Barriers to Effective Performance Appraisals

Read this article to learn about the Barriers of Effective Performance Appraisal in HRM with steps for overcoming barriers, Halo and Horn Effects, Reasons for Failure and Common Errors Involved with the Performance Appraisal Process.

Every organization undertakes performance appraisal, either formally or informally. Performance appraisal methods are not fool-proof.

There are strengths and weaknesses in every method of appraisal. Since every method involves judgements of one or other kind, there is scope for errors.

There are certain barriers which work against the effective appraisal systems. Some of these barriers are more pronounced in specific methods of appraisal; in some methods, these may be less pronounced. Identification of these barriers is essential so that suitable measures may be adopted to reduce their impact to a possible minimum level.

A: The barriers to effective appraisal may be grouped into three categories – 1. Faulty Assumptions 2. Psychological Blocks 3. Technical Pitfalls.

B: The two most important barriers or errors of performance appraisal are – 1. The Halo Effect 2. The Horn Effect.

C: Some common errors involved with the performance appraisal process are as follows – 1. Halo Effect 2. The Horn Effect 3. Leniency or Constant Error 4. Central Tendency 5. Spill-Over Effect 6. Personal Bias 7. Recency Effect 8. Stereotyping.

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Barriers to Effective Performance Appraisal (with Problems)

Barriers to Performance Appraisal – With Steps for Overcoming Barriers

Every organization undertakes performance appraisal, either formally or informally. However, it is full of shortcomings and limitations. Considering these aspects, Edwards Deming, a proponent of total quality management, has observed that performance appraisal, in its present form, is dysfunctional because it- (i) rewards people for manipulating the system rather than improving it, (ii) is often self-defeating, (iii) is inconsistent with teamwork, (iv) acts as a substitute for proper management, and (v) is inherently unfair.

To a very great extent, the observations are valid because there are certain barriers which work against the effective appraisal systems. Some of these barriers are more pronounced in specific methods of appraisal; in some methods, these may be less pronounced. Identification of these barriers is essential so that suitable measures may be adopted to reduce their impact to a possible minimum level.

The barriers to effective appraisal may be grouped in three categories:

1. Faulty assumptions,

2. Psychological blocks, and

3. Technical pitfalls.

Barrier # 1. Faulty Assumptions:

Because of the faulty assumptions of the parties concerned — superior and his subordinates — in appraisal system, it does not work properly or objectively.

These assumptions work against an appraisal system in the following manner:

i. The assumption that managers naturally wish to make fair and accurate appraisal of subordinates is untenable. Both superiors and subordinates show tendencies to avoid formal appraisal processes, as well as to heed them in their respective work roles. Their assistance lies partly in their psychological characteristics, partly in their organizational roles, and partly in technical deficiencies and the unwise management of appraisal policies and procedures.

ii. Another faulty assumption is that managers take a particular appraisal system as perfect and feel that once they have launched a programme that would continue for ever. They expect too much from it, and rely too much on it, or blame for their faults. It should be recognized that no system can provide perfect, absolutely defensible, appraisals devoid of subjectivity.

iii. Managers sometimes assume that personal opinion is better than formal appraisal, and they find little use of systematic appraisal and review procedures. However, this ‘management by instinct’ assumption is not valid and leads to bias, subjectivity, and distorted decisions based on partial or inaccurate evidence.

iv. Managers’ assumptions that employees want to know frankly where they do stand and what their superiors think about them are not valid. In fact, subordinates resist to be appraised and their reaction against appraisal has often been intense. As such, they tend to defeat the basic purpose of appraisal by providing camouflaged information as far as possible.

Barrier # 2. Psychological Blocks:

The value of any tool, including performance appraisal, lies largely on the skills of the user. Therefore, the utility of performance appraisal depends upon the psychological characteristics of managers, no matter whatever the method is used. However, research tells more about the inhibiting rather than the facilitating characteristics of people. There are several psychological blocks which work against the effectiveness of an appraisal system.

These are- managers’ feeling of insecurity, appraisal as an extra burden, their being excessively modest or sceptical, their feeling to treat their subordinates’ failure as their deficiency, disliking of resentment by subordinates, disliking of communicating poor performance to subordinates, and so on. Because of these psychological barriers, managers do not tend to become impartial or objective in evaluating their subordinates, thereby defeating the basic purpose of appraisal.

Barrier # 3. Technical Pitfalls:

The design of performance appraisal forms has received detailed attention from psychologists; but the problem of finding adequate criteria still exists there. At best, appraisal methods are subjective and do not measure performance in any but in the most general sense. The main technical difficulties in appraisal fall into two categories- the criterion problem and distortions that reduce the validity of results.

i. Criterion Problem:

A criterion is the standard of performance the manager desires of his subordinates and against which he compares their actual performance. This is the weakest point in appraisal procedure. Criteria are hard to define in measurable, or even objective, terms. Ambiguity, vagueness, and generality of criteria are difficult hurdles for any process to overcome. Traits too present ambiguity. A particular trait is hard to define and variations of interpretation easily occur among different managers using them.

ii. Distortions:

Distortions occur in the form of biases and errors in making the evaluation. Such distortions may be introduced by evaluator consciously or unconsciously.

An appraisal system has the following possible distortions:

(a) Halo Effect:

This distortion exists where the rater is influenced by ratee’s one or two outstandingly good (or bad) performances and he evaluates the entire performance accordingly. Another type of halo effect occurs where the rater’s judgement is influenced by the work team or informal group with which a subordinate associates. If the group is not well liked, this attitude may work in the rating of the individuals, apart from the actual performance.

(b) Central Tendency:

This error occurs when the rater marks all or almost all his personnel as average. He fails to discriminate between superior and inferior persons. This may arise from the rater’s lack of knowledge of individuals he is rating, or from haste, indifference, or carelessness.

(c) Constant Errors:

There are easy raters and tough raters in all phases of life. Some raters habitually rate everyone high; others tend to rate low. Some rate on potential rather than on recently observed performance. In such a situation, the results of two raters are hardly comparable.

(d) Rater’s Liking and Disliking:

Managers, being human, have strong liking or disliking for people, particularly close associates. The rating is influenced by personal factors and emotions and raters may weigh personality traits more heavily than they realize. Raters tend to give high rating to persons whom they like and low rating whom they dislike.

Overcoming Barriers to Effective Appraisal:

In spite of various shortcomings and limitations, performance appraisal continues and will continue as a tool for managing human resources. Therefore, there is a need for taking steps to overcome different barriers operating against effective performance appraisal.

Such steps can be divided into two broad categories:

I. Adoption of contemporary appraisal system, and

II. Objectivity in appraisal and feedback.

I. Adoption of Contemporary Appraisal System:

We have classified appraisal methods into two broad categories- traditional methods and modern methods. In both the methods, there is vulnerability though it is more in traditional methods. Therefore, there is a need for changing the appraisal system in line with the contemporary development.

A survey, conducted by Institute of Personnel and Development, UK, in 1997-98, reveals that the following developments have taken place in performance appraisal:

i. From superior’s appraisal to joint review.

ii. From outputs to inputs (behaviours).

iii. From focus on appraisal to development with less prominence to ratings.

iv. From a directive to supportive approach.

v. From monolithic to flexible.

vi. From ownership by HR managers to ownership by line managers.

These developments can be characterized as:

i. Temporal changes — conducting more frequent appraisal.

ii. Source changes — obtaining appraisal data from multiple sources including external parties.

iii. Content changes — appraising on the basis of input competencies rather than process outcomes.

An organization can include such characteristics in its appraisal system which give more fair results. While deciding on the characteristics to be included, the factors like organizational culture, nature of employees, and human resource management practices should be taken into account because a single appraisal system may not be suitable for all organizations.

II. Objectivity in Appraisal and Feedback:

It is widely agreed that at each stage of performance appraisal including feedback, there should be fairness. Thus, fairness in appraisal includes procedural fairness, interpersonal fairness, and outcome fairness. However, even if the above changes are incorporated in the appraisal system, it is not necessary that it is totally free from errors and biases as any man- made system cannot be totally fool-proof. Therefore, there is a need for infusing objectivity in appraisal and feedback.

For this purpose, the following steps may be taken:

i. The appraisal should be made by the persons who have intensive knowledge of the working of the appraisee. The HR department can assume the responsibility of monitoring the system. Though the HR department cannot change any appraisal result, it can point out inconsistencies to the appraisers such as harshness, leniency, central tendency, and so on.

ii. The reliability of appraisal system can be obtained by comparing the appraisal reports of two or more appraisers for the same employee. Further, the result of the appraisal of the employee may be compared over the period of time to ensure whether consistency in appraisal has been maintained.

iii. The appraisal result should be made open to review by the appraisee. This not only helps the appraisee to know where he stands but it also enables him to judge the degree of fairness in appraisal. This will minimize the degree of resistance likely to be shown by the appraisee.

iv. Often, persons who are responsible for appraising employees lack adequate skills for objective appraisal. Therefore, the organization should infuse these skills in appraisers through relevant training.

v. To make appraisal system effective, it should be backed by effective feedback system, which is often a missing link in appraisal system. Employees often feel scared if the post-appraisal feedback is not provided or feedback becomes threatening. The managers should realize that performance appraisal is not just a fault-finding system but it is meant for improving performance by indicating where an employee lacks and how it can be overcome.

vi. The last factor but the most important one for effective appraisal system is the supportive management philosophy. Without an appropriate basic philosophy to generate the continuous support of all the managers, appraisal system cannot succeed. The philosophy must pervade the organization with good examples from top management.

It should be remembered that establishing the climate in which appraisals are effective and reliable takes time and patience. Goal-oriented climate, in which informality is the keynote of work relationships, communications, and the conduct of business among employees at all levels, favours the development of effective performance appraisal methods.

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Barriers to Performance Appraisal – Two Most Important Effects: Halo and Horn Effect

Performance Appraisal is an important tool in the hands of superiors to assess their subordinates. It is a systematic evaluation of an employee by some other qualified person who is familiar with the employee’s performance. It is also an important command in the hands of seniors which the subordinates respect. This makes many juniors obey reasonable orders of their superiors to avoid any unwanted or adverse entry. However, this authority should never be misused by the executives for personal reasons. But it also have some barriers.

The two most important barriers or errors of performance appraisal are:

1. The Halo Effect:

The halo effect is the tendency of the manager to overrate a favoured employee.

This can happen for a variety of reasons:

i. Effect of past record – Because the person has done good work in the distant past, performance is assumed to be O.K. in the recent past, too. Good opinions tend to carry over into the current rating period.

ii. Compatibility – There’s a tendency to rate people whom we find pleasing of manner and personality more highly than they deserve. Those who agree with us, who nod their heads when we talk, or who—even better—make notes of our words: these people get better ratings than their performance justifies.

iii. Effect of recency – An outstanding job done last week or yesterday can offset a mediocre performance over the rest of the year.

iv. The one-asset person – The glib talker, the person with an impressive appearance or an advanced degree, or the graduate of the manager’s own alma mater gets a more favourable rating than the person who lacks these often irrelevant attributes.

v. The blind-spot effect – This is the case where the supervisor doesn’t see certain types of defects because they are just like his or her own. For example, the supervisor who loves accounting may overrate another detail person.

vi. The high-potential effect – We sometimes judge the person’s paper record, rather than what she has accomplished for the organization.

vii. The no-complaints bias – Here the appraiser treats no news as good news. The employee who has no complaints and says that everything is terrific is likely to go over well.

2. The Horn Effect:

This is the reverse of the halo effect—the tendency to rate a person lower than the circumstances justify.

Some specific causes of this are:

i. The manager is a perfectionist – Because the expectations of the manager are so high, she is often disappointed and rates an employee lower than deserved.

ii. The employee is contrary – Here the manager vents private irritation with the employee’s tendency to disagree too often on too many issues.

iii. The oddball effect – All the lip service to nonconformity seldom counts when appraisal time comes around. The oddball, the maverick, the nonconformist get low ratings simply because they are different.

iv. Membership in a weak team – A good player on a weak team ends up with lower ratings than he would have gotten if he were on a winning team.

v. The guilt-by-association effect – The person who isn’t really known well by the manager is often judged by the company he keeps.

vi. The dramatic-incident effect – A recent goof can wipe out the effect of months of good work and give a person a lower rating than deserved.

vii. The personality-trait effect- The employee who is too cocky, too brash, too meek, or too passive or who lacks some trait the manager associates with good employees suffers in the appraisal.

viii. The self-comparison effect – The person who does the job differently from the way the manager did it when she still had that job suffers more than a person whose job the manager has never done.

Other Problems:

Some of the most common problems include the following:

i. Inadequate preparation on the part of the manager.

ii. Employee is not given clear objectives at the beginning of performance period.

iii. Manager may not be able to observe performance or have all the information.

iv. Performance standards may not be clear.

v. Inconsistency in ratings among supervisors or other raters.

vi. Rating personality rather than performance.

vii. Inappropriate time span (either too short or too long).

viii. Overemphasis on uncharacteristic performance.

ix. Inflated ratings because managers do not want to deal with “bad news.”

x. Subjective or vague language in written appraisals.

xi. Organisational politics or personal relationships cloud judgments.

xii. No thorough discussion of causes of performance problems.

xiii. Manager may not be trained at evaluation or giving feedback.

xiv. No follow-up and coaching after the evaluation.

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Barriers to Performance Appraisal – With Reasons for Failure Provided by Eminent Scholars

Performance appraisal methods are not fool-proof. There are strengths and weaknesses in every method of appraisal. Since every method involves judgements of one or other kind, there is scope for errors. These errors may be – errors of ‘Central tendency’ or ‘Errors of leniency’.

The Central tendency error is one which does not use extreme scale scorers on the judgement scale; most of the rates are clustered in the middle. Errors of leniency occur when the rater puts most of the raters on the higher side of the scale, while the tough rater places them on the lower side of the scale.

The “halo effect” is also a problem which arises when there is a tendency to allow one trait to influence assessment on others.

Another problem arises when there is criterion contamination and bias because of a variety of circumstances and functions beyond the control of the rater and the ratee. These biases, according to Blum and Nylor, are – (a) Opportunity bias, (b) Group characteristic bias (c) Knowledge of predictor bias, and (d) Bias in ratings.

(a) Opportunity bias – An Opportunity bias takes place when an employee gets better facilities in his work environment as compared to another.

(b) Group characteristic bias – A Group characteristics have much to influence the overall performance. An individual’s performance is greatly influenced by the group performance.

(c) Knowledge of predictor bias – A rater’s knowledge of the performance of an employee on predictors is likely to influence his appraisal ratings. One topping the selection list creates the impression that he is the best performer.

(d) Bias in ratings – The rater’s own biases and competence in rating influences the objectivity of performance appraisals. These problems of halo effect, rater’s training, central tendency errors, etc., are examples of this “contamination”.

The methods of performance appraisal are founded on validity and reliability but case studies reveal the lack of these two vital conditions for the success of appraisal methods. Appraisal methods are, after all, substantially dependent on personal judgements which are very often influenced by various considerations having no relationship with an employee’s performance.

While criticising the different methods of performance appraisal in Indian Companies, it has been observed that there is no significant relationship between evaluation vis-a-vis promotion, transfer and placement. Very often differences exist between the appraiser’s face-face assessment and his report on the worker’s performance.

Appraisal reports are prepared mostly just at the time when they are to be submitted. Supervisors do not feel happy and comfortable in judging their subordinates. Lastly, it was found through case studies that different raters evaluate differently on the performance of the same employee.

The appraisal methods for the evaluation of the performance of employees fail to give us cent per cent satisfaction as to the correct judgement of one’s performance. So, we can say performance appraisal fails.

The reasons of the failure of performance appraisal have been summarised as follows by some eminent scholars after several case studies:

1. The dual and conflicting role of both judge and helper of the supervisor.

2. Confusion due to too many objectives is very common.

3. The supervisors themselves are not very much interested in their subordinates’ personal appraisal because of the apprehension of bitter relations that may develop owing to adverse reports.

4. Two appraisal programmes may take place between two long intervals.

5. There is a conflict between the skills required for daily administration and employee development.

6. Employees are generally unaware of what is expected of them because of communication.

7. As to the degree of excellence of the performance of an employee, there is very often difference of opinion between the supervisor and the employee.

8. Variations between ratees are less than those between raters.

9. Both to the supervisor and to the subordinate feedback on appraisal is generally unpleasant.

10. Most of the supervisors do not possess the tact and insight to communicate in a constructive way to the employees now to improve their performance.

From the observations given above, two conclusions can easily be drawn – One is that sufficient attention is not given in appraising the performance of an employee by his supervisor and the other that there is a gulf between decisions and their actual executions.

A performance appraisal entails time and money and since every method of appraisal has its shortcomings, the personnel management should ensure a sound plan involving minimum cost. The financial resources and the philosophy of the organisation must be taken into account in formulating any plan for performance appraisal.

A sound appraisal plan should be so devised and chalked out as to avoid the elements inherent in the psychology of the supervisors that are deterrent to the preparation of an impartial appraisal report. Supervisors avoid playing the role of judges. They feel uneasy in criticizing their subordinates.

The militancy of trade unions also affects impartial appraisal reports. The reports should be made known to the employees and in case of unfavourable reports, employees should be informed in such a manner that their feelings are not wounded nor their ego hurt in any way. Personnel management should develop human skills to deal with such delicate matters.

In view of the trend of trade unionism that has developed in our country, employees should be taken into confidence and the performance appraisal should be conducted in an atmosphere of cordial relationship between the management and the employees. A post-appraisal review committee can be formed including a few union leaders. This joint participation has a salutary effect as it establishes a two-way communication between the management and the common workers.

There are organisations where supervisors, managers and other raters meet occasionally for discussions with employees about their performance and particularly to communicate negative evaluation just to enable employees to offer their explanations, if any. This is to ensure natural justice through appraisal interviews.

These interviews serve certain purposes:

1. They provide feed-back to the employee ensuring better performance in future.

2. The organisation itself is benefitted since it gets some idea of its working; thus its functioning can be improved.

3. In the socio-economic conditions in India, where the continuity of service of the employee is essential, appraisal interviews help the organisations to make arrangements for proper training of the employees whenever the need for it actually arises.

According to N. R. F. Maier, three appraisal interviews, each with a specific and slightly different objective, can be held for improving upon the existing performance appraisal methods.

These interview methods are:

(1) The Tell and Sell Method,

(2) The Tell and Listen Method, and

(3) The Problem-Solving Approach Method.

(1) The Tell and Sell Method:

In the “Tell and Sell” method, it is assumed that the evaluation has been done in fairness. The purpose of the method is to communicate the rater’s evaluation to the employee as accurately as possible.

(2) The Tell and Listen Method:

Under the “Tell & Listen” method, the response of the employee to his report is wanted. The rater listens to the response of the employee. Since, in this method, attempts are made to explore the feelings of the employee about the evaluation on him, there is less fear of reprisal and resistance is also very much less from the employee’s side.

This is a method where there is a scope for improvement of relationship between the superior and the subordinate; an atmosphere of cordiality is likely to prevail in the industrial relation.

(3) The Problem-Solving Approach Method:

In the “Problem-solving” approach method, unlike previous two methods, there is no need for communication. The employer here assumes the role of a helper rather than a judge and the thrust is upon employee development.

In this method of appraisal, there is very little effort to find fault with the employee, to point his weaknesses but attempts are made to stimulate the thinking of the employee on how to improve his performance.

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Barriers to Performance Appraisal – Common Errors Involved with the Performance Appraisal Process

Some common errors involved with the performance appraisal process are as follows:

Barrier # 1. Halo Effect:

This is a tendency to let the assessment of a single trait influence the evaluation of the individual on other traits too. As for example, an employee demonstrates a high degree of dependability and from this behaviour, a comparable high degree of integrity could be inferred.

Barrier # 2. Horn Effect:

This is a tendency to allow one negative trait of the employee to colour the entire appraisal. This results in an overall lower rating than may be warranted.

Barrier # 3. Leniency or Constant Error:

Depending upon the appraiser’s own value system which acts as a standard, employees may be rated leniently or strictly. Such ratings do not carry any reference to actual performance of the employee. Some appraisers consistently assign high values to all employees, regardless of merit. This is a leniency error. The strictness tendency is a reverse situation, where all individuals are rated too severely and performance is understated.

Barrier # 4. Central Tendency:

This is the most common error that occurs when a rater assigns mainly middle range scores or values to all individuals under appraisal. Extremely high or extremely low evaluations are avoided by assigning “average ratings” to all.

Barrier # 5. Spill-Over Effect:

This refers to allowing past performance to influence the evaluation of present performance.

Barrier # 6. Personal Bias:

Perhaps the most important error of all rises from the fact that very few people are capable of objective judgements entirely independent of their values and prejudices.

Barrier # 7. Recency Effect:

In this case the rater gives greater weightage to recent occurrences than earlier performances.

Barrier # 8. Stereotyping:

It is a mental picture that an individual holds about a person because of the person’s age, religion, caste etc. By generalizing the behaviour on the basis of such blurred images, the rater grossly overestimates or underestimates an individual’s performance.

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