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A performance appraisal system can only be effective if both the management team and the employees can relate to it and feel comfortable with the whole process (Fink & Longenecker, 1997). At EatNGas inc. the existing performance appraisal system is ineffective and deeply flawed. The first problem with the system is that it has not been very helpful as no positive impact has been achieved. Secondly, it seems that employees view the process negatively and bad reaction to the appraisal feedbacks is common.
The third problem is that the managers are unable to fill the appraisal forms correctly hence meaningful information cannot be derived from the process. The final problem noted with the system is that no guidance has been provided to the managers concerning the appropriate methods to describe employees’ positive behavior and future improvements needed.
A well structured performance appraisal system should be subjective, individualized, qualitative and be geared towards problem solving. The appraisal system should be specific and contain realistic and measurable standards and performance indicators (Yammarino & Atwater, 1993).
The current system that exists at EatNGas cannot effectively meet the above requirements hence there is need to institute a new performance appraisal system. There are several performance appraisal techniques that differ both in strengths and weaknesses process (Fink & Longenecker, 1997).
- Essay appraisal method: This system requires the assessor to describe the general potential of the employee as well as their strengths and weaknesses in an essay format. The method therefore requires extensive interaction between the assessor and the employee and has the disadvantage that it is hard to compare results due to differences in the content of the essays written for different employees.
- Graphic Rating Scale: This method assesses an employee with respect to their work. Terms generally used include unsatisfactory, average, above average or outstanding. This method is more consistent and reliable than the essay appraisal technique and can be used to assess many types of job responsibilities within the company.
- Field Review Method: Due to the limitation of the graphic rating and essay appraisal technique, researches in the field of human resource management developed a methodical review process by combining the two techniques forming the field review method. Due to differences arising in the standards used by assessors, a discussion group consisting of assessors and a member of the HRM office discuss each rating used for analyzing performance and systematically analyze all the differences in the system thus arriving at a more standardized performance criterion. This method has the disadvantage that it is very time consuming (Longenecker & Golf, 1992).
- Forced-choice rating method: In the techniques, several statements are provided describing a given criterion and the assessor has to choose one to describe the subject. The statements are given particular scores in advance which are not revealed to the assessor to avoid bias. This technique however cannot be used in interviews and is only undertaken by the assessor without employee involvement.
- Management by Objectives: This is a relatively new technique whereby the performance goals and criteria are set by the employees themselves. The advantage of this method is employees can discuss with the management on what constitutes fair standards and they know what is required from them by the company. A disadvantage is that in some cases employees feel pressured in choosing the standards and are usually victimized on not achieving the set goals especially since the whole system was modeled by the employees themselves.
- Work standard approach: This technique involves setting targets that are realistic and in an open manner by the management team. The targets are based on realistic output standards that are integrated into the appraisal system. This ensures that the employees know what their duties are and what the company expects from them. Although this technique is more accurate and objective, individual ratings are difficult to compare. This problem can be eliminated by using a collectively acceptable ranking system (Lawrie, 1990).
- Ranking Methods: This technique involves a checklist that describes a series of standards and the assessor has to tick an answer which he believes describes best the individual being assessed. This technique allows for comparison between individual rankings.
- 360 degree feedback: This technique involves collecting feedback about an employee from everyone connected with the organization and has knowledge of the employee under assessment. Feedback is collected from fellow workers, supervisors and sometimes, source outside the organization such as customers. This method also requires the employee to carry out a self assessment. This method however depends on the time the rater has known the employee and is also very time consuming.
The techniques described above can be combined to form a more user friendly and more reliable system that can provide more useful and consistent information for employee management.
Conclusion and Suggestions
Due to the failure of the existing performance appraisal system in the company, I would suggest using the work standard technique together with the ranking method (checklist method) The system I propose would include both essay based description and a checklist giving statements describing a given criteria.
The performance assessment criteria already in use cover the basic aspects of an employee’s work and can be effectively applied with better guidance. The categories given cover most of the criteria required to generate a good appraisal report and only a few more categories need to be added. The discussion of these categories and their possible modifications are presented in the slideshow provided.
Fink, L. S., & Longenecker, C. O. (1992). Keys to designing and running an effective appraisal system. Journal of Compensation and Benefits, 23, 36-41.
Lawrie, J. (1990). Prepare for a performance appraisal. Personnel Journal, 69(2), 132-136.
Longenecker, C.O. & Goff, S. A. (1992). Performance appraisal effectiveness: A matter of perspective. SAM Advanced Management Journal, 14, 17-23.
Yammarino, F. J., & Atwater, L. E. (1993). Self-perception accuracy: Implications for human resource management. Human Resource Management, 32(3), 231–235.