Human capital forms the foundation of an organization’s success. Recognizing this, organizations invest significant resources in hiring the best available talent and training them according to the organization’s vision, making them valuable assets for growth. While hiring and training are essential, monitoring and evaluating human resource performance in line with organizational standards is equally important. This is typically done through performance appraisals, a critical system for enhancing employee satisfaction and organizational effectiveness.
Performance appraisal systems serve as a mechanism to assess employee performance, significantly influencing job satisfaction, motivation, and commitment to the organization. By evaluating employees, organizations can determine how effectively they meet their responsibilities and identify areas for improvement, leading to more targeted training and development efforts that boost productivity toward achieving organizational goals.
This process not only keeps the organization informed about workforce performance but also provides input for allocating resources and creating growth opportunities for employees. Given the universal nature of performance appraisal objectives, organizations worldwide use various techniques and tools to assess employee performance in alignment with their standards, strategic goals, and vision.
In Pakistan, the most widely used performance appraisal method is the traditional ranking or rating system through the Annual Confidential Report (ACR) or Performance Evaluation Report (PER). This method involves an employee being ranked by their immediate supervisor based on both objective and subjective attributes. The recognition and feedback from this process can significantly enhance job satisfaction and motivation, making employees feel more valued and integral to the organization’s operations.
One of the most common employee performance appraisal systems, with some structural variations, is the 360-degree system. This method involves feedback from both vertical and horizontal dimensions, where supervisors, managers, peers, and subordinates all provide input on an employee’s performance. Another approach is Management by Objectives (MBO), in which employees and supervisors mutually assess progress toward quantifiable goals. Additionally, Behaviorally Anchored Rating Scales (BARS) is a common technique where immediate supervisors rate an employee’s performance based on specific behaviours. Other methods include the critical incident method, skills-based appraisals, and employee self-assessment.
In Pakistan, employee performance evaluation in most public and semi-public sectors follows a formal hierarchical approach. This process typically involves an assessment by the employee’s immediate supervisor or manager using the well-known performance assessment tool, the Annual Confidential Report (ACR). The primary purpose of the ACR is to evaluate an employee’s performance over the year, focusing on professional, personal, and behavioral attributes across various dimensions such as efficiency, effectiveness, and contributions to the organization’s growth.
The ACR also allows supervisors to provide feedback on the strengths and weaknesses of their subordinates. In addition to its evaluation function, the ACR serves as an accountability tool, ensuring that employees are assessed based on predefined criteria. The information gathered from ACR provides valuable input to decision-makers – including immediate supervisors, the human resources department, and higher management – on issues such as employee strengths and weaknesses, benefits and compensation, career progression and promotions, and training and development needs.
The ACR derives its name from its annual frequency and the confidentiality of its assessment process. The confidentiality aspect of the ACR serves several purposes: first, it ensures the privacy of sensitive personal information and performance insights, protecting them from other employees and stakeholders. Second, it promotes an unbiased, pressure-free evaluation process, allowing assessors to provide honest feedback without fear of repercussions. Third, confidentiality maintains the formal flow of information necessary for organizational control over decisions related to training, promotions, benefits, disciplinary actions, salary adjustments, and other human resource matters.
However, despite these objectives, the ACR system in Pakistan has often been criticized for being biased, inefficient, subjective, and exploitative. It is frequently regarded as a flawed mechanism, prone to discrimination and favoritism, as it relies heavily on the subjective perceptions of supervisors, who may allow personal biases or preferences to influence their evaluations of subordinates.
In many settings, the system is unidirectional, as it only involves employee performance feedback from supervisors. In less developed countries like Pakistan, where true leadership is often lacking in management, supervisors may use the ACR as a tool to exploit employees who do not align with their personal or professional agendas. As a result, many employees spend more time trying to please their managers than focusing on their actual performance. By leveraging these relationship dynamics, employees often secure better ACR scores from their supervisors, even with subpar performance. In contrast, those who refrain from indulging in such behaviour may receive lower scores despite excellent performance. In societies like Pakistan, these deviations occur openly, as there are no effective mechanisms to address the grievances of lower-level staff against their supervisors or managers.
When an employee files a complaint about bias, discrimination, or injustice, the higher administration typically sides with the supervisor or manager. Under these circumstances, employees in countries like Pakistan often prioritize pleasing their managers to secure their growth, success, and job security rather than striving to meet the highest performance standards. Rationally, many employees willingly or unwillingly focus on relationship management and workplace politics to advance their careers and gain perks and privileges. This tendency to prioritize relationships over performance can severely damage an organization’s growth prospects in both the short and long term. When an organizational structure rewards employees based on relationships rather than performance, the workforce devotes more energy to maintaining favorable relations with their supervisors than delivering the required results.
In the short term, this unjust appraisal process fosters resentment among high-performing employees who feel deprived of recognition despite their superior work. Over time, this behaviour creates a disconnect between organizational goals and individual contributions, ultimately stifling excellence by demotivating top performers. As a result, organizational efficiency and growth suffer in the long run. Additionally, when genuine performers are not recognized, innovation is stifled. High-performing individuals in such a hostile environment may become reluctant to share their best ideas or take risks, knowing that their contributions will not be acknowledged.
The worst long-term outcome of this flawed appraisal system is extreme and persistent dissatisfaction among employees, leading to their disengagement or irrelevance within the organization. This, in turn, results in higher turnover rates as top talent seeks opportunities in environments where merit and performance are valued over relationships.
If left unaddressed, a situation where management decisions are influenced by personal biases can pose serious challenges to an organization's survival and growth. This dynamic can hinder an organization's ability to adapt to changing market conditions, ultimately damaging its competitiveness and development.
Two major factors contributing to poor performance and strategic corruption in Pakistan's public and semi-public sectors are the absolute power held by managers and the unidirectional feedback system, where only managers assess their subordinates' performance. This one-sided approach leaves no room for feedback from subordinates, allowing managers to exercise significant control over evaluations without fear of accountability or reverse feedback.
To address the potential for biased decision-making through unilateral appraisals, organizations should consider adopting a 360-degree appraisal system, which would make the evaluation process more effective in judging performance and allocating rewards. In such a system, both managers and employees assess each other's performance based on well-defined criteria. For example, if managers provide feedback on job-related milestones and behavioral aspects, employees should also have the opportunity to rate their supervisors on attributes such as integrity, honesty, impartiality, and fairness.
This bidirectional feedback system should be taken seriously in decisions regarding career progression and resource allocation. Implementing a 360-degree appraisal process would promote a growth-oriented and healthier work environment by encouraging managers to conduct unbiased and honest evaluations. On the one hand, this approach would foster greater respect for management among employees, and on the other, it would ensure that top performers receive appropriate recognition and appreciation.
Ultimately, such a system would cultivate a growth-oriented organizational culture, fostering loyalty and creating a new trajectory for success and sustainable growth.
The writer is an assistant professor at the Air University, Aerospace & Aviation Campus, Kamra. He can be reached at: nayyar.rafiqueaack.au.edu.pk