Key Concept

The annual appraisal interview has a lasting impact on the perceptions and attitudes of employees. Treat people with respect and you encourage the kinds of behaviours that create value for shareholders and stakeholders. Get the interview wrong, on the other hand, and you put the organization at increased risk.

Idea Summary

Treat people with respect and you encourage the kinds of behaviours that create value for shareholders and stakeholders.

The high-profile scandals that have engulfed both the private and public sectors in recent years have focused attention on unethical behaviour — and ways to prevent it. It’s been acknowledged that organizations have to do more than promulgate ethical codes and ask people to follow them. Formal measures only work if supported by the informal side of the organization — i.e. an ethical culture.

Ethical cultures are complex and not created over night. They can, however, be influenced by relatively simple and relatively ‘standard’ things — and one of these is the annual performance appraisal.

Researchers at Rotterdam School of Management, Erasmus University and the Amsterdam Business School have found that the way the annual appraisal interview is carried out can make employees more or less likely to ‘go the extra mile’, correct ‘faulty’ procedures and generally act in the best interests of the organization.

Based on a sample of German police officers, randomly selected from two police forces, their study tests the relationship between perceptions of organizational justice (fairness), ‘affect’ (feelings and emotions), and ethical and unethical work behaviours.

The results suggest that performance appraisals symbolize the trustworthiness of organizations and supervisors to employees — and that they can have long-lasting effects. Police officers evaluated their appraisals in terms of how fair they seemed to them, and their perceptions had strong implications for their subsequent behaviour.

The researchers found that perceptions of fairness were correlated with perceptions of the support received from supervisors and, to a lesser extent, the organization. Employees who felt supported by their supervisor and organization tended to behave more ethically at work. Those who believed themselves to have been treated shabbily, on the other hand, were more inclined to flout the rules afterwards — showing up late for work and taking over-long breaks — and continued to hold that grudge for the following months.

Importantly, perceptions of organizational justice were not closely linked to whether the appraisal was positive or negative. Even a good review could have an adverse effect on behaviour — if carried out in a way that was perceived to be disrespectful.

The results can be encapsulated like this: people are more likely to work well for you if they believe you’re conscientious and you care. The study lends further support to the ‘reciprocal’ model of working relationships. (See Ideas 164 and 165.)

Business Application

The research confirms that the 30-60 minute yearly performance appraisal is a key event in the HR calendar — and one that should be handled carefully. The quality of the interaction between employee and interviewer will be critical. “Many respondents,” say Jacobs, Belschak and Den Hartog, “wrote long and highly emotional descriptions of how they perceived the distanced and formal atmosphere of performance appraisal situations as inappropriate.”

Leaders tend to get the followers they deserve. The more conscientious and ‘pro-social’ they are, the more conscientious and ‘pro-social’ their employees will be.

Certain specific recommendations for the supervisor carrying out the interview can be inferred from the research:

• Create a relaxed atmosphere. (Sitting behind a desk might be a bad idea.)
• Don’t rush it — or give the impression it’s just another thing on your list.
• Don’t avoid bad news. Deliver it calmly and honestly — treat the employee as a grown-up, not a child.
• Give the employee ‘room’ to let off steam and vent their feelings. (Don’t allow bad feeling to ‘travel’ for the rest of the year.)

The appraisal is not only of great ‘symbolic significance’ for employees but also important for the future performance of the organization. In an article posted on RSM Discovery recently, Jacobs says that it can trigger ethical behaviour — as well as prevent its opposite. The corollary is that it can make a disaffected employee happier. The golden rule: treat the interview and the interviewee with respect.