2.3.1 The Concept of Performance Appraisal
Performance appraisal is an essential management tool that has two important functions: to support administrative decisions and support employee development (Murphy and Cleveland 1990). They suggest that the success of every organization depends on the quality and commitment of its human resources. In order to ensure continued efficiency and effectiveness of members of staff, each organization has to carry out employee performance appraisal from time to time so as to keep them in check and replace, motivate, retrain or take any other appropriate action. Kirkpatrick (2006) describes an appraisal as “the evaluation or judgment of how well a job has been done, this is done by the supervisor with or without input from employees”. In most an appraisal interview has been used, and this is a discussion of the appraisal between the supervisor (reviewer) and the employee (person being reviewed).This interview may consist of communication of the supervisor’s appraisal to the employee and vice versa and agreements on the strengths of the employee, fair appraisal, job segments and needing improvement and also on performance improvement plan that specifies what needs to be done in order to improve performance.
Scholars of varying backgrounds have different views on the concept of performance appraisal and have defined it differently. Lansbury (1988) states that the PA involves identifying, evaluating and developing the work performance of employees in the organization, so that the organizational goals and objectives are more effectively achieved, while at the same time benefiting employees in terms of recognition, receiving feedback, catering for work needs and offering career guidance”. Shelly (1999) describes performance appraisal as the process of obtaining, analyzing and recording information about the relative worth of the employee. The focus of performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does. Shelley again considers performance appraisal as a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future. It is a powerful tool to calibrate, refine and reward the performance of the employee. By focusing the attention on performance, performance appraisal goes to the heart of human resource management and reflects the management’s interest in the progress of the employee.
As a process by which organizations evaluate employee performance based on pre-set standards, (Moats: 1999) notes that the main purpose of appraisals is helping managers effectively plan for the staff of the company and use human resource and ultimately improving productivity. When conducted properly, appraisals serve the purpose of (1) showing employees how to improve their performance, (2) setting goals for employees and (3) helping managers to assess subordinate’s effectiveness and take actions related to hiring, promotions, demotions, training, compensation, job design, transfers and terminations. The above expositions given by Moats and Shelley collectively establish performance appraisal as a clear and concise, regular and unbiased system of rating an employee’s performance in his/ her current position, which can also be used to determine how far the employee can go in carrier development. The study therefore will attempt to the effectiveness of performance appraisals on employee development and based on the above discussed concept of performance appraisal, it is envisaged that this study will reveal how PA can lead to employee development at the MHA in the department of National Registration, Passports and Citizenship.
The existence of organizations is to achieve competitive advantage through efficient performance of employees in such organizations. Therefore, it has become an established part of administration convention that there should be an avenue by which performance should be measured, monitored and controlled (Bratton and Gold, 2003). The purposes for PA is to evaluate performance and employee training and development (Ovando and Ramirez jr, 2007; Aguinis, 2009); for identifying goals, setting them and achieving them (Ikramullah et al, 2012). An appraisal is a system that provides vital data for logical, objectives and competent decision making aimed at improving performance, identifying training needs, managing careers and setting levels for reward and for legal purposes. Redman and Wilkinson (2009) acknowledge that there are more critical aspects of performance appraisal than being just a developmental approach. This ensures that there is a move away from using it for identifying future potential, improving current performance, allocating rewards and career planning to performance appraisal used as an effective tool in identifying strength and weaknesses of employees and ways of using the strength to the advantage of the organization in order to overcome the weakness.
Bersin (2008) argued that performance appraisal takes record of an employee’s past performance and compares it to the present and focuses on the improvement of the future. By so doing, it gives employees the opportunity to communicate their ideas, concerns and prospects for the overall goal of the organization. Mullins (1999), states that ideally, performance appraisal helps the employee to receive feedback for their performance and evaluate their contributions to the common goal of the organization. Whiles Kuvaas (2006) reviews that PA helps align employee performance to organizational goals. It does not confine employees to make personal decisions regarding his or her current performance and provide strategies for future development. This is in agreement with the assertions of David (2013) who believes that self-efficacy is an important factor for personal growth and development on the job. On the other hand, Nelson (2000) adds that performance appraisal basically helps the employee to have a purpose and set approach in the direction of the target goal elaborating that appraisal system acts like a motivator for the employee who performs well in the present to keep the achievement up and in the future.
The benefits of PA to an organization as discussed by (Malcolm and Jackson: 2002) are that performance appraisal is an effective basis for retention of employees, reward decisions, targeted training based on identified needs and future employee promotion decisions. Schraeder and Lindsay,(2006) added that PA is beneficial in identifying unproductive work practices, identifying potential problems, which are hindering the growth of the organization and detecting talented employees and future leaders of the organization. On the other hand, Farmer &Van Dyne (2010) noted that PA is beneficial to the organization for updating personnel records, revisiting job description. Behery and Patron (2008) assert that PA helps the organization to certify promotion and demotion and relate the benefits of PA to affective commitment on the part of the employees. They opine that employees can influence the growth of the organization through commitment leveraged by effective relationship between individuals including supervisor-subordinate relationships.
According to (Jones et al: 2009:441) performance appraisal gives managers vital information on which to base human resources decisions. Decisions about pay raises, bonuses, promotions and job moves all hinge on the accurate appraisal of employees’ performance. Performance appraisal can also help managers determine which workers are candidates for training and development and in what areas. Performance feedback encourages high levels of employee motivation and performance. It lets poor performers know that their efforts are valued and appreciated. It also lets poor performers know that their unsatisfactory performance needs improvement. Effective appraisals, if used correctly, can significantly contribute to the satisfaction and motivation of employees. Since performance appraisals are done by people, there will always be an element of subjectivity, personal likes and bias, which may skew the evaluation process. Rating staff can provide a clear indication of how rewards are linked to performance; it can, however, also have a negative impact on employees who receive low evaluation results; especially if such results are not managed pro-actively and in positive manner (Grobler et al., 2011:297).
The human resource system in any organization can be more effective by adopting a suitable appraisal system in rating the performance of employees (Armstrong, 2003). Seidu (2012), agree to this but pointed out that it also depends on how the employees feel about the suitable method of appraisal in the organization; whether it gives a positive or negative impact on them. This goes to show whether the employees get motivated to improve performance or if the feedback they receive de-motivate and make them loose interest in the job. While (Jawahar: 2006) argues that the satisfaction employees derive from PA feedback fosters job satisfaction and organizational commitment. Denisi & Pritchard, (2006) recognized participation of employees in appraisal process as precursor to employees’ work motivation because they will feel a sense of fairness in the process. On the one hand, Brown and Benson (2003) confirms that employee respond more favorably to fair performance appraisal systems while Pettijohn et al, (2001) sees it in a similar light and points out that the participation is very essential to employees and leads to the perception of job satisfaction and commitment. If employees perceive an appraisal process in an organization as valuable source of feedback to improve their performance, bring opportunity for promotion and personal development they will be motivated to perform.
Therefore, Cheng (2013) opines that it is important for managers to make appraisal process very clear to the employees. This is because employees have certain expectations when they join the organization such as growth and the organization expects a lot from the employee as well, so the feedback they receive from appraisal will either motivate or de-motivate the employees which will either way affect the organization performance. To this effect, it is important for mangers to carry out appraisal appropriately and recognize how to present information about improvement and criticism as well (Anthony et al., 1999).
There are different types of performance appraisal used in organizations both in public and private. In this study on four will be discussed since these are frequently used with respect to the available literature. These are 360 degree feedback, management by objective (MBO), balanced scorecard and self-appraisal.
2.7.1 360 Degree Feedbacks
The traditional method of appraisal where the managers alone appraises employees has become insufficient for the organization. Therefore, many organizations have extended the idea of upward feedback into a 360 degree feedback (Dessler, 2000). This method of appraisal provides wider perspectives about employee performance and also allows employees to understand how others view their effectiveness as co-workers and as individuals (Gallagher et al, 1990). According to (Decenzo and Robbins: 2005), a research into the effectiveness of 360 degree appraisal was reported positive because the feedback result was more accurate and also reduces the subjective factor of evaluation process.
2.7.2 Management by Objectives (MBO)
In 1954, Peter Drucker coined this appraisal method. It states that objective is vital in any area where performance and result openly affect the continued existence and success of the organization. The central theme of this method emphasized the need for a participative goal setting, self-control and self-evaluation. In goal setting, the objectives of the organization are used as a guideline to which employee objectives are setup, and it becomes a standard against which the employee performance will be evaluated. In the aspect of self-control MBO, it helps in monitoring the employee performance in order to have a clear picture of result against objectives. MBO is a type of appraisal where the employee and the employer agree on a set goal and targets and deadline is given to achieve them. Rudman (2003), states clearly that it is key to have comprehensible and defined objectives to avoid the problem of appraising based on unclear objectives which can affect employee motivation to work. Notwithstanding the fact that MBO assist management to plan and control functions, it is also considered as result oriented approach to performance appraisal. Therefore MBO has survived as an effective management approach because it has grown and developed over the years.
2.8.3 Balanced Scorecards Format
Swanepoel et al. (2011:392) define balanced scorecard as a management system that tracks organizational performance, not only form the traditional reliance on short-term financial measures, but would also combines hard and soft measures together with short- and long-term ones. The focus is not purely on management accountancy bottom-line measures, but incorporates performance measures from four balanced perspectives, including financial, customer, internal business processes and employee learning and growth.
Designing an individualized balanced scorecard for an organization and deciding what metrics to use starts off with a clarification of the organization’s strategy by top management and linking it to the vision and mission. The central question of each of the four quadrants needs to be examined, and, in response to these questions, critical objectives are set and appropriate measures are determined. For each measure, targets are then set and initiatives are devised that will result in their achievement. Once this process of designing the organization’s balanced scorecard is completed, the measures need to be cascaded down to departmental level. Using the strategy that has been articulated, the individual departments would need to discuss their respective purposes and how they contribute to the overall results envisaged. Their appropriate key measures that are aligned to the strategy are determined. This ensures that departments are empowered to design measures themselves, rather than being dictated to by a top-down approach (Gallagher et al, 1990)
Departmental performance and initiatives are, thus, ideally aligned to the strategic intent of the organization, and, once all their measures are in place, the next step of developing individual scorecards by means of performance contracts can follow. Interaction between the four quadrants of the balanced scorecards means that employee learning and growth and competence that flow from them feeds into the organization’s internal business processes, which feed into customer satisfaction and then influences financial bottom-line financial results. Some practitioners do, however, report that cascading down to the individual level is often not executed effectively and caution that extensive training is needed to ensure that line managers and employees fully understand what is needed to make the balanced scorecard work (Human Capital Management, 2006:133).
2.8.4 Self-appraisal
Cascio (2010:349) states that there are several arguments for recommending wider use of self-appraisal. The opportunity to participate in the performance-appraisal process, particularly if appraisal is combined with goal setting, improves the employee motivation and reduces his/her defensiveness during the appraisal interview. On the other hand, self-appraisal tends to be more lenient, less variable, more biased and to shows less agreement with the judgments of others. Using self-evaluations in performance feedback is reported to lead to more constructive evaluation interviews, less defensiveness during the appraisal process and an even higher level of commitment to organizational goals (Nelson and Quick, 2002:176). Research suggests that supervisors react to employees’ self-ratings. Supervisors who learned that certain employees’ self-ratings were higher than their own changed their initial ratings. Supervisors generally changed the ratings in a positive direction, gave these employees larger increases and were less willing to sit down and discuss the appraisal with these high self-raters. This finding suggests that some negotiation or posturing may be taking place in such PA procedures (Grobler et al., 2011:318).
Performance appraisal is widely practiced worldwide in organizations. One of the greatest challenges faced by appraisal processes in organizations is the inconsistency existing between theory and practical implementation. This is affirmed by (Saffie-Robertson & Brutus: 2014) who highlight that most performance appraisal activities are resisted by employees in a bid to protect their jobs. They continued to argue arguing that the inflation of performance evaluation as a show of leniency for employees in order to encourage them poses a major threat to the integrity of performance appraisal systems in various organizations
Maroney and Buckley (1992) give an account that there is a significant gap between theory and practice. They underscored that human resource managers do not fully utilize the psychometric tools available and middle management argue that the process should be simple and easy to follow if not it becomes time consuming and cost ineffective. Another criticism is the appraisal carried out by managers lead to the tendency of employees being dependent on them and more so sometimes the managers are not properly trained and the feedback is hindered due to subjectivity and bias which at the end leads to incorrect and unreliable appraisal of employees.
Walters (1995) in his discourse, summarized some of the challenges faced by performance appraisal process in an organization as top managements inability to determine evaluation criteria in a quantifiable terms, lack of competence and expertise in carrying out appraisal objectively, error in appraisals due to bias like stereotyping and employee resistance due to lack of clarity about the purpose and the process of the appraisal. While Zhang (2013) added that cultural differences in performance appraisal in terms of attitude of extrinsic rewards, group performance, and specific formal appraisal methods, and employee involvement are a challenges well. He suggest that it can pose a challenge because employees in a collectivist culture prefer team work rather than individual appraisal and are uncomfortable with direct face to face feedbacks or criticism.
The majority of empirical studies on performance appraisal (PA) systems focus on the search for the perfect form in which subjective traits are replaced by objective and job relevant measurable behaviors. Organizations using a performance appraisal system to evaluate their employees, struggle with issues of implementation, adoption and linkage with other human resource systems. To make a performance appraisal a viable management tool from a broader perspective, organizations and researchers must invest time in training managers in performance appraisal skills, in developing system evaluations which take into account reliability, validity and managerial goals as well as designing systems to meet specific organizational conditions and employee development needs. Nyaoga (2010) conducted a research study on the effectiveness of performance appraisal systems in private firms in Kenya. The study showed that performance appraisal system is the only tangible metric way by which an organization can know the level of performance of its diverse employees. Although most employees were aware of the type of performance appraisal system used in the private firms, such systems were not based on any serious formal purpose for which they were designed. The effectiveness of performance appraisal systems in the private universities for example were only based on training to the employees involved in the rating/appraising process and are multi-rating systems.
Conclusively, because the performance appraisal systems used in private firms were not effective and that they exist just as a matter of formalities, the private entities could not measure employees’ performance hence making it difficult to achieve the intended Human Resource Management objectives. The gap in knowledge here stems from the fact that performance appraisals are only conducted with the view of improving the achievement of the organizational goals neglecting the aspect of the need for development of employees in these firms. In a study conducted by Mackenzie (2000) on performance appraisal systems for organizational success, He highlighted that the problem with PAs being conducted in organizations of work today they are too concerned with achievement of goals and objectives. He recommended that the central theme of PA should also carter the aspect of employee development because undeveloped employees are most unlikely achieve their goals in the organizations. Mackenzie (2000) developed procedures overcame these issues. This was achieved by evaluating the need for performance appraisals, problems associated with various methodologies and examining the qualities that need to be measured both in terms of the individual and organization and identifying the means of improving organizational performance.
In another study conducted by (Rao: 1979) on a performance appraisal in public sector in India. The objective of the study was to know if the performance appraisal helps to recognize their strength and weaknesses. The survey of 588 officers of large public sector company in India indicated that about 98 percent of the respondents felt that the appraisal system should help to recognize their strength and weaknesses. A fairly high percentage of them (over 60 percent) recognized that it is very difficult to have objective assessment in any form of appraisal because human factors are always involved. This survey seems to have been conducted in a company that operates traditional appraisal system. This study will focus on an open performance appraisal program that is based on direct engagement between the appraiser and the appraised.
A study carried out by Njekwa (2009) in many Zambian organizations revealed that performance appraisal is viewed and conducted solely in terms of its evaluative aspect thereby overlooking its use for facilitating growth and development in workers through training, coaching, counseling and feedback of appraisal information. It explains that performance appraisal is accorded a lesser role in Zambian organization as more emphasis is given to selection and salary administration This means that organizations are putting the cart before the horse and are in turn stifling genuine individual and organizational growth. It would be inappropriate for organizations to emphasize more on special attention to performance appraisal without paying attention to employee training and development as Rao (2005) writes that it is the outcome of employee development that would reveal performance appraisal needs.
Organizational performance and its resultant efficiency and effectiveness can only be achieved when individuals are continuously developed. The inability of organization to install an effective employee development strategy has hindered them from achieving competitive advantage which they require more now than ever before. Appraisal processes are not systematic and regular and often characterized by personal influences occasioned by organizations preoccupation to use confidential appraisal system which hinders objectivity and fairness. Effective performance appraisal is essential to ensure that a business is operating effectively and is on track to achieve strategic goals. Performance appraisals are a review of a workers performance against pre-determined objectives. They identify the strengths and weaknesses of an employee and address how to improve or develop these areas. They aim to motivate the employee and provide them with sufficient challenges and responsibilities in relation to the business objectives (Manoharan, Muralidharan and Deshmukh: 2009).
Performance appraisal is intended to engage, align, and coalesce individual and group effort to continually improve overall organizational mission accomplishment (Grubb, 2007). In some organization’s appraisal results may be used to determine relative rewards in the firm who should get merit pay increases, bonuses, or promotions. Similarly, appraisal results can be used to identify the poorer performers who may require some form of counselling, demotion, dismissal or decreases in pay. Interestingly, performance appraisal is a very controversial managerial issue. Some researchers have expressed doubts about the validity and reliability of the process. On the other hand, there are advocates of performance appraisal who claim that it may well be the most critical of all Performance Appraisal and Motivation.
In spite of the large body of published literature on the subject of performance appraisal, there are still gaps in empirical investigations on the effectiveness of PA on employee development. This study will attempt to fill this gap and establish the effectiveness of PA on employee development. Organizational performance and its resultant efficiency and effectiveness can only be achieved when individuals are continuously developed. The inability of organization to install an effective employee development strategy has hindered them from achieving competitive advantage which they require more now than ever before. Appraisal processes are not systematic and regular and often characterized by personal influences induced by organizations preoccupation to use confidential appraisal system which hinders objectivity and fairness. Often organizations ignore management by objectives, critical incidents to personal prejudices. This is retrogressive as it affects the overall performance of the individuals.
The literature reviewed shows that performance appraisal is often used to assess individual performance of employees in an organization. Employees are supposed to be developed before they can be assessed through performance management approaches. Given the fact that there have been no extensive studies on evaluation of the effectiveness of the Zambian appraisal system, it was imperative to fill that gap in literature. As earlier adduced little has been researched or published on the effectiveness of PA on employee development. This study will, therefore, endeavor to assess the effectiveness of performance appraisal on employee development in the MHA in the department of National Registration, Passport and Citizenship.