In this chapter, the study reviews literature about theories of performance appraisal, performance appraisal criteria, performance improvement and “recruitment & selection” &
“performance management”. More specifically, each term is defined accordingly and summaries are also given at the end of each section.
Performance Appraisal
Performance appraisal is considered as one of several key elements of performance management. In the past decades, many different definitions of performance appraisal were discussed. Cardy and Dobbins (1994) define performance appraisal as the process of identifying, observing, measuring and developing human resources in organizations. Latham and Wexley (1981) focused more on the link between supervisor and subordinate, and said that performance appraisal is a set of structured formal interactions between a subordinate and a supervisor, usually in the form of a periodic interview, in which the performance of the subordinate is reviewed and discussed, with an emphasis on identifying weaknesses and strengths as well as opportunities for performance improvement and skill development (Latham and Wexley, 1981).
Latham and Wexley brought out the importance of performance appraisal to performance improvement and human resource development. Performance appraisal is the analysis of an employee's recent successes and failures, personal strengths and weaknesses, and suitability for promotion or further training (Singh, Sharma & Cheema, 2011).
Logger &Vinke and Schuler also addressed the importance of performance appraisal from another perspective. A performance appraisal is also important to employees in material terms (Logger & Vinke, 1995, p. 261) and it guides managerial career development, future promotion decisions and compensation adjustments (Schuler et al., 2002). Holbrook (2002) claims that performance appraisal is important to set performance goals, solve performance problems and administer rewards, disciplinary issues and dismissals. More specifically, performance appraisal can be used for numerous purposes including: reward; discipline; coaching; counseling;
negotiating improvements in performance; improving the work environment; raising morale;
clarifying expectations and duties; improving upward and downward communications;
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reinforcing management control; helping validate selection decisions; providing information to support HR activities; identifying development opportunities; improving perceptions of organizational goals; and selecting people for promotion and redundancy (Wilson & Western, 2000). In Singh, Sharma and Cheema’s study, performance appraisal is a formal structured system of measuring and evaluating an employee’s job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee organization and society all benefit (Singh, Sharma & Cheema, 2011). In the study of Saini and Rajpoot in 2013,
“Performance Appraisal is the Key to High Performance”, they also claimed the following statement about the importance of performance appraisal to the organizations:
Performance appraisal is an unavoidable element of organizational life. Performance appraisal is an influential tool that organizations have to organize and coordinate the power of every employee of the organization towards the achievement of its strategic goals.
It can focus each employee’s mind on the organization’s mission, vision and core values.
(Saini & Rajpoot, 2013)
In a highly competitive environment, human resource management (HRM) has become a strategic imperative tool for most organizations, at a minimum long-term total cost. Performance appraisal is seen as one of the most critical of HRM tools (Ratzburg, 2008). Performance appraisal is the process used to determine how an employee is performing in their job, and communicates the information back to the employee. It provides input for the training and development needs of employees. Further, it provides input for the validation of selection procedures and human resource planning (Riggio, 2003). Performance appraisal can be used as promotion rotations, training & development needs analysis and to judge the reliability and validity of the tools of recruitment & selection.
In general, performance appraisal is concerned with the assessment of three areas: results, behaviors, and personal characteristics. Each of these dictates a specific type of appraisal format based on competency- or job-related behavior (Scheneier et al., 1986). The following figure shows the process of performance appraisal:
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Figure 2.1. The Performance Appraisal Process. Adapted from https://www.sagepub.com/upm-data/45674_8.pdf
Performance appraisal systems are also employed to achieve five primary goals (Mathis &
Jackson, 1998) that include:
(1) clarifying employee work expectations;
(2) documenting employee performance;
(3) fostering employee development;
(4) creating a linkage between merit and pay; and, (5) monitoring workforce improvement
Summary
In this session, the importance of performance appraisal was diversely discussed in different researches and studies. In the early 1990s, performance appraisal was only seen as the process of identifying, observing, measuring and developing human resources in organizations (Cardy &
Dobbins, 1994). The latest point of view toward performance appraisal focused more on the organizational side, by saying that performance appraisal can help employees to focus their minds on the organization’s mission and value.
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In the human resource activities, performance appraisal plays an important role in the process. Performance appraisal reveals the gap between the expected goals and the recent progress, which will provides the resources for performance improvement. At the same time, it offers the input for employee development and the validation of selection. Although the exiting studies already show the dissimilar points of views, there is still missing the discussion about the process of performance appraisal.
Performance Appraisal Criteria
The criteria employers use to evaluate job performance vary according to occupation, position, department and organizational goals, past performance and performance standards. The type of performance appraisal might also dictate what criteria managers use when they evaluate an employee's performance. Basic criteria for evaluating job performance include performance standards, skills and competency, goal-setting and professional development and overall adherence to the company's philosophical principles concerning business and work ethic.
During the performance appraisal process, different criteria and elements are evaluated.
Those include the achieved results and goals, skills and abilities, job-related behaviors, personal characteristics and things that are under the employees’ control (Palaiologos, Papazekos &
Panayotopoulou, 2011).
According to Gregersen et al. (1996) and Dowling et al. (1999), performance appraisal criteria should include the following three major aspects:
(1) Hard goals are objective, quantifiable, and can be directly measured as return-on-investment (ROI), market share, and so on.
(2) Soft goals tend to be relationship- or trait-based, such as leadership style or interpersonal skills.
(3) Contextual goals attempt to take into consideration factors that result from the situation in which performance occurs.
Logger and Vinke (1995) propose more detailed criteria of appraisal and state that a combination of criteria may be used, depending on the employee’s job description, and detailed criteria are sometimes less strictly applied. Paauwe and Dewe (1995) suggest that criteria of assessment should be accessible, easy to understand, equitable and motivating for every manager,
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regardless of nationality and cultural background. Goal-setting theory suggests that appraisal criteria and performance goals should be clear and understandable so as to motivate the appraisee, otherwise the appraisee would not know what to work towards (Locke & Latham, 2002).
Another study, performed by Viswesvaran, Schmidt, and Ones (2002), derived several dimensions of job performance out of numerous measures that they extracted from previously published articles. These were: overall job performance, quality, productivity, motivation, interpersonal competence, administrative competence, job knowledge, communication competence, leadership, and acceptance of (or compliance with) authority.
The importance of accurate performance criteria for performance appraisal was also addressed in the past studies. Boice and Kleiner in the study “Designing effective performance appraisal systems” said that if the system does not provide the linkage between employee performance and organizational goals, it is bound to be less than completely effective. To build linkages employees must have individualized objectives and performance criteria which allow them to relate directly to the organization (Boice & Kleiner, 1997). Debora and Bryan also supported that organizations need to have a systematic framework to ensure that performance appraisal is “fair” and “consistent”, and that the system should provide a link between employee performance and organizational goals through individualized objectives and performance criteria (Deborah & Brian, 1997).
Summary
Accurate criteria for performance appraisal can also affect the result. Goal-setting theory is applied to support the statement that the goals should be clear and understandable to motivate the employees to work forward. Criteria for appraisal not only have to be accessible but also attached with the organizational goals and individualized objectives of employees. Though the criteria vary from different job positions, the general criteria can include the following elements:
the achieved results and goals, skills and abilities, job-related behaviors, personal characteristics and things that are under the employees’ control.
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Performance Improvement
Performance improvement is considered the concept of measuring the output of a particular process or procedure, then modifying the process or procedure to increase the output, increase efficiency, or increase the effectiveness of the process or procedure. In 2012, Rothwell, Hohne and King mentioned in the book “Human performance improvement” that the goal in today’s dynamic organization is achieving results- and thereby improving performance (Rothwell, Hohne & King, 2012). Earlier, Rothwell (2000) mentioned the definition of “human performance improvement”:
Human performance improvement is “a systematic process of discovering and analyzing important human performance gaps, planning for future improvements in human performance, designing and developing cost-effective and ethically justifiable interventions to close performance gaps, implementing the interventions, and evaluating the financial and non-financial results.” (p.16)
In 1999, Rothwell already published a study with the ASTD (American Society for Training
& Development) Models for Human Performance Improvement(HPI), this model includes a six-step HPI process model, which was derived from many sources and confirmed through an expert-based research study. The following model (Figure 2.2.), ASTD HPI model, shows the process of human performance improvement. From Rothwell’s viewpoint, the whole model of human performance improvement is seen as change management. There are five critical parts for the improvement cycle: performance analysis, cause analysis, solution selection, solution implementation, and evaluation results. In this study, this HPI model will be the base for the development for a model for performance improvement.
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Figure 2.2. ASTD Human Performance Improvement Process Model. Adapted from “ASTD models for human performance improvement: Roles, competencies, and outputs”, by W.J.
Rothwell, 1999, American Society for Training and Development, P.16. Copyright 1999 by American Society for Training and Development.
Other than Rothwell, Schultz(2007) also mentioned about the performance improvement steps:
Table 2.1.
Performance improvement: The Means to Process Improvement.
Performance Improvement Steps 1. Define goals and performance expectations
2. Identify the performance gap, including its sources and causes 3. Develop solutions that address causes
4. Plan a corrective action
5. Empower individuals to take responsibility and action for improvement
6. Create opportunities for small, meaningful accomplishments
7. Expand accomplishments and complete unfinished change activities 8. Reinforce the new approach
Source. Adapted from “Performance Improvement”, by Schultz, J. R. (2007). Performance Improvement, 46(7), 27-32.
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Table 2.1. illustrates how these steps for performance improvement are integrated into the process improvement framework. The performance improvement steps that follow define an approach that on its own can be used to bring about change; when it is applied in conjunction with process change, it ensures desired behavioral adjustments and improvement outcomes.
The importance of performance improvement is also addressed in the past studies.
Numerous studies and statistical indicators (Campbell et al, 1998; Chen & Kuo, 2004) demonstrates that the success and competitiveness of organizations depend largely on the professional performance of employees, and the ways to improve it should become a pressing and permanent concern, in a competitive market. In the research, “Performance Improvement Strategies Used by Managers in the Private Sector”( Patricia & Leonina-Emilia, 2013), Figure 2.3. is a model concerning the strategies for improving employees’ performances. In the model, human resource management strategy should be the integration of business strategy, internal and external environment. And then, the strategies for improving employees’ performances will follow the strategy of human resource management to develop different dimensions for improving performance.
The performance-improvement specialist Bill Evans (2004) also mentioned in one of his paper about “What exactly is meant by performance improvement?” A performance improvement project is a related group of tasks resulting in measurable improvement in at least one part of the organization such a project may address performance gaps at levels ranging from key individuals and teams up to and including the entire organization. The performance improvement plays an important role in performance management. The figure shown below, Figure 2.4., brings out the whole picture of the continuous improvement and learning.
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Figure 2.3. Strategies for Improving Employees’ Performance. Adapted from “Performance Improvement Strategies Used By Managers In The Private Sector”, by Patricia & Leonina-Emilia, 2013, Annals of Faculty of Economics,1(1), 1613-1624.
The framework follows the plan-do-review-revise cycle (Atkinson, 2012) as each phase of this cycle lies at the heart of performance management. The cycle integrates planning, action and monitoring of performance to ensure continuous improvement, the achievement of objectives and systematic learning about what works and what needs to be changed. In the center of the cycle, there is “continuous improvement & learning”, it shows that continuous learning also plays an important role in the whole cycle of the improvement process.
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Figure 2.4. Continuous Improvement & Learning. Adapted from “A Manager’s Guide to Performance Management 2nd ed.”, by Audit Commission and the Improvement and Development Agency, 2010. Available at: www.idea.gov.uk/idk/aio/4810918 (accessed 10 September 2010).
Summary
The ASTD human performance improvement model and the plan-do-review-revise cycle are both critical for this study to develop a model for performance improvement. The ASTD human performance improvement model gave a clearer picture about the process of implementing performance improvement, but it didn’t show the evaluation of the results. The plan-do-review-revise cycle filled the gap of the evaluation results by continuously learning, which made up for the shortage from the ASTD HPI model. The concept of the model and the cycle are both applied in this study.
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Recruitment & Selection & Performance Management
Recruitment and selection process is fundamental to performance management. Employers recruit and hire candidates who show they are capable of performing the position's tasks and responsibilities. Job performance evaluations then measure the competency and skill an employee demonstrates in performing her assigned tasks. Performance management is a critical aspect of organizational effectiveness (Cardy, 2004). Performance measures also link information gathering and decision making processes which provide a basis for judging the effectiveness of personnel sub-divisions such as recruiting, selection, training and compensation (Singh, Sharma
& Cheema, 2011).
Singh, Sharma and Cheema. (2011) in the same study also discussed the linkage between the selection validation and performance appraisal:
Performance Appraisal helps the supervisors to understand the validity and importance of the selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of selection procedure. Future changes in selection methods can be made in this regard.
(Singh, Sharma & Cheema, 2011)
Earlier, Huselid also mentioned the linkage between recruitment & selection and performance management, but in the context with selective staffing techniques and greater productivity. Huselid (1995) pointed to the fact that investments in HR activities, such as incentive compensation, selective staffing techniques and employee participation, result in lower turnover, greater productivity and increased organizational performance through their impact on employee skill development and motivation.
If the organizations want to improve the employees’ performance, giving feedback to the recruitment & selection department is very important; in that case, the recruitment & selection department would have clear ideas what the desired behaviors for the organization. In terms of performance appraisal, if firms want to elicit desired behaviors from employees, they must provide feedback and incentives that reinforce the desired behaviors (Collins and Clark, 2003).
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Summary
As a result of the literature reviews, performance appraisal plays an important part in the process of performance management, and the result from performance appraisal helps to validate the information from selection. The linkage between recruitment & selection and performance management is used as a basis of this study to develop the model for performance improvement.
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