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-2173 John Bratton,Jeff Gold; Human Resource Management; Theory and Practice 4th ;Palgrave McMillan,pge-284

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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.

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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

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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.

12 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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