CHAPTER TWO

LITERATURE REVIEW

This chapter traces the historical review, the evaluation of techniques and approaches of performance appraisal. The chapter will also highlight the practical problems associated with appraisal and I addition the appraisal benefits to both employees and the employers.

2.1 HISTORICAL REVIEW

The need for individual employee training and development for higher responsibilities brought to land light the past records of employees to be nominated for further training etc. historical date were available in the form of records of performance for individual employees. Obviously, it became possible to isolate problem areas in the carriers of individual employees. Learning principles stipulates that individual performance tends to increase with successive promotions However, a point of plateau in performance is reached beyond where performance begins to drop. Accordingly, the learning principle is refered to as the Peter Principle Figure 2.1 below shows the peter principle. THE PETER PRINCIPLE

Objective, historical records of performance would enable organistional management to highlight declaration in performance to which appropriate remedies are taken.

2.2

WHAT IS APPRAISED?

Deciding upon the things to be appraised in any appraisal system is often harder than doing the appraising it s self. Reaching consensus on what should be appraised and criteria that should be used is fraught with difficulty. Below are some of the characteristic that is appraised. y Task outcomes: This refers to the number of operations a subordinate has completed, how many outputs are produced and whether or not the sulordinate work is of an acceptance standard. Behavior: This refers to how the employee deals with the public and punctuality. Personality Traits: This refers to whether the employee is assertive and well motivated.

y y

2.3

WHY ORGANISATIONS APPRAISE EMPLOYEE PERFORMANCE

Performance management review that valued excellent information is derived from employee appraisal that aids management decisions in respect of employee past performance, present reward distribution and future training and development needs of employees. Furthermore, the appraisal record has more and more relevance to management s future arrangement towards employees training, succession, carrier counseling and job or occupational changes including promotions and advancements.

There are also other benefits and uses of appraisal records to both the employees and managements amongst which are listed below: y y y y y y y y Updating of job description Identification of potential fro development Obtaining information about hidden work problems Rewarding performance Setting job targets and objectives Identifying employee/management training needs Validation of previous trainings Improving employee morale

The need for employee appraisal in an organization cannot be overemphasized since the benefits derivable from it are endless.

2.4

WHO SHOULD APPRAISE WHO?

Who should appraise the employees performance in the workplace has been a major concern in the performance appraisal system. The obvious answer would seem to be his or her immediate boss. By, tradition, a manager s authority typically has included appraising subordinates performance.

The logic behind this tradition seems to be that since managers are held responsible for their employees performance, it only makes sense that these managers do the appraising of their performance. But logic may flaw since others may actually do the appraising better. Stephen Robbins (2001)

IMMEDIATE SUPERIOR It is implied that 95% of all performance evaluation at the lower and middle levels of organizations are conducted by employee s immediate bosses. Many organizations recently have also discovered the drawbacks inherent in the use of immediate bosses as the source of evaluation. For instance, many bosses fell unqualified to appraise the unique contribution of each employees working under their supervision. Other resort to play with their subordinates career. Organizations of today s orientation who use self managed teams and other devices that distant boss from employees agree that an employee s immediate boss may not be reliable to judge his or her performance.

PEERS This is one of the most reliable sources of appraisal method. The reason being that peers are close to the point as the daily interactions provide them with a detailed view of an employees job performance. Thus using peers as rater results in a number of independent judgments. A boss could offer a single evaluation while peers can provide

multiple appraisals. Though, the average of multiple ratings are more reliable than a single evaluation. Consequently, peers evaluation suffers from co-workers unwillingness to evaluate one another and who are biased on friendship or animosity.

SELF EVALUATION Having employees appraise their own performance is consistent with high marks, over inflated assessment and self serving bias which tend to lessen employees defensiveness about the appraisal process. For these serious drawbacks inherent, self evaluation are better suited to developmental uses than evaluative purposes.

IMMEDIATE SUBORDINATES The immediate subordinates employees appraisal can provide detail and accurate data about a manager s behavior about the appraise. The obvious drawback with this form of rating is fear of reprisal from bosses who are given unfavourable appraisal. The appraiser s anonymity is required should this method be encouraged by organization

360 DEGREE EVALUATIONS This is the latest approach to performance evaluation in which feedbacks are provided from full circle of daily contacts tha an employees might have made. These contacts ranges from the organizations mailroom to outside and internal customers to the employees are received as he or she makes contacts with people within and outside the orgaisation. The 360 degree evaluation model is well fitted in organizations that have introduced teams, employees involvement and TQ programmesl this systemof employee appraisal encourages active participation of employees in the organization. A recent survey shows that about 12% degree evaluation model thought it is on the increase today. Figure 2.2 below show a diagrammatic representation of 360 degree evaluation model

2.5

TECHNIQUES OF APPRAISAL

Appraisal technique refers to the restrictness or openness of a system in communicating to employees of their appraisal ratings. Commonly, there are two techniques mainly, open reporting system and close eporting system. In the open reporting system, the employee is conversant with the grading made by the rater and he is given the chance to agree or contest the observation. On the other hand, the closed reporting system does not offer the employee the opportunity to see the comments passed on him by the appraiser. Although, the open reporting system offers the appraise the chance of contributing to the system, it is characterized with unnecessary acrimony, hence the closed reporting is preferred.

2.6

METHODS OF PERFORMANCE APPRAISAL

The appraisal methods reward systems are designed to measure the effectiveness of
job performance gauge its value and provide appropriate rewards or (punishment) as payments. Some of the most popular and important methods of appraising employees performance in organizations can be describe below.

2:6.1 RANKING
Ranking method is the oldest one in which the evaluator rates employees from the highest to the lowest and/or the best to the worst on a global basis using one criterion of performance. This in essence means that on employee will lead while others follow. Thus, the uniqueness of this approach is that it can be done mentally provided the candidates for evaluation are few. This method is capable of rating both performance and other employees qualities but it has problem of subjectivity when the number of candidates to be appraised are large.

2:6.2 GRADING OR FORCED CHOICE RATING

These is usually a set of adjectives against each factor being assessed relating to job performance or personal qualities of employees such as outstanding, satisfactory, unsatisfactory, very good and good etc. There is always agreement between the rater ant the rate and can be easily understood and applied. It has no limit of ranking since there are various criteria to be measured simultaneously. The demerit is that there is noticeable halo effect and error of central tendency. 2:6.3 CRITICAL INCIDENTS This technique requires a manager to prepare a list of statement of query for an employee. These ineffective behaviour as the critical incident. The employee is evaluated on the basis of make and break elements of the job. These critical incidents are sealed on which employee performance is compared against. The evaluation discusses during the period of evaluation. The critical incident has the following shortcomings: y y y Negative incidents are usually more than positive incidents It encourages close observations of the employee which they dislike Managers jump into conclusion against the employees on the negative critical incidents without referring to the positive incidents too.

BEHAVIOURALLY ANCHORED RATING SCALE (BARS) Bars: Has a combination of elements from critical incidents and graphic rating scale approaches. The appraiser rates the appraises based on items along a continuum. The points

actually represent the behavior on a given task rather than a general description or traits, hence this is called behaviourally anchored rating scales (Bars). y y y Job goals are viewed in relation to effective job behavior They enable appraiser to identify strengths and weakness of employees They identify specific job behavior which leads to results and goal achievements.

However, these adored ratings do not apply at all times because emphasis is much on behavior instead of results.

FREE WRITTEN REPORT Here, appraises are required to use their own words to describe the employees strong and weak points such as performance level, technical effectiveness, potentials, work behavior and leadership ability. One weak point of this method is that subjectivity may set up and poorly written report by the rater may have negative effect on the appraise. It is otherwise cumbersome on the part of the rater when the number of rates is many.

2.7

JOB EVALUATION AND PERFORMANCE APPRAISAL DIFFERENTIATED

Job evaluation evaluates the job or task itself and not the job holder whereas performance appraisal is connected with the evaluation of job holder on the job or task. Job evaluation is useful in the selection of person or persons. Hence, jobs are evaluated before holders are selected. Performance evaluation on the other hand is conducted after job holders have been selected, inducted and placement taken place. The purpose of job evaluation is to determine the relative worth of a job while performance appraisal is aimed at identifying the relative worth of an employee who is on the job. Merit rating appraises the relative performance of the employees qualities, traits and characteristics so as to identify the differences in personal abilities and capabilities. The primary objective of job evaluation is to decide on the wage rate for jobs in the organizations. Performance appraisals objective is to develop the employee by letting

him realize his weaknesses and strength and provide him opportunities for improvement.

2.8

PRACTICAL APPRAISAL PROBLEMS

In the recent past, performance appraisal has witness a number of problems in its adoption in employee appraisal and below are few of such problems: y Inadequate (hasty) preparations for the exercise y Dwelling more on workers rather to overcome the weakness y Ignorance of the objectives of the exercise on both parts of appraises and appraiser. y Regarding appraisal as a means to discipline subordinates instead of means of encouraging them to progress on the job. y Lack of courage to appraise objectivity y Regarding appraisal as once a year exercise

DISCREPANCY IN APPRAISAL PROCESS Situation arise in the appraisal process when disagreement between the appraiser and the appraise occur, hence discrepancy situation. In the Nigerian environment, the following are peculiar: Inabilities of appraiser to record accurately and in addition to leniency factor. Misunderstanding of managements intention of the appraisal process Adoption of individual patronage instead of the organizations patronage Different opinions between the superior and the subordinates in the definition of performance y Performance discrepancy could as well be managed via: y The periodic review of management policies, programme and procedures y Concerted efforts by managements at training and development, carrier and succession policies y y y y y

In totality therefore, all methods to employee appraisal can be considered imperfect from the objectivity angle, each methods has its important to note that in the selection of methods of appraisal, the complexity of the organization should be considered in respect of acceptability, reliability, validity and fairness of that method.

2.9

ERRORS OF PERFORMANCE APPRAISAL

The use of ratings assumes that evaluates are reasonably objective and precise. According to James, S. Bowman (1999), regardless of the appraisal instrument used, though, a large number of well known error occur in the process based on: 1. Cognitive imitations 2. Intentional manipulation, and 3. Organization influences

When they happen, and they are difficult to prevent, not only is the rater s judgement called into question, but also the resulting evaluation may leave the rater unable to accurately judge his or her own performance. These errors include the following: Regency error: Here, the rater recalls events, rather than summation of events inventive rating period. Therefore, total performance is evaluated on the most recent part of a subordinate s performance First impression: The rater remembers only the initial impression. This is what is then used to evaluate the subordinate s performance. Halo effect: This occurs when a rater rates an employee high or low on all items because of one characteristic. Central tendency: This is the reluctance of the rater to rate at either end of the spectrum but to rate the employee average or satisfactory. Basically, all subordinates are rated as an average. Contrast effect: The rater compares an individual s on the basis of perception about the group

Leniency error: This is when a superior decides to give all subordinates favourable ratings Strictness error: This is the exact opposite of the leniency error, as the superior gives unfavourable ratings.

2.10 OBJECTIVE METHODS OF PERFORMANCE APPRAISAL

1. 2. 3. 4. 5. 6. 7. 8. 9. Planning for the future To create self awareness To instill a sense of achievement in individusl as well as in the organization To help in rating job performance To realize feedback objectives It helps in planning job rotation It guides in training and development of both the employees and organization. To streamline promotion. It helps in discovering potential or hidden talents.

2.11 PROCEDURES FOR IMPLEMENTING METHOD(S) OF PERFORMANCE APPRAISAL

According to Richard A. Enion, the following procedures must never be forgotten while implementing performance appraisal. 1. An appraisal of the subordinate s job performance is written by the supervisor 2. The superior submits the written appraisal to a committee, who reviews and approves it. 3. The superior dissects the appraisal with the subordinate at a private interview. 4. The superior and subordinate together, create a personnel development programme for the subordinate. 5. Every supervisor accepts the responsibility for daily appraisal of subordinates performance planning and assignment of work. 6. Criteria of job performance should be related to the job itself. 7. Personal qualities ( honesty, loyalty integrity, and conscientiousness) are requisite in jobs but need not be enumerated in the appraisal process.

8. The employee directly takes part in the setting of performance and or achievement measures. He should know what is expected of him, how he is doing and how and when he can get assistance. 9. Annual feedback is less useful. The feedback is less effective because the more time allowed there are lapses between performance and feedback. 10. The supervisor is a coach and not a judge. Mutual recognition of roles should be present.

2.12 DEVELOPMENT AND EVALUATION APPRAISAL CHART

NOTE: Development role of appraisal is for present related jobs, takes and duties while the evaluative appraisal discusses the future expected role. It would be more germane and enriching to use the two for increase or generational effectiveness.

2.13 SOME COMMON PITFALLS OF METHOD OF PERFORMANCE APPRAISAL

Obstacle to the success of formal performance appraisal programmes should be familiar to most mangers either from painful personal experience or from the growing body of critical literature. According to H. Meger, Kay, and French J. (1965) here are the most troublesome and frequently cited drawbacks: y Performance appraisal programmes demands too much from supervisors. Formal performance appraisal, obviously require at least periodic supervisor observation of subordinates performance. However, the typical first-line supervisor can hardly know, in a very adequate way, just what each of 20, 30, or more subordinate is doing. y Standards and ratings tend to vary widely and often unfairly. Some raters are tough while others are lenient. Some departments have highly competent people, others have less competent people consequently, employees subject to less competition or lenient ratings can receive higher appraisal than equally competent or superior associates. y Personal values and bias can replace organizational standards. An appraiser may not lack standards, but the standards he uses are sometimes the wrong ones. For example, unfairly low ratings may be given to valued subordinates so they will not be promoted out of the rater s department. More often, however, outright bias dictates favoured treatment for some employees. Because of lack of communication, employees may not know how they are rated. The standards by which employees think they are being judged are sometimes different from those their superiors actually use. No performance appraisal system can be very effective for management decision, organization development, or any other purpose until the people being appraised know what is expected of them and by what criteria they are being judged. y Appraisal techniques tend to be used as performance panaceas. If a writer lacks the basis ability or has not been given the necessary training for his job, it is neither reasonable to try to stimulate adequate performance through performance appraisal, not fail to base salary, dismissal, or other negative decisions on such appraisal. No appraisal programme can be substitute for sound selection, placement and training programmes. Poor performance represents someone else s failure

y Performance appraisal ratings can boomerang when communicated to employees. Negatives feedback (i.e criticism) not only fails to motivate the typical employee, but also can cause him to perform worse. Only those employees who have a high degree of self-esteem appear to be stimulated by criticism to improve their performance. y Performance appraisal interfere with more constructive coaching relationship that should exist between a superior and his subordinates. Performance appraisal interviews tend to emphasis the superior position of the supervisor by placing him in the role of judge, thus, countering his equally important role of teacher and coach. This is particularly damaging in organizations that are attempting to maintain a more participative organizational climate.

2.14

PERFORMANCE APPRAISAL FEEDBACK

Feedback informs employees of the organisation s standards and how their performance measures up (R. S. Schuler, 1984). No appraisal is ideally complete, if the feedback is not communicated. Not doing so, denies the individual the foresight on how to improve performance and other related variables, and also if there is need for any adjustments. Also, communicating feedback, can give an individual a sense of belonging, bringing about commitment, since the individual is aware of what to do and what is expected of them. Feedback improves productivity, devotion and individual s commitment to the job in the long run.