Using the below information - Discuss the difference between Developmental and Administrative uses of performance appraisals.

Developmental versus Administrative Uses of Performance Appraisal

Another key debate in performance appraisal is how to balance the foundational performance appraisal purposes of employee development and administrative decision-making (Bernardin & Beatty, 1984). Some researchers argue that appraisals are more accurate and useful for improving performance if they are diagnostic and not linked to pay or other administrative outcomes. Opponents argue that employees will not take the process seriously unless there is a bottom-line outcome. Where managers make mistakes is linking performance appraisal ratings solely to monetary rewards. This is dysfunctional for several reasons including the classic case of goal displacement in which monetary rewards focus employee attention and effort on the measured behaviors (quantity of output) at the expense of equally important, but unrewarded, job duties (such as maintenance). In addition, it is important to reject embracing the Theory X view that employees are motivated by money alone and not the intrinsic satisfaction that occurs from a job well done, and the failure to recognize the utility of nonmonetary rewards such as recognition and time off. Another de-motivating factor is the bait and switch routine in which organizations make mid-year corrections on performance pay formulas thereby reneging on promised rewards. Other characteristics that reduce employee trust are the linkage of the appraisal rating and compensation system in the absence of employee input into the performance standards and an absence of clear communication and employee understanding regarding how managers make performance decisions. Performance appraisal information is most accurate and comprehensive when used to developmentally coach and mentor employees. Using performance appraisal ratings for administrative decisions inflates ratings as managers seek to reduce raterratee conflict and maintain workplace harmony. It also reduces the breadth, depth, and accuracy of performance feedback given concerns that honest feedback may adversely influence employee job standing. One solution is for the first level supervisor to present an overall summary of employee performance to a panel of senior managers who make the final administrative decisions. This removes the direct responsibility from supervisors, enabling them to assume the role of coach providing performance feedback.

There is an inherent conflict between the administrative and development applications of performance appraisal systems. For example, when managers use appraisal ratings for compensation and promotion decisions, there is an unfortunate natural tendency to reduce the quality and quantity of performance feedback to reduce employee anxiety and manager discomfort. Hence, if an adverse action such as a layoff occurs, the absence of balanced feedback accentuates the surprise effect. Over the long run, this cycle erodes the two-way communication needed for effective performance management. Organizations sometimes embrace performance appraisal religion right before layoffs. The underlying motive is to protect the company from a legal liability from wrongful discharge and discrimination lawsuits. The unfortunate consequence of the instrumental use of performance appraisal is the erosion of employee trust and the reduction in the motivational value of performance appraisal.