Question

Many organizations use performance appraisals to decide on promotions. Do you think this is fair? What are the factors that would make it less fair for employees?

Answer 1

Answer:

Performance Appraisal is a very important activity in Human Resource Management. It aims at evaluating the performance of each employee in the organization
It forms the basis for various strategic decisions in an organization.
•   It helps is confirming if the recruitment process and procedures adopted by the organization is appropriate
•   It helps in identifying the need for training
•   It validates the effectiveness of training offered by the company
•   Performance appraisal serves as a motivation for higher performance and provides a feeling of self-worth
•   It helps in deciding the employee's compensation and incentives
•   Helps in identifying performance gaps
•   It helps in creating an awareness among employees regarding the goals of the organization
•   Provides input for succession planning

Performance Appraisal has varied applicability in an organization. It is an inevitable activity in an organization but often practiced with flaws and mishandled. It disturbs the team cohesiveness when appraisal and rewards are individual-based. The performance appraisal has inherent errors arising out of central tendency,- where rater appraises every individual within a narrow range, Halo effect where preconceived perceptions influence appraisal, Recency effect where recent incidents can influence the perception of rater, and many more.

Performance appraisals to decide on promotions

To decide on promotion organizations adopt a seniority-based strategy or performance-based strategy. A performance-based strategy is the best method. However performance-based strategy has to focus on a mix of Performance appraisal as well as Potential appraisal while deciding promotion decisions.

I don’t think it is fair since organization largely adopt only Performance appraisal method to take a promotion decision without including Potential appraisal

The deficiency of performance appraisal in promotion decisions is due to the following reasons.

1. Focus only on present performance- It certifies the suitability of the individual at the given time frame and does not focus on future potential
2. Targets are based on the present job description- the skills and competencies considered are based on the present job description. While in a promotion decision the employees potential to handle advanced responsibilities are to be evaluated
3. Is backward focused- it checks if the employee has fulfilled the targets fixed in the past. while it does not look into the inherent strengths and weakness in an individual
4. Target-based- Performance appraisal reviews an individual based on already set targets while for promotion decisions the individual’s capacities to handle critical incidents need to be evaluated.
5. Use of standardized tools created for the particular job position- The Performance appraisal tools are intended to check the individual's capability at the current level, while promotion requires the ability to check the suitability for future positions.

Hence organizations have to adopt a mix of Performance appraisal as well as Potential appraisal for promotion decisions as it is
•   Forward oriented and focuses on futuristic skills of individual
•   Focuses on latent or hidden potential and competencies
•   Ability to handle responsibilities in higher-level positions
•   Has a different mix of appraisal tools like MBO ( Management by Objectives), psychometric tests Self-appraisal, multi-rater appraisals, and in-basket exercises which are flexible to identify the true potential of the individual for future positions.

A high-performance employee or a high potential employee may not serve better in a higher position. It is the employee with the right mix of performance and potential who would be the best performer. Employees should have the important ingredient of loyalty, value congruence with the organization to serve the best in his capacity.

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