Effects of Performance Appraisal on Employee Attitudes

Introduction
If one reads few articles on performance appraisal, he will soon discover that this is a topic about which huge arguments are kept. One can find opinions varying from performance appraisal being “so inherently flawed that it may be impossible to perfect it” [1], to “the most crucial aspect of organizational life” [2].

This work is set to demonstrate big variety in opinions about performance appraisal and related activities. Additionally, a link between performance appraisal practices and employees’ attitudes, behavior, development and improvement within organization is portrayed. This work also wants to show that if performance appraisal is done properly, it may have very positive effects on the employees and thus performance of the company.

In this paper, a closer look will be taken at performance appraisal as a whole; some recent as well as older views on appraising will be presented, including definition of traditional and developmental approach. Most commonly used performance appraisal techniques will also be described.

Subsequently, employee attitudes and behaviors will be discussed; what those are, how they form and which are desirable ones. Job related attitudes, job satisfaction and job dissatisfaction, will also be covered.

Finally, focus will be placed on effects of performance appraisal on those attitudes and when it is suitable to use which performance appraisal technique to achieve a desired goal (attitude or behavior). Discussions about whether performance appraisal should or should not be linked to remuneration will not be omitted.

Performance Appraisal
Even though performance appraisal as a distinct management procedure dates from the time of World War II, in a broader sense, it is one of the oldest professions. [3] People judge themselves and they do judge other people as well.

Definition of performance appraisal
In organizational setting, performance appraisal (PA) is defined as “a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.” [3] Moorhead and Griffin (1992) describe it as “the process of evaluating work behaviors by measurement and comparison to previously established standards, recording the results, and communicating them back to the employee. It is an activity between a manager and an employee.” (p. 784) [4]

In companies, performance appraisal systems (PAS) began as simple methods for deciding whether or not the salary of an employee was justified. Later on, empirical studies [3] showed that pay rates were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have major influence. That resulted in progressive rejection of emphasis of performance appraisal on reward outcomes, and in 1950s, in the United States, its potential as a tool for motivation and development was recognized. The general model of performance appraisal, as it is known today, began from that time. [3]

If an appraisal within a company is carried out without any rules and prospect of things linked to it, it might cause severe troubles: not only can it damage climate at workplace and lead to decrease in productivity, it also can end up with ethical and legal problems. [3] Manager should always be aware of what he or she is doing and what consequences might it have when appraising performance.

In many organizations, appraisal results are directly or indirectly linked to remuneration. That means, the better performing employees get pay increases, bonuses, promotions; while those poorer might get some counseling, or in extreme cases, demotion, dismissal or decreases in pay. [3]

Oberg lists goals of performance appraisal programs, which are: help for supervisors to do a better coaching job; motivate employees by providing feedback on how they are doing; provide data for management decisions such as salary increases or decreases, transfers or dismissals; improve organization development by identifying people with promotion potential; and establish a research and reference base for personnel decisions. [5]

It should be also noted that performance appraisal is a part of a performance management which “includes activities to ensure that goals are consistently being met in an effective and efficient manner.” [6] Performance management includes many other practices besides performance appraisal, like employee performance improvement, performance development, training, cross-training, challenging assignments, career development or coaching. [7]

However, as was mentioned in the very beginning, there are scholars who consider performance appraisal useless and evil. Daniels says: “The research on performance appraisals has never shown that they improve performance.” Furthermore, he claims that the only reason why they are so prevalent in the workplace is that “they are a way to document poor performance – in other words, a step in the firing process.” Furthermore, he suggests that the best performance appraisal is one that is done every day. [8]