CASE $7$

Research has shown that the performance appraisal

process, particularly the interaction between em$-$

ployees and managers, is a key determinant affecting

employee motivation and productivity. Understand$-$

ably, managers can view the appraisal of employee

performance as a "catch$-22"$ in which the slightest

mistake can cause employee resentment, as this case

illustrates.

Marcus Singh, a naturalized U$.$S$.$ citizen from In$-$

dia, is a research economist in the Office of Research

and Evaluation in the city of Newport, Oregon. He

is $40$ years old and has worked for the city of New$-$

port for the past $10$ years. During that time, Singh

has been perceived by his supervisors as an above$-$

average performer. However, due to the small size

of the department and the close working relation$-$

ship between employees and management, a formal

evaluation of employees was considered unnecessary.

About $10$ months ago, Singh was transferred from

the department's industrial development unit to the

newly formed Office of Research and Evaluation.

Other employees were also transferred as part of an

overall reorganization.

Out of concern for equal employment opportu$-$

nity, plus the realization that employee performance

should be evaluated formally and objectively, Victo$-$

ria Popelmill, department director, issued a directive

to all unit heads to formally evaluate the perfor$-$

mance of their subordinates. Attached to her memo$-$

randum was a copy of a new performance appraisal

form to be used in conducting the evaluations. Garth

Fryer, head of the Office of Research and Evaluation,

decided to allow his subordinates some input in the

appraisal process. $($In addition to Garth Fryer, the

Office of Research and Evaluation comprised Mar$-$

cus Singh, five other research economists$-$Jason

Taft, Susan Mussman, Richard Gels, Marsha Fetzer,

and Juan Ortiz$-$and one administrative assistant,

Connie Millar.$)$ Fryer told each of the researchers to

complete both a self$-$appraisal and a peer appraisal.

After reviewing these appraisals, Fryer completed the

final and official appraisal of each researcher. Before

sending the forms to Popelmill's office, Fryer met

with each researcher individually to review and ex$-$

plain his ratings. Each researcher signed the appraisal

and indicated agreement with the ratings.

About one week after submitting the appraisals

to the director, Fryer received a memorandum from

Popelmill stating that his evaluations were unaccept$-$

able. Fryer was not the only unit head to receive this

memorandum; in fact, they all received the same note.

On examination of the completed appraisal forms from

the various departments, the director had noticed that

not one employee was appraised in either the "fair" or

"satisfactory" category. In fact, most employees were

rated as "outstanding" in every category. Popelmill felt

that the unit heads were too lenient and asked them

to redo the evaluations in a more objective and criti$-$

cal manner. Furthermore, because the department's

compensation budget for salary increases was largely

based on a distribution of employee ratings, evaluating

all employees as outstanding would result in raises that

exceeded the city's budget limits$.$

Garth Fryer explained the director's request to his

subordinates and asked them to redo their apprais$-$

als with the idea of being more objective this time.

To Fryer's astonishment, the new appraisals were not

much different from the first ones. Believing he had no

choice in the matter, Fryer unilaterally formulated his

own ratings and discussed them with each employee.

Marcus Singh was not pleased when he found

out that his supervisor had rated him one level lower

on each category. Although he signed the second appraisal form, he

indicated on the form that he did not agree with the

evaluation. Jason Taft, another researcher in the Office

of Research and Evaluation, continued to receive all

"outstanding" ratings on his second evaluation. Like Singh, Taft has a master degree in economics, but has been working for the city of Newport for less than two years and is only $24$ years old. Taft had also worked closely with Fryer before being transferred to his new assignment ten months ago. Recently, the mayor of the city had recieved a letter from a regional director of a major government agency praising Taft and Fryer's amaxing research. Marcus Singh's relationship with Fryer and Taft and others in the department have been good. On some occaisions though, he has found himself in awkward disagreements with coworkers in areas he had strong opinions. Pay raises were awarded, and Marcus did not recieve a raise due to his appraisal. Marcus was also observed surfing the internet for a while at work.

What are the problems in this case? Could these problems have been avoided? How? Please write a one page response.