Performance Management and Appraisal in Human Service Organizations: Management and Staff Perspectives

• DOI: 10.1177/009102601104000305
• Author: Jessica E. Sowa,Sally Selden
• Date: 01 September 2011
• Published date: 01 September 2011
• Subject Matter: Article

Performance
Management and
Appraisal in Human
Service Organizations:
Management and Staff
Perspectives
By Sally Selden, PhD, and Jessica E. Sowa, PhD
To demonstrate their effectiveness, nonprofit organizations, like public and private
sector organizations, are facing increasing pressure to demonstrate how well they
perform and their plans for future improvement. An essential part of this process of
measuring and fostering effectiveness is managing the performance of
organizational members; typically this is accomplished with performance
management processes, as the ability of nonprofit organizations to meet their
goals is directly dependent upon the ability of the staff to perform effectively in the
management and delivery of services. Performance management systems have
been studied extensively in the public and for-profit sectors but have not been
adequately explored in the nonprofit sector to surface possible sector-specific
challenges. This study addresses this gap in the nonprofit knowledge base by
comparing the utilization of different components of a performance management
system from the perspective of management and frontline staff. It identifies gaps in
the perceptions of management and staff concerning performance management
and identifies five different models of performance management systems,
concluding with lessons for practice.
Nonprofit organizations, like public and private sector organizations are facing
increasing pressure to demonstrate how well they perform and their plans for
future improvement. In recent years, the field has witnessed a surge in atten-
tion to the conceptualization and measurement of organizational performance and
effectiveness.1 Most of this research focuses on managing performance at the organi-
zational level and determining the crucial explanatory factors that can be influenced
and manipulated in order to foster performance improvement. An essential part of
this process of measuring and fostering effectiveness is managing the performance of
organizational members. Typically this is accomplished by a performance management
process, as the ability of nonprofit organizations to meet their goals is directly depend-
ent upon the ability of the staff to perform effectively in the management and delivery
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of services.2 As Twomey and Twomey3 note: “the human resource function is increas-
ingly important in shaping the new organization in which the quality and commitment
of people is key to survival. Every aspect of human resource management needs to
be reassessed but none is more pivotal or difficult than performance appraisal.” While
the efficacy of performance management for both public and nonprofit organizations
has been recognized, there currently exists a paucity of research in nonprofit organi-
zations specifically that provides useful direction for nonprofit practitioners and
scholars in the continuing quest to improve nonprofit effectiveness.
This study addresses this gap in the nonprofit knowledge base by comparing the
utilization of different components of a performance management system from the
perspective of management and frontline staff. It identifies five models of perform-
ance management that organizations in this study adopted, with one model
representing what appears to be the most comprehensive or best practice for non-
profit organizations. First, this article reviews research in the nonprofit and human
services literature on performance appraisals, the most often research performance
management tool. Second, it discusses the study’s design, including data collection
and analysis. Next, the article compares the organization’s espoused practices with
staff ’s perceptions of performance management practices, exploring the degree of
alignment between the two perspectives. Finally, the article identifies different per-
formance management models adopted and presents several important lessons
learned from this study.
Performance Management and Appraisal: A
Review of the Knowledge Base
In exploring performance management, one must start with an explanation of the
process of managing individual employee performance. The process of managing indi-
vidual performance is similar to the models used to manage performance at the
organization level. Typically, the process starts at the top of the organization with man-
agement developing a performance management policy. Managers primarily control
“performance by influencing inputs (e.g. skills by training) and by the feedback pro-
vided by outputs (assessments).”4 The ultimate objective of a performance
management process is to align individual performance with organizational perform-
ance; the process should signal employees about the organization’s goals, priorities,
and expectations and how well they are contributing to them.5 An organization’s per-
formance management process, however, is subject to interpretation by individual
employees. Employees do not necessarily react to the signals in the same way, requir-
ing the need to think about and develop theories and ideas concerning how these
employees may respond and to factor that into the performance appraisal and man-
agement process. Guest6 in particular suggests that the impact of human resource
management (HRM) practices, such as performance management, depends upon the
employee’s perception and evaluation, prompting the need for nonprofit manage-
ment scholars studying performance management to recognize the crucial role of
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employee perceptions and to incorporate them into the analysis and construction of
performance in these organizations.
Performance management often refers to or encompasses the set of activities
adopted by an organization to enhance the performance of their employees.7 Organ-
izations typically develop performance management processes to motivate
employees.8 The process can motivate employees by establishing expectations and
providing feedback on an employee’s progress toward meeting those expectations.
Ideally, the organization can then target training to address the weaknesses identified
or areas of potential growth. In addition, organizations can adopt compensation sys-
tems to reward the achievement of goals. Managing individual performance should
result in higher employee satisfaction and morale and lower employee turnover, a
process that has been demonstrated in research on public organizations.9
Performance management involves providing both formal and informal perform-
ance-related information to employees. The centerpiece of a performance
management system is typically the performance appraisal, a formal and systematic
process for reviewing performance and providing oral and written feedback to staff
about performance at least annually. The formal process is often designed to supple-
ment the informal, ongoing feedback processes that exist in organization. Barber10
argued that feedback and recognition were essential factors in motivating human serv-
ices workers. He found that human services supervisors who did not receive praise
for their work were more likely to be dissatisfied with their work.11 Feedback from the
performance review should be used as a basis for development and improvement.12
Performance appraisal is an established activity in nonprofit organizations; Math-
eson, Van Dyk, and Millar13 contend that most human services organizations evaluate
employees annually. Despite the espoused utilization of performance appraisals in
nonprofit organizations, little research has explored the implementation of perform-
ance appraisals in nonprofit organizations and the connection of these HRM activities
to the performance or effectiveness of the organizations. Scholars in other disciplines,
such as public management and nursing, have devoted significantly more attention to
the topic.14 The research on performance appraisal is extensive.15 Many studies
emerge from the field of psychology exploring rater errors and biases and rating accu-
racy.16 However, contemporary studies examining performance appraisals in nonprofit
organizations providing human services are not common. Levy and Williams’ review
of over 300 articles about performance appraisals from 1995-2003 did not include a
single study involving human services or nonprofit organizations. In our review of the
literature, including such publications as Nonprofit and Voluntary Sector Quarterly,
Nonprofit Management and Leadership, Administration and Social Work,...