Simulation-based analysis of a forced distribution performance appraisal system

Abstract

Purpose The paper aims to estimates the limitations of a forced distribution performance appraisal system in identifying the highest performing individuals within an organization. Traditionally, manpower modeling allows organizations to develop plans that meet future human resource requirements by modeling the flow of personnel within an organization. The aim is to quantify the limitations of a performance appraisal system in identifying the best-qualified individuals to fill future requirements. Design/methodology/approach This paper describes an exploratory study using discrete event simulation based on the assignment, evaluation and promotion history of over 2,500 officers in the US Army. The obtained data provide a basis for estimating simulation inputs that include system structure, system dynamics, human behavior and policy constraints. The simulation approach facilitates modeling officers who receive evaluations as they move throughout the system over time. Findings The paper provides insights into the effect of system structure and system dynamics on the evaluation outcome of employees. It suggests that decreasing the number of a rater’s subordinates has a significant effect on the accuracy of performance appraisals. However, increasing the amount of time individuals spend on each assignment has little effect on system accuracy. Practical implications This research allows an organization’s leadership to evaluate the possible consequences associated with evaluation policy prior to policy implementation. Originality/value This work advances a framework in assessing the effect of system dynamics and structure, and the extent to which they limit or enhance the accuracy of an organization’s forced distribution performance appraisal system.