APTER 10: STRATEGIES FOR EFFECTIVE PERFORMANCE APPRAISAL SYSTEMS
329
7. Training programs should be implemented to (a) help raters avoid common
perceptual errors in evaluations and (b) help raters with their performance
r eview/feedback skills.
The
link between the performance appraisal system and the organization's
8.
long-term strategic plans should be clearly defined.
9. In general, a successful performance appraisal system should be built around
clear objectives, have the support of both management and employees, be
flexible enough to adapt to organizational changes, and foster open discussions
between supervisors and employees.
0. The validity of the performance appraisal system should be examined at regular
intervals.
Questions for Review
1. What are some of the major strategic choices that organizations should make prior to implementing a performance
appraisal system?
2. Why is a job analysis important to the performance
appraisal system design?
3. What are the differences between the behavioral methods
and the personnel comparison methods of performance
appraisal?
6. How does the halo effect differ from stereotyping?
7. What are some ways that an evaluator can avoid recency
effects?
8. How can evaluators avoid leniency, strictness, and central
tendency errors in ratings?
9. What are some characteristics of an unsuccessful versus a
successful performance appraisal system?
4. What is the purpose of a performance appraisal?
5. What is the relationship between the performance
appraisal system and the strategy of the organization?
Case: Xerox Revamps Performance Appraisal System 47
Kerox Corporation was faced with a problem—its performance appraisal system
was not working. Rather than motivating the employees, its system was leaving
hem discouraged and disgruntled. Xerox recognized this problem and developed a
iew system to remedy the situation.
rHE OLD SYSTEM
[he original system used by Xerox encompassed seven main principles:
1. The appraisal occurred once a year.
2. It required employees to document their accomplishments.
3. The manager would assess these accomplishments in writing and assign
numerical ratings.
4. The appraisal included a summary written appraisal and a rating from 1
(unsatisfactory) to 5 (exceptional).
5. The ratings were on a forced distribution, controlled at the 3 level or below.
6. Merit increases were tied to the summary rating level.
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PTER 10: STRATEGIES FOR EFFECTIVE PERFORMANCE APPRAISAL SYSTEMS
331
Seventy percent met their personal and work objectives
Seventy-seven percent considered the system a step in the right direction
In conclusion, it can be clearly seen that the new system is a vast improvement
er the previous one Despite the fact that some of the philosophies, such as the use
f self-appraisals, run counter to conventional management practices, the results
peak for themselves.
In May 2008, Xerox was awarded one of the prestigious National
nvironmental Performance Track awards by the Environmental Protection Agency.
"al-daily due to an improved performance evaluation system for employees and
,inanagers, Xerox reached out to local communities, worked with state agencies, and
4emonstrated environmental stewardship at the corporate level. The Performance
Track is the EPA's most comprehensive environmental leadership program. Xerox
made a commitment to go beyond its legal requirement and through commitment,
performance communication, and employee performance feedback and awards, they
were able to earn this top honor.
QUESTIONS FOR DISCUSSION
1. What type of performance appraisal is central to the new system at Xerox?
Which, if any, of the criteria for a successful appraisal system does this new
system have?
2. Given the emphasis on employee development, what implications does this
have for hiring and promotions?
3. How do you think management feels about the new performance appraisal
system? Why?
4. Are there any potential negative aspects of the new performance appraisal
system?
Additional Readings
Banker, R. D., S. Lee, G. Potter, and D. Srinivasan. "Contextual
Analysis of Performance Impacts of Outcome-Based Incentive
Compensation." Academy of Management Journal 39 (1996),
pp. 920-948.
Bartel, A. P. "Productivity Gains from the Implementation of Employee
Training Programs." Industrial Relations 33 (1994), pp. 411-425.
Becker, B. E., and M. A. Huselid. "Strategic Human Resources
Management: Where Do We Go From Here?" Journal of
Management 32 (2006), pp. 898-925.
Cho, S., R. H. Woods, S. Jang, and M. Erdem. "Measuring the Impact
of Human Resource Management Practices on Hospitality Firms'
Performances." Hospitality Management 25 (2006), pp. 262-277.
Collins, C. J., and K. G. Smith. "Knowledge Exchange and
Combination: The Role of Human Resource Practices in the
Performance of High-Technology Firms." Academy of
Management Journal 49 (2006), pp. 544-560.
Combs, J., Y. Liu, A. T. Hall, and D. Ketchen. "How Much Do
High-Performance Work Practices Matter? A Meta-Analysis of
Their Effects on Organizational Performance." Personnel
Psychology 59 (2006), pp. 501-528.
Evans, W. R., and W. D. Davis. "High-Performance Work Systems
and Organizational Performance: The Mediating Role of
Internal Structure." Journal of Management 31 (2005),
pp. 758-775.
Felin, T., W. S. Hesterly. "The Knowledge-Based View, Nested
Heterogeneity, and New Value Creation: Philosophical
Considerations on the Locus of Knowledge." Academy of
Management Journal 32 (2007), pp. 195-218.
Grandey, A. A., G. M. Fisk, A. S. Mattila, K. J. Jansen, and L. A.
Sideman. "Is 'Service with a Smile' Enough? Authenticity of
Positive Displays during Service Encounters." Organizational
Behavior and Human Decision Processes 96 (2005),
pp. 38-55.
Hatch, N. W., and J. H. Dyer. "Human Capital and Learning as a
Source of Sustainable Competitive Advantage." Strategic
Management Journal 25 (2004), pp. 1155-1178.
Hui, L. "Do It Right This Time: The Role of Employee Service
Recovery Performance, Perceived Justice, and Customer Loyalty
after Service Failures." Journal of Applied Psychology 92 (2007),
pp. 475-489.
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