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Employees’ Perception of Performance Appraisal System: A Case Study
Article · January 2012
DOI: 10.5539/ijbm.v7n2p73
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International Journal of Business and Management
Vol. 7, No. 2; January 2012
Employees’ Perception of Performance Appraisal System:
A Case Study
Francis O. Boachie-Mensah (Corresponding author)
School of Business, University of Cape Coast
Cape Coast, Ghana
Tel: 233-332-137-870
E-mail: [email protected]
Peter Awini Seidu
School of Business Studies, Takoradi Polytechnic
Takoradi, Ghana
Tel: 233-243-322-945
E-mail: [email protected]
Received: September 22, 2011
Accepted: October 11, 2011
Published: January 16, 2012
doi:10.5539/ijbm.v7n2p73
URL: http://dx.doi.org/10.5539/ijbm.v7n2p73
Abstract
Performance appraisals are essential for effective evaluation and management of staff. Since perceptions
influence people’s judgement and attitudes towards particular phenomena, it could be expected that the staff of
an educational institution might hold diverse opinions about the performance appraisal system in the institution.
This study focused on employees’ perceptions of performance appraisal biases or errors, and examined the
implications for developing and implementing an effective appraisal system in a polytechnic in Takoradi, Ghana.
The study also sought to identify pragmatic ways to ameliorate any appraisal biases that may be present in the
institution’s appraisal system. Data was collected from 140 employees of the institution, which included both
academic and administrative staff who had worked in the institution for at least two consecutive years, and
whose work had been appraised previously. A content validated semi-structured interview schedule was used to
interview the respondents. The data collected was analysed, using descriptive statistics, in order to address the
research questions. The results of the study indicate that employees of the institution perceive that the
performance appraisal system of the institution is affected by subjectivity, and is influenced by some major
errors. The findings have serious managerial implications for training, motivation and provision of resources for
effective performance appraisal. A major limitation of the study is that, due to financial constraints, it was
conducted in only one institution. Therefore, the findings may not be described as a reflection of the general state
of affairs in the other educational institutions in the country.
Keywords: Appraisal error, Attribution, Perception, Performance appraisal
1. Introduction
In today’s competitive business world, it is understood that organisations can only compete with their rivals by
innovating, and organisations can be innovative by managing their human resources well. The human resource
system can become more effective by having a valid and accurate appraisal system used for rating performances
of employees (Armstrong, 2003; Bohlander & Snell, 2004). Unfortunately, the number of organisations using an
effective performance appraisal system (PAS) is limited (Hennessey & Bernadin, 2003).
Perceptions of employees about the targets, outcomes and uses of performance appraisal (PA) results would be
beneficial depending on a number of factors. For example, employees are more likely to be receptive and
supportive of a given PA programme if they perceive the process as a useful source of feedback which helps to
improve their performance (Mullins, 2007). Employees are likely to embrace and contribute meaningfully to a
given PA scheme if they perceive it as an opportunity for promotion, and as an avenue for personal development
opportunities, a chance to be visible and demonstrate skills and abilities, and an opportunity to network with
others in the organisation. On the other hand, if employees perceive PA as an unreasonable attempt by
management to exercise closer supervision and control over tasks they (employees) perform, various reactions
may result. PA will be effective if the appraisal process is clearly explained to, and agreed by the people
Published by Canadian Center of Science and Education
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International Journal of Business and Management
Vol. 7, No. 2; January 2012
involved (Anthony et al., 1999). Without adequate explanation or consultation, PA could turn counterproductive.
In addition, staff motivation, attitude and behaviour development, communicating and aligning individual and
organisational aims, and fostering positive relationships between management and staff are essential for
successful appraisal (Armstrong, 2003).
In order to obtain accurate PA information, raters must provide objective and unbiased ratings of employees.
Due to difficulty in developing an accurate performance checklist, managers’ subjective opinions are frequently
called for. Many organisations use some combination of subjective and objective assessment for actual PA. Yet,
there are numerous problems in actual assessment of employee performance (Corbett & Kenny, 2001). The
existence of such problems suggests that PAS may be fraught with biases or errors, resulting in compromised
evaluations of employees’ accomplishments and capabilities. And the PAS of the institution of study might not
be an exception. For a PAS to be perceived as fair, it must be free of bias. It is known that appraisal errors can
harm perceptions of pay system fairness by confusing the relationship between true performance differences
(Miceli et al., 1991). The importance of effective PA in organisations cannot be overemphasised as appraisals
help develop individuals, improve organisational performance and feed into business planning. An
understanding of the phenomenon, therefore, in every sector of human endeavour is imperative. This recognition
has raised interest in studying people’s perceptions of the quality of PA in organisations (educational institutions
inclusive).
There, however, seems to be a paucity of credible data on the quality of PA in Ghana’s educational sector. The
Ghanaian situation is relatively unexamined in genre academic literature. This makes it difficult to fashion an
appropriate management intervention to address any existing problem, because the exact dimensions of the
challenge and its causes are not known. It is against this backdrop that this study was undertaken. It sought to
assess the level of perceived PA biases in the educational sector in Ghana by analysing employees’ perceptions
of PA in one of the ten polytechnics in the country. The study sought to examine PA from the perspective of
employees’ perceptions of errors with the view to gathering and analysing information that could assist in
development of innovative approaches to achieve both individual and corporate goals. Findings of the study
would help fill the gap in extant literature. The findings would also provide useful insights and guidelines for
enhancing the quality of PA in organisations.
2. Literature Review
2.1 The process and purpose of performance appraisal
Studies show that there are many approaches for evaluating employee behaviour and performance with respect to
job tasks and/or organisational culture. As a result, various applications of PA have left many managers in a state
of confusion and frustration with the employee evaluation process (Gurbuz & Dikmenli, 2007). This situation
seems to negatively impact the popularity of appraisal systems in many organisations. Most people support the
concept and purpose of PA, in spite of their concerns about the process and application of appraisal outcomes by
managers (Grote, 1996). The biggest complaint from managers is that they are not given sufficient guidelines to
assess people; and the biggest complaint from employees is that the process is not equitable and fair. PA
concentrates much in assessing past behaviours of employees, a situation some managers exploit to victimise
unfavoured employees (Bersin, 2008).
The appraisal process has been categorised into: (1) Establishing job criteria and appraisal standards; (2) Timing
of appraisal; (3) Selection of appraisers and (4) Providing feedback (Scullen et al., 2003). Early PA processes
were fairly simple, and involved ranking and comparing individuals with other people (Milkovich & Boudreau
1997). However, these early person-based appraisal systems were fraught with problems. As a result, a transition
to job-related performance assessments continues to occur. Thus, PA is being modified from being
person-focused to behaviour-oriented, with emphasis on those tasks or behaviours associated with the
performance of a particular job (Wellbourne etb al., 1998).
Regarding the purpose of PA, Cleveland et al. (1989) describe four types of uses of performance appraisal:
between person, within person, system maintenance and documentation. Between person uses are what have
been referred to as administrative purposes, consisting of recognition of individuals’ performance to make
decisions regarding salary administration, promotions, retention, termination, layoffs and so forth. Within person
uses are those identified in Management by Objectives (MBO), such as feedback on performance strengths and
weaknesses to identify training needs and determine assignments and transfers. PA also helps in organisational
goals, which are referred to as system maintenance uses. Finally, documentation purposes are to meet the legal
requirements by documenting HR decisions and conducting validation research on the PA tools. Some
organisations are attempting to meet all of these goals simultaneously while they continue to use tools that were
designed for one type of purpose (Wiese & Buckley, 1998). Jawahar and Williams’s (1997) findings suggest that
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Vol. 7, No. 2; January 2012
ratings collected for administrative purposes are more lenient than ratings for research or developmental
purposes. Although rating scale formats, training and other technical qualities of PA influence the quality of
ratings, the quality of PA is also strongly affected by the administrative context in which they are used (Murphy
& Cleveland, 1995). Effective managers recognise PAS as a tool for managing, rather than a tool for measuring
subordinates. Such managers use PA to motivate, direct and develop subordinates, and to maximise access to
important resources in the organisation to improve productivity.
2.2 Rater issues
Researchers have shown considerable interest in variables related to the individual doing the appraisal
(Lefkowitz, 2000; Levy & Williams, 2004; Robbins & DeNisi, 1998). One of the most studied rater variables is
rater affect (Levy & Williams, 2004). A general definition of affect involves liking or positive regard for one’s
subordinate (Lefkowitz, 2000). Forgas and George’s (2001) study suggests that affective states impact on
judgements and behaviours and, in particular, affect or mood plays a large role when tasks require a degree of
cognitive processing. In PA, raters in good mood tend to recall more positive information from memory and
appraise performance positively (Sinclair, 1988). Affective regard is related to frequently higher appraisal
ratings, less inclination to punish subordinates, better supervisor-subordinate relationships, greater halo, and less
accuracy (.Lefkowitz, 2000). Antonioni and Park (2001) found that affect was more strongly related to rating
leniency in upward and peer ratings than it was in traditional top-down ratings. This effect was stronger when
raters had observational time with their subordinates.
A second broad area related to raters is the motivation of the rater. Traditionally, researchers seemed to assume
that raters were motivated to rate accurately, and that the problems with the appraisal process involved cognitive
processing errors and complexities (Levy & Williams, 2004). This position has, however, been questioned,
leading to attempts to identify and understand other elements of raters’ motivation and how such motivation
affects the appraisal process. The issues involved include individual differences and the rating purpose on rating
leniency. Most practitioners report overwhelming leniency on the part of their raters, and this rating elevation
has been found in empirical papers as well as surveys of organisations (Murphy & Cleveland, 1995; Villanova et
al., 1993; Bernadin et al., 2000).
The role of attribution in the PA process has also attracted recent research attention on how the attribution that
raters make of ratees’ behaviours affect their motivation to rate or their actual rating (Struthers et al., 1998).
Raters consider ratees’ behaviours and their reputations when drawing attributional inferences and deciding on
appropriate rewards (Johnson et al., 2002). This implies that attributional processing is an important element of
the rating process, and these attributions, in part, determine raters’ reactions and ratings. Another aspect of rater
motivation has to do with rater accountability (Frink & Ferris, 1998). Klimoski and Inks (1990) posit that raters
distort appraisal ratings more when they are to be held accountable to the ratee for those ratings. They emphasise
that accountability can result in distortions of performance ratings. This view is confirmed by other research
findings (Mero et al., 2003; Shore & Tashchian, 2002). There have also been calls from practitioners to use
accountability as a means of improving the accuracy of appraisal ratings, increasing acceptance of the appraisal
system, and making the HR system more efficient (Digh, 1998).
2.3 Ratee issues
A second major focus of PA research relates to the role of PA in ratee motivation and ratee reactions to PA
processes. The research focusing on motivation is generally categorised as being about either (1) the links
between performance ratings and rewards or (2) those elements of the PA process which increase ratees’
motivation, such as participation (Levy & Williams, 2004; Goss, 2001; Campbell et al., 1998). One theme of
some recent work is that although merit pay systems sound like a good idea, there is very little evidence
indicating that they are at all successful (Goss, 2001). In spite of its intuitive appeal and theoretical support,
merit pay plans seldom reach their objectives (Campbell et al., 1998). Mani (2002) argues that while pay is an
important motivator along with recognition, work enjoyment, and self-motivation, very few organisations
actually link the PAS to pay or compensation in any clear, tangible way. Starcher (1996) contends that how well
employees perform is much more a function of the situational constraints they experience than their own skills or
motivation. But Levy and Williams (1998) argue that these situational constraints are not so important to exclude
social or motivational factors that have been quite clearly linked to employee satisfaction and productivity over
the years.
Roberts (2003) identified the significance of participation in the PA process as an antecedent of ratees’ work
motivation. The author suggests that participation is simply essential to any fair and ethical appraisal system.
Pettijohn et al, (2001) identify participation and perceptions of fairness as integral to employees’ perceptions of
job satisfaction and organisational commitment. They conclude that PAS can be used to actually improve
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Vol. 7, No. 2; January 2012
employees’ levels of job satisfaction, organisational commitment, and work motivation. Roberts and Reed (1996)
submit that participation, goals, and feedback impact on appraisal acceptance, which affects appraisal
satisfaction and eventually employee motivation and productivity.
Ratee reactions to PA has been categorised into: (1) reactions to the appraisal process, (2) reactions to the
appraisal structure or format, and (3) reactions to multi-source appraisal or feedback (Levy & Williams, 2004).
Regarding reactions to the appraisal process, Keeping and Levy (2000) argue that perhaps the best criterion to
use in evaluating PAS is the reactions of ratees. They claim that an appraisal system will be ineffective if ratees
(and raters) do not see it as fair, useful, valid, accurate, etc. Measuring appraisal effectiveness involves, among
other things, assessing perceptions of or actual rater errors and biases, rating accuracy and reactions of raters and
ratees about the PAS in place (Keeping & Levy (2000). Folger et al., (1992) identify three elements that must be
present to achieve higher perceptions of fairness: adequate notice, fair hearing, and judgment based on evidence.
In general, both raters and ratees respond more favourably to fair performance appraisal systems (Brown &
Benson, 2003).
With regard to how individuals react to elements of appraisal structure or methodology, Tziner and Kopelman
(2002) found that both raters and ratees responded more favourably to behaviour observation scales (BOS) than
they did to other scales, such as graphic rating scales or Behaviourally Achored Rating Scales (BARS). The
BARS is generally not well received by raters and ratees, and consistently ranks below the other ratings formats.
The value of BOS is that it allows the appraiser to play the role of observer rather than of judge. In this way, they
may more easily provide constructive feedback to the employee (Tziner & Kopelman, 2002). DeNisi and Peters
(1996) also examined the role of diary-keeping, and they found that raters react more favourably to PA systems
that employ diaries even though in many instances it is more work for them. Raters are better able to recall
performance information and are better able to discriminate among employees.
Despite the widespread use of the aforementioned methods, there are dissatisfactions and problems with the
feedback systems associated with single source PA (Gurbuz & Dikmenli, 2007). In response to the concerns
raised, considerable emphasis has been placed on developing multi-source feedback systems. It is useful to
implement a variety of the appraisal methods simultaneously in an organisation to a wide range of
job-performance information for effective decision-making. This gives credence to the use of 360-degree
appraisal (Schuler, 1995; Lepsinger & Lucia (1998; Hurley, 1998). Regarding participants’ reactions to
multi-source feedback, Waldman and Bowen (1998) propose that factors such as organisational culture,
credibility of raters, high rates of participation, and anonymity of ratings are likely to influence its acceptance.
Williams and Lueke (1999) also emphasise that knowledge of and experience with the multi-source system as
well as social support play an important role in multi-source system reactions. A supportive work environment
and an individual’s self-efficacy are the most important predictors of employees’ attitudes towards multi-source
feedback and frequency of developmental activities (Maurer et al., 2002). When individuals receive lower than
expected ratings, they respond quite negatively and this may influence their response to developmental activities
(Brett & Atwater, 2001). Generally, if participants do not perceive the system to be fair, the feedback to be
accurate, or sources to be credible, then they are more likely to ignore and not use the feedback they receive
(Facteau et al., 1998).
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