxall and Purcells’definition, performance appraisal is typically annual (2003:144). However, Boice and Kleiner thought that “a typical frequency would be bi-monthly or quarterly” (1997:198). They also pointed that frequent appraisals help people remember what happened during the last month, give both managers and employees predictions about any performance problem and help to modify these problems before annual review. Therefore, frequent appraisals make managers ensure that performance appraisals are useful to develop objectives (1997:199). Actually, bi-monthly performance reviews are obviously better than annually reviews since they give staff more motivations, more consciousness and more impetus. Whereas, over-frequent appraisals are unnecessary since they are cost and human resource wasting. At the same time, they will make staff adaptive with the PA and lose motivation. Yuan’s company do performance appraisal monthly, which is a little over-frequent. It will make staff weary and paltered with appraisal.
In terms of documentation, a core rule of good documentation is to keep minimum and clear. Usual documents are evaluation forms with signatures, appraisal meeting records and appraisees’ performance statistics. Yuan’s company keep these documents in HR department and file all of them by one person. However, they only keep these documents for one year and documents more than one year are moved to a storehouse. This solution loses confidentiality of appraisal and is difficult to review previous records.
Training the participants of performance appraisal
Appraisal training will help to develop an effective performance system (Boice & Kleiner, 1997:198). Appraisal training should include following items: agreeing key tasks, setting objectives, agreeing skills, knowledge and capability requirements, reviewing performance on
a continuing basis, providing feedback, coaching and counselling, preparing work plans and agreeing personal development plans (Armstrong, 2000:192). Other experts also think linking the system to pay and setting performance standards are objectives of appraisal training as well (Boice & Kleiner, 1997:198). Actually, appraisal training should be provided to both appraisers and appraisees. Although more studies focus on the training of appraisers, appraisees’ training is also important to enhance the effect of performance appraisal. Yuan’s company has not any training programme for performance appraisal. They just write down the instruction on the first page of evaluation forms. There still are lots of skills that participants of performance appraisal should grasp, such as assessment skills, communication skills, and skills of giving feedback, problem solving and motivating skills.
Monitoring and measurement of performance appraisal
Performance appraisal process should be monitored and measured to ensure that the whole PA process could be evaluated. There are both short-term and long-term criteria for PA measurement and maintenance. Short-term criteria include completion rate, action generated, quality of written reports, attitudes and the perceived value of appraisal and equity. Long-term criteria include organisational performance, quality of staff, retention of staff and level of commitment (Fletcher, 1993:90-94). These criteria help organizations to evaluate whether their performance appraisal systems are effective or not and how to improve it. Yuan’s company has not any monitoring and measurement programme for the performance appraisal system. It will result in a vicious circle which wrong process induces wrong result or right method is not up-to-date. As a result, the performance appraisal can not bring the expected outcomes at all.
Conclusion and recommendations
Yuan’s company has a relative integrated performance appraisal system and operates this system well. However, there still are many weaknesses needed to be improved. They have very clear aims but these aims are not complete and objective. They only focus on benefits of the company without caring about staff. They may use performance review to understand what employees really need, what kinds of training should be provided to employees and whether some extra rewards should give to special individuals? In terms of the performance appraisal system, Yuan’s company may keep self-assessment, peer and superiors assessments and multi-source and multi-level assessments. Self-assessment and peer or superiors assessments are used in regular appraisal and 360 degree assessments are used in promotion
and salary decision process. Moreover, they may try upward appraisal as one source of 360 degree appraisal. The key contents of upward appraisal are communication skill of superiors, capability of planning out work effectively, inspiring subordinates, never imposing unrealistic objectives and courteousness. Meanwhile, they may try to involve all participants to attend appraisal meetings and discuss together to find out whether the employee should be promoted or not. Moreover, HR and financial people should have no right to make the final decision unless they take part in the performance appraisal process. In terms of frequency, Yuan’s company may change monthly reviews to bi-monthly reviews and decide the promotion and salary change in the first month of the second quarter and the forth quarter. They may keep all of documents as soft copies in their computers to avoid loss and keep confidential. They should add some training programmes for both appraisers and appraisees annually. The training may cover how to finish self-assessment and evaluation forms, how to communicate different opinion, how to provide feedback and how to discuss in the appraisal meetings. They may also add some further topics, such as how to motivate subordinates, how to tell drawbacks to appraisees and how to discuss with superiors to get more rights. And for monitoring and measurement, they may design some short-term and long-term objectives to fulfil by performance appraisal. If the appraisal can not reach the objectives, they have to modify the PA system accordingly. They may assign a HR people to monitor the whole appraisal process to find mistakes or weaknesses, then HR department may held a meeting to resolve all these problems to improve their appraisal system.
References
1, Armstrong, M 2000, Performance management 2nd ed., Kogan Page Limited, UK.
2, Boice, D F & Kleiner, B H 1997, Designing effective performance appraisal systems, Work Study, Vol.46, No.6, pp. 197-201.
3, Boxall, P & Purcell, J 2003, Strategy and human resource management, Palgrave Macmillan, New York.
4, Dalessio, A T 1998, Using multisource feedback for employee development and personnel decisions, in Smither, J, W (ed.), Performance Appraisal: state of the art in practice, Jossey-Bass Inc., California.
5, Fletcher, C 1993, Appraisal: routes to improved performance, Institute of Personnel Management, IPM house, Camp Road, Wimbledon.
6, Katsanis, L P & Pitta, D A 1999, The performance appraisal process of pharmaceutical product managers in Canada: an empirical study, Journal of Product & Brand Management, Vol.8, No. 6, pp. 463-493.
7, Spinks, N, Wells, B & Meche, M 1999, Appraising the appraisals: computerized performance appraisal systems, Career Development International, Vol.4, No.2, pp.94-100.