Despite all the potential advantages of formal performance appraisals, there are some challenges. Determining the relationship between individual job performance and organizational performance can be a difficult task. Generally, there are two overarching problems from which several complications spawn.
One of the problems with performance appraisals is that they can have detrimental effects to the organization(s) involved if the appraisals are not used appropriately.
The second problem is that they can be ineffective if the system does not correspond with the organizational culture and system. Complications stemming from these issues are as follows:
Traditional performance appraisals are often based upon a manager’s or supervisor’s perceptions of an employee’s performance and employees are evaluated subjectively rather than objectively. Therefore the review may be influenced by many non-performance factors such as employee ‘likeability’, personal prejudices, ease of management, and/or previous mistakes or successes. Reviews should instead be based on data-supported, measurable behaviors and results within the performer’s control.
Employees’ negative perceptions
Quite often, individuals have negative perceptions of performance appraisals receiving and/or the anticipation of receiving performance appraisals can be uncomfortable and distressful and potentially cause “tension between supervisors and subordinates”. If the appraisee does not trust their employer, appraiser or believe that they will benefit from the process it may become a futile exercise.
Manipulation of ratings to avoid conflict
Performance appraisals should provide accurate and relevant ratings of an employee’s performance as compared to pre-established criteria/goals (i.e. organizational expectations). However, supervisors will sometimes rate employees more favorably than that of their true performance in order to please the employees and avoid conflict.
Managers who have had unsatisfactory experiences with inadequate or poorly designed appraisal programs may be skeptical about their usefulness while other managers may not like to play the role of a judge and be responsible for the future of their subordinates or they may be uncomfortable about providing negative feedback to the employees. This tendency can lead them to inflate their assessments of the workers’ job performance, giving higher ratings than deserved.
When performance appraisals are not carried out appropriately, legal issues could result that place the organization at risk. Performance appraisals are used in organizational disciplinary programs as well as for promotional decisions within the organization. The improper application and utilization of performance appraisals can affect employees negatively and lead to legal action against the organization.
Overemphasis on performance goals
Performance goals and performance appraisals systems are often used in association. Negative outcomes concerning the organizations can result when goals are overly challenging or overemphasized to the extent of affecting ethics, legal requirements, or quality. Moreover, challenging performance goals can impede employees’ abilities to acquire necessary knowledge and skills. Especially in the early stages of training, it would be more beneficial to instruct employees on outcome goals than on performance goals.
Lack of transferability to other cultures & situations
Performance appraisal systems, and the premises of which they are based, may not have the transferability for effectual utilization in other countries or cultures. Performance “appraisal is be deeply rooted in the norms, values, and beliefs of a society.
Appraisal reflects attitudes towards motivation and performance (self) and relationships (e.g. peers, subordinates, supervisors, organization), all of which vary from one country to the next”. Therefore, appraisal should be in conjunction with cultural norms, values, and beliefs in order to be operative.
The deep-seated norms, values and beliefs in different cultures affect employee motivation and perception of organizational equity and justice. In effect, a performance appraisals system created and considered effectual in one country may not be an appropriate assessment in another cultural region.
The use of computers in performance appraisal
Computers have been playing an increasing role in performance appraisal for some time. There are two main aspects to this.
The first is in relation to the electronic monitoring of performance, which affords the ability to record a huge amount of data on multiple dimensions of work performance which facilitates a more continuous and detailed collection of performance data in some jobs.
The second aspect is in mediating the feedback process, by recording and aggregating performance ratings and written observations and making the information available on-line; many software packages are available for this.
The use of information technology in these ways undoubtedly helps in making the appraisal process more manageable, especially where multiple rating sources are involved, but it also raises many questions about appraisees’ reactions and possible effects on performance appraisals outcomes.
Mistakes made by raters are a major source of problems in performance appraisal. There is no simple way to completely eliminate these errors, but making raters aware of them through training is helpful. Ratter errors are based on the feelings and it has consequences at the time of appraisal. Rater errors include: Use of varying standards which occurs when a manager appraises (evaluates) his or her employees using different standards and expectations for employees who are performing similar jobs. Recency effects occur where the manager rates the employee according to the last performance,
Example: When a supervisor rates based just in the performance of the employee in the last week. Primacy errors occur when the person who evaluating gives more weight according to information he received first. Central Tendency errors occur when the manager evaluate every employees within a narrow range, as the average because he or she is dismissing the differences in the performance that employees have done. Leniency errors occur where the manager rates all employees are at the high end of the scale.
Other rater errors are rater bias where the manager rates according to his or her values and prejudices which distort rating. Those differentiations can be made due to the ethnic group, gender, age, religion, sex, appearance e.t.c. Halo Effect is where a manager rates an employee high on all items because of one characteristic that he or she likes.
Example: If a worker has few absences but the supervisor has a good relationship with that employee, the supervisor might give to the employee a high rating in all other areas of work, in order to balance the rating. Horns Effect is the opposite to the Halo effect and Horns effect occurs when a manager rates an employee low on all items because of one characteristic that he or she dislikes. Sampling may also lead to some errors e.g. When the rater evaluates the performance of an employee relying only on a small percentage of the amount of work done.
Managing Challenges of Performance Appraisals
Although performance appraisals can be so easily biased, certain steps that can be taken to improve the evaluations and reduce the margin of errors through:
Training that involves creating an awareness and acceptance in the people conducting the appraisals that within a group of workers, they will find a wide range in difference of skills and abilities
Providing feedback to raters, managers who evaluated their subordinates should be provided with feedback, including information on ratings from other managers to reduce leniency errors.
In addition, Subordinate Participation should be encouraged. By allowing employee participation in the evaluation process, there is employee-supervisor reciprocity in the discussion for any discrepancies between self-ratings and supervisor ratings, thus, increasing job satisfaction and motivation.