Performance Appraisal,its Relationship With Other Human Resources Functions

1.1 Introduction Performance appraisal, also known as employee appraisal, is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost and time). Performance appraisal is a part of career development and is linked to other human resources functions. Before discussing the link between performance appraisal and other human resources functions it is important to understand what appraisal is all about and how it affects organizations and individuals. This assignment will discuss firstly performance appraisal as a human resource management function, its uses, the problems, the methods of performance appraisal lastly the link between performance appraisal and other human resources management functions

human

resources

management

planning,promotion,remuneration training and development and dismissals. 1.2 Performance Appraisal: an overview

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Performance evaluation unlike job evaluation stresses the individual in the job rather than the job itself1. There are as many definitions of performance appraisals as there are authors. In some sources performance appraisal and performance evaluation are regarded as synonymous. The following definitions can be given, performance appraisal; •

…

is the process of systematically evaluating each

employee’s job-related strengths and weaknesses, as well as determining

ways

to

improve

his

or

her

performance.(Hellriegel and Slocum-1992:409) •

… is process of evaluating and communicating to an employee hw he or she is performing the job and establishing a plan for improvement, Byers2.

•

…is a process that provides an analysis of a person’s overall capabilities and potential allowing informal decisions to be made for particular purposes, Bratton3.

Thus it can be deduced that performance appraisal is about the reviewing of an individual performance for the reasons to be explained as uses below. 1

Leornard R.Burgess (1989): Compensation Administration 2nd Edition; Merrill Publishing Company-pge 250 2

Lioyd L.Byars,Leslie W.Rue;HRM,9th ,McGraw-Hill/lrwin,pge-217 John Bratton,Jeff Gold; Human Resource Management; Theory and Practice 4th ;Palgrave McMillan,pge284 3

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1.3 Parties in Performance appraisal The employee is obviously the subject being evaluated and the question arises; who does performance evaluation? According to Burges (1989:250); the employer’s superior, subordinates, peers, the employee, other individuals or a combination of these subjects can do performance evaluation. Groups and assessment centers are also responsible according to him. 1.4 Uses/Purposes of Performance appraisal Hellriegel and Slocum (1992:409) divided the uses of performance evaluation into four classes namely; reward decisions, personnel movement, feedback on performance and determining training needs. Rothwell and Kazanas (2003:106) states that appraisals serve as a two-fold purpose. First they furnish employees with feedback on past performance. Second they provide a starting point for planning future performance improvement. Thus performance appraisal is about evaluating employees’ performance for organizational decisions in rewarding, personnel movement (i.e. promotion, transfers and demotions) and also for individual career planning. The feedback on the current performance will probably give the employee the view of what he or she can achieve thereby planning for the future. 3

1.5 Problems in performance appraisal Every human resource function has its problems and performance appraisal is not an exception. Many performance problems can be avoided by designing performance appraisal systems. An effective performance appraisal system lets people know what is expected of them, how well they are meeting those expectations and what they can do to improve on their weaknesses4.Two major problems can be noted, subjectivity and political issues. 1.5.1 SUBJECTIVITY 1. Rater characteristics –characteristics of the rater exert a subtle and often indirect influence on performance appraisals .Younger and less experienced managers, who may have received low evaluations themselves tend to rate others strictly than older more experienced managers do. 2. Leniency- A common and often intentional rating error, occurs when a manager rates all employees in a group higher than they deserve, for any of a number of reasons. Reasons are usually unprofessional, may be; avoiding conflict, giving employees a morale boost, creating a good record for the group or making one self feel good. 4

Luis R.Gomez, Mejia-David B.Balkin, Robert L.Cardy (1998): Managing Human Resources; Prentice Hall.

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3. Halo effect-As in interviewing, the halo effect occurs in rating where the rater allows his/her knowledge of an employee’s performance one dimension to colour the rating of all dimensions. 4. Central tendency- Central tendency is a rating error that occurs when a manager gives an average rating to all employees, even when their performance varies. Manager with broad spans of management and little opportunity to observe behaviour are likely to play it safe by rating most of their subordinates in the middle of the scale rather than high or low. 1.5.2 POLITICAL ISSUES Office politics decides who gets what raise, promotion or demotion5.Thus performance appraisals will always a political bearing in organizational politics which determines who go where, who gets what and how much goes where for example R400 000 is for T&D this year. 1.6 The link between performance appraisal and other human resources management functions 1.6.1 Appraisal and Human resources planning Human resource planning is used to estimate future human resources management needs by analyzing current job occupation, turnover, transfers, promotions (as well as the related skill levels) and retirements (Haasbroek et al 2008:275).Because the managers 5

Don Hellriegel, John W Slocum, Jr (1992): Management 6th Edition; Edison-Wesley Company

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and supervisors must take decisions concerning promotions, demotions, transfers and lay-offs. Past performance appraisals normally help to determine which employee is most deserving of a promotion or other desirable job changes6.Gomez-Meja et al (2001:226) as cited in Swanepoel et al (2003:813) writes that, “performance information can be categorized under two main headings

of

administrative

and

developmental

processes”.

Administrative purposes concern the use of performance data as a basis for personnel decision making, including human resources planning, for example compiling skills inventories, obtaining information regarding positions to be created, and developing succession

plans7.

Thus

through

performance

evaluation

organizations can use that feedback whether it is positive or undesirable to plan for future personnel needs. For example which employees will need training or which skills is the organization lacking so as to determine if external recruitment is a solution. 1.6.2 Appraisal and promotion lf promotions are not fairly administered, low employee morale; high turnover can be the order of days in an organization which will ultimately reduce productivity and increase unnecessary costs. 6

P Grobler,Surrette Warnich,Michael R Carell,Norbert f.Elbert,Robert d.Hatfield(2001);Human Resource Management in South Africa3rd edition ,pge 7

Ben Swanepoel, Barney Erasmus, Marius Van Wyk, Heinz Schenk (2003): South African Human Resource Management; Theory and Practice 3rd Edition, Juta-pge813

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Performance evaluation can be used to increase and to promote an individual as well as to improve employee performance. An effective performance evaluation will also improve employee motivation.

(Burgess-1989:250).Thus

when

conducting

performance appraisal for promotion purposes subjectivity (leniency, halo error, central tendency) should be avoided so that any outcome of the appraisals will be perceived as fair by all employees who will be expecting promotion. 1.6.3 Appraisal and remuneration If the decision is made to use a merit pay system which is based on performance appraisal results, then it follows that appraisal must be done and done very well. Even if performance appraisal results are not used for merit pay purposes, there is a good reason to believe that appraisals should be done8.The most common decisions based on evaluative objectives concern compensation, which includes merit increases, employee bonuses and other increases in pay. Thus the term merit review or merit evaluation can be found in organizations using performance appraisal to determine pay increases. (Grobler et al 2001:265) 1.6.4 Appraisal and training and development 8

Edward E.Lawler,111(1981):Pay &Organization development,Pge-129

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Employee performance appraisals are especially appropriate for identifying individual training and educational needs. After all,an appraisal is intended to determine how well an individual is performing his or her job. Deficiencies stemming from the lack of individual knowledge or skill are appropriately used to identify traditional training needs; proficiencies are traditionally used to plan employee educational activities leading to promotion or other future career moves for individuals9.Carell et al (2001:265) writes that the results of appraisals influence decisions about the training and development (T&D) of employees. To him below average evaluations may signal areas of employee behaviour that may be strengthened through on- and away- from-the-job training. Of course, it is arguable that not all performance deficiencies may be overcome by T & D.lt is therefore the role of managers and supervisors to distinguish problems resulting from the lack of a critical skill or ability from those caused by low morale or some form of job dissatisfaction. 1.6.5 Appraisal and dismissals Dismissals cause movement outside the organization and invariably lead to an unplanned vacancy. They represent extreme disciplinary action and must not be taken lightly10.Dismissals 9

Rothwell William and Kazanas H.C(2003): The Strategic Development of Talent: A framework for using talent to support your organizational strategy(2003Pge106) 10 PS Nel.A Werner,GD Haasbroek,P Poisyt,T Sono,HB Schultz(2008);HRM 7th edition,pge-275

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should only be taken as the last resort after all other efforts have failed because they are costly to an organization as a severance package has to be prepared for each dismissed employee. The appraisal can establish that there is a serious performance gap between the desired and current performance. Corrective measures to make up for the performance gap should be instituted and this may include some form of training (on or off-the-job).lf performance has failed to match the required job performances, another job less challenging should be given to the employee after which failure to execute may call for the dismissal of an employee. 1.6.6 Performance appraisal and recruitment, selection, and placement Grobler et al (2001:265) are of the opinion that performance appraisal can also be used to evaluate the recruitment, selection and placement system. The effectiveness of these functions can be partially be measured by comparing employees’ performance appraisals with their test scores as job applicants. For example, management may find that applicants who scored about the same on selection tests show a significant difference in performance after one year on the job, thus the test may not accurately predict behaviour.Thus performance appraisal carried out on new Pge-275

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employees will help to determine the effectiveness of our recruitment, selection and placement processes. However negative feedback from the appraisals should not only be attributed to recruitment, selection and placement processes as there are great chances that other factors such as poor motivation and vague job tasks may also lead to unsatisfactory results. Conclusively, performance appraisal which is most concerned with the evaluation of an individual job strengths and weaknesses is not carried out in isolation. Rather the process is intertwined with other human resources functions such as human resources management planning, promotion, remuneration training and development and dismissals. Performance appraisals are of great value to any organization however the problems of subjectivity and political issues should always be taken into consideration for its effective execution.

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Question 2 2.1 Introduction 11

Unfair dismissal of an employee constitutes unfair labour practices. This contrasts with the provision section 23 of the Constitution of Republic of South Africa Act 108 of 1996 which provides that, “everyone has a right to fair labour practices”11. According to South African law an employee can only be dismissed on three conditions which are, misconduct, incapacity and operational requirements. Moreover to these conditions any dismissal should follow a fair procedure thus substantive fairness and procedural fairness. This assignment will; firstly discuss the concepts, dismissal and incapacity; secondly the considerations required in dismissing an employee on the grounds of incapacity; thirdly fair dismissal. 2.2 Dismissals and incapacity defined According to the Labour Relations Act (LRA), s186 (1) a, Dismissal means that,an employer has terminated a contract of employment with or without notice. Grogan (2007:121) writes, ‘capacity’ refers to employees’ ability to perform their work adequately. Thus from this definition we can deduce that 11

section 23 of the Constitution of Republic of South Africa Act 108 of 1996

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‘incapacity’ refers to the employees’ inability to perform their work adequately since it is the opposite of capacity. Incapacity includes incapacity due to ill-health and poor work performance12. 2.3 Considerations lf an employee is not capable of doing the work because he lacks skills, knowledge or ability and, therefore does not meet the required standards, he can be dismissed for poor work performance. 2.3.1 Probationary worker When probationary employees’ does not meet the required standards, evaluation and assistance by the employer are required. Only in instances where the employer has taken reasonable steps to help improve the employees’ performance and his performance does not improve, can be dismissal be considered. Poor performance is treated less strictly in probationary workers than in permanent workers. (Du Plessis et al-2002:311).Thus probationary workers are given more chances to work on their performances as compared to senior workers.

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JV du Plessis, MA Fouche, MN Van Wyk: A practical guide to labour law 5th Edition; Butterworths, Durban,pge

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2.3.2 Dismissal for incapacity after expiry of probation period. The employee may be dismissed for incapacity after a hearing if shown to be incapable of performing the work for which he was employed to the standards required. It is not reasonable to expect of an employer to return the services of an employee who process incapable of performing the job of which he/she was hired principles of logic and equity dictate that the employer attempts to final alternatives to dismissal by and instance offering an often less demanding post in which she is capable of performing if a situation such post be available, even if this would mean a demotion from her incumbent post. (www.roylaw.co.za). 2.3.3 Dismissal on poor work performance Section 9 of the Code of Good practice on dismissal, schedule 8 of the Act sets out the requirements when the dismissal is based on poor work performance: Any person determining whether a dismissal for poor work performance is unfair should consider; (a) whether or not the employee failed to meet the performance standard; and (b) if the employee did not meet a required performance standard, whether or not:

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(i) the employee was aware could be reasonably be expected to be aware of required standard; (ii) the employee was given a fair opportunity to meet the required performance standard; and (iii) dismissal was an appropriate sanction not meeting the required performance standard13 2.3.4 Dismissal based on ill-health If the incapacity of the employee is based on ill-health or injury, section 11 of the Code of Good Practice lays down the following guidelines: Any person determining whether a dismissal arising from ill-health or injury is unfair should consider: (a) whether or not the employee is capable of performing the work; and (b) if the employee is not capable to; (i) the extent to which the employee is able to perform the work (ii) the extent to which the employee’s work circumstances might be adapted to 13

Section 9 of the Code of Good practice

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accommodate disability, or, where this is not possible; the extent to which

employee’s

duties might be adapted; and (iii) the availability of any suitable alternative work14 2.4 Fair appraisal A proper appraisal of the employees work performance is essential to purposes of proving that the employee failed to attain the required performance standard. An appraisal serves an important function it gives the employer the chance not only to assess the employees’ performance, but also to discuss the problems that may have been identified with the employee. The employee’s capacity must be objectively assessed in relation to such factors as changes in production technique, new technology and other factors that might

be

retarding

the

employees’ performance.(Grogan-

2007:415). Unfair dismissal constitutes unfair labour practices hence they are not allowed.Numsa(National Union of Metalworkers of South Africa) successfully defended a member who was dismissed for incapacity arguing the company had not followed the relevant LRA guidelines.ln this case Lear Corporation dismissed an 14

11 of the Code of Good Practice

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employee, James White who was a Numsa member purportedly on the basis of incapacity. Lear demoted White from quality inspector to line feeder ‘operator’ after an enquiry found him guilty of poor work performance after he had approved a fault headrest. Prior to demotion, the employer became aware that he was an epileptic. However the company did not conduct medical investigations as required in terms of LRA guidelines related to discipline for incapacity. The employee also accidentally burnt himself with hot water that spilt from urn and again the company suspected that it was due to epileptic fits. The company on a latter date summoned him to an incapacity inquiry and alleged that he posed a risk to the company and fellow workers. They dismissed him in terms of Occupational Health and Safety Act (OHSA), 35 of 1993 and Numsa referred his unfair dispute to arbitration by the Motor lndustry Bargaining Council. The senior Commissioner, Wickus Ricket ordered the reinstatement of White on the same terms and conditions of his employment prior to dismissal. A compensation for 3 months was also ordered. (www.numsa.org.za).Thus consequences of unfair dismissals due to incapacity may take form of reinstatement and/or compensation.

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In conclusion, the onus lies with the employee to prove that in fact he was dismissed and was an employee at the time of dismissal while the employer has the obligation to attest that the employee was fairly dismissed. Probationary employees are treated less strictly than senior employees. Besides probationary workers, employees can be dismissed for incapacity on poor work performance and based on ill-health. Dismissals need to follow a fair procedure thus substantive and procedural fairness otherwise the employer may end up entangled in costly legal battles which are not easy to win. Also organizations need to observe all the legislations dealing with dismissal to ensure uniform standards.

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