12.3 Components of a Performance Management System

Frequency of the Performance Appraisal

Every organization must determine how often performance appraisals should be given. Please keep in mind that managers should constantly be giving feedback to employees. The performance appraisal is a formal process for managing performance on a scheduled basis. Some organizations choose to give performance evaluations once per year, while others give them twice per year or more. The advantages to giving an evaluation twice per year, of course, are more feedback and more opportunity for employee development. The downside is the time it takes for the manager to write the evaluation and discuss it with the employee. If done well, it could take several hours for just one employee. You may choose one or the other depending on your organization’s structure. For example, if a manager has five or ten people to manage (this is called span of control), it might be worthwhile to give performance evaluations more than once per year since the time cost is not high. If a manager has twenty or more employees, performing this process more than once per year may not be feasible. This does not preclude the manager or supervisor from providing ongoing continuous feedback throughout the year.

Evaluators

The person evaluating (evaluator) an employee’s performance is most often their direct manager. However, performance input may also be provided by subordinates, clients, other managers and those who having regular work related dealings with. The employee is also encouraged to conduct a self-evaluation or appraisal. The table below “Advantages and Disadvantages of Each Source for Performance Evaluations” shows some of the advantages and disadvantages of each source of information for performance evaluations. Ultimately, using a variety of sources might garner the best results.

A 360-degree performance appraisal method is a way to appraise performance by using several sources to measure the employee’s effectiveness. Organizations must be careful when using peer-reviewed information. Organizations may want to purchase software programs to help administer and assess 360 review feedback.

Table: Advantages and Disadvantages of Each Source for Performance Evaluations

Source Advantages Disadvantages
Manager/Supervisor
  • Usually has extensive knowledge of the employee’s performance and abilities
  • Bias
  • Favouritism
Self
  • Self-analysis can help with employee growth
  • Works well when the supervisor does not always directly observe the employee
  • In the employee’s interest to inflate his or her own ratings
  • Relationships can create bias in the review
Peer
  • Can bring different perspectives, since peers know the job well

 
  • If evaluations are tied to pay, this can put both the employee and the peer in an awkward situation
  • If confidential, may create mistrust within the organization
  • Personal relationships may introduce bias
Customer/Client
  • Customers often have the best view of employee behaviour
  • Can enhance long-term relationships with the customer by asking for feedback
  • Can be expensive to obtain this feedback
  • Possible bias
Subordinate
  • Data garnered can include how well the manager treats employees
  • Can determine if employees feel there is favouritism within their department
  • Can be used as self-development tool for managers
  • Possible retaliation if results are not favourable
  • Subordinates may not understand the “big picture” and rate low as a result
  • Rating inflation
  • If confidential, may create mistrust within the organization
  • If nothing changes despite the evaluation, could create motivational issues among employees

“Performance Management Systems” in Human Resources Management – 2nd Ontario Edition by Elizabeth Cameron is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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Human Resources for Operations Managers Copyright © 2022 by Connie Palmer is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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