The Trials and Tribulations of Performance Appraisal

Problems and Prospects on Entering the Twenty-first Century

Dennis Daley
North Carolina State University

At the beginning of the twenty-first century performance appraisal is poised to undertake

major advancements. Experimental trials of various versions such as 360degree, pass/fail,
and team appraisal build upon the developments during the twentieth century of objective
system. These trial will test our abilities to engage in a process of cognitive ergonomics
that will transform our appraisal systems into truly usable instruments. Yet, these new
approaches will face the same tribulations that past performance appraisal system had to
endure. Advancement is dependent on our abilities to constantly deal with the problems
of training, measurement, and inconsistency.
Research on and the practice of performance appraisal during the twentieth
century has resulted in the ability to create highly complex, yet objective instruments
with which to assess employee performance. Whether we focus on results, behaviors, or
competencies, the performance appraisal process can map the job terrain (Daley, 1992,
Latham and Wexley, 1981, Milkovich and Widgor, 1991, Mohrman, Resnick-West, and
Lawler, 1989, Murphy and Cleveland, 1995).
Yet, problems persist. It is not the ability to accomplish the performance appraisal
process that is in question but the willingness to do it. Performance appraisal does not
occur in isolation; it is an integral part of an organization’s performance management
system. Success is dependent upon how well processes and people are melded together.
In essences, our difficulties are ones of cognitive ergonomics. Adjusting the cognitive fit
between processes and people is analogous to the efforts undertaken in the area of
physical ergonomics. Improvements enhance productivity. Just as physical materials need
to be designed to work in accord with the realities of the human body, administrative
processes must incorporate the ways in which the human mind actually functions.
At the beginning of the twenty-first century we are exploring ways to refine
performance appraisal processes to better suit our needs. Following an overview of the
performance appraisal techniques used in the twentieth century, this chapter examines
three techniques-360-degree appraisal, pass/fail appraisal, and team appraisal-which are
currently undergoing trial for use in the twentieth-first century. However, these prospects
also face problems. The chapter concludes with an examination of the continuing
tribulations-training, measurement, and inconsistency-that have previously limited efforts
at successful performance management.

OVERVIEW OF PERFORMANCE APPRAISAL TECHNIQUES

SUBJECTIVE INSTRUMENTS
Essays, graphic rating scales, and check lists are three of the formats which are
basically subjective appraisals. The accuracy of the assessments derived when each of
these formats is employed may prove exceedingly high. However, this accuracy flows
more from the interactive combination of organization and individual rater than from the
merits of the specific instrument being employed.
 The essay appraisal format is a tabula rasa. Supervisors have a blank space on
which they are free to write. Essay appraisals (along with the more modern audio or
video log equivalents) are descendant from the traditional duty or fitness report. Almost
all appraisals, including today’s objective techniques, include an essay component.
The subjective graphic rating scale is perhaps still the most pervasive from of
performance appraisal (Landy and Farr, 1980:83; Murphy and Cleveland, 1995:434;
Milkovich and Widgor, 1991:55-56). A graphic rating scale consists of a set of items
addressing personal traits (trustworthy, loyal, helpful, friendly, courteous, kind, obedient,
etc.) and job activities (communications skills, sets realistic goals, keeps files and records
up to date, adheres to policies and procedures, knowledge of job, etc.). employee
“performance” on these items is then rated using another set of adjective evaluations
(poor, acceptable, fair, good, exceptional, etc.), which are invariably linked to a system of
numeric scores. This enables the calculation of an average or overall, summary numeric
evaluation or rating.
Checklist or forced-choice appraisals include sets of items which are linked to the
performance of specific job; they also include items for which no established relationship
have been previously documented (Landy and Farr, 1980:85-86; Mohrman, Resnick-
West, and Lawier, 1989:52-54). In conducting a check list performance appraisal,
supervisors are asked to pick from a series of lists of four items in each set which are
deemed to be most like and least like an employee. These are then compared against a
code sheet and only those which match validated relationships are tabulated into a final
score.

INTERPERSONAL COMPARISONS
Interpersonal comparisons, such as rankings or forced distributions, may be based
on either subjective criteria. However, even when initially based solely on objective, job-
related evidence, they experience serious shortcomings. Central to all interpersonal
appraisal system is the comparison or assessment of the individual against other
individuals rather than with the specific job to the done.
One method for interpersonal comparisons is that of ranking. This is approached
in a wholistic manner wherein an organization’s employees are graded from best to
worse. This requires a complete knowledge and understanding of the entire organization-
purpose and people. While perhaps feasible only in very small organizations, a number of
gimmicks can be used in order to extend its application to large units.
An alternative ranking process can be employee in which an organization’s best
and worst employee are designated. The process is then repeated as finem with the
remaining employees whereby the next best and next worst employees are so indicated.
In the end this peeling of the onion produces a composite list which ranks employees
from best to worst.
Forced distributions are another means for making interpersonal comparisons
(Mohrman, Resnick-West, and Lawler, 1989:182-183). Grading on the curve is not a new
notion and, unlike rankings, can easily be applied to large organizations. However, it is
just as prone to error. Forced distributions assume that employee performance fits some
external model or distribution, usually envisioned along the lines of something like a
normally distributed, bell-shaped curve.

OBJECTIVE INSTRUMENTS
 Behaviorally Anchored Rating scale (BARS) and Management by Objectives
(MBO) essentially involve the same components but approach them with a slightly
different focus in mind. Hence, the objective components which are common in both
approaches are introduced into the appraisal process in a somewhat different order.
Behaviorally anchored rating scales are extensions of the subjective graphic rating
scale. They are a clear attempt to translate the graphic rating scale into an objective
appraisal system. They address and correct for many of the subjective issues that cloud
the validity and inhibit the use of graphic rating scales (Bernardin and Beatty, 1984;
Landy and Farr, 1980:83-85; Latham and Wexley, 1981).
Both the BARS and MBO approaches emphasize detailed job analyses. Ideally,
performance appraisal should be able to work off the same job analysis system use in the
development of an organization’s position description and position classification system
(and employed as a guide in the selection process and for designing training programs ).
Unfortunately, many organizations, especially among those in the public sector, employ
different systems of job analysis when it comes to selecting people to perform a job and
when it comes to assessing their performance on that job.
Management by Objectives (MBO) is more focused on results: however, it
obviously can also be adapted to situations which outputs or processes are more involved
than outcomes. MBO originated as a means for managers to translate their strategic plans
into implementatable programs. It is a basic command and control management system
for implementation and monitoring (Odiorne, 1971, 1987; Swiss, 1991:61-127).
While we can design successful performance appraisal instruments, their use on a
day-to-day basis often leads to failure. Our complex appraisal systems often fail to
accommodate the work world in which real management occurs. Supervisors and
employees balance a myriad of techniques and tasks everyday. This is a world in which
neither the time nor energy exists to concentrate on “high maintenance” systems. Hence,
performance appraisal must evolve into a more user-friendly version.
Three different versions are undergoing trial at the beginning of the twenty first
century: 360-degree appraisal, pass/fail appraisal, and team appraisal. With a strong
developmental focus, 360-degree appraisal calls upon the perspectives of supervisors,
subordinates, peers, and even self-review to form a well-rounded, balanced view.
Assuming that most employees are indeed performing well, pass/fail appraisal simplifies
the appraisal process into a binary yes/no decision. This allows corrective attention to be
focused on the few problems rather than wasted on the “busy work” of documenting the
obvious. Finally, team appraisal introduces an appraisal approach that focuses on the
work group itself. While organizations are composed of individuals, their work is
accomplished through cooperative teams. Compatible with Total Quality Management
(TQM) and gainsharing/goalsharing system, team appraisal assesses this cooperative
effort.

360-Degree Appraisal and Development

The combination of information sources (especially supervisor, subordinate, peer,
and even self-ratings) is the basis for 360-degree feedback (Murphy and Cleveland,
1995:144-146, Pollack and Pollack, 1996, Edwards and Ewen, 1996, DeLeon and Ewen,
1997, DeNisi and Kluger, 2000, Ghorpade, 2000). With its low hierarchy and
professional staff, the modern organization is, on the other, is blessed with highly
knowledgeable employees. Hence, 360-degree feedback promises to provide a more
balanced form of appraisal. Of course, the 360-degree appraisal is designed to serve as a
developmental instrument. When it is transformed into a judgmental appraisal, 360-
degree appraisal loses its effectiveness (and often engenders employee distrust).
This technique is especially useful when employed for developmental purpose
(Lepsinger and Lucia, 1997, DeNisi and Kluger, 2000, Ghorpade, 2000, daley,
forthcoming). However, it is somewhat problematic when incorporated in a judgmental
system. Subordinates and peers are especially likely to be concerned with an appraisal
that is used judgmentally. Such a transformation is viewed quite negatively and arodes
employee loyalty. Depending on the purpose (e.g., pay in crease, promotion, demotion,
etc.), individual ratings may change in up to a third of the cases (Waldman, Atwater, and
Antonioni, 1998 ).
As with any performance appraisal system, 360-degree appraisals must be
focused on job-related components. The training for rates (and the possible affects of rate
error) is much more important. Since 360-degree appraisal is a highly participative
technique, its success or failure has greater symbolic significance and implications
(Waldman, Atwater, and Antonioni, 1998).

Pass/Fail and progressive Discipline

While performance appraisal is one of the most researched aspects of
management, it is exceeded by the effort devoted to the staffing process. Recruitment,
testing, and selection have been the subject of study and improvement for most of the
past century (Gatewood and feiled, 1998). Because of the enormous strides made here,
we can propose the introduction of pass/fail appraisal. Since no organization consciously
hires people to fail, and our selection devices are indeed rather good, the “average”
workforce is, all in all, rather exceptional. In addition, as is evident from basic
motivational theories, people want their work to make a difference.
Given the presence of employees selected for success and willing to work, there is
little need to actually separate them into various grades (or performance ratings). In fact,
most performance appraisal system report ratings with restricted ranges. In fact, most
performance appraisal system report ratings with restricted ranges. Most employees fall
into categories that can be designated as “stars” or “superstars”, and even these
distinctions often prove problematic. Very few employees fail. Hence, for most
employees the performance appraisal system is meaningless.
The introduction of a pass/fail appraisal greatly simplifies the endeavor. The vast
bulk of the workforce is in actuality exempt from the more burdensome aspects of the
process (they pass). Supervisors are then free to devote their efforts not in meaningless
documentation but in productive management. Special appraisal processes can be
introduced to deal with very specific concern-problem employees and promotions (Daley
forthcoming).
The need to established job-related documentation for undertaking disciplinary
action gives rise to its association with the performance appraisal process. Although
focused on negative behaviors, discipline fits in with both judgmental and developmental
approaches to performance appraisal. However, the ultimate consequences of disciplinary
action are clearly judgmental in nature. The requirement to include suggested corrective
action provides only a sight developmental cast to this process. A true developmental
approach to appraisal would most likely prefer that disciplinary cases be dealt with
separately.
Inasmuch as a pass/fail appraisal process readily distinguishes problem
employees, it allows the supervisor or manager to interact with most employees on a
purely developmental level. Thereby, the supervisors employee relationship can be
virtually freed of the judgmental specter. Such an interpersonal relationship would be
conductive to fostering organizational trust and commitment.
A separate disciplinary reporting process can be established. This would be
triggered at the occurrence of a critical incident (i.e., a specific and substantive rule
infraction or performance failure). Only at this point would a file be “opened” and
reactive action is undertaken, the file can be made. If no other events occur or successful
corrective action is undertaken, the file can become “inactive” or “closed” (legally all
records must be preserved to document organizational behavior).
Progressive discipline is applied to specific behaviors and is designed to correct
them. When an employee who has been subjected to progressive discipline for one
behavior exhibits a new disciplinary problem, it is a necessary to begin the process anew.
Each type of infraction is dealt with separately. To jump all disciplinary together creates
an “out to get me” impression among employees and negates any successful or good faith
efforts.