Effectiveness of performance appraisal

Abstract

Purpose – The purpose of this paper is to develop a conceptual framework for the effectiveness of performance appraisal (PA) systems by using a competing values approach. Design/methodology/approach – The review employs a three-step approach: first, the paper discusses the existing criteria to determine the effectiveness of PA systems, and presents criticisms of these criteria. Second, the paper reviews the literature on the competing values model of organizational effectiveness. Third, the paper integrates the PA system in the competing values model to develop a comprehensive framework for the effectiveness of PA systems. Findings – A practical model is developed, taking into account the processes and procedures involved in PA systems. Originality/value – The paper is designed to provide a guideline for managers to consider the effectiveness of a PA system. The paper suggests that assessing the effectiveness of a PA system on any single criterion ignores various important aspects of the system. Moreover, the effectiveness of a PA system should be based on the values and preferences of all major stakeholders of the system, i.e., appraisers, appraisees and the organization.