Performance Appraisal - Theory and Practice

Abstract

The objectives of this report are to present a review of the research findings and practice in relation to key areas of Performance Appraisal and Review (PR) over the past decade ( what to appraise, how to appraise and who appraises ), and to distill some key principles for general application. These are supported by empirical evidence from the Brisbane corporate environment.The first two Chapters consider the purpose and objectives of PR, together with its relationship to other human resource functions and to strategic planning within organizations. Two major influences leading to an increased emphasis on PR over the past decade are the growth in legislation protecting employees from discrimination and unfair dismissal, and the need for discriminating assessment in performance-based pay systems. These are examples of administrative uses of PR, as distinct from developmental purposes, such as the identification of training needs and career paths.Chapter 3 provides a brief overview of the processes involved in job analysis and the setting of standards - if this process involves the job occupant the likelihood of their acceptance and support of the resulting standards is increased.The next two Chapters examine the major techniques and options available in designing an appraisal system. Chapter 4 outlines techniques (or rating instruments) available in three major categories - characteristics, behaviour and results-based. Research in this area is inconclusive, but joint behavioural and results-based appraisal is recommended as the most effective way of ensuring valid assessment. Chapter 5 looks at the relative effectiveness of alternatives to the traditional manager/supervisor appraisal - namely peer, self, subordinate and external - and again recommends that some combination of methods is the most desirable. Chapter 6 discusses the difficulties involved in the reviewer-reviewee relationship and reviews research into techniques for training reviewers to produce more accurate and fair appraisals. These include teaching observation and interpersonal skills, and the need to document critical incidents. Again, the research findings are equivocal, largely based on the assumption that reduced rater error means more valid rating. Finally procedures for more effective appraisal interviews and feedback are presented. Chapter 7 reports the results of a survey of PR practices of Brisbane companies in August 1989 - these findings are compared with previous surveys, both in Australia and overseas, and with research findings. This reveals that a gap still exists between theory and practice, particularly in areas such as avoiding administrative and developmental appraisal at the same time, providing more training in PR processes rather than system content, and using more than one reviewer (e.g. supervisor and peer).The report concludes with a summary of the most desirable features of a performance appraisal and review system, as indicated by the findings and recommendations highlighted throughout. There is no universally applicable formula for PR - each system should be tailored to the specifics of the job and organization.

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