Thread: Measuring Human Capital: Performance Appraisal Effectiveness

Measuring Human Capital: Performance Appraisal Effectiveness

Measuring human performance has long been of interest to researchers and practitioners (Avery & Murphy, 1998, Bernardin & Beatty, 1984, and Hyde, 2001). One process in measuring and evaluating human capital that has received much attention in the literature is performance appraisal (Avery and Murphy, 1998). Performance appraisal research has three general streams (Bretz, et al. 1992). First, research has focused on developing and honing instruments to more accurately and objectively measure human performance (for examples see Tznier et al. 2001, Tznier, et al., 1993). Second, research has focused on supervisor and employee characteristics as sources of potential and actual bias in the performance appraisal ratings (Cleveland & Murphy, 1992; Dewberry, 2001; Ford et al., 1986; Feldman 1981). And third, research has focused on the uses and types of performance appraisal systems within organizations (Scott & Einstein, 2001, and Lam & Schaubroeck, 1999). Literature to date has helped organizations adopt more efficient and effective performance appraisal systems. It has helped administrators understand the challenges with objectively measuring behavior as well as some of the pitfalls associated with employee and supervisor bias in administering performance appraisals. Questions that have yet to be pursued in the literature include: what leads to performance appraisal system effectiveness and how can performance appraisal system effectiveness be defined? Research shows that the measures and systems we now have are not free from bias (Cleveland & Murphy, 1992; Dewberry, 2001; Scott & Einstein, 2001; and Lam & Schaubroeck, 1999), but, how can organizations understand if their performance appraisal system is effectively producing their desired results? This study is an initial attempt at answering these questions.

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Performance appraisal, as a process of identifying, observing, measuring and developing human performance in organisations has attracted the attention of both academics and practitioners. The process is also viewed as making an important contribution to effective human resource management, as it is closely linked to organisational performance.
Performance appraisals are used to assist individual development and organizational planning, are considered an important part of effective human resource management