Appraisal Adjustment Process in a Japanese Company: Analysis with a Set of Personnel Micro Data

Abstract

In recent years, an increasing number of Japanese companies have adopted performance appraisal systems in their human resource management. On the other hand, it has been pointed out that, in the human assessment in general, the scores for different employees to be evaluated tend to merge around the average, or the mean value. This study examines how a Japanese company in the manufacturing sector devised, in introducing a performance appraisal system, its human assessment process in order to provide greater working incentives to its employees.

In the company, as in ordinary Japanese companies, the initial scores for employees under managerial level are adjusted twice. The first adjustment is made by a group of managers for the purpose of averaging the scores between different sections or departments. The results are then subject to the second adjustment by senior managers or executives. In the study, the determinants of the initial scores are statistically analyzed. The adjustment process of appraisal is then examined by comparing those initial scores with two other revised ones.

It is found that, unlike what is believed in general, the initial scores for managers have a lower degree of variance than those for employees under managerial level. As a result of subsequent adjustment, the degree of score variance decreases, contrary to the company's intention.

This contradictory result is attributable to the fact that the adjustment of initial scores for managers is virtually made in just one step. The first adjustment step that is intended to even up the scoring differences among assessors decreases the total variance of initial scores. Furthermore, the second step that would be necessary to increase score variance by differentiating the contribution by each manager is unlikely to be realized. It is because the assessors, who are senior managers and executives, do not wish to revise the scores that they once marked themselves; otherwise they would be forced to clarify the reason for such revision to their junior managers.