Performance Appraisal's Impact on Employee Performance: Analysis

This report investigates the impact of performance appraisal on employee performance, focusing on Marks and Spencer. The research encompasses five chapters, beginning with an overview of the topic, research aims, objectives, and structure. The literature review delves into the concept and process of performance appraisal, including methods like 360-degree feedback and rating scales, and explores the concept of employee performance and influencing factors. The research methodology outlines the approach, design, sampling, data collection, and analysis techniques. Findings and analysis are presented in chapter four, while the final chapter offers conclusions, recommendations, and references. The study aims to determine how performance appraisal systems affect employee performance, identifying key factors and effective appraisal methods. The report examines the performance appraisal system of Marks and Spencer, its factors, and its influence on employee performance.

Running head: IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE
Impact of Performance Appraisal on Employee Performance
Name of the Student:
Name of the University:
Author’s Note:

IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 1
Executive Summary
The entire research work is divided into five key chapters. In the first chapter the
overview of the research topic along with the research aims, objectives and the research aims are
provided. In other words the first chapter provides an overall outlook of the entire dissertation.
The second chapter had focused on reviewing the wide range of literature based on the topic
“Impact of performance appraisal on employee performance”. This has helped the researcher to
get an in depth understanding of the research issue. The third chapter provides the overview of
the research methodologies adopted in the research work. Chapter four is focused on analyzing
the data gathered for substantiating the research hypothesis while the last and final chapter
provides a broad conclusion and a few plausible recommendations.

IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 2
Acknowledgement
The research conducted by me has been one of the enriching experiences of my life. This
research helped me in gaining enhancing experience by providing me the understanding to
skilfully carry out the research. The research helped me in overcoming the drawbacks by facing
them skilfully. However, this would not have been possible with the help and encouragement I
received from my professor. I also received the encouragement from my peers and all the people
who helped me carry out the research. I would like to thank my supervisor
_______________________________ for the constant support and encouragement to carry out
the research. It would not be right if I do not thank my academic guides who have constantly
assisted me in the research. I would also like to thank by friends who helped and encouraged me
for the research. Finally, I would like to thanks the customers who participated in the survey that
was conducted to gain primary data. The support of all these people has been enhancing and
inspiring throughout the research process.
Heartfelt thanks and warmest wishes,
Yours Sincerely,

IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 3
Table of Contents
Chapter 1..........................................................................................................................................6
1.0 Introduction................................................................................................................................6
1.1 Background of the Organisation............................................................................................6
1.2 Problem Statement.................................................................................................................7
1.3 Research Rationale................................................................................................................7
1.4 Aims of the Research.............................................................................................................8
1.5 Objectives of the Research....................................................................................................8
1.6 Research Questions................................................................................................................9
1.7 Structure of the Dissertation......................................................................................................9
Chapter: 2.......................................................................................................................................10
2.0 Literature Review....................................................................................................................10
2.1 Concept of Performance Appraisal......................................................................................10
2.1.1 Process..........................................................................................................................12
2.1.2 Assessing Systematically..............................................................................................12
2.1.3 Key Objective...............................................................................................................12
2.1.4 Scientific and Periodic Evaluation:..............................................................................12
2.2 Process of Performance Appraisal.......................................................................................12
2.2.1 Establishing the Performance Standards......................................................................14
2.3 Responsibility of Performance Appraisal............................................................................16

IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 4
2.3.1 Supervisor.....................................................................................................................16
2.3.2. Subordinates................................................................................................................17
2.3.3 Peer Groups and team Members...................................................................................17
2.3.4 Customer Appraisal......................................................................................................18
2.4 Methods of Performance Appraisal.....................................................................................18
2.4.1 360 Degree Feedback Method of Evaluation...............................................................18
2.4.2 Rating Scale Method.........................................................................................................19
2.4.3 Critical Incident Method...............................................................................................19
2.5 Concept of Employee Performance.....................................................................................19
2.6 Factors Affecting Employee Performance...........................................................................20
2.6.1 Leadership.....................................................................................................................21
2.6.2 Coaching.......................................................................................................................21
2.6.3 Performance appraisal..................................................................................................21
2.6.4 Motivation.....................................................................................................................22
2.6.5 Training.........................................................................................................................22
2.7 Role of Performance Appraisal in Improving Employee Performance...............................23
2.7.1 Commitment of the Employees....................................................................................24
2.7.2 Skills of the Employees................................................................................................25
Chapter: 3.......................................................................................................................................26
3.0 Research Method.....................................................................................................................26

IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 5
3.1 Introduction..........................................................................................................................26
3.2 Research Approach..............................................................................................................26
3.3 Research Design..................................................................................................................27
3.4 Sampling Method.................................................................................................................29
3.5 Data Collection Method.......................................................................................................29
3.6 Techniques of Data Analysis...............................................................................................30
3.7 Accessibility Issues..............................................................................................................30
3.8 Ethical Issues.......................................................................................................................31
Chapter 4:.......................................................................................................................................32
4.0 Findings and Analysis..............................................................................................................32
Chapter: 5.......................................................................................................................................40
5.0 Conclusion and Recommendation...........................................................................................40
Reference List................................................................................................................................43
Appendix-1....................................................................................................................................50

IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 6
Chapter 1
1.0 Introduction
Performance appraisal is considered among one of the key material of the performance
management system that incorporates various measurements within the organisations.
Performance appraisal could be considered as the most important process if and only if the
organisation is willing to derive maximum advantage of its most valuable asset, which is the
employees (Harrington and Lee, 2015). Therefore, it can be stated that if the organisations are
willing to obtain the human capital advantage they should make sure to implement as appropriate
performance appraisal system within their human resource management structure. As argued by
LePine et al., (2016) performance appraisal can leave an effective impact over the performance
of the employees. In other words, performance appraisal is an effective tool for identifying the
skills and competencies of the employees. This helps the organisation to recognise those skills
and competencies and thereby rewarding them for their hard work. This in turn motivates the
employees and marks and impact on their performance (Zhong et al., 2016). This research work
has shed light on the detailed process through which performance appraisal system affects the
performance of the employees of Marks and Spencer.
1.1 Background of the Organisation
Marks and Spencer PLC was formed in the year 1884 by a Polish refugee Michael Marks
and its first stall was opened in Leeds. Presently the company can be identified as one of the
largest retailers in the United Kingdom. It owns 300 Marks and Spencer’s stores in the United
Kingdom alone (Annualreport.marksandspencer.com, 2017). These stores generally sell
footwear, gift items, apparels, food and home furnishing products among which most of the

IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 7
products are labelled St Michael Brand which is a private brand of M & S. The company also
owns more than 100 exclusive Marks and Spencer stores in Europe, Canada and Hong Kong and
at the same time it also franchises 85 M & S stores in Europe, Bahamas, Middle East and
Australia. Marks and Spencer also operates in the food industry and 60% of its UK business
turnover is generated from the food industry. The Marks and Spencer first spread its wings in the
food market during 1931 selling the canned foods and produces. Currently the company sells
food products through 942 UK based stores that includes 253 company owned and 383 franchise
food only stores (Annualreport.marksandspencer.com, 2017). The company has depicted a
significant growth rate since the past few years and is expected that it will further flourish in near
future.
1.2 Problem Statement
This specific research work is concentrated on determining the impact of employee
appraisal system on the performance of the employees of Marks and Spencer. Marks and
Spencer has always implemented a succinct performance appraisal system and the employees of
M & S are also found to be performing as efficiently as possible leading to a drastic success of
the organisation. However, investigating the relationship between the performance appraisal
system and employee performance may in turn help the organization to enhance its employee
performance.
1.3 Research Rationale
The research is concentrated on the issue of determining the impact of performance
appraisal on the performance and productivity of an employee. In the era of globalization and

IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 8
with the emergence of ever increasing competitiveness almost all the organisations are striving to
sustain the market profitably (Iqbal et al., 2015). In order to do so the organisations are required
to increase their productivity and profitability. The most effective way of increasing the
productivity of an organisation is to motivate and drive their employees efficiently. As the
previous researches suggest if there is an effective performance appraisal process in place then
an organisation will certainly be able to enhance the performance of its employees (Ohme and
Zacher, 2015). Hence the impact of performance appraisal over the performance of the
employees is considered as the key issues of the research.
As market competitiveness is increasing over time and it can easily be inferred that it will
further increase in near future, organisations are always required to be prepared to cope with
such situation (Budworth et al., 2015. Therefore, enhancing the employee performance through
an effective performance appraisal system is considered as a major issue of research now. This
research work will investigate the key factors of performance appraisal and its role in the
performance management system. Later on the research work has minutely focused on
determining the impact of performance appraisal over the performance of the employees.
1.4 Aims of the Research
The aim of the research was to determine the key impact of performance appraisal system
on the performance of the employee. It attempted to review whether the system affects the
employee performance positively or negatively. As well as the research also aimed at
determining the most effective performance appraisal method through which employees could be
influenced more.
1.5 Objectives of the Research

IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 9
The objectives of the research can be summarized as follows,
 To get a detailed overview of the performance appraisal system of Marks and Spencer
 To determine the key factors of the performance appraisal system of Marks and Spencer
 To determine the factors affecting the employee performance in Marks and Spencer
 To determine how and in which direction employee performance is affected by
performance appraisal system in Marks and Spencer
1.6 Research Questions
The key questions of the research can be stated as follows
 What is performance appraisal system?
 What are the factors or elements of performance appraisal system of Marks and Spencer?
 What are the factors affecting employee performance in Marks and Spencer?
 How employee performance is affected by performance appraisal system in Marks and
Spencer?
1.7 Structure of the Dissertation
Figure 1: Dissertation Structure

Introduction
Conclusion and
Recommendations
Literature Review
Research Methodology
Findings and Analysis
IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 10
Figure 1: Dissertation Structure
(Source: Created by Author)
Chapter: 2
2.0 Literature Review
2.1 Concept of Performance Appraisal

IMPACT PERFORMANCE APPRAISAL ON EMPLOYEE PERFORMANCE 11
Performance appraisal is characterized as a formal system designated for reviewing and
evaluating the performance of an individual or team. A noteworthy point in the definition is the
use of the word “Formal” this is because the managers usually evaluate the performance of
individual on a continuing basis (Zhong et al., 2016).
Performance appraisal is an essential component of the performance management system.
As argued by Cascio (2018), performance appraisal is a component of the performance
management system it is important in a sense that it directly reflects the strategic plan of the
organization. However, the evaluation of the performance of a team is also essential if teams
exist within an organization, in most of the organizations performance appraisal focuses only on
evaluating the performance of individual employees. Irrespective of the emphasis an effective
performance appraisal system in turn enumerates the accomplishments of the employees and
thereby designs an effective plan for development, goals and setting up objectives (Kehoe and
Wright, 2013).
A group of researchers have observed that performance appraisal have often been
regarded as a negative or disliked activity. Managers dislike giving performance appraisal while
employees do not like receiving them. As per the data obtained through a survey it has been
observed that 80 percent of the employees were not satisfied with their performance appraisal.
Despite of all these facts performance appraisal system is still in its place because it serves
several purposes and improved performance and efficiency of the employees are crucial in
today’s competitive market environment. Therefore following the words of Pichler (2012),
deserting the only process that is concerned about performance and focuses on employees would
never be an effective decision.
The conventional performance appraisal system possesses the following characteristic features.