Performance has always been a buzz word in business circles. This time of the year is the typical time for a wave of performance appraisals, particularly in organisations where the appraisals are linked to the financial year. There is a strong link between performance and perceptions. Today’s column will discuss the what, how and why of it.
What is performance? The dictionary meaning is that it is the execution or accomplishment of work. Moving beyond, it can also be regarded as achieving a planned set of objectives utilising the available resources in an efficient and effective manner.
Performance can happen at three levels in a typical organisation, individual, interactive team and institutional. I would call them triple Is. There is one solid “I” needed in order to link the above three Is. That is integration.
I have seen individuals getting rewarded for their performance, while the institution is not performing well. Also, the institution may do extremely well, yet depriving the rewards for individual performance. Both these cases highlight the lack of integration. The solution is to have a properly designed performance management system, with the needed inputs from all involved.
Perception in focus
As scholars say, “we don’t see things as they are but we see things as we are”. This is the basis of perception. It is a term derived from the Latin root, perceptio, which means attaining awareness. It is the process of understanding of the environment by organising and interpreting sensory information.
From the medical point of view, all perception involves signals in the nervous system, which in turn result from physical stimulation of the sense organs. For example, vision involves light striking the retinas of the eyes, smell is mediated by odour molecules and hearing involves pressure waves. It should be noted that perception is not the passive receipt of these signals, but can be shaped by learning, memory and expectation.
In essence, the study of perception is concerned with identifying the process through which we interpret and organise sensory information to produce our conscious experience of objects and object relationship.
Perception can then be summarised as the process of receiving information about and making sense of the world around us. It involves deciding which information to notice, how to categorise this information and how to interpret it within the framework of existing knowledge. In brief, it is a process by which individuals organise and interpret their sensory impressions in order to give meaning to their environment.
A number of factors operate to shape and sometimes distort perception. These factors can reside in the perceiver, in the object or target being perceived or in the context of the situation in which the perception is made.
Performance and perceptions
Performance evaluation is a vital aspect in the whole process of performance. I prefer the term employee performance evaluation (EPE) to identify this important “annual ritual”. It can be a messy act unless you handle it professionally. The key is to minimise the biases arising out of perceptions. That’s where the damaging link is.
We have heard the term “MBO”. Globally it means “managing by objectives”. The expectation here is to have a set of SMART (specific, measurable, agreed, realistic and time-bound) objectives and to ensure the achievement of them. Rather strangely, we have another MBO in Sri Lanka. It is ‘management by opinions”. Opinions can be far more influential than objectives in our cultural context. That is where perceptions play a pivotal role in the performance evaluation.
There can be many ways perceptions can affect the effectiveness of performance evaluation. Let’s discuss two of them, interestingly representing two extremes.
Halo is a circle of light surrounding the head of a saint or holy person. In more scientific terms, it is a circular band of coloured light around a light source, as around the sun or moon, caused by the refraction and reflection of light by ice particles suspended in the intervening atmosphere.
What we are interested here is to view it as a “social phenomena”. First noted by Edward Thorndike in the 1920s, the halo effect has since been applied to a variety of social sciences, including management. Halo Effect is a type of bias where one characteristic of a person or one factor in a situation affects the overall evaluation of that person. In other words, it refers to drawing a general impression about an individual on the basis of a single characteristic.
It can occur when one is influenced by a person’s strengths, weaknesses, physical appearance, behaviour, or any other single factor. The halo effect is most often apparent in situations where one person is responsible for evaluating or assessing another in some way. These may include assessment of applicants for jobs, scholarships, or awards. The foremost case in point is the employee performance evaluation.
Halo Effect in performance evaluation is all about “inflated ratings”. For an example, an appraiser might overlook glaring performance shortcomings of an appraisee by simply going on one remarkable feature of the appraisee. It can be physical attractiveness in some cases. The sensitive issue of gender also may come here. I have heard some employees complain that for their bosses, “pretty legs are more important than proper leadership”.
Early research on Halo Effect
Edward Thorndike’s first study of the Halo Effect was published in 1920. The study included two commanding officers that were asked to evaluate particular qualities of their soldiers. The point of this study was for Thorndike to see how the results of one characteristic affected another characteristic result. The officials evaluated their soldiers on physical attributes, intellect, leadership skills, and personal qualities.
Thorndike’s experiment showed how there was too much of a connection (correlation) in the responses of the commanding officers. The term he coined as “Halo Error” showed that the officers relied mainly on general perception of certain characteristics that determined the results of their answers.
One classic demonstration of the Halo Effect is linked to film stars and celebrities. Hollywood stars. As they are often attractive and likeable, some of us tend to assume that they are also intelligent, friendly and so on. That is, until we come across (sometimes plentiful) evidence to the contrary.
In the same way politicians use the Halo Effect to their advantage by trying to appear warm and friendly, while saying little of any substance. The famous statement by a late Sri Lankan politician is a case in point: “We never devalue the Sri Lankan Rupee. It was worth 100 cents earlier, as much as it is now.” People tend to believe a politician’s policies are good, because the person appears good. It’s that simple.
This is the opposite of Halo Effect. It occurs when one having a “deflated” view on another, based on one bad characteristic. Despite the significant performance, an appraisee might get a poor rating due to him/her appearing as “one with horns”. In fact, by apprising so, a manager might demonstrate that he/she actually deserve to have horns.
One common complaint from the victims of the horns effect is that they are continuously being viewed as bad, lazy and lousy performers. “No matter how much we try, we get the same result” (kochhara kalath ochhchra thamai). Such a scenario can lead to a wide scale de-motivation among a team, resulting in low productivity.
A frequent Sri Lankan case is a “unionised employee”. Managers tend to view a person affiliated to a recognised political union as a troublesome, difficult and unreliable one. Such a perception might not match the reality always.
Causes for perceiving halos and horns
As it is evident by now, having halos or horns can be very damaging. Among the possible causes, three can be discussed with managerial implications.
Compatibility with the appraiser: This is the tendency to rate people whom we find pleasing of manner and personality higher than they deserve on all factors, not just interpersonal skills. Those who agree with the appraiser, nod their heads when he/she talks, etc., might get better ratings than what their performance justifies.
The one-asset person: The glib talker, the person with the nice looks,the person with advanced degrees, or the graduate of one’s alma mater usually has the advantage of an upward bias when he or she is evaluated.
Overrating the potential: One might judge the person’s credentials rather than what the person has actually done for the organisation.
The contrary person:
The boss may find it difficult to be objective and ignore his or her individual irritations with a person who disagrees too often on too many things.
We can see many such cases in Sri Lankan scenario. The reality is that connections may prove to be more important than competencies. Digital division of employees as ones with halos and horns can create far-reaching disturbances.
There is no sure-fire recipe to overcome halo and horns effects. Some tips can be handy to mitigate the impact. Beware of one’s tendency to inflate or deflate without supporting facts. Self-awareness and self-regulation, two components of emotional intelligence, can be handy in this respect.
In essence, perceptions should not clutter performance evaluations. Managers should be vigilant on their tendency to see halos or horns in their employees. If not, what will remain are a bunch of ineffective managers with their sycophants, in a sinking organisation.
(Dr. Ajantha Dharmasiri is the Acting Director of the Postgraduate Institute of Management. He also serves as an Adjunct Professor in the Division of Management and Entrepreneurship, Price College of Business, University of Oklahoma, USA.)