Recent performance appraisal developments and approaches

4.1 From control to development

During recent years performance appraisal systems have tended to move away from being primarily control and maintenance based and have moved towards an approach more concerned with motivational and developmental issues.

The performance appraisal focus has become one of linking corporate strategic objectives with an employees' personal aspirations and developmental needs and continually reviewing, developing and improving their performance and potential. Recognising this need performance appraisal systems were redesigned and re-launch with these new objectives as performance review and development systems. However, this approach needed managers to reappraise their role, their attitude, their style and the developmental skills they need to make a developmental culture work.

Consequently if any organisation is considering the introduction of a performance review and development system (particularly where a performance appraisal is or has been in place) it is most advisable for the organisation to first invest in getting attitudes and the culture right, and developing supporting management skills before performance review and development systems are introduced. Otherwise failure may be inevitable.

4.2 Openness

The performance appraisal procedure as a whole has become much more 'open' with both appraiser and appraisee being encouraged to develop mutually agreed targets, based on clearly communicated and understood corporate and functional objectives. The performance appraisal interview should also encourage the appraisee to give feedback on the procedure and the appraisers own performance with both parties having confidence to put forward judgments on the performance appraisal outcomes.

I.E. performance improvement is the result of a partnership with both parties accomplishments being recognised and rewarded.

This is a key principle of performance review and development systems.

4.3 Performance appraisal and behavioural standards and competences

The use of traits and non-performance related measures in performance appraisal interviews are being replaced by behavioural standards and competence definitions.

The competence definitions are specific, observable, and therefore measurable, terms that clearly define the behaviours and performance expected of employees. By structuring competences into increasingly complex 'levels of work' to reflect the role holders responsibility and expected higher levels of performance, performance appraisal rating scales can be used to provide both expected and actual performance improvement profiles.

This has resulted in performance appraisal interviews needing both the manager and employee to be very specific when describing behaviour, what has been achieved and what is required. The use of personal development portfolios and the concept of evidence is becoming more popular and makes the performance appraisal process much more objective. An employee would prepare for a review by collecting evidence of achievement in their portfolio. The same portfolio is also used to identify development needs and plan their activities. Indeed, performance appraisal documents are routinely included in many organizations personal development portfolios.

4.4 Performance appraisal and performance related pay

With the establishment of new and more objective performance appraisal standards, performance related pay schemes are being increasingly linked to the performance appraisal process. The idea being that through reward employees will be motivated to develop themselves and thereby enhance their productivity and financial rewards. However, the proportion of performance related pay varies greatly from one organisation to the other.

Whereas it is not uncommon for performance review and development systems to be separated from performance related pay, in the belief that development brings its own personal reward, which can be recognised by the organisation when opportunity presents itself.

4.5 360 degree feedback and self-appraisal

The emergence of 360 degree feedback, involving confidential inputs from peers and subordinates, is a growing performance appraisal trend (e.g., adopted by Tesco in 1987, Rhone-Poulenc Agriculture in 1992).

The use of self performance appraisal is also developing as a feature of performance management and performance improvement thinking.

4.6 Performance appraisal forms and paper work

Somewhat aging forms for managing the performance appraisal process are still in widespread use. Whilst forms will always be part of the performance appraisal process (and personal development portfolios where they form part of the process) their design should reflect advances in management thinking and more readily reflect the organizations developmental strategy.

As an alternative approach many organisations are emphasising, and indeed assessing, the manager's role in developing and improving the performance of their people. Therefore, the balance between formal and informal performance appraisal reviews is shifting. Some organisations do not issue performance appraisal forms, but merely a record sheet to record the performance appraisal date and participants in a review. Instead they provide performance appraisal guidelines that require the manager and employee to develop their own agenda, perhaps though with some core mandatory elements.

In this way the performance appraisal process is seen as a key opportunity for manager and employee to work together on achieving organisational and departmental results to mutual benefit.

4.7 Developing potential or correcting deficiencies

The development aspect of the performance appraisal interview continues to be a difficulty for many managers.

Those who see development as a value adding process, rather than an attempt to make up for some deficit, will use the performance appraisal process to look for ways in which the employee can progress to learn new skills that enhance their contribution to the organisation.

Those who use the deficit model, and talk only of training needs and performance problems, are limiting the performance appraisal process to past and current problems and shortfalls.

4.8 The three phases of performance management

There's a thought emerging that there are three distinct aspects to performance management, (Egan 1995).

The first is performance improvement. This is the day to day concern of the line manager (i.e. continuous informal performance review and development) who must ensure that all their employees are fully aware of what is expected of them, of how they are doing and of how they can improve and develop.

The second is the performance appraisal record that this process has taken place. It is completed during a relatively brief performance appraisal interview which effectively summarises what has already happened.

The third is a discussion of future reward, based on a recognition of achievement (maybe linked to attainment) but within an understanding of the organisation's capability to reward, i.e. performance related pay.

The key problem with all performance appraisal schemes and procedures is that they try to move the first aspect in with the second. One often cited case where all performance appraisal phases seem to have been combined successfully is that of IBM where their performance appraisal system is linked not only to merit pay determination but also to a counselling programme geared to employee development.

4.9 Developmental ownership

Increasingly the ownership of performance improvement and performance appraisal systems is moving to line managers, and their people, and away from operationally remote HRM professionals who merely play a supporting role.

This ensures that line managers become responsible for performance improvement, the performance appraisal and the supporting development processes (by making their performance appraisal, in part, based upon the developmental results they realise) and the employees performance appraisal, in part, being based upon the attitude they display towards their work, human relations and the developmental opportunities they are presented with.

Consequently performance appraisal, in the guise of performance review and development, is no longer seen as a threatening intrusion from unsympathetic outsiders but an internal process to deal effectively with real departmental issues.

For the first time people feel that their needs are being listened to and acted upon, and that a real forum exists to fairly advance their careers and career rewards.

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