Organizations are increasingly turning towards peer appraisal as a tool to rectify the defects observed in, top-down appraisal, assess group performance, and improve the internal working of teams. Unfortunately, the process of peer reviews requires a larger number of competent assessors in order to be accurate and also has an inherent problem of being susceptible to biased (self serving) assessments. Hence, there is a need to develop some method to validate the results of the peer review. This paper reports the findings of a study on peer appraisal. The concurrent validity of peer appraisal is examined by comparing the actual performance of student groups on several assignments, and the ratings awarded by group members to themselves, using Pearson's correlation coefficient. The study indicates that peer appraisals lack concurrent criterion validity. Organizations using peer reviews for administrative purposes are therefore unlikely to observe any improvement in their appraisal processes and are likely to be disappointed to face problems similar to those observed with traditional systems.

Peer evaluation is becoming more common among organizations either as a distinct part of the performance appraisal process or as a significant sub-part of the 360-degree process. Furthermore, in light of the new workplace realities favoring teams, organizations are coming to recognize that successful teams require effective interaction between interdependent team members. This is particularly evident in the so-called information technology or software companies where work assignments are often handled by project or development teams. However, it must also be noted, lest the wrong impression be given, that this phenomena is not confined to certain service sectors or organizations; manufacturing firms, notably the well known Japanese companies have for long made use of work teams, a trend which is now emulated by numerous others. Peer feedback is, therefore, being suggested as one possible element that can be used to improve the internal working of teams.

A general definition of peer appraisal is provided by Peiperl (1999) who states that in peer evaluation, an individual's performance is evaluated by one or more of that individual's co-workers, other than the individual's direct boss, subordinates or external customers. In other literature, peer appraisal is generally defined as the process by which an individual's colleagues who are of more or less the same rank in the organization evaluate the performance of that individual (McCarthy and Garavan, 2001). In case of a work group or team, the peers are easily defined as the other members of the work group or team. In other cases, it is a little more difficult. The question of which specific co-worker should be asked to provide such information is to be answered by analyzing work relationships, and accordingly choosing those who have sufficient work related interactions with the subject to be able to evaluate the same.

Peiperl (1999) mentions that peer review has the advantage of multiple sources of feedback and the proximity of raters to the performance tasks being evaluated should result in improved appraisals. It is also recognized that peer review can, by itself, improve the quality of appraisal. For example, Othman (1994, p. 12) records that in order to improve objectivity and transparency, new procedures proposed for performance evaluation in the UN include the following: "self-appraisal, peer review, supervisor review, review by subordinates for certain supervisory competencies, and/or review by a performance review board or committee". As a result, organizations are relying more on multi-source feedback of which an important component is the peer review.

Organizational Behaviour Journal, Peer Evaluation, Group Works, Traditional Systems, Information Technology, Software Companies, Development Teams, Japanese Companies, Organization Structures, Assessment Methods, Group Assignments.