Case study

Two generations ago or so many HR articles decried problems with performance appraisal. A common complaint was that managers did not devote sufficient time to conducting the appraisals and that biases were rampant. Another common complaint was that most managers gave high ratings to all employees and did not bother to properly differentiate and carefully document the performance evaluation of subordinates. Several old surveys reported that three quarters or more of employees hated performance appraisals and found them to be useless, increasing tension at work (Gomez-Mejia & Mussio, 1975). Today, performance appraisals are standard practice in American businesses and presumably these are used to make key HR decisions, such as distributing merit pay and incentives, screening people for promotions, providing feedback, choosing candidates for layoffs, ensuring equal pay for equal work, and such. Many organizations have spent a lot of money in designing and redesigning appraisal systems; and a specialized cadre of HR consultants, industrial psychologists, and other academics have focused most of their efforts and/or research on improving appraisal systems (such as reducing interpersonal biases in the evaluations). Surprisingly, a 2010 large-scale survey of 750 HR professionals conducted by New Yorkbased consulting firm Sibson Consulting Inc. and WorldatWork, a professional association, found that, if anything, dissatisfaction with performance appraisal systems had gotten worse over the years. Only 3 percent of HR executives graded their own performance appraisal system as A, and the majority rated it as C or below. In what seemed like dj-vu, these new -generation HR executives say they are frustrated that managers dont have the courage to make truthful appraisal decisions and to give constructive feedback to employees.

1. How would you explain this? Discuss

2. Do you see this situation as a lack of progress or as an indication that some faulty assumptions continue to be made by HR professionals who design these programs?

3. Based on what you have learned in this course, what implications does this have for HR practices that presumably rely on accurate assessment of employee performance (such as promotions and merit pay decisions)?