O Longenecker; Laurence S Fink
Management , Page 18-23
Copyright (c) 1999 Bell & Howell Information and Learning Company.
All rights reserved. Copyright Institute of Industrial Engineers
appraisals can be a good way for organizations to boost employees'
motivation and hone their competitive edge. But creating useful
performance appraisals and making sure they are used effectively
throughout an organization - isn't easy. The 10 lessons here can
help your company move closer to appraisals that help staff perform
irony is that our organization has been doing formal appraisals
for at least 30 years and we still struggle to do them right. It
takes a clear purpose, a good system, and effective managers all
operating together to get the job done." - Director of human
resources, Fortune 500 manufacturing organization
is common knowledge that most managers and employees find participating
in formal performance appraisals as appealing as having a root canal.
However, it is also true that - for better or worse - formal performance
appraisals are an inescapable part of organizational life.
are two main reasons that formal performance appraisals are here
to stay. First, formal appraisals are required to justify a wide
range of human resource decisions such as pay raises, promotions,
demotions, terminations, and selection validation. They also are
key to evaluating recruitment results and determining training needs.
Second, formal appraisals are required to maintain a competitive
edge. In a recent study of high-performance organizations, the practice
of employing a value-added performance appraisal process was cited
as one of the top 10 vehicles for creating competitive advantage.
The manufacturing organizations in this study clearly stated that
an effective appraisal and review process created focus, a platform
for measurement, a vehicle for employee improvement, and a means
of linking key outcomes to performance.
the 1990s, we and many other researchers have studied the formal
performance appraisal process. The lessons presented here were culled
from this research.
lessons for developing and sustaining a high- performance appraisal
system are based upon two key tenets. The first tenet suggests that
if appraisal processes operate as a system, a systems perspective
must be applied to identify the critical appraisal system components
and stages to make sure that organizational procedures and practices
work in harmony. The second tenet is that individual managers play
a pivotal role in achieving effective appraisals and that they need
the right tools and support to be effective.
identify the characteristics of effective performance appraisal
systems, we conducted in-depth focus groups with 60 mid- and upper-level
human resources executives from 28 U.S. manufacturing and service
organizations. They were asked to identify the keys to effective
appraisal systems (see Figure 1).
keys to effective performance appraisal systems can be organized
into three critical components: effective systems design, effective
managerial practice, and effective appraisal system support. Within
those categories, we identified 10 lessons that managers can apply
to boost appraisal effectiveness.
a proper foundation it is impossible to build a successful appraisal
program. A good system design lays the groundwork and provides the
manager with the necessary tools.
1: Clearly define why the organization conducts formal appraisals.
The organizational leadership must identify and communicate to all
employees why performance appraisals are being conducted and the
specific goals of the appraisal system. Carefully developed and
clearly articulated goals will enable managers to choose appraisal
criteria that support the organization's goals. Also, clear goals
increase managers' motivation to conduct appraisals properly and
boost their interest in performance management. When managers know
that information collected during their appraisals is likely to
affect decisions about employee development, planning, performance
improvement, compensation, and performance planning, they will be
motivated to execute their responsibilities competently This is
especially true if managers are held accountable for the quality
of their appraisals and performance management activities. Without
clearly defined goals, managers may simply go through the motions
of conducting appraisals and performance management, which can severely
compromise the effectiveness of the system.
2: Employee/manager involvement in systems design is critical. Effective
appraisal systems include input from managers and employees about
appraisal practices and the criteria used to evaluate performance.
Involvement of employees at all levels facilitates acceptance of
the system and increases cooperation. When employees are allowed
to participate in the design of the appraisal system, their sense
of ownership increases. Attempts to save time by bypassing employee
and manager input can short-circuit ownership of the system, lower
the system's credibility, produce a system that does not meet staffs
needs, damage the perceived connection between pay and performance,
and lose the performance-enhancing effects of employees' commitment
to organizational goals.
3: Develop user-friendly procedures and jobrelated forms. Effective
appraisal systems need forms that are simple and easy to understand.
Performance criteria, rating procedures, and feedback should be
expressed in terms that are focused and meaningful for both managers
and employees. It is essential that the forms assess the degree
to which employees perform their job duties and achieve specific
organizational goals. Forms that include matters unrelated to performance
of essential job functions or are deficient in measurement of important
activities performed within a job function decrease the effectiveness
of the system. Forms should be designed to aid communication between
managers and employees about behaviors, work processes, and opportunities
involvement of managers and employees in the design of the forms
and procedures is the best way to ensure that an appraisal system
has these important attributes. Unclear, poorly focused, and cumbersome
forms and procedures decrease ownership of the system and negatively
affect essential trust and communication between supervisor and
subordinate. When performance on key aspects of your employees'
jobs is ignored, it sends the message that those aspects are unimportant
and should be ignored.
4: Employees and managers must know how the process operates and
understand their roles. Surprisingly, managers frequently report
that they receive very little training beyond a description of the
rating form. An effective formal appraisal system cannot exist without
the ongoing education of all key players in the appraisal process.
are four basic integrated stages in the performance appraisal process,
and they require different appraisal competencies on the part of
managers. Failure of managers to properly execute their responsibilities
at any stage undermines the effectiveness of the entire system.
1: performance planning
2: performance management and ongoing coaching
3: the written performance appraisal
4: the performance appraisal review in our research, managers
were asked to identify the skills and abilities needed to conduct
results are ranked in Figure 2. These critical skills are necessary
to complete the four basic stages of the performance appraisal process.
the appraisal system foundation is in place, managerial appraisal
practices will determine how well appraisal plans are translated
following standard operating procedures reflect and influence the
organizational performance appraisal culture.
5: Managers must conduct effective performance planning. At the
beginning of the appraisal cycle, managers must work closely with
employees to review their job descriptions and duties, set clearly
defined goals, and communicate expectations of behaviors and results
for which the employee will be held accountable and be rewarded.
Important behaviors and activities that critically affect performance
and the appraisal form itself (which should include evaluation of
these behaviors and activities) should be discussed early in the
performance evaluation cycle. When managers conduct effective performance
planning, the credibility of the formal performance appraisal is
enhanced and employees are motivated to perform behaviors and activities
that support the organization. Failure to plan effectively eliminates
a valuable performance enhancing tool and decreases managers' and
employees' satisfaction with the process and its results.
6: Managers should provide their direct reports with ongoing informal
performance feedback. Effective appraisal systems do not consist
solely of once-a-year formal performance reviews. Failure to provide
ongoing informal feedback allows minor, easily correctable problems
to grow into more serious ones. Lack of ongoing coaching can lead
to employees disengaging from work, looking for alternative employment,
and demonstrating decreased productivity Lack of ongoing coaching
also makes it difficult to conduct reviews of employee performance
and can fray the bonds between managers and their employees, since
employees may interpret the lack of feedback as a sign of supervisors'
disinterest in employees' professional growth.
7: Raters must be motivated to conduct effective appraisals. An
organization will never achieve effective appraisal practices if
the managers are not motivated to follow procedural guidelines and
use information from training to conduct effective written and face-to-face
performance reviews. Unmotivated managers can undo even the best
performance appraisal system because they most directly impact the
overall quality of the appraisal process and the motivation of employees
to perform. Managers will be motivated to conduct effective appraisals
when their supervisors conduct effective appraisals on them. Effective
appraisal of managers by their supervisors signals the importance
of appraisals in the organization and models proper procedure. In
addition, a manager's motivation to conduct effective appraisals
will increase when manager appraisals are based in part on how effectively
they execute their role in the appraisal process and how well they
coach their employees. Failure to motivate supervisors to conduct
effective appraisals can lead to poorly documented, poorly run appraisals
in which ratings of subordinates are inflated or deflated for expediency
or in the pursuit of personal agendas. This, in turn, tends to reduce
employee faith in the performance appraisal system, motivation to
perform, and willingness to accept and pursue organizational goals.
a properly designed system will fail if these suggested managerial
practices are not followed. The manager responsible for employee
performance must be proficient at these activities if appraisals
are to get desired results.
system support directly affects managerial motivation to perform
required appraisal activities diligently-, it also protects the
system from problems caused by inconsistent or improper execution
of appraisal procedures. The lessons below can help companies develop
effective appraisal system support.
8: Top management must support and demonstrate effective appraisal
practices. For appraisal systems to be effective, they must get
support from top management. Support for effective appraisal practices
can be demonstrated through written and oral communications with
managers and employees in memos, testimonials, videotaped messages,
and company newsletters. Top executives can also show support by
practicing the same appraisal practices when they appraise managers.
Our research clearly indicates that when top managers don't practice
what they preach, lower-level managers emulate those practices instead
of stated policies.
9: Effective appraisal systems link performance ratings to organizational
rewards. Research consistently indicates that, to maximize the effectiveness
of a pay-for-performance program, organizational rewards must link
greater rewards to superior job performance. When employees feel
that their rated performance is accurate and reflects the full range
of their contributions to the organization, their motivation to
perform increases. On the other hand, when employees feel that performance
ratings are inaccurate or a function of politics, they tend to perform
only to minimum standards, be absent more often, engage in theft,
10: Appraisal systems require ongoing systems review and corrective
action. It is important to systematically and regularly review system
operations to make sure that processes and practices are being followed
and are effective. Examples of measures that can be used to assess
the health of your appraisal system include employee acceptance
and trust of the appraisal system; the relationship between level
of performance and rewards-, level of individual performance and
organizational financial performance; consistency of implementation
of policies and practices across levels, departments, and locations-,
and turnover and absenteeism rates compared to other organizations
or to levels at the organization itself before and after the start
of the performance appraisal system.
the support components function to encourage effective rating practices
on the part of individual managers who determine the ultimate effectiveness
of most appraisal systems.
approach is outlined in Figure 3. Ineffective appraisals lead to
a number of serious problems that negatively affect both individual
and organizational performance. To avoid these problems, it is important
to focus on the three critical appraisal system components and make
sure that managers have the skills needed to complete each stage
of the appraisal process effectively. Attention to all three appraisal
system components and all four appraisal system stages is vital
for a formal performance appraisal system to motivate employees
and to improve manufacturing organizations' competitiveness.
your organization does formal appraisals, it is imperative to do
them right. This requires time, effort, discipline, and proper support.
If you do appraisals in a cavalier or ineffective fashion you are
making trouble for yourself in a time when the last thing organizations
need is more problems."
automotive plant manager
these days of re-engineering, total quality management, and continuous
improvement, progressive organizations will do well to conduct a
self-assessment of their current appraisal practices against the
benchmarks of high- performance appraisal systems. The self-appraisal
tool in Figure 5 is a good way to start the continuous improvement
process. If your appraisal system is not a value-added activity,
then it just might be time for a change.
O. Longenecker, Ph.D., is the Stranahan distinguished professor
of management at the University of Toledo. He holds a B.B.A. in
marketing and an M.B.A. in management from the University of Toledo,
and a Ph.D. in management from Pennsylvania State University. He
is a management consultant whose clients include a number of Fortune
S. Fink, Ph.D. is an assistant professor of management at the University
of Toledo. He holds a B.A. in psychology from the State University
of New York at Albany and a Ph.D. in organizational behavior/human
resource management from Purdue University. He is a researcher in
performance management, selection and recruitment, turnover, and
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