Factors Affecting Performance Appraisal
Performance appraisal is an important process for any organization, large or small. The effectiveness of a company performance appraisal efforts will depend on a number of factors, including how well documented and communicated the process is, training for managers and supervisors, the evaluation and analysis of results and ongoing improvement efforts.
Primary objective of a performance appraisal is to evaluate the performance of an employee, reward good performance with promotions and pay raises and set goals to help employees continue to improve. In reality, however, performance appraisals are affected by an array of psychological factors. Even when supervisors are working with a well-defined guideline to evaluate workplace performance, they can easily fall off track with results adverse to both the employee and the company.
Some common factors which affect a performance appraisal process are as follows.
- The Halo and the Horns: Sometimes subdivided into the halo and the horns the factor arises from the human tendency to over generalize. An employee who is good or outstanding in one or two areas will receive a “halo”.
- The Matthew Effect: It is somewhat similar to the halo effect, but more long lasting. In instances, a worker is permanently judged based on an early performance evaluation. If he fared well in the early evaluation, he will gain a positive footing than other employees and all of his work will be seen in a favorable light. If he did poorly, he will have a tough time gaining trust or a positive evaluation from his superior, who will judge all his future actions in light of an early impression.
- Relative standards of evaluation: One especially tricky performance appraisal factor is the relativity in the standards of evaluation. Many companies use subjective terms like “excellent,” “good” and “fair” to characterize performance.
- General Biases: There are many ways a supervisor can skew subordinate’s evaluations. Some supervisors exhibit the central tendency, rating everyone as about average and only deviating in an extreme situation.
- Documented Process: Effective performance appraisal is formal and not left to chance. More than just asking supervisors and managers to evaluate staff, effective systems provide step-by-step guidance and standardized evaluation forms for all managers to evaluate all employees.
- Communication: Communicating the performance appraisal process, not only to new managers but on an ongoing basis, can help remind all supervisors that the process exists, what it is, how it works and where to get advice and assistance if needed.
- Training: Supervisors and managers automatically know how to conduct performance appraisals. In addition, processes and philosophies at companies differ, so training and education is critical. Training should take place regularly to provide refreshers and updates on any changes to the process or the evaluation forms.
- Evaluation of Results: While performance appraisal generally focuses on one individual, looking at the aggregated results of performance appraisals can tell a company a lot about the general level of performance of its staff, areas where there may be training or development needs and trends within and between departments.
- Follow-Up and Performance Improvement: The greatest affect on performance appraisal effectiveness is how the business uses the results. Employees both individually and across the organization should use the appraisal system as a tool to improve performance.