Page 157 - Psychological Management of Individual Performance

140 performance appraisal
defined in a fixed range. The expenses cannot exactly be estimated beforehand, which is
a disadvantage for the company.
The second possibility is that the company fixes an amount for bonus salaries for a cer-
tain department. This amount has to be distributed in a fair method among the employees
of the business unit. The dilemma for the superiors is that they cannot define a certain
amount for each employee because it depends on the performance of all employees. The
disadvantage for the employees is that they do not know exactly how much bonus they
can get.

CAN PERFORMANCE APPRAISAL SYSTEMS BE USED
FOR BOTH OBJECTIVES AT THE SAME TIME?
A performance appraisal system should not be used for personnel development and salary
distribution at the same time, for the main reason that the employee will probably behave
differently in a feedback dialogue according to its aim. If the aim is to appraise goal
achievement in order to fix a bonus, employees will tend to highlight their achievements.
It is then difficult to admit weaknesses. The goal of salary distribution dominates the
developmental function of the appraisal system. In spite of this, in real life, performance
appraisal systems are often used for both objectives at the same time.
There may be a compromise between these two purposes by combining the perfor-
mance appraisal system with goal-setting, as the achievement of defined goals is another
dimension on which the employee is appraised.
This can be used as one step on the way to a flexible pay or bonus system which
is performance related. As goal setting can be used to define goals for the personal
development of the employee, this also becomes a clear objective. That method may
help to realize personal development, but it does not solve the problem of the employee
being less willing to admit weaknesses when his or her bonus is going to be defined.

INTRODUCTION OF A PERFORMANCE APPRAISAL SYSTEM

ARGUMENTS FOR A PERFORMANCE APPRAISAL SYSTEM

When introducing a performance appraisal system in a company, it is necessary to have an
influential advocate who supports the process. Someone from the corporate management
or from the executive board has to be convinced of the benefits of performance appraisal
and then support the introduction of such a system. If the appraisal system is only
implemented by the initiative of the personnel department it is highly probable that it
will not be successful. The introduction of an appraisal system should be a decision made
as part of the business policy and not just as a service of the personnel department.
If the members of the corporate management are not convinced of the advantages of
the appraisal system, it is the task of the human resources management to convince them.
At this point the personnel manager should use more economical than “soft” arguments:
it is not reasonable to use arguments such as “the employees will feel happier with
feedback” or “corporate climate will improve”. We have observed that people of the
personnel department have a tendency to use these “soft” arguments, but are not very
successful by exclusively referring to them.