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delineation of performance potential analysis 161
aspects of performance appraisals that do not hold for potential analyses are their use for
salary administration (Harris, Gilbreath, & Sunday, 1998) and for decisions concerning
employment retention or termination (Cleveland et al., 1989; Ilgen, Barnes-Farrell, &
McKellin, 1993). In addition, a significant purpose of potential analysis is the identi-
fication of training needs which in contrast might be a minor matter in performance
appraisals.
Further, potential analysis usually differs from performance appraisal in the sources
which are used to obtain performance evaluations. Although in principle there are var-
ious sources for performance appraisals (see Fletcher in this volume; Landy, 1989), in
most cases the immediate superior renders the judgment (Hentze, 1980; Moorhead &
Griffin, 1995; Viswesvaran, Ones, & Schmidt, 1996). In contrast, potential assessments
are usually obtained from multiple sources. Potential analysis involves not only an imme-
diate superior as judge but also higher-level managers and human resources specialists.
Sources used for potential analysis are dealt with in more detail later in this chapter and
in the chapter by Altink and Verhagen (this volume).
Another major difference between potential analysis and performance appraisal is the
kind of rating dimensions by which the performance is measured. The latter ranges from
(a) non-judgmental measures or results of performance such as output, turnover and
absenteeism to judgmental measures such as (b) observable job behavior, and (c) per-
sonal characteristics, i.e., traits, such as initiative, honesty, and flexibility (Landy & Farr,
1983; Latham, 1986). Behavioral dimensions and results are preferred in performance
appraisals whereas personal characteristics are most common in performance prediction.
Non-judgmental measures as the outcome of behavior are performance indicators which
best meet the organizational goals; and it is these results which should be employed
if work outcomes can be reached by two or more ways of behavior. For example, a
reduction in costs (as a result criteria) for employees in the sales department may be
reached by various behaviors. The employees could either reduce the period allowed
for payment for one or several clients. Alternatively, they could reduce costs by using
cheaper and less office equipment. Further, behavioral feedback is most easily under-
stood by the individual and applicable to future behavior. Additionally, the dimensions
which are used for performance appraisals are related to the current position, i.e., to
what the individual actually does. However, as potential analysis aims at the prediction
of behavior rather than the evaluation of past behavior, it should not apply to a specific
position but rather to a family of jobs with requirements not yet known in detail. In this
case, the use of personal traits as rating dimensions might be more favorable since they
may offer the desired transsituational generalizability when an individual’s performance
with regard to a new situation is to be predicted (Landy & Farr, 1983). Moreover, Landy
and Farr argue that personal traits may cause or limit performance levels and in this way
relate to the performance maximum rather than to typical performance. Schuler (1991)
points out that traits are more abstract than behavioral dimensions or outcome measures
and therefore allow for better comparisons across individuals as well as different jobs.
The latter refers exactly to what is required for potential analysis. It should be noted,
however, that trait dimensions used in performance appraisals are normally inferred
from the work behavior observed. The direct measurement of traits (by use of person-
ality tests) is unusual. That would be a self-assessment and superiors would not accept
non-involvement in the appraisal process as they are responsible for administrative de-
cisions based on performance appraisals.