PERFORMANCE APPRAISAL AND ITS EFFECT ON EMPLOYEES

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

Performance appraisal is the critical and clinical evaluation of employees of an organization. It may further be described as the total or comprehensive sizing of an employee based on the performance of his task or job. It exposes the capabilities, skills, capacities and talents for development in an employee. Hence, some employees are nicknamed high fliers and potential managers, while some are known as managerial materials.

Performance appraisal is the evaluation of employee’s job performance and contribution to organization. Performance appraisal is also defined as a systematic periodic evaluation of the worth of an individual to the organization N. Bature (2010).

Total worth of an individual to his organization is in terms of a combination of factors, some of which are quantitative, such as the number of pieces he produces an hour, number of absence from work; and some of which are qualitative, such as the goodness of his work or his attitude on the job.

In this case, performance appraisal can be said to be the process of assessing quantitative and qualitative aspects of an employee’s job performance.

It is a review discussion of an employee’s performance of assignment, duties and responsibility.

2.1 THEORETICAL FRAMEWORK

Several theories have highlighted the importance of performance appraisal and its impact on employees’ productivity. McGregor (1957) stressed that performance appraisal is designed to meet three needs; One for the organization and the other two for the individual. For the organization, it provides systematic judgments to back up salary increase, transfers, demotions and terminations, while for the individual, it is a way of telling a subordinate how he is doing and suggesting needed changes in his behavious, attitudes, skills or job knowledge. It makes him know “where he stands” with the boss.

Secondly, for the individual, it is used for coaching and counseling the individual by the supervisor.

The work of management theorists over the last hundred and fifty years can be used to argue the case for an in depth theoretical.

The following also are two theories that linked performance appraisal to employees’ productivity:

The goal-setting theory.
Expectancy theory.

Goal-setting theory had been proposed by Edwin Locke in the year 1968. This theory suggests that the individual goals established by an employee play an important role in motivating him for superior performance. This is because the employees keep following their goals. If these goals are not achieved, they either improve their performance or modify the goals and make them more realistic. In case the performance improves, it will result in achievement of the performance management system aims (Salaman et al, 2005).

Expectancy theory had been proposed by Victor Vroom in 1964. This theory is based on the hypothesis that individuals adjust their behavior in the organization on the basis of anticipated satisfaction of valued goals set by them. The individuals modify their behavior in such a way which is most likely to lead them to attain these goals. This theory underlies the concept of performance management as it is believed that performance is influenced by the expectations concerning future events (Salaman et al, 2005).

Federick Taylor, while working as a gang boss in Midvale, USA became determined to eradicate ‘systematic soldiering’; an attempt by workers to do no more than was necessary. Taylor developed a strategy where particular jobs were studied, then broken down into individual tasks, which had to be completed exactly as stated thus helping the process of performance appraisal. Workers were allocated specific tasks, and were not allowed to deviate from that task at all.

Henri Fayol, the ‘Father of Modern Management Theory’ was interested in how management worked, and could be applied on a universal basis geared towards a better performance appraisal in an organization.

Druker’s work followed on from that of Fayol. He had categories of ‘Management Operations’ as follows;

· Setting Objectives: Senior Managers organize objectives into targets. This cascaded down to more junior managers.

· Organizing: The workload is divided into manageable actives and jobs.

· Measurement: Comparing performance against targets.

2.1.1 PURPOSE AND IMPORTANCE OF PERFORMANCE APPRAISAL

Performance appraisal is very important in assessing the quality of the employees in an organization. It assesses the caliber and qualifications of the work force in relation to the performance of their assigned duties or tasks. Performance appraisal must genuinely and sincerely involve the appraised in the entire appraisal. An appraisal must be within a specified time period or duration, say from January to June or from July to December. In some organizations, appraisals are done annually and in some organizations twice annually.

There are many reasons why employees are evaluated in relation to the task they perform. The purposes are enumerated thus:

(a) The organization need to determine how well the employees are carrying out their tasks.

(b) The organization needs to measure each employee’s performance in order to reward those who are doing well and punish those who fall below expectation.

(c) The organization must measure an employee’s potential for a possible promotion, demotion or dismissal as the case may be

(d) The organization needs to assess an employee’s attitude

(e) The appraisal process tends to fortify manager-subordinate relationship, thereby monitoring a harmonious atmosphere; and

(f) It serves as a training and development guide for each employee.

2.1.2 WHO DOES THE PERFORMANCE APPRAISAL?

According to Bature (2010), performance rating or appraisal involves two distinct processes; observation and judgment. She opined that the prevailing practice in nearly all private and public organizations is to have the superiors and managers of each department evaluate the performance of each of their subordinates. She continued by saying that any one or a combination of any of the following can do it:

i. Self evaluation

ii. Subordinate evaluation

iii. Peer evaluation

iv. Superior/supervisors’ evaluation

Self Evaluation: Self – evaluation, also called self-appraisal, is one in which the individual is asked to assess his or her own job performance as a part of the basic data for judging the worker’s job performance. The employee is usually asked to assess his or her won weaknesses and strengths as well as area of improvement.

No doubt, self-appraisal is essential to improving one’s skills, for productivity in an organization and to overcoming one’s weakness, and assisting the worker in personal development.

Appraisal by Subordinate: This is a situation in which the superior in an organization have their performance evaluated by their subordinates. This type of evaluation takes place more in tertiary institutions such as universities than in other form of organization. In Nigerian Universities, for example, students evaluation is probably one of the most commonly used methods of evaluating a lecturer’s performance in the classroom. Like the other methods of evaluation, students’ appraisal also has its positive and negative aspects. For instance, Bergguist and Phillips (1975) argued that if effectively conducted, student evaluation produces data allow for valid comparisons for teaching performance of lecturers. The reason for this has been lucidly made by Miller (1975;31:32) when he stated that:

Students are in the best position to judge whether course objectives are clear and the course is well organized, whether the lecturer explains clearly, allows dissent, is patient, is interested in students, and how he compares with other lecturers with whom they have taken courses.

Peer Evaluation: This is a method that requires colleagues to judge or evaluate one another’s job performance.

Generally speaking, co-workers observe many things that the supervisor would not have time to observe. The employees in the organization know who is working hard or not. It is base on this that they would make their judgment, which may be favourable or unfavourable.

Superior’s Evaluation of Subordinates: This is the most widely used source of appraisal information. Bernardin and Beatty (1984), for example, stated that surveys show that up to 93% of appraisal exercises ask the immediate superior/supervisor to take sole responsibility for the appraisals.

2.2.2 PERFORMANCE APPRAISAL METHODS

Over the years, a considerable number of appraisal methods have been developed. There has been a continuing effort to make them more objective and valid.

The human resource department handles the performance appraisal as they are concerned with sending the evaluation forms to the employees.

As a general rule, supervisors should evaluate the subordinates. According to N. Bature in her book (Human Resources Management), she said that there are many methods of appraisal but only the most four considered methods she mentioned and explained, namely:

i. Merit rating

ii. Written assessment pattern

iii. Check Lists

iv. Management by objectives (MBO)

Merit Rating: The criteria used in this rating are in terms of employee’s features, such as personality traits, or qualities such as loyalty, cooperation, reliability, etc. These features are marked according to a scale, e.g. A, B, C, D and E.

Where:

A = Excellence

B = Very Good

C = Good

D = Fair

E = Poor

The problems associated with this system is that there is no satisfactory way of quantifying such factors since different people see personality or qualities in varying ways, each tending to mean something slightly different and attaching varying degrees of performance to them. One fact about the system is that in most cases, the traits are not relevant to the job and as a result uniformity of evaluation is lost.

With this method, supervisors hardly discuss the qualities of the subordinates with them, as the criteria and rather subjective. Another weakness is for the appraising supervisor to go for a middle-of-the-road rating which results in average assessment in terms of the overall assessment.

Written Assessment Pattern: This entails making comments on the way the subordinates are perceived by the superiors in carrying out their task. The written assessment pattern is similar to the merit rating method as the main difference lies in the method of approach. The written assessment pattern is in a short form of language, while the merit rating method is graduated into five point scale. Also, the written assessment method requires the appraising officer to put down in writing his own views in respect of each of the set criteria. Since the set factors of personality traits or qualities are the basis of the assessment, one would easily agree that subjectivity would play a major role in the assessment of the employees. It therefore, means that the merit rating and assessment methods do not meet the standard of a good appraisal which should be useful to management. Drucker (1975) opinioned that “appraisal must be based on performance. Appraisal is judgment and judgment always requires definite standards.

To judge means to apply set values, and value judgments without clearly defined standards are irrational and arbitrary. The above is a nutshell x-rays what an ideal and objective performance appraisal should target.

Human resource managers have therefore, argued that, thought the written assessment system and the merit-rating method contain a good deal of characteristics needed for staff appraisal, they are however, not immune from the subjectivity and therefore suggested on objective appraisal, widely known as management by objectives (MBO).

Check Lists: To reduce the burden upon the appraiser, a check list system can be utilized. The rater does not evaluate performance, but merely records it on a series of questions concerning the employees behaviour, the rater checks ‘yes’ or ‘no’ responses. The rater is generally not aware of the values associated with each question, but because he or she can see the positive or negative connection of each, bias can be introduced.

Management by Objectives (MBO) or Appraisal by Result: Management by Objective is also described as a philosophy of management.

It seeks to reduce external controls to a minimum and maximize internal motivation through joint goals setting and self control.

Its emphasis is on results. The better the results produced, the higher rated the subordinate-employee will be for promotion, training and development.

The Management by Objective method is anchored on the following cardinal principles:

i. Both the manager and the subordinate jointly set specific objectives to be accomplished for which the employee is held directly responsible;

ii. The manager and subordinate jointly decide how the performance is to be measured;

iii. The manager and the subordinate jointly develop short term targets to be accomplished within a given time frame;

iv. The evaluation focuses on the results that have been achieved in accomplishing these goals.

In order for this method to achieve good results, it is absolutely necessary that the following points are observed;

a. The objectives of the organization should be well known to all stage and every staff should know how his or her work fits into the overall objectives of the organization.

b. There should be a detailed job description of all the jobs in the organization and targets of performance in terms of quantity and quality of work, and the time needed to accomplish them should be stated.

c. The specification of each job should be clearly stated and the organization must ensure that all job holders possess the necessary attributes for their jobs.

d. Appraisal should be taken as a standard rather than the exception. Objectivity appraisal should highlight and stress strengths and weaknesses and how those areas can be strengthened.

Management by Objectives (MBO) was an idea expounded by Drucker- encouraging and advocating total participation by all levels of management in setting the objective of an organization. It has the following advantages:

i. The need to clarify objectives is stressed and suggestions for improvement are obtained from all levels of management.

ii. All managers have a clear idea of the important areas of his work and standard required.

iii. The performance of staff can be assessed and their needs for improvement highlighted.

iv. Managers have to plan to achieve results which are a means to achieving growth and profits.

The disadvantages of Management by Objectives are summarized thus:

i. It takes time to be effective

ii. Too much paperwork and difficulty in measuring principal or key operations.

iii. Achieving objectives may be at the expense of organizational goals, e.g. cost reduction programmes have been achieved by deferring maintenance.

iv. Some organizations tend always to raise targets; if these agree too high staff become frustrated.

v. Staff appraisal are sometimes made on personal traits rather than on performance

vi. Some organizations have geared their remuneration packages to appraisal by results.

vii. It becomes difficult to set measurable objectives for staff groups who only exist to help the line managers achieve their results.

viii. Review and counseling of managers may be ineffective.

ix. Some employees avoid responsibility and objectives forced on them may lead to ill-feeling.

x. The appraising staff were not trained on appraisal techniques and methods, they were not motivated to make the system work and tended to treat it in a mechanized form.

MBO has some inherent problems which may arise if the objectives are not realistic and the system may even fail if it is not pursued with the full support and understanding of the management team.

In the light of the above, managers must not only be involved in defining their own objectives, but must also be receptive to comments, criticisms and suggestions from their subordinates.

There must be in place an effective communication channel in the organization.

2.2.3 PROBLEMS OR ERRORS OF PERFORMANCE APPRAISAL

In evaluating employees, a number of common problems or errors often arise, namely:

i. Halo Effect

ii. Influence of the job

iii. Leniency or strictness Tendency

iv. Central Tendency

v. Misconception

vi. Recency

vii. Other biases

The Halo Effect: The halo effect is the fault of human nature. This may be as a result of love or hate at first sight. The rater or supervisor may give high score to the ratee whom he has sympathy for or low score to the ratee whom he does not like irrespective of the ratee’s performance.

Influence of the job: Performance rating is designed to evaluate how well an individual does on a particular job. In some organizations, it is common to give managers on higher-paid jobs, higher ratings because of their position.

Leniency Or Strictness Tendency: In performance appraisal, the tendency to be too strict or liberal could result in biased judgment leading to unearned reward or punishment to the appraisee. Leniency or strictness tendency should be avoided in all organization.

The Central Tendency: When the superior or the appraiser does not have adequate information on the employee or on the item for appraisal, he may want to avoid being involved or committed and in such a situation, awards average marks to the appraisee. There is a need in this case to keep adequate records of employees in organization.

Misconception: There is a serious misconception that managers and other participants charged with the conduct of performance appraisal have already mastered the skills required in the process. This can be misleading as many evaluators have been found to lack skill, training, experience and ability to handle performance appraisal procedures and techniques effectively.

Recency: Unless managers keep regular records of each subordinate throughout the year, they may be thinking about performance over the last few days or weeks. This is known as recency error and it can work in favour or against a subordinate, depending on what has recently occurred.

Others: This could be on the ground of sex, religion, tribe and so on. Experiences have shown that some supervisors do not feel comfortable when a female worker is an achiever. Discrimination in form of religion is rampant. Ethnicity could cloud the minds of some supervisors in performance appraisal system. Management will do well and also achieve the organizational goal, if they avoid such demoralizing influences coming in the way of genuine performance appraisal.

2.2.4 THE MERITS AND DEMERITS OF PERFORMANCE APPRAISAL

Performance Appraisal could be an effective source of management information, given to employees. It is focused on contributions to the organizational goals. Some forms of these reviews include the question "What organizational goals were contributed to and how?"

The Outcomes of performance appraisal can lead to improvements in work performance and therefore overall business performance, for example increased productivity or customer service.

N. Bature (2010), outlined six (6) different advantages and five (5) disadvantages of performance appraisal for employee and organization. These are;

Advantages

(a) It provides a basis upon which the employee knows he will be evaluated

(b) It provides information for management decisions concerning improvements in remuneration, promotions, transfer and dismissals.

(d) It helps in discovering the good and bad traits among employees

Besides these benefits, performance appraisal can help to identify inefficient work practices or reveal potential problems, which are restricting the progress and productivity of the company.

Disadvantages

(a) Performance appraisal programmes demand too much from the superiors

(b) Personal values and biases can replace organizational standards

(d) Standard and rating tend to vary widely and unfairly

(e) Some of the managers lack good training on the techniques and methods of appraisal.

2.3 EMPIRICAL STUDIES

Performance Appraisal process can also be a bitter process which can create emotional pressures, stress and sometimes can adversely affect the morale and lead to demotivation. Performance appraisals are often time consuming and use incorrect methods to measure performances. They are generating false results and the decisions taken can be politically influenced.

The empirical evidence and example to support these points mentioned above would be the case of Interweb Satcom Limited employees, Abuja. The appraisal of Interweb Satcom Limited employees are based on the amount of work they do, the number of sites they visited, the average time they spend on each site. But if analyzed, all these factors depend on other factors like the response of the site owners, the nature of the job they did on site etc. which are often not considered during appraisals.

When an employee is being aware of all these secondary factors that have not been considered when they are assessed, the situation can create stress and dissatisfaction.

The University of Abuja’ student material (Human Resources Management Unit1), outlined how to reduce Errors in the performance appraisal process;

a. Constructive attitudes by superior and the outcome not predetermined.

b. Participation in discussion and decision of the subordinate should be of a high level

c. Mutual approach to solving problems

d. Opportunity for self-appraisal encouraged, so managers can be encouraged to develop themselves

e. Appraisal must be a regular activity. Twice a year is ideal

f. Staff remuneration must be divorced from objective appraisal of performance

g. Each employee must understand how his own objective relates to the broader objectives of the organization and how the attainment or otherwise will affect the organization.

2.3.1 APPRAISING REPORTING SYSTEM OF AFRICA INDEPENDENT TELEVISION (AIT)

Having discussed the different methods of appraising employee performance, it will be necessary to know how the various ways can be reported. There are two known systems for reporting performance appraisal namely;

Open reporting system

Confidential or close system

With open reporting system, the supervisor makes his report known to the subordinate being evaluated by asking him to make any comment he feels appropriate. Having taken the decision to implement systematic appraisal, it has to be decided whether it will be kept secret from the appraisee or whether the completed appraisal form will be seen and signed by the appraise.

C.A.J. Aniebo (1981) condemned the old reporting system practiced in Nigeria as an archaic and identified a number of flaws in the new open reporting system such as the superior, inferior relationship between the report and the subordinate and the “plan ignorance” of most manager involved in the appraisal of employees. He recommended a new approach to open system of staff performance appraisal, which fundamentally presuppose the setting of machinery for a normal open reporting system and includes as relevant formal, knowledgeable and enlightened reporters, pragmatic and impartial decision makers.

Confidential reporting system is the system of secretly appraising the performance of employees without his comment. The subordinate is not allowed to know what is said about him. Victor I. Fep. (1976), said that “in many quarter it was regarded as a colonial hangover which have been scrapped with the attainment of independence”. According to him the system succeeded, with the white colonial supervisors, who as foreigners issued fair and reasonable reports on their subordinates.

2.3.2 BRIEF HISTORY OF AFRICA INDEPENDENT TELEVISION (AIT)

DAAR Communications did not start broadcast operation until 1994, six years after incorporation. This was due to legislative initiative in Nigeria’s broadcast sector. It was not until August 24, 1992, about fifty years after the advent of broadcasting in Nigeria that the government promulgated Decree No. 38 which deregulated the ownership of the electronic media in the country.

Following this piece of legislation which ushered in a new era of private ownership of Radio and Television stations, DAAR Communications applied for Radio, Television and Direct Broadcasting by satellite license. The license was subsequently granted. It began full commercial broadcast operations on September 1, 1994 on its high profile radio channels with the call sign, Raypower 100.5, the first private independent radio station in the Federal Republic of Nigeria.

Coverage: AIT beams quality programs round the clock which are down-linked and redistributed in Africa, the whole of America, Mexico and the Caribbean. AIT’s in-depth coverage aims to keep global viewers fully in tune with the soul of an African broadcaster offering premium quality service.

Transmission schedule for Daar’s services: DAAR Communications Limited broadcast stations are on air 24 hours daily. The internet company also provides a 24 hours service.

AIT: December 6, 1996 heralded the coming of a star in global Satellite Broadcasting, Africa Independent television channel 21.
AIT provides a fresh slant to TV broadcasting with a unique programming theme that shares the African Experience with the wider global community.

Management Structure: The management structure allows for autonomy in the running of the distinct services that make up the broadcast company, Raypower 100.5, Raypower 2 106.5FM, AIT, and Daar Internet with separate general managers for each of the stations.