ExpertReview and Appraisal of Individual Performance
Learning outcomes
- Understand the purpose and methods of performance appraisal.
- Identify barriers to effective appraisals.
The Purpose of Appraisals
Performance appraisals are formal reviews of an employee's work. They serve three main purposes:
- Reward: Deciding on pay raises or bonuses.
- Performance: Identifying areas for improvement.
- Development: Identifying training needs for future career growth.
Appraisal Methods
- Top-Down: Manager reviews subordinate (traditional).
- 360-Degree Feedback: The employee is reviewed by their manager, their peers, their subordinates, and sometimes customers. Provides a fully rounded view.
Which appraisal method involves gathering feedback from an employee's manager, colleagues, and direct reports?
The Halo and Horns Effect
A major barrier to fair appraisals is bias.
- Halo Effect: The manager likes one thing about the employee (e.g., they are always punctual) and assumes they are brilliant at everything else.
- Horns Effect: The manager dislikes one thing (e.g., messy desk) and rates them poorly on everything.
Barriers to Effective Appraisals
Other than bias, appraisals fail due to:
- Central Tendency: The manager is afraid of conflict, so they rate everyone as 'average' (3 out of 5).
- Recent Event Bias: The manager only remembers what the employee did last week, ignoring the previous 11 months.
A manager rates an employee as 'Excellent' in all categories simply because the employee recently closed a big sale, despite poor performance earlier in the year. This is an example of:
Exam Focus
Appraisals should be a two-way conversation, not a lecture. The best appraisals use the 'Tell and Listen' or 'Problem Solving' approach, rather than 'Tell and Sell' (where the manager just dictates the review).
What is the 'Central Tendency' error in performance appraisals?
Which of the following is a key feature of an effective appraisal meeting?
If an appraisal is used to determine who gets a pay raise, it is fulfilling which purpose?
Ready to put this into practice?
Ready to test yourself?
ACCA BT — Business & Technology Practice Exam 3
Premium mock exam replication for ACCA Business and Technology (BT). This exam mirrors live computer-based testing parameters, featuring 46 Objective Test Questions (Section A) and 6 Multi-Task Questions (Section B). It covers the complete syllabus: Business Organization, Structure & Governance, Technology & Regulation, Leadership, Personal Effectiveness, and Professional Ethics.