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Performance appraisal continues to be a subject of interest and importance to human resource specialists. For
decades, performance appraisal has received considerable attention in the literature, from both researchers and
practitioners alike. Many authors (Bernardin & Klatt, 1985; Hall, Posner, & Hardner, 1989; Maroney & Buckley,
1992; Thomas & Bretz, 1994) maintain that there is a considerable gap between theory and practice, and that human
resource specialists are not making full use of the psychometric tools available. To support their claim, these authors
cite surveys of practitioners concerning current performance appraisal methods and use.
Nearly two decades ago, Taylor and Zawacki (1976) published the first of two articles that documented trends in
performance appraisal usage among U.S. organizations. When comparing the results of two surveys taken five years
apart, the authors noted a remarkable shift away from what they called collaborative approaches (e.g., MBO, BARS)
and toward the more traditional performance appraisal techniques (graphic rating scales). Taylor and Zawacki
(1984) hypothesized that managers, responding to the legal constraints prevalent in the 1980s, preferred techniques
that were defensible in court. Accordingly, managers tended to be more satisfied with the objective traditionalapproaches, whereas their subordinates seemed to prefer the developmental collaborative methods.
Through the 1980s, researchers continued to document performance appraisal practice. Bernardin and Klatt (1985)
noted that small firms tended to rely heavily on trait-based approaches, while larger firms relied on a combination of
trait, behavioral, and results-based techniques. They noted that one in five organizations did not give employees the
opportunity to review the performance appraisal results. In another study, Locher and Teel (1988) identified graphic
rating scales (57.1%), the open-ended essay (21.3%), and Management-by-Objectives (18.1%) as the most popular
performance appraisal techniques. Unlike Taylor and Zawacki (1984) before them, Locher and Teel identified a
trend toward the use of MBO as a popular technique.
Besides recording current trends in methods used, only a few researchers have clarified how performance appraisal
data is used. Thomas and Bretz (1994) report that performance information is most likely to be used for employee
development or to administer merit pay. They identified the main developmental uses as improving work
performance, communicating expectations, determining employee potential and aiding employee counseling. Other
common administrative uses included promotions, lay-offs, transfers, terminations, and validations of hiring
decisions. In addition, Hall, Posner, and Hardner (1989) identified common objectives of performance appraisal as
reviewing past performance, rewarding past performance, goal setting for future performance, and employee
development. Cleveland, Murphy, and Williams (1989) warned that organizations should exercise caution when
using the same performance appraisal methods for multiple applications (e.g., counseling vs. evaluation), since
different performance appraisal methods may yield different types of data (e.g., qualitative vs. quantitative).
Purpose of Study
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The purpose of this research is to ascertain whether traditional trends in performance appraisal have persisted
throughout the mid 1990s or whether human resource managers have chosen new directions. Specifically, this study
surveyed human resource professionals concerning the types of performance appraisal methods used and how such
data was utilized.
To investigate performance appraisal trends the 1990s, this research investigated the current performance appraisal
practices of human resource managers. The sample consisted of 250 managers in the mid-western U.S. All managers
were current members of the Society for Human Resource Management (SHRM). A 10-item questionnaire was
developed with questions relating to performance appraisal format, frequency, use, and instrument development.
One hundred forty (56%) of the surveys were returned. Table 1 shows the frequency of response to each of the
questions.
Table 1
Frequency of Response to Survey Questions
Question Frequency Percentage Frequency Percentage
1. What is the approximate number of
employees in the company?
0-50 4 2.90%
51-100 19 13.37%
101-200 19 13.37%
201-500 28 20.29%
501 and up 68 49.28%
2. Describe the use of performance
appraisals in your company.
Does not exist 4 2.86%
Exists but is never used 0 0.00%
Discretion of specific managers 12 8.24%
Required for all employees 124 88.57%
3. If performance appraisals are
used, how often are they given?
Quarterly 6 3.59%
Semi-annually 26 15.57%
Yearly 105 62.87%
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Other 30 17.97%
4. What type(s) of performance
appraisal does your company use?
(Check all that apply)
Graphic Rating Scales 56 24.03%
Management-by-Objectives 74 31.76%
Narrative Essay 79 33.91%
Other 24 10.30%
5. Is a different performance
appraisal form used for different
types of employees?
Yes 90 66.20%
No 46 33.80%
6. If a different performance
appraisal form is used, how are
the employees divided?
Exempt and non-exempt 45 50.00%
Blue collar and supervisory 3 3.33%
Managerial and non-managerial 24 26.67%
Other 18 20.00%
7. Is a performance appraisal
review and feedback session
required in the company?
Yes 126 91.97%
No 11 8.03%
8. Does your company have formal
written job descriptions?
Yes 127 92.03%
No 11 7.97%
8a. If yes, how are the job
descriptions created?
Upper level management 40 31.30%
Employee 16 12.50%
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Group collaboration 28 21.90%
Job analysis 44 34.40%
8b. If yes, how often are the job
descriptions updated?
Never been updated 2 1.56%
Quarterly 0 0.00%
Semi-Annually 2 1.56%
Yearly 26 20.31%
Every 2-5 years 46 35.94%
Other 52 40.63%
9. What is your performance
appraisal used to determine?
(Check all that apply)
Salary decisions 112 27.86%
Promotions 67 16.67%
Employee objectives for coming 111 27.61%
period
Training needs 98 24.38%
Other 14 3.48%
10. What impact do you feel that
performance appraisal has on
successful job performance?
Not important at all 1 0.74%
Of little importance 3 2.21%
No opinion 3 2.21%
Somewhat important 56 41.18%
Very important 73 53.68%
Respondents represented a full range of company sizes: 49% represented large firms with over 500 employees and
the remainder represented smaller firms from various size categories. Most of the respondents (88.57%) reported
that performance appraisal was required of all of their employees. Only four (2.9%) reported that they did not
presently use performance appraisal, an improvement over the 5.9% found by Locher and Teel (1988) and 7.9%
reported by Taylor and Zawacki (1984). Results indicated that human resource managers have a great deal at stake
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in the performance process. For most of these firms (88.6%), decisions based on performance appraisals will affect
every employee to some degree. Therefore the choice of performance appraisal format is not to be taken lightly.
Format
Many companies reported using more than one appraisal format. Among the responses, Management-by-Objectives
and graphic rating scale forms were popular. The percentages reported in the present study for MBO (31.8%) were
similar to those reported by Taylor and Zawacki for the same technique in 1981 (29.5%). However, the use of the
graphic rating scale (24%) fell considerably from the 1984 data (50%). Approximately 10% of the companies polled
used formats classified in the "other" category. These techniques included use of performance standards, matching
performance against job descriptions, and other hybrid techniques. None of the human resource managers reported
using behaviorally anchored rating scales (BARS), although the Taylor and Zawacki survey reported that 11 of 84
(14%) companies used BARS in 1981.
Of particular interest is the percentage of companies using the narrative essay format (33.9%). Under the essay
format, raters are asked to take an open-ended approach in describing employee behaviors. The essay typically
involves a manager listing specific employee strengths and weaknesses, with concrete suggestions for future
improvement. Unfortunately, the exact criteria used in recording narrative information may not be the same in all
organizations. Rater emphasis may vary greatly across a number of variables including traits, goal accomplishment,
and critical incidents. The percentage reported here represents a substantial increase over the 21.3% reported by
Locher and Teel in 1988, indicating a trend toward this format.
Frequency and Use
Though a handful of companies conduct quarterly (3.6%) and semiannual (15.6%) appraisals, the current survey
found that the majority stick to annual evaluations. Although the yearly schedule is commonplace, such long
intervals are not always optimal when considering the purpose and use of the performance ratings. For example,
employee development programs, identification of individual strengths and weaknesses, and performance feedback
are better suited to shorter intervals. On the other hand, when performance appraisal is used for administrative
decisions, such as pay raises, promotions, terminations, or layoffs, they require comparative judgments among
individuals that may be more effectively handled annually.
Information was also gathered concerning current use of performance appraisal information. Salary decisions,
employee objectives, and training needs accounted for nearly 80% of the appraisal use responses. Although this
came as no surprise, what was noteworthy was the total of 402 responses to this question from the 136 total
companies taking part in the survey. This shows that most companies polled used performance appraisal methods for
multiple purposes.
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A large majority (92%) of those responding reported that a review and feedback session was required as part of the
performance appraisal process, an increase over the 79% reported by Bernardin and Klatt (1985). This supports the
conclusion that the performance appraisal process may help form a communication channel between supervisor and
subordinate and also substantiates employee desire for more collaborative appraisal formats.
Discussion
A considerable amount of literature has focused on differences between performance appraisal theory and practice.
Researchers argue that practitioners have not made the best use of recent advances in the area, including cognitive
processing of information, rater training, feedback, and instrumentation. Practitioners, on the other hand, argue that
much of the recent research is directed to an audience of other researchers, whose laboratory studies have become
segmented and have little relevance to the outside world. Much of this debate is healthy to the extent that it
stimulates researchers and practitioners to reevaluate their assumptions concerning the measurement of employee
performance.
The purpose of this paper was to examine changes in performance appraisal practice. Table 2 summarizes the key
performance appraisal trends identified by the present study. The following discussion summarizes these changes in
appraisal format, use, and feedback.
Table 2
Key Trends in Performance Appraisal
Format
* Companies are using multiple performance
appraisal formats for individual
appraisals
* Through the years, Management by
Objectives (MBO) has maintained a
steady level of use among practitioners
* The use of graphic rating scales has
decreased steadily over time
* The use of the narrative essay as a
performance assessment technique is
becoming more common
Frequency and Use
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* Most firms evaluate employee performance
at yearly intervals
* Most companies use performance
appraisal results for multiple purposes
(e.g., compensation, selection, and
training)
* Ninety-two percent of companies report
the use of performance review and
feedback sessions, an increase of 13%
from previous years
Format of Appraisal
Considerable change has. in tact transpired compared with reported figures in the published research of the 1970sand 1980s. Although Taylor and Zawacki documented a movement away from collaborative approaches
(particularly MBO) and toward objective techniques, the current survey shows that the trend did not continue as
predicted. Management-by-objectives still maintains a significant following in the workplace, as does the graphic
rating scale. The rise of the narrative essay is far from an anomaly. It is only conjecture, but many of the companies
in the current survey may be using the essay as supporting documentation for other performance evaluation formats.
However, reliance on the narrative essay as a sole means of appraisal cannot be justified without carefully
evaluating the company's goals and how it uses performance appraisal outcomes. In the end, the suitability of the
chosen method must be evaluated against a number of criteria.
McAfee and Green (1977) identified the key criteria for choosing a performance appraisal method. These included
employee development, administrative, personnel research, economic, and validity criteria. Human resource
specialists must weigh these to determine which format represents the best match with their needs. For example,
formats that meet the administrative requirements of the company (e.g., salary and promotion) may be beyond the
economic means of the firm (e.g., behaviorally anchored rating scales (BARS). Relative to these factors, the
narrative essay format rates well against economic criteria and may be suitable for employee development.
However, it is not amenable to administrative decisions, personnel research, or validity studies.
Use of Appraisal Information
In addition to concerns of format selection, several authors have expressed concern over using performance
appraisal for multiple purposes, especially when those purposes may be conflicting. Cleveland, Murphy, and
Williams (1989) suggest that performance appraisal use can be grouped into four categories: between-individual,
within-individual, systems maintenance, and documentation. Between-individual comparisons are critical for many
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administrative decisions such as promotion, salary, retention, termination, layoffs and employee recognition. Such
decisions are frequently cited as the most common performance appraisal outcome. Within-individual comparisons
are tailored toward employee training and development needs. Typical of this kind of use are performance feedback,
determination of transfers and assignments, identifying strengths and weaknesses and training needs. In the current
survey, within-individual comparisons accounted for nearly 62% of the responses under performance appraisal use.
Systems maintenance uses refer to personnel planning, organizational training need analysis, organizational goal
identification and analysis, evaluation of personnel systems, and identification of organizational development needs.
Finally, documentation uses are needed for validation research, legal requirements, and to record personnel
decisions.
Cleveland, Murphy, and Williams point out that the intended use of performance appraisal affects the rating process
as well as the rating outcomes. Raters typically identify the most salient purpose and then de-emphasize other rating
information that is not deemed to be consistent. That is, acquiring information for the purpose of salaryadministration may obstruct the ability to gather other information needed for developmental feedback. In the
current survey, the pattern of responses suggests that performance appraisal forms serve multiple uses.
Appraisal Feedback
Most of the respondents required a review and feedback session as a part of the overall performance appraisal
process. It is difficult to assess how they used the review and feedback session, although recent developments in the
literature clarify how feedback affects performance. Specifically, the typical feedback session involves a review of
previous performance based on the format chosen. Also, some organizations encourage employee self-appraisal to
foster employee participation during the appraisal review session. However, this kind of feedback does little to
affect performance itself. It does, however, seem to improve the employee's satisfaction with the appraisal process
(Dorfman, Stephan, and Loveland 1986). Of course, appraisal satisfaction is an important variable in the employee's
overall satisfaction, but a large portion of the literature has demonstrated that a happy worker is not necessarily a
productive worker.
The literature concerning performance appraisal feedback does suggest that specific feedback gained from the job
itself does affect performance (Bretz, Milkovich, & Read 1992). If performance improvement is desired, perhaps
emphasis on job redesign is necessary. For example, production workers whose job has been redesigned to include
feedback concerning their own quality are more likely to see improvement than those who receive feedback from
external sources such as quality control officers. Organizations should rethink how they use performance appraisal
and tailor the process to the kinds of outcomes they desire.
Concluding Comments
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The practice of performance appraisal appears to be changing, but not necessarily in the direction specified in earlier
research. While some criticisms can be levied against the practices reported in this survey, it is important to note that
the respondents felt that their performance appraisal systems had an important effect on job performance (nearly
95% of the respondents reported important impact).
Human resource practitioners should regularly review and evaluate the effectiveness of their performance appraisal
practices, especially in terms of their impact on employee performance, their bearing on employee development,
their contribution to strategic human resource planning, and their legal compliance. In the end, each company has to
come to terms with employee satisfaction and performance appraisal systems, as well as the decisions made from
appraisal outcomes. Companies should be careful not to respond to fads in the appraisal area, but should rest their
decisions on the specifics of their organizational context.
Two current managerial challenges, total quality management (TQM) and the use of work teams, raise new
questions regarding the use of performance appraisal. These management philosophies may be incompatible with
more traditional performance appraisal techniques that may encourage competition among workers (e.g., for the
same dollars in the merit pool) instead of the cooperation and integration required for the effective implementation
of either work teams or TQM principles. Specifically, managers must consider the strategic objectives of the
organization as well as specific performance assessment objectives when choosing one of many appropriate
performance appraisal techniques. Performance appraisal instruments must be compatible with current management
philosophies.
Dr. Smith, whose research interests include compensation management, human resource practice, and management
teaching, has published in several management journals, including the Journal of Applied Psychology. Dr. Hornsby,
who has published nearly 40 articles and is completing a book on human resource management, focuses on
compensation, teambuilding, corporate entrepreneurship, among other areas. Roslyn Shirmeyer, a graduate of Ball
State's Human Resource management program, works in that field in Orlando, Florida.
REFERENCES
Bernardin, J. H., & Klatt, L. A. (1985). Managerial Appraisal systems: Has practice caught up to the state of the art?
Personnel Administrator, November, 79-82, 84-86.
Bretz, R. D., Milkovich, G. T. & Read, W. (1992). The current state of performance appraisal research and practice:
Concerns, directions, and implications. Journal of Management, 18(2), 321-352.
Cleveland, J. N., Murphy, K. R., & Williams, R. E. (1989). Multiple uses of performance appraisal: Prevalence and
correlates. Journal of Applied Psychology, 74(1), 130-135
Dorfman, P. W., Stephan, W. G., Loveland, J. (1986). Performance appraisal behaviors: Supervisor perceptions and
subordinate reactions. Personnel Psychology, 39, 579-597.
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Hall, J. L., Posner, B. Z., Hardner, J. W. (1989). Performance appraisal systems: Matching practice with theory.
Group and Organization Studies, 14(1), 51-69.
Locher, A. H., & Teel, K. S. (1988). Appraisal trends. Personnel Journal, September, 139-140, 142, 145.
Maroney, B. P., Buckley, M. R. (1992). Does research in performance appraisal influence the practice of
performance appraisal? Regretfully not? Public Personnel Management, 21(2), 185-196.
McAfee, B. and Green, B. (1977). Selecting a performance appraisal method. Personnel Administrator, May, 61-65.
Taylor, R. L., & Zawacki, R. A. (1976). A view of performance appraisal from organizations using it. Personnel
Administrator, June, 290 292, 299.
Taylor, R. L., & Zawacki, R. A. (1984). Trends in performance appraisal: Guidelines for managers. Personnel
Administrator, March, 71-72, 74 76, 78-80.
Thomas, S. L., & Bretz, R. D. (1994). Research and practice in performance appraisal: Evaluating employeeperformance in America's largest companies. SAM Advanced Management Journal, 59(2), 28-34.