With ongoing overhauling of HR system in the wake of growing employee motivation, retention, and engagement; many traditional activities and practices have come under the scanner. For instance, conventional leadership styles have given way to more participative and supportive approaches; customary workspaces are now called living spaces with organizations rolling out informal office designs to suit to employees' creativity and comfort. So are the employee management and supervision system. Instead of highlighting the performance issues blatantly, managers, nowadays, are preferring to do it informally and politely, to the ease of employees. Rather than conducted a scheduled meeting, some supervisors favor to do it impromptu, over a cup of coffee or so.
Scholars have cited the range of issues deviating them from informal appraisal systems. Some of these include a high cost of operation, employee dissatisfaction, and lack of transparency. This paper reviews scholarly articles on performance management to spotlight the pros and cons of the formal method. The detailed analysis will help readers understand the topic in a holistic manner.
Performance appraisal systems have been at the center of overall employees supervision and management since before. A successful performance management is supposed to be a win-win situation for employees and organizations, in terms of employees' professional development and organizational achievement of goals and objectives.
Nevertheless, the spar over the associated costs has propped up the debate. Soft costs underlying the formal approach include the erosion of employees' motivation, reduction in productivity, and the creation of emotional anguish. Associated hard costs are also debilitating. As calculated by Johann Hanekom, the CEO of a telecommunication company in South Africa, the annual per-person cost of performance appraisal amounts to $2200 in his company. It contributes to structural inflation, Hanekom says. On top of it, poor performers constitute less than ten percent in an organization, so why waste time in records and book-keeping.
Despite the lacunae, employee supervision cannot be done away with. It legitimizes the salary increase for employees and imparts a financial leverage to the management. Any organization, without performance management, can go wayward thereby missing on its goals and objectives.
This confusion, rather, is over benefits and costs that make formal appraisal system questionable, and make it an interesting topic for the research study. It's importance is further increased because of the relation with employees- the most important asset for any organization. Employees need to be supervised and guided, but in the manner that is non-invasive, transparent, and mutually accommodating. Primary questions, thus, arise is: Should the formal system be replaced by informal approach or it is necessary to retain this formality in increasingly transforming informal organizational structures? A detailed discussion on the benefits and harms is imperative to answer it.
Discussion: An Evaluation of Formal Performance Appraisal Systems- 800 words
There are a plethora of scholarly articles on the efficacy/inefficacy of formal performance appraisal system. Views are also divergent, some endorsing the effectiveness of a structured system while some forcing to opt out of it and embrace a relationship-oriented, informal approach.
An article published by Barbara Townley in the Journal of Management Studies spotlighted the futility of a formal appraisal system. The views can be summed up as follows:
Appraisals are valuable, but filling in the paperwork degenerates its real purpose. There are lots of pressure points in formal appraisal approach; it makes the things unpleasant as a tick and cross can't improve an individual's performance. Additionally, an appraisal is a matter of relationship, and formal representation distorts the mutual understanding.
Pym(1973) has aptly pointed out the hidden political naivety in the process. As such, there is a conflict between rational or political; transparent or vague. High dependence on managers' feedback/inputs makes employees a cog in the wheel; efforts of employees get shifted towards influencing the managers and seniors to manipulate their perception. Succinctly, the process falls prey to political maneuvering.
Fred Nickols has further pinpointed the constructs related to employees productivity, motivation, performance, and teamwork. The performance of employees gets reduced temporarily as a consequence of formally structured sessions; that may last about few days to 6 months. A product development manager with Nokia, Tauo Jokinen, asserted that employees tend to develop achievable goals in attempts to avoid negative appraisals. A direct corollary to this is that they try to hamstring the upper limits of goals signifying an erosion in their efforts and productivity. Underlying emotional stress may disengage the workers, stated an engineer with Intersys. Associated fear create mistrust between employees and the management in general. It may develop into a phenomenon scholars call malicious compliance, i.e., I will do what you want to do." More disturbing is the fact of short-term focus that that these appraisals entail. Done usually in a year, these tend to neglect an employees' contribution over the years.
Emphasizing the individualistic or task-orientation, they seem to negate the team performance, the recent buzz of HR policies. Some tasks require genuine teamwork and providing performance presentations individually negate the very essence of it thereby creating divisiveness in the working environment. Associated hard costs are an additional haul. The analysis of Hanekom palpably testifies that.
Despite a platter of shortcomings, organizations need a tracking system to monitor employees' performance. There must be a system that lets employees know about their strengths/weaknesses along with a way to improving them. A formal system, therefore, make employees wary of their ranking/reputation and encourage them towards accomplishing the desired targets. Additionally, the feedback system identifies the need for training and development programs in the organization. Having rolled out a structured and transparent method, organizations can stay clear of any legal issues arising out of the charges of discrimination or so.
However, these are only supposed benefits of the system. Scholars have doubted turning into reality given the political, social, cultural, and organizational hiccups. There is a view that appraisals fail to address perceived needs, rather they tend to oversimplify a complex set of relationships. It may be counterproductive.
A recent journal article highlighted two emergent themes related to performance appraisals:
Interns' preference for feedback from immediate supervisors
Preference for considered and specific feedback
Preference for formative feedback
Formative feedback only aims to modify employees learning with no intention to rank/grade them. Additionally, participants expressed concerns over rushed and hasty process of appraisals, specifically because of lack of time or lack of knowledge about an intern's knowledge and work. Interns exhibited dissatisfaction with the process of appraisals on part of following aspects:
Insufficient time spent with assessors
A perceived notion of ticking the boxes instead of performing specific, and considerate feedback
Interns viewed current appraisal systems only as a means to meet the statutory requirement in the organization with the lack of concern for a constructive feedback. Revealing a similar scenario is another article that draws attention to the current appraisal trends in US industries.
In an interesting outcome, the paper reveals that 85 percent appraisal forms do not assess employees performance against desired/set organizational goals. They, rather, evaluate employees on specific behaviors and traits. Nevertheless, scholars agree on the effectiveness of the formal system and suggest for a strategic planning to make the process more effective than before. The view has endorsed that contribution reviews help the organization in achieving long-term objectives and support the bottom line. The 2011 Drake Business Review Study reveals that around 6000 professionals agreed that delivering desired outcomes was the most important factor in their professional success.
The problem, thus, is that appraisal system are fraught with subjectivity, politics, bad judgment, and inaccuracy. It is just reduced to a usual groove that the organization has to fulfill. It does not mean that the process is ineffective; what it means is its implementation is voodooed.
There are very fewer numbers of poor performers in an organization that renders this lengthy process useless and futile.
The formal system has been found to have a negative impact on overall engagement and job satisfaction of employees.
This research analysis may unveil some good trends in overall employee supervision and management. It is obvious that the formal system has more costs than benefits. Still, organizations can't replace it the whole hog. The best strategy is to couple it with informal counseling and guidance. For instance, retaining formal reviews annually with informal mid-term sessions can be a good strategy. Additionally, the organization can look at the performance records of employees and take the decision on the basis of numbers of good/poor performers.
Secondly, the organization can increasingly involve immediate supervisors into the decision-making rather than making the process reliant on distant managers. These steps are expected to bring out the required transparency and make the process more convincing.
The appraisal system, despite advantages, has been questioned on the grounds of underlying bias, subjectivity, and possibilities of emotional despair on the part of employees. Though the system provides a structure for the organization, its actual benefits are uncertain. The overall analysis reveals that the process is not worth spending hundreds or millions of dollars. It is, thus, imperative to poking around the alternative informal approach or conflating it with the formal methodology to make the whole process more effective and rewarding.
Dewettnick, K., & Dijk, H. v. (2013). Linking Belgian Employee Performance Management System Characteristics with Performance Management System Effectiveness: Exploring the Mediating Role of Fairness. The International Journal of Human Resource Management , 806-25.
Ibrahim, J., MacPhail, A., Chadwick, L., & Jeffcott, S. (2014). Interns' Perceptions of Performance Feedback. John Wiiley and Sons.
Longenecker, C. O., Laurence, F., & Sheri, C. (2014). Current US Trends in Formal Performance Appraisal: Practices and Opportunities- Part II. Industrial and Commercial Training , 393-99.
Nickols, F. (2007). Performance Appraisal. Journal of Quality and Participation .
Pym, D. (1973). The Politics and Rituals of Appraisal. Occupational Psychology , 271-5.
Townley, B. (1999). Practical Reason and PerformanceAppraisal . Journal of Management Studies .