The Effect Of Performance Appraisal On Employee Performance

Modified: 27th Apr 2017
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In the study main emphasis has been made on the company’s reward management (performance appraisal) and its effect on enhancing the employee’s performance. The research was only limited to a few selected departments in the company. We know that there is specific department in company in order to maintain the criteria of performance appraisal.

Performance appraisal may be defined as a structured formal interaction between the subordinate and supervisor or manager who identifies the strengths and weaknesses as well as skills development.

Some of the things are vital to the successful establishment of training and staff development within an organization, the commitment of senior management, positive perceptions among staff, and assurance that training and staff development support departmental and company aims. In order for appraisal and training interviews to be perceived as valuable their outcomes must be linked to a planned programme of training and staff development .The basic idea of the topic to highlight the performance evaluation of subordinates in the company and its departments. Our main focus of the research is to investigate the effects of performance appraisal in the company. By the help of performance appraisal we want to ensure that the contribution by employees closely fitted to the needs and goals of the company and as well as gives more chance to recognize good performance and address issues.

Research Questions:

What is performance appraisal and its importance in the employee performance evaluation process?

What are the effects of performance appraisal on employee performance?

How is the process of performance appraisal carried out?

How do we evaluate the effectiveness of performance appraisal?

What actions we be taken to improve the performance appraisal process in Tesco?

Research Objectives:

To review the existing literature on performance appraisal

To review the effects of performance appraisal on employee performance

To carried out the process of performance appraisal

To review and evaluate the effectiveness of performance appraisal

To improve the performance appraisal process in Tesco

Contextual Background:

Tesco was founded in 1919 by jack Cohen, who invested his serviceman gratuity of 30 in grocery stall. The first private label product was Tesco tea . Tesco name is combination of two persons -TE Stock well name of supplier of tea and two letters of Cohen’s name. Tesco opened its first store in 1929. Basically Cohen’s was influenced by the superstore culture in America and tried to introduce the concept in UK. Main slogan of the company was “Pile It High And Sell It Cheap”. In 1947 Tesco went public and year later Tesco self service stores were started. In 1956 the first Tesco self service supermarket was opened.

Tesco is one of Europe’s leading food retailers, having enjoyed a period of

tremendous growth during the 1980s.Now well established within the UK with over 440 stores, we have acquired Catteau in France and more recently bought a stake in Global./////////



The performance appraisal is a formal interaction between the staff and supervisor, through which the performance of subordinate is assessed and discussed on the ground of evidences with the view to identifying strengths and weaknesses as well as opportunities for improvement and skills development. In the most of organizations performance appraisal assessment is used either directly or indirectly to evaluate the reward outcomes. The results of appraisals are used to identify the performance of staff, if it is on merit then it will go for pay increase, bonuses and promotions, if not then possibly may require some form of counselling or in some extreme cases, dismissals, demotions or decrease in pay. But the company has to follow the legal procedures that might restrict their capacity to dismiss employees and or decrease pay.

There are some benefits in the performance of employees:

ensure that every employee’s contribution fits into the overall aims of the company

help individual employees better understand their aims and role within the company

create standards to measure the quantity and quality of employees’ work

to monitor the success of the business

identify ways to make the business run more efficiently

identify ways to expand the business

The effective appraisal system will help you to assess staff against defined objectives it is a system by which we can assess the relationship with employees and employer how they gives you rewards and appreciate the employee .

Followings are the essential characteristics of an effective performance appraisal.


Job Relatedness

Standards and Measurements



Open Communication

Trained Appraisals

Ease of Use

Employee Accessibility to results

Review Procedures

Appeal Procedures

Different authors have given their own views and opinions in explaining each of these characteristics of Effective Performance Appraisals such as,

Essential characteristics:

Performance appraisal system should be based on true and fair basis and free from criticism and it should be legally acceptable. The Development of an effective appraisal system is the result of hard work, careful thinking and serious planning particularly if we are intending to integrate of the administrative, developmental, and strategic needs of the organization.


The first step towards developing a performance appraisal is to formalize all the procedures, policies, rules and regulations of the organization. (Allan, 1994).

By formalizing the business needs means to write clearly the overall objectives of organization what it want to achieve. This helps in eliminating any problems that may arise in future. It’s a higher level practice to decide the aims of the organization in terms of policies, procedures regarding employment in organization.

The information should be so perfectly formalized the results can be consistently fed back into the strategic process for decision-making, inspiration, improvement initiatives, problem-solving, and the successful alignment and/or realignment of people and processes needed for strategy implementation and adjustment.

(Humphreys, 2007).

Job relatedness:

During the process of appraising jobs all relevant factors must be considered and there should be no discrimination done on the basis of traits, personality characteristics, and tenuously related job factors.

Due to the different natures of jobs, different factors will need to be considered as criteria for the evaluation of a specific job within organization. (Martin and Bartol, 1998).

Some devastating problems that come as a result of weak strategies related to jobs defined by the organization are lower employee morale, obstacle in strategic ability to execute properly in dynamic organizations.

(Sales Agency Management, 1999; Marsden, 1999).

Standards and measurement:

In order to set the standards of organization expectations of both employees performing job and the organization itself should be carefully measured. This will help in getting meaningful evaluation of employees.

(Brown, 1987).

The next thing to implement after setting up the standards is to implement different methods of measuring actual results. This become hard sometimes due to complicated natures of jobs to implement single measurement method all the time. But still there should be some measures performed against such complicated jobs.

(Marsden, 1999).

The job-related measures become more important when we intend to integrate the information into the overall strategic processes of the organization and if there is to be consistent functional alignment with the broader organizational objectives.

The following three characteristics are suggested (Marsden, 1999):


The method used is valid if it measures what it is suppose to measure in performance appraisal. This implies that all the methods used in appraisal system should measure the actual job performance against set standards. During the job analysis the actual job the validity of performance appraisal starts with the presence of all performance factors identified. These factors include total work load, deadlines met, quality of work and others. (Marsden, 1999)

There is always a high relationship between the evaluation an employee has received on a specific performance factor and the actual results achieved by that individual by that factor.


An effective performance appraisal is one that always measure work performance of employee accurately. A system that consistently measures performance accurately is known as a reliable system.

(Marsden, 1999).

Definitive standards and measures must be used in order to reduce the reliability problems. Mostly reliability problems arise due to the lack of objective criteria for evaluating performance.

It may be wreaking for a firm to use unreliable control measures into the strategic management of the firm.

All employees have a need to know how well they are performing. The performance appraisal system producing such results which are not reliable because of the lack of consistency. High performance must consistently

Receive a high rating, just as low performance must consistently receive a low rating for the

Measurement system to be considered reliable (Longenecker and Fink, 1999).

Open communication:

Assurance of an effective performance appraisal is that where feedback is provided on regular basis, not in the form of written annual evaluation report, but in the form of daily,weekly,and monthly comments from staff’s supervisor or manager(Lee, 2005).

For an effective performance appraisal this ongoing aspect of its nature must be emphasized to appraiser and providing regular feedback information on job performance must be underscored.( Longenecker and Goff, 1992).

The annual performance evaluation and its consequences on performance discussion and interview must be devoid of surprises.While annual performance discussion gives an excellent opportunity for both parties to exchange views and observations in depth,annual performance appraisal review is not a alternative for day-to-day or week-by-week performance communications(Longenecker and Fink, 1999).

Trained appraisers:

Training as well as periodic updating and retraining,of all individuals in the company who conduct evaluations is an essential to the effectiveness of a performance appraisal system (Allan, 1994).

House training or classroom training is very important when a new or revised system is being installed in company;this type of training is absolutely necessary for all new staff and managers .A company should never assume that,because all the information about performance appraisal is contained in a supervisors and managerial handbook or is included in the company personnel policy manual,supervisors and managers will automatically learn how to conduct effective appraisals.

In a company such personal formal training sessions often permit the discussion and resolution of appraisal in their incipiency. Moreover by involving each level of management in training performance appraisal, the system becomes more strongly imbedded in the organization as a vital function of human resource management,and to enhance the broader strategic management processes (Humphreys, 2005)

Ease of use:

A performance appraisal system does not have to be complex to be effective (Longenecker

and Fink, 1999). If the system is firmly based on standards and measurements, it will probably be easier but also more valid and reliable, than many of the performance appraisal approaches in use(Allan,1994)

Basically the idea to develop performance appraisal system more easier to forces senior management to spend considerable thought to what they intend to receive from the appraisal function .Also an evaluation system that is efficient and well-designed simplifies use by all stakeholders with a greater understanding of the role the appraisal system plays in human resource management and long- term organizational success.

Employee access to results:

As a result of the Federal Privacy Act of 1973, employees of the federal government as well

as federal contractors must be given access to their personnel records, including all files or

other data pertaining to their performance appraisals. First confidentiality may breed suspicion about the fairness of the system in the mind of employees. (Lee et al, 2004).

The fairness of system could possibly lead to discrimination charges and raise motivational issues related to perceived inequity. The concept of fairness in dealing with employees to make sure there is no doubt in certain information that directly affects them on their jobs ,and it allow employees to review and asses their performance appraisal records builds a safeguard into the system in that employee have the great opportunity to review and detect errors that may have been made in performance evaluations.

Finally ,employee development is the espoused purposes of performance appraisal. Employees must have access to performance appraisal records if they are, in fact, to take corrective actions to improve the way in which they are fulfilling their job duties and responsibilities (Mount, 1984).

Review procedures

The purpose of review can be used to eliminate all the hurdles generated by bias, favouritism, or discrimination(Allan 1994).

The higher level of management, usually the evaluator’s immediate supervisor, should automatically review all performance evaluations of employees made by the subordinate managers. The purpose of this review to make sure the evaluation for consistency, fairness, accuracy, reliability, and assuring that the evaluator has carried out his or her function honestly.

The segregation of different managerial levels increases the importance that the data generated by the review will be incorporated into the various levels of company hierarchy. This process of review can be more efficiently interjected into the broader strategic management of the company. The higher level management must recognize that valuable strategic input emerges from all levels of the company (Humphreys, 2005).

Appeal procedures :

Unfortunately, in some organizations there is no legal procedure whereby an

employee can appeal what he or she considers an unfair or inaccurate performance

appraisal. In such circumstances, the employee has few options other than living with the unfair performance review or

possibly leaving the organization for employment elsewhere. There have even been where employees whose performance was acceptable for years were summarily

discharged on the basis of one bad performance appraisal. Now that an employer’s right to

fire at will is being challenged in the courts, sometimes successfully, the need for a clearly

delineated appeal procedure in the performance appraisal system is imperative

(Beck-Dudley and McEvoy, 1991).

In these circumstances organizations having to deal with trade unions have long had well-established appeal system in the form of grievance procedures(Grievance Guide, 2003).

Main purpose of an appeal process would seem to serve three purposes:

Protection of employees from unfair appraisals;

Protection of organization from potential charges of unfairness;

It helps to assure that appraiser do a more fair and accurate evaluation because they know their appraisal assessment are subject to examination by others in the organization.

appeal procedure typically depends on the size of the organization. As a minimum, there should be two steps: an appeal to the higher level of management and an appeal to supervisors or managers. In larger organizations,the human resource department would be included at some point in the process The procedures by which an employee can appeal an unfavourable review must be clearly spelled out in the formalized policies and procedures of the performance appraisal system as well as specified in the employee handbook.

3. Research Methodology:

According to Klein and Myers the research is interpretive if it is assumed that our knowledge of reality is gained only through social constructions such as language, consciousness, shared meanings, documents, tools, and other artefacts. It attempts to understand phenomena through the meanings that people assign to them.

Klein and Myers’ (1999, 69) There are two basic types of research methodologies used in data collection process. These are,

Qualitative Research Methodology

Quantitative Research Methodology

3.1 Qualitative Research:

/////The qualitative research can be done either in the form of one to one interview or in form of group discussion.

The primary research data will be obtained from the employees of Tesco within the same branch where i am working because it is much convenient for me to arrange group discussions and or interviews to have their views and feedback on current appraisal system of Tesco. Whereas, some face to face interviews will be conducted with managers (HR manager, Shift manager, store manager), to get the true feeling and their views .These interviews will be recorded for evidence and future use in data analysis.

3.2 Quantitative Research:

In quantitative research i will choose randomly some branches of Tesco where i can use questionnaires which are designed specifically for the performance appraisal to get the accurate views of employees and managers.

Quantitative research is used to measure how many people feel, think or act in a particular way. These surveys tend to include large samples – anything from 50 to any number of interviews. Structured questionnaires are usually used incorporating mainly closed questions – questions with set responses. There are various vehicles used for collecting quantitative information but the most common are on-street or telephone interviews

3.3 Research Philosophy:

For my research proposal, overall research philosophy is choice between two primary alternatives which is positivist or a phenomenological philosophy. But i am using positivist approach because all the characteristics of this philosophy holds true such as focus on facts of the

3.4 Research Strategy:

3.5 Sample Method And Size:

3.6 Research Ethics:

The Research should be reviewed and conducted in a manner to maintain integrity and quality and the research staff and subjects must be informed fully about the purpose, methods and intended possible uses of the relevant subject matter with clear indication of risks involved with the given allowed variation according to the policy guidelines.

Harm to research participants should be avoided at all times and the confidentiality of information provided by research topic must be maintained.

The participants involved in research should be participating in a voluntary way.

The conduct of the research responsibility in accordance with the relevant principles should be decided by the principle investigator.

The institution which holds or seek an award is responsible that research is subject to appropriate ethical review and it is also responsible for the approval and monitoring of it.

3.7 Action Plan:


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