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PR
45,2
Effectiveness of
performance appraisal
Developing a conceptual framework
334 using competing values approach
Received 28 July 2014 Malik Ikramullah
Revised 16 May 2015 Department of Management Sciences,
Accepted 11 November 2015
COMSATS Institute of Information Technology, Islamabad, Pakistan
Jan-Willem Van Prooijen
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Abstract
Purpose The purpose of this paper is to develop a conceptual framework for the effectiveness of
performance appraisal (PA) systems by using a competing values approach.
Design/methodology/approach The review employs a three-step approach: first, the paper
discusses the existing criteria to determine the effectiveness of PA systems, and presents criticisms of
these criteria. Second, the paper reviews the literature on the competing values model of organizational
effectiveness. Third, the paper integrates the PA system in the competing values model to develop a
comprehensive framework for the effectiveness of PA systems.
Findings A practical model is developed, taking into account the processes and procedures involved
in PA systems.
Originality/value The paper is designed to provide a guideline for managers to consider the
effectiveness of a PA system. The paper suggests that assessing the effectiveness of a PA system on
any single criterion ignores various important aspects of the system. Moreover, the effectiveness of a
PA system should be based on the values and preferences of all major stakeholders of the system, i.e.,
appraisers, appraisees and the organization.
Keywords Qualitative, Competing values framework, Performance appraisal system,
Performance appraisal system effectiveness
Paper type Conceptual paper
Introduction
Research on performance appraisal (PA) has been advancing its traditional content areas
as well as exploring the newer ones. In the past, PA had been employed as a formal
process of employee monitoring (Cardy and Dobbins, 1994; Murphy and Cleveland, 1991).
Personnel Review In the early 1990s it has evolved as a wider-reaching and inclusive process rather than
Vol. 45 No. 2, 2016
pp. 334-352
a heavily bureaucratized practice (CIPD, 2009). Thus, in its recent form, PA is defined
Emerald Group Publishing Limited
0048-3486
as activities through which organizations seek to assess employees and develop
DOI 10.1108/PR-07-2014-0164 their competence, enhance performance and distribute rewards (Fletcher, 2001, p. 473).
This definition suggests that a PA system should not be confined to mere performance Effectiveness
planning and review sessions. Rather it should be considered to consist of various of
interrelated elements involved in implementation, management and communication of
appraisal-related activities (Walsh, 2003) such as setting employees performance targets,
performance
conducting appraisals, giving feedback, assessing employees developmental needs appraisal
(CIPD, 2009).
Despite a decent amount of research on its varied aspects, in practice many PA 335
systems operate far from perfect. In the current age, HR professionals are striving to
establish PAS which could appraise performance of employees fairly on job-related
attributes by keeping the system up-to-date and compatible with ever changing
environments (CIPD, 2009). Hence, organizations are witnessing the failure of their PA
systems, and thus, would benefit from a theoretical model designed to improve the
effectiveness of PA systems (Atkins and Wood, 2002; Banks and Murphy, 1985; DeNisi
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and Kluger, 2000; Schraeder et al., 2007; Taylor et al., 1995). Thus, an effective PA
system that could hold up such activities together is still a need of the PA practice.
The literature has pointed out a range of deficiencies attributed to many existing PA
systems (see Claus and Briscoe, 2009; Maley and Kramer, 2014). For example, failure to
pursue and achieve PA purposes (Meyer, 1991); lack of reliable, valid and objective
performance measures (Folger et al., 1992); appraisers dependency on human
information processing and rating judgments (Wiese and Buckley, 1998), inability to
meet expectations of the key stakeholders, i.e., the appraiser, the appraisee, and the
organization (Ilgen, 1993; Murphy and Cleveland, 1995), weak interpersonal relationships
between appraisers and appraisees, which in turn, increase interpersonal conflicts and
dwindle trust and communication between them (Bernardin and Villanova, 1986;
Murphy and Cleveland, 1991; Greenberg, 1991). Hence, it is not easy to predict what
determines the effectiveness of a PA system (e.g. Chiang and Birtch, 2010; Claus and
Briscoe, 2009; Levy and Williams, 2004; Varma et al., 2008), and more often than not,
doubts prevail regarding the effectiveness of PA systems (Tuytens and Devos, 2012).
Until recently, PA literature has reported numerous studies that are considered a
step forward to the effectiveness of PA systems, as they attempted to suggest solutions
to the above problems, albeit piecemeal. These studies have suggested the following
four criteria of effectiveness of PA systems: the utilization criterion that refers to
purpose achievement, which addresses the question why PAs are conducted; the
qualitative criterion that refers to users justice perceptions of a PA system, which
relates to a set of rules and practices that ensure fairness in the PA system; the
quantitative criterion that refers to psychometric soundness of rating formats,
focussing on enhancing appraisal accuracy and minimizing rating errors and biases;
and the outcome criterion that refers to appraisee reactions, in terms of both person- as
well as organization-referenced outcomes reflects on appraisees attitudinal evaluations
of and responses to the PA system (Boyd and Kyle, 2004; Chiang and Birtch, 2010;
CIPD, 2009; Hedge and Teachout, 2000; Ilgen et al., 1993; Iqbal et al., 2015; Jacobs et al.,
1980; Kudisch et al., 2006; Levy and Williams, 2004; Linna et al., 2012; Keeping and
Levy, 2000; Pichler, 2012; Roch, 2006; Wood and Marshall, 2008, among others).
Building on the above, we assume that the problem that PA practitioners are facing
is a lack of an overall, holistic theory of PA system effectiveness. Over the years, the
body of literature on effectiveness of PA systems has suggests numerous solutions to
the above problems, but still, PA theory and practice are deficient of a holistic
framework of its effectiveness. Thus, with the aim to overcome this dearth, the present
study proposes a holistic framework of the effectiveness of PA system by using the
PR competing values approach. The present study attempts to integrate the competing
45,2 values framework of organizational effectiveness in the context of PA systems. This
competing values framework was formulated on the basis of fundamental assumptions
about how organizations work and how they are managed (Cameron and Quinn, 2006).
Competing values framework was developed to determine organizational
effectiveness. However, to the best of our knowledge, thus far, this model has been
336 applied to various organizational functions, but not to PA systems. Cameron and Quinn
(2006) assert that besides assessment of organizational effectiveness, the robust
framework of competing values would also accurately describe various other aspects of
the organization. Therefore, the present study employs the competing values
framework (Quinn and Rohrbaugh, 1983) for suggesting a holistic framework of
effectiveness of PA systems. Our review is hence designed to make a twofold
contribution to the theory and practice of PA. First, the present study is likely to
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Flexibility
Internal External
recorded. This form needs to be reliable and valid, i.e., the form should be designed in
such a way that it could measure the actual job performance of appraisee accurately.
Moreover, PA (i.e. assessing performance and recoding on form) needs to be conducted
at a specified period of time (quarterly, semi-annually or annually).
Practical application
The utility of a competing value approach to PA system effectiveness is that it can
serve as a way to diagnose the efficacy of a PA system with respect to different
stakeholders of the system. Each stakeholder has different values and preferences
PR regarding various facets of a PA system. To start with this approach to PA system
45,2 effectiveness, the manager needs to assess that how the key stakeholders, i.e.,
appraisers, appraisees and the organization (HR department and/or top management)
value the PA system. These values can be elicited with respect to both, the specific
stakeholders viewpoint and the holistic view of all the stakeholders regarding the
competing values prevailing in the PA system. One central recommendation is for
346 researchers and practitioners to develop a measurement tool to assess how
stakeholders evaluate a set of values in a quadrant. For instance, rational goal
should measure planning and setting performance targets, performance monitoring
and purpose achievement. Likewise, the remaining measures should be developed for
the internal process, human relations and open system quadrants (for details see
Figure 1). Ideally, such a measurement tool should involve a relatively straightforward
scoring procedure that managers can apply in a simple and relatively cost-effective
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manner. The results would give average scores that individual stakeholder assign to
each set of values. Through this, the manager could determine how stakeholders are
valuing the PA system and thus, which area needs improvements.
For example, suppose that the suggested questionnaire is administered to
appraisees as a stakeholder of a PA system. After scoring, the results reveal that
appraisees assigned low scores on the set of values in the human relations quadrant.
These scores may indicate that the PA system is weak in terms of employees skill
development, training and development needs assessment. Likewise, in the same
quadrant, the score may indicate how appraisees view the PA system with respect to
participation in the decision making. Consequently, the scores on these competing
values can present a complete picture of the PA system and the manager can take
tailored measures to improve the set of values that have a low score. In the similar
fashion, calculating the average of data collected from different stakeholders can
provide an overall picture of a PA system. In this way, the competing value approach to
a PA system enables managers to ensure system effectiveness based on values and
preferences of all stakeholders of the system.
Conclusion
Summing up the paper, we maintain that in order to assess the effectiveness of a PA
system, the PA researchers have suggested four criteria: utilization, qualitative,
quantitative, and outcome criteria. However, to the best of our knowledge, these criteria
have never been applied simultaneously to develop a framework of effectiveness of PA
systems. Building on the competing values framework of Quinn and Rohrbaugh (1983),
the present study proposed a framework revealing a holistic view of all criteria of the
effectiveness of PA systems in an integrative manner.
Since there is a lack of appropriate theory regarding effectiveness of PA system, the
present is the first of its kind that has attempted to propose a comprehensive
framework for the effectiveness of PA systems, which is based on the competing values
framework. This framework is developed with the notion that PA system should be
effective in four broad areas, that is, internal process model, human relations model,
open system model and rational goal model. These models are the most suitable
representation of four criteria of effectiveness of PA system.
This framework is the first step in developing effectiveness criteria for PA systems;
much of the work is remaining and could be done in the future. Future research may
explore this framework by developing an instrument to measure set of values in each
quadrant. Further, the instrument should be validated. In doing so, one could judge the
efficacy of a PA system based on preferences of stakeholders. In addition, future Effectiveness
research efforts may judge whether any trade-off exists between these models. of
Moreover, future academic efforts may also ascertain whether the effectiveness of a PA
system satisfies all the criteria of four quadrants instead of just one (i.e. psychometric
performance
soundness, fairness or utility). appraisal
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Ilgen, D.R., Fisher, C.D. and Taylor, S.M. (1979), Consequences of individual feedback on
behavior in organizations, Journal of Applied Psychology, Vol. 64 No. 4, pp. 349-371.
Landy, F.J. and Farr, J.L. (1980), Performance rating, Psychological Bulletin, Vol. 87 No. 1, pp. 72-107.
Corresponding author
Assistant Professor Malik Ikramullah can be contacted at: malik.ikram@comsats.edu.pk
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