Relevance of Performance Appraisal in Organizations: A Literature Review
Relevance of Performance Appraisal in Organizations
In the tight competition that is present in business organization, there is always a re-call on the organizations aims and goals. For most of the organizations, it is better to make a slow improvement than jump into the easy success which eventually follows with a drastic failure. In the international business, strategy can be the main theme of the business leaders and one of the various strategies is to make use of their people’s knowledge, skills, and potential. In this sense, conducting the performance appraisal among the people is an effective approach to increase the people’s capacity to work.
Empowering the people can be the basic rule in human resource department and the managers are focused on the strategies and policies on how to improve the employees. Organizations in various service and manufacturing industry are aware about the idea in the performance appraisal wherein there is an evaluation of skills and developing the areas that needs to be improved. Upon the implementation of performance appraisal, there are many recognizable benefits.
Probably, the main problem that more organizations encountered in the era of globalization is how to maintain the market leadership in the global fast-food industry. Nowadays, there are many organizations are in tough competition in the same industry. The main issue is the application of strategy in the international market. Businesses already developed the various products through experimentation and researches and providing the excellent type of service. But the success in the service is considered as a short-term success in which the company is truly aware of. Therefore, the performance appraisal for every employee is implemented and is sought to assist the people towards the improvement. Appraisals are made to meet the needs of the employees towards improvement through assessing their past performances in the company (Price, 2007).
In appraising performances of employees, personality play crucial role. A personality is the combination of psychological traits that describe a person (Stelle, 2003). Attribution Theory builds from perception (Stelle, 2003). This theory states that people judge others based on the meaning attributed to their behavior. This theory affects managers in that subordinates tend to attribute organizational performance to the characteristics of the manager. When an organization does well, people give credit to the manager's ability, however when the same organization does poorly, the manager's ability is called into question.
Moreover, personality perception is used as a factor in personnel selection. Before, the use of personality inventories was thought to be of little use in personnel selection (Ash & Stevens, 2001). Researchers now recognize that personality is important (Hogan et al., 1996), predictive of job performance and career success over periods of several years (Hogan, 1998 and Judge et al., 1999), and that the predictive ability of some personality dimensions on performance measures can be gene realized across occupations (Barrick and Mount, 1991; Mount and Barrick, 1995).
The use of personality inventories for personnel selection is receiving increasingly positive attention due to the person-versus-situation debate which has largely ended and there is recognition that personality plays an important role in the prediction of criterion (Hogan, 1998 and Hough & Schneider, 1996). Further, personality researchers have begun to agree on a five-factor model of personality that can serve as taxonomy for investigating personality-related issues (Digman, 1990). These five factors of personality are Extraversion, Emotional Stability (Neuroticism), Agreeableness, Conscientiousness, and Openness to Experience.
Research by Barrick & Mount (1991), Tett et al. (1991), and Mount & Barrick (1995) has demonstrated the usefulness of the five-factor model for predicting job performance. While it is true that these studies were investigating the predictive ability of personality for job performance, if a relationship can also be shown between personality and preferences for manager-subordinate relationships in first-line manager's jobs, personality inventories will be-come even more valuable as selection instruments (Ash & Stevens, 2001).
Further, researchers have assumed that increased contact between members of different groups will improve intergroup relations (Barnum, 1997). It is unclear, however, whether increased contact between members of different groups has a positive effect on the impressions they form of each other.
Given the fast-moving pace at which business are undergoing structural and technological changes, organizations are facing the pressure of competitiveness in the market, industries have looked for ways to outperform and stand out from the competitors. To compete, business leaders have to continually improve their performance by reducing costs, innovating products and processes, improving quality, productivity and speed to market.
With this, employee’s individual performance is deemed important in understanding organizational behavior. A number of factors impact on individual performance: personality, attitude, values, perceptions, ability and motivation. Robbins et al. (1992) emphasize the importance of ability-job fit, rather than pure assessment of ability, as being an important determinant of job performance and satisfaction. Fischer, Schoenfeldt and Shaw (1997) state that performance appraisal should be used as an employee development tool to identify areas of skill and ability deficiency to improve the focus for training and development, as the possession of appropriate skills and abilities are key elements in improving individual performance.
The knowledge of the theories on personality performance and individual skills enable decision-makers manage an organization effectively. Managers are interested in human behavior because they desire to predict behaviors at work (Stelle, 2003). By knowing how people react, managers can mold the behaviors that concern them such as absenteeism, productivity and turnover. Human behavior at work can be viewed on either an individual or group level. Individual characteristics include attitudes, personality, perception, learning and motivation. Group characteristics include norms, roles, team building and conflict.
The main objective of the appraisal is to determine the employee’s potential, learning the training needs, and the appropriate procedures for the career planning. In addition, appraisal system may be used to determine whether the employees deserve to receive the reward or incentive for their performance (Kellaway, 2007). The aim for development cannot be ignored because it focuses on maintaining the high level work and the use of appropriate skills towards the excellent service and in achieving the organizational objectives (Rafferty, 2008). It is also believed that employees who encountered the appraisal schemes can experience an impact in their area of work as well as planning in their future careers (Parsa, 2004).
Ash, R. A. & Stevens, C. D. (2001). Selecting Employees For Fit: Personality And Preferred Managerial Style. Journal of Managerial Issues, Vol. 13.
Barnum, C. C. (1997). A reformulated social identity theory. In B. Markovsky, M. J. Lovaglia, and L. Troyer (eds.), Advances in Group Processes, 14: 29-57. Greenwich, CT: JAI Press.
Barrick, M. R. & Mount, M. K. (1991). The Big Five Personality Dimensions and Job Performance: A Meta-Analysis. Personnel Psychology 44:1-26.
Digman, J. M. (1990). Personality Structure: Emergence of the Five-Factor Model. Annual Review of Psychology 41: 417-440.
Fisher, C. D., Schoenfeldt, C. F. & Shaw, J. B. (1997). Performance appraisal, Human Resource Management, 3rd edn, Houghton Mifflin, Boston, pp. 449-502.
Hogan, R. (1998). Reinventing Personality. Journal of Social and Clinical Psychology 17: 1-10.
Hough, L. M. & Schneider, R. J. (1996). Personality Traits, Taxonomies, and Applications in Organizations. In Individual Differences and Behavior in Organizations. Ed. K.R. Murphy. San Francisco, CA: Jossey Bass. p. 31-88
Judge, T. A., Higgins, C. A. & Thoresen, C. J. (1999). The Big Five Personality Traits, General Mental Ability, and Career Success Across the Life Span. Personnel Psychology 52: 621-652.
Kellaway, J., (2007). “Initiatives Delivering Excellence and Safety Report”, Reward Scheme, Accessed 08 March 2011, from http://www.merseyfire.gov.uk/aspx/pages/fire_auth/pdf/CFO_91_07_appendix.pdf
Mount, M. K. & Barrick, M. R. (1995). The Big Five Personality Dimensions: Implications for Research and Practice in Human Resources Management.
Parsa, M. (2004). “Council Member Appraisal”, Management Board, Accessed 08 March 2011, from http://www.dorsetforyou.com/media/pdf/d/0/Cncl_-_14_Sept_04_-_Item_17.pdf
Price, C. (2007). “Staff Appraisal Scheme”, Human Resources Policy Statement, Accessed 08 March 2011, from http://www.mdx.ac.uk/Assets/staff_appraisal.pdf
Rafferty, J., (2008). “Performance Appraisal Scheme Guidance”, Accessed 08 March 2011, from http://www.scra.gov.uk/cms_resources/employee%20appraisal%20guidance%2007.pdf
Robbins, S. P., Millett, B., Cacioppe, R. & Waters-Marsh, T. (1998). Organisational Behaviour: Leading and Managing in Australia and New Zealand, Prentice Hall, Sydney.
Stelle, T. (2003). Human Behavior in the Workplace. Business Administration. Accessed 08 March 2011, from http://www.geocities.com/tstellebusad/13HumanBehavior.htm
Tett, R. P., Jackson, D. N. & Rothstein, M. (1991). Personality Measures as Predictors of Job Performance: A Meta-Analytic Review. Personnel Psychology 44: 703-742.