Performance Management: Critical Literature Review- HR Management Assignment Solution

Performance Management Literature Review

Critical Literature Review

This assignment requires you to undertake a critical review of the literature on a selected area of Performance Management as it relates to organisations and their employees. Additionally you are required to provide recommendations on policies and practices which should be developed and/or implemented by organisations to respond to issues identified as being of critical importance in performance management.

Choose ONE of the following topics:

• Measuring employee performance
• Developing employee performance
• Performance information and appraisals

Your essay may relate generally to the topic or look at a specific issue within the topic. You should look at the unit content for each topic and base your essay on content discussed in the lecture, text book readings and learning activities. Suggestions include (but are not limited to):

• Measuring employee performance – for example, you could consider task and contextual performance, or measuring performance based on results and behaviour.
• Developing employee performance – for example, you could consider 360 degree or multi-source feedback, mentoring or coaching.
• Performance appraisals – for example, you could consider the advantages and disadvantages of formal performance appraisals, or rating errors.

Research and Referencing:

Research the literature on your chosen topic and incorporate a minimum of eight (14) scholarly or peer reviewed journal articles dated 2005 or later (i.e. published within the last 10 years). The prescribed textbook may be referenced in addition to the minimum of eight (14) journal articles. No other books, textbooks, magazines, web sites or Internet sources are to be used. It is recommended that you use the Griffith library catalogue to access journal articles. You may also find Google Scholar useful. Use APA or Harvard referencing style according to the Griffith University Referencing Tool.

Performance appraisal ratings – a critical review

Introduction

One of the critical components of performance management is performance appraisal as this impacts the overall performance of the organization. Despite having several advantages, scholars maintain that performance appraisal may also have adverse impacts on employee performance and the overall performance of the organization. The paper will analyze the adverse impacts of performance appraisal and the manner in which it helps in providing

prejudiced judgement.

Performance appraisal is the process in which employees are evaluated based on their roles and responsibilities and provided feedback to improve their performance. Academic scholars maintain that supervisors have the ability for garner perfect judgments on employee performance. Despite this, inaccuracy in employee rating has been a conscious distortion process employed to further the agenda of the rater and not due to an unconscious error. Most

reviews concerning employee performance are centered on high or moderate performance (Agyen-Gyasi & Boateng, 2015). There are less chances of communicating adverse data as compared with positive information. An immediate outcome of this is the inclination of personnel to provide an average or higher rating to employees (Akinbowale, Lourens & Jinabhai, 2014). The rating system has been further criticized on the grounds that supervisors use ratings to attain contradictory objectives. Furthermore most performance appraisal ratings are motivated in order to evade conflict with an employee displaying poor performance. Supervisors, on the other hand may also give inflated ratings in order to enhance employee performance by enhancing self-efficacy (Byron, 2007). Supervisors also increase employee ratings consistently to protect their own reputation as poor employee performance reflects

negatively on the supervisor.

Critiquing performance appraisal systems

Employee performance appraisal systems have been criticized mainly because the management uses a framework that appraisal employees using traditional methods. Orthodox techniques help to repair the shortcomings of an employee and the performance appraisal systems have been developed for this purpose. However, in the traditional pattern there exist conflicting appraisal purposes (Bryan & Palmer, 2012). Appraisals may help in staff motivating by clearly communicating goals and setting a clear path for career enhancement by imparting staff development and mentoring requirements to effect the performance goal favorably. Such appraisals are in conflict with the examination of previous performance and the distribution of awards based on prior performance. Hence, employees do not confide any shortcomings and highlight concerns with their ongoing performance as they fear that these may act as barriers to promotion or merit centric awards (Stepanovich, 2013).

On the other hand, scholars have criticized the attitude of supervisors to not provide adverse judgments on the performance of an individual employee as it may de-motivate the personnel leading to the supervisor being accused of providing less supervisory contribution and support to enhance the performance level of a subordinate. Another consequence is the conflict evasive nature of supervisors who prefer to provide an average or a middle point rating. This rating bias is also called as “central tendency” (Prowse & Prowse, 2009). Other rating biases in employee performance appraisal include the horns and the halo effect. A study conducted by academic scholars maintained that ratings were influenced by organizational politics. Such politics contained deliberate individual attempts to protect or enhance self interests especially in instances of conflicting situations. This involved in

providing inaccurate or biased ratings to employees during performance appraisal. The same study maintained that organizational politics led supervisors to impart enhances performance ratings on the basis of core competencies rather than provide a comprehensive or critical review of the overall performance of the employee. This is known as the halo effect. Also, the study found that in some situations, the manager awarded favorable reviews despite the fact that the employee reflected shortcomings in some core competencies. This is known as the horns effect (Prowse & Prowse, 2009). Scholars have also found some employee ratings to be based on recent events only. This is termed as the “recency effect”. Furthermore studies have also found ratings to be biased on the basis of ethnicity and gender and the appraise ratings. Thus, scholarly research has determined that supervisors often provide prejudiced ratings to subordinates rather than focusing on their performance.

Resolving the issue of biased ratings in performance appraisal

A methodology used to remove rater bias was by using “test metaphor”. The test metaphor assumed that appraisal ratings were based on assessing the authentic performance thereby requiring enhanced validity and reliability of appraisal as a function to develop performance and motivation. The issues of rater errors and prejudiced judgments can be solved by enhanced organizational justice that in turn accelerates the reliability and validity of the judgment of the appraiser. Despite this scholars have maintained that the test metaphor may not successfully resolve the issue related to prejudiced ratings. This is mainly due to the problem of subjectivity in which decisions of employee appraisal may be influenced by organizational politics. Scholars have criticized the test metaphor to not resolve this issue as appraisals is poorly conducted due to inadequate appraiser training. Moreover, the fact that appraisers do not attach any value to performance issue defeats the very purpose of rating employees for enhanced performance. Most firms engage in organizational politics wherein appraisers strive to maintain performance from the view of the subordinates in order to ensure employee satisfaction. They have further criticized the construct of organizational justice that is completely missing while conducting performance appraisal ratings (Rowland & Hall, 2012).

A mixed study was conducted to determine the authenticity of performance appraisal ratings.It was found that performance appraisal of employees are not a homogeneous but a sporadic process. Furthermore several flaws ensued in the performance appraisal process. These involved in not providing enough consideration to the opinions of employees, no application of the decision making criteria, feedback to employees after negotiations were not provided, employees were not provided any justifications for decisions and employees were not treated civilly and with courtesy. Furthermore, the same study found that most organizations have introduced the concept of performance related pay. However, the performance related pay is linked with a variable that is outside the scope of individual performance. The performance linked pay was related to the organization achieving enhanced returns. This has been severely criticized as the inclusion of this component leads to employee dissatisfaction and de-motivates the personnel. Scholars have criticized that most firms try to develop methods for performance appraisal but fail to create a comprehensive performance management system thereby impacting employee and overall organizational performance (Heathfield, 2007).

Multisource problems in employee performance appraisal

Most organizations have embraced multisource performance appraisals and the implementation of 360 degree performance appraisal is one of the most common multisource performance appraisal systems. Multisource performance appraisal systems are aimed to garner data from diverse sources as opposed to traditional performance appraisal that collect information from specific sources. Scholars have criticized the multisource performance appraisal systems on the grounds of being subjective and prejudiced as individual traits,behaviors and performance are rated by other individuals. Furthermore, the ratings are planned and are not associated with the completion of tasks or objectives. The fact that such ratings are systematically planned to be held for all employees during a specific time may lead to judgments on insufficient information. Furthermore the process is compulsorily linked with incentives or performance that may sometimes be an external variable. This is usually the case in firms that use performance related pay as a component (Law, 2007).

One of the main problems in multisource performance appraisal systems is that of authenticity in ratings. Furthermore multisource performance appraisals use collecting feedbacks from diverse sources. The main problem is that in most cases the feedback is not accepted by employees and hence the purpose of the performance appraisal is defeated.Furthermore multisource performance appraisals use self rating, supervisor rating and peer-rating for employee feedback and future development. Often these ratings are contradictory to each other. The fundamental issue with self rating is that they often negate the ratings provided by the supervisor. Critics, however maintain that discrepancies in employee and managerial ratings can help in the development of healthy negotiations to resolve differences. Such discussions may be focused to clarify employee goals and also chalk out a future path for enhancing individual employee performance (Kline & Sulsky, 2009).

Another problem lies in the ratings. Raters are not held accountable for their ratings and this may help in distorting the ratings. Furthermore, linking accountability with ratings makes individuals provide lenient and positive ratings. Despite this, even in multisource performance appraisals, most employees seriously consider the ratings of their supervisors only thereby ignoring the ratings of peers and their own ratings for improving performance. Scholars have also determined that the ratings of colleagues or peers have been found to be extremely unreliable while using multisource performance appraisal (Spence & Keeping, 2011). Peers have access to diverse information about the rate. Despite this, academic studies have determined that peer ratings are superior as compared with self – ratings of individuals (Payne et al. 2009). Furthermore, studies have also established that employees would accept feedback from their colleagues for the purpose of development as compared with the purpose

of evaluation. Due to these barriers, multisource performance appraisal may not yield accurate outcomes of employee performance.

Ethical issues in employee performance appraisal ratings

Most organizations completely ignore the ethical aspect to performance appraisals. Scholars acknowledge this issue and maintain that for an effective performance appraisal process it is essential to integrate ethics into the performance appraisal process. They have furthered that it is essential for organizations to respect every individual employee and during the performance appraisal process there must be mutual respect between the rater and the employee whose performance is being appraised. The performance appraisal process should be authentic and supervisors should not be prejudiced while giving ratings. Also, the performance appraisal process should reflect transparency in decision making by taking into account that employees are communicated on certain relevant decisions (Sillup & Klimberg, 2010).

Implementing performance appraisal is highly challenging due to subjective judgments made about individuals leads to an opportunity for ethical transgressions especially in today’s competitive world. Furthermore, most performance appraisals are linked with decisions related to compensation rather than linking employee development and organizational performance simultaneously. Hence, this leads to the creation of ethical dilemma for both the employee as well as the rater. With this is the associated issue of the absence of objectivity in ratings. Ratings may be extremely harsh or lenient leading to prejudiced ratings of employees. Furthermore, some organizations hold discussions with the employee and the person rating the employee without specifying any parameters for employee performance appraisal. These lead to several ethical issues in employee performance appraisals (Butchner, 2007).

Recommendations

The above discussion on performance appraisal ratings and its evident barriers infer that most performance appraisal systems are comprehensive and detailed institutional systems that are being performed as a management function. However, the development of performance appraisal systems is a critical rhetoric due to bureaucratic controls. In practice, organizations modify, evaluate, develop and if necessary even abolish performance appraisal if they do not help in enhancing and developing the overall performance of the organization. Sadly, critiques have not pointed out an alternative process that can help in enhancing and providing suggestions, recognize the needs for training and mentoring, develop employee motivation and provide evidence that engaging in performance appraisals help in justifying potential enhancements in developing employee careers and furthering overall growth of the employee and the organization (Scheuer, 2014). It is recommended to imitate a culture of ethics into the

performance appraisal system and at the same time design more stringent performance management systems that help in mitigating the issue of rating errors. Further studies should be conducted to determine whether there are some situations in which the rating errors may be mitigated.

Conclusion

Performance appraisal of employees is a significant manner in which the feedback of other individuals including peers and supervisors can be strongly associated to augmenting employee motivation. It is also an opportunity to clearly communicate objectives to attain long term performance of individual employees thereby leading to career enhancement and growth. Despite this, performance appraisal process has several loopholes that require being resolved. One of the main issue is that of biased ratings of supervisors as well as peers. Another problem is the violation of ethics in evaluating employees’ performance. Furthermore, most performance appraisal reviews are not objective and are based on experiences that may not be related to employee performance. Sadly, academic scholars have not yet found any suitable answer to resolve these gaps in performance appraisal. Hence, for most performance appraisals in practice, getting higher ratings is largely dependent upon the relationship an employee shares with the immediate supervisor (Spence & Keeping, 2011).