Comparing the Performance Appraisal Practices in Large Firms with the Directions in Research Literature: Learning More and More about Less and Less

Abstract

Managers responsible for the performance appraisal practices of the Fortune 100 were surveyed to describe their firm's current practices and to solicit their views regarding important issues related to these practices. First the results of the survey are reported. These results are compared to the current research directions and issues discussed in human resource journals over the past five years. Survey results reveal that performance appraisal systems in large firms were designed primarily by human resource specialists, with limited input from either managers or employees. Objective based plans are far and away the most widely used. Little concern over psychometric properties of scales is evident. Managers spend about six hours per employee per year appraising performance, but are not evaluated on how well they conduct them. According to the managers responsible for performance appraisal, employee acceptability and employee sense of fair treatment are the most important issues they face. Over 90 percent of the firms use performance appraisals in their merit pay decisions. The survey findings contrast sharply with the directions of performance appraisal research. The recently published research is dominated by cognitive process and psychometric issues; the vast majority of which are conducted in laboratory settings, using student subjects and paper people or video scenarios. The differences between current practices and concerns of managers in large organizations, and research directions are discussed. Suggestions are offered for future research.