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Overview Performance appraisal is a formal program in which employees are told the employer's expectations for their performance and rated on how well they have met those expectations. Performance appraisals are used to support HR decisions, including promotions, terminations, training, and merit pay increases. This chapter discusses the traditional appraisal method—where a supervisor reviews an employee's performance during a set period—and several other methods, including self-appraisals, multisource assessments, upward appraisals, peer reviews, and computer-based appraisals. Rating techniques, implementation, and legal considerations also are discussed. For a model annual performance review policy, see “Model Performance Appraisal Policy.” For a model performance evaluation form, see “Model Performance Appraisal Form.” Performance Appraisal Uses and Steps What Are Performance Appraisals? Performance appraisals are an employer's way of telling employees what is expected of them in their jobs and how well they are meeting those expectations. A typical performance appraisal entails the supervisor: • monitoring the employee's performance, • completing a performance appraisal form about the employee, and • conducting a performance appraisal interview with the employee to discuss his or her performance. Performance appraisals are conducted over a specific rating period—typically three months, six months, or a year. Performance Appraisal Steps The performance appraisal process should begin before the employee's performance is appraised. In an effective performance appraisal system, employees know what is expected of them and against what standards they will be judged. The following is an outline of performance appraisal steps, including those leading up to the actual appraisal: • Define the job and performance standards. The job should be well defined so that the employee knows what tasks are critical. Standards of acceptable performance also should be determined for each task—for example, quantity produced, quality of work, and timeliness of task completion. Standards should be the same for all employees in that particular job. • Plan for performance. In this stage, the supervisor and employee develop a plan for the rating period that guides the subordinate's work. During planning, the employee must understand the key tasks of the job, the results and conduct required in the job, and the standards of performance. • Monitor performance. Both the employee and the employer should be actively involved in monitoring the employee's performance during the rating period. Throughout the rating, the supervisor should provide feedback to the employee, reinforcing good performance and correcting poor performance. The employee should be encouraged to discuss both performance successes and problems throughout the rating period. • Appraise performance and conduct performance interview. The supervisor completes a performance appraisal form and conducts a performance appraisal interview with each employee. Employees should be told how well they are doing, why they are doing well or poorly, and what they can do to improve or maintain their performance. • Reward performance. During this final stage, good performance often is reinforced with a reward. The reward system should be capable of differentiating among various levels of employee performance—for
What is the nature of the relationship between employees and supervisors. especially in less hierarchical workplaces that encourage employee involvement and teamwork. termination. regardless of who does the appraisal? Or does the same individual receive such widely varying scores from different raters that providing meaningful feedback is impossible? • Validity or relevance of method. Merit pay decisions not based on an accurate and fair performance appraisal system can lead to charges of discrimination. Does the method measure the aspects of performance that the employer wants to reward? • Minimization of biases and errors. • facilitate employee growth and development. employer should consider the following factors: • Management or nonmanagement application. Is the method useful as a tool to improve productivity and manage performance? • Ease of use. but not all performance appraisal methods work equally well for every employer. top-down appraisal method often is supplemented by other appraisal methods. many employers find that relying an immediate supervisor as the sole evaluator is insufficient. as well as employee dissatisfaction with the pay system. Does the performance appraisal method provide a way to measure supervisors' and managers' ability to direct and motivate employees? Does it measure individual work behaviors and output of nonmanagers? • Types of jobs employees perform. and employees and customers? • Reliability of method. What types of jobs are involved? Will one method work equally well in all or most cases? • Nature of work relationships. Why Appraise Performance? Employers appraise performance for a number of reasons. However.example. As a result. Is the method understood and accepted by both raters and employees? Is it easy to use? Appraisals traditionally have been top-down. Performance appraisals also can be used to: • motivate employee performance and improve productivity. and discussing the appraisal with the employee. employees and peers or subordinates. and • identify current and future training needs. promotions. the highest performers would get the greatest reward and the lowest performers would get the smallest reward or no reward. the traditional. Employers that plan to use a merit pay plan must have a performance appraisal system that effectively and accurately assesses employee performance that the employer wants to reward and is capable of differentiating among different levels of performance. To choose the right performance appraisal method. Performance appraisals frequently are used to support HR decisions involving merit increases. Does the method reduce the chances of raters making errors or acting on biases? • Usefulness in productivity improvement. and layoffs. including: . Appraisal Methods Choosing the Right Method Employers use a number of methods to appraise and record employee performance. with a supervisor monitoring an employee's performance. completing a performance appraisal form. Does the method provide an employee with reliable scores.
• Set follow-up meetings. the supervisor should ask the employee to provide other examples of good performance that the supervisor might have missed. If appropriate. Top-Down Appraisals In a traditional. • upward appraisals or subordinate appraisal of managers. At the end of the designated period.• self-appraisals. the discussion should focus on just two or three critical weaknesses since most individuals have difficulty improving more than a few shortcomings at a time. By itself. the performance appraisal interview has little to no motivational effect. The supervisor and employee should set performance objectives for the next appraisal period and identify steps to improve any performance deficiencies. or ready the employee for new duties or advancement. • Plan for future performance. Self-Appraisal . Supervisors should follow up by asking how they can assist the employee in addressing these weaknesses. Asking employees to describe their weaknesses can defuse some of the defensiveness that accompanies a performance appraisal. top-down performance appraisal. For the appraisal to have value. In many cases. • Ask about problems. and address any problems that might have arisen. During these meetings. Follow-up meetings should be conducted throughout the rating period to monitor employee performance. At the beginning of the interview. the supervisor monitors employee performance and progress throughout the appraisal period. However. and • computer-based appraisals. it must be part of an ongoing process rather than a one-time event. disadvantages of one system can be minimized by combining it with elements of another system. prepare the employee to meet the performance objectives in the next period. A suggested outline for the performance appraisal process follows: • Schedule interview. • peer reviews. Employees should be given sufficient notice of the performance appraisal interview and encouraged to conduct a self-appraisal so that they come to the interview prepared to discuss their performance. the purpose of the appraisal should be reiterated. The supervisor should describe specific examples of the employee's good performance and explain why it deserves recognition. Each of these performance appraisal methods has advantages and disadvantages that employers must carefully weigh before selecting a plan. By being specific. Suggestions for improvement should focus on specific employee behaviors rather than personality aspects. If the employee fails to mention important weaknesses. During this discussion. • multisource assessments. the employee's progress toward specific goals and impediments to performance can be discussed. ensure that the employee is on track. the supervisor uses some rating technique to make a performance assessment and meets with the employee to discuss the assessment. the supervisor should raise them. the plan should include specific types of training that could improve performance deficiencies. the supervisor tells the employee the types of behaviors that contribute to overall effectiveness. • Describe good performance.
top-down appraisals. especially where profound disparities in ratings exist. but achieving its intended outcome requires some preparation. To facilitate the process. making evaluation a two-way process. • look over the employee's job description and complete the same form using the same rating factors. To prepare for formal discussions. supplemented by memos or notes about the employee based on personally observed behaviors or information from other sources. Self-assessment simply offers a means to obtain additional information that can result in a better evaluation and more responsible supervision and direction. • compare the completed review forms and try to reach agreement. • ask the employee to review his or her job description for performance criteria and then complete the appraisal form. such as the employee's contributions to the department or division. • provide constructive comments about any shortcomings while focusing on potential for improvement. or training needs. Most employers treat self-appraisals as a supplement to. and • suggest training they think they need. self-directed. and career-focused workers. • list projects they would like to work on. Employees should understand that supervisors still have the responsibility to write thoughtful. Self-appraisal forms often include space in which employees can: • note any difficulties they might have had or are having performing their jobs. supervisors should: • provide the employee with a copy of the evaluation form at least two weeks in advance of the review interview. Supervisors like self-appraisal because it: • requires employees' participation.Self-appraisal gives employees an opportunity to evaluate their own performance. • provides common grounds for discussion. and not a substitute for. such as peers and other supervisors. balanced reviews. Employees usually like self-appraisal because they can articulate their interests and goals and explain how they think they have performed. without being encumbered by their supervisor's judgments or conclusions. career aspirations. some employers ask employees and supervisors to complete identical work sheets so that they can compare responses. Implementation Guidelines Self-appraisal is a simple method. A self-appraisal can be conducted formally or informally. • listen carefully and note what the employee considers performance strengths or weaknesses. • prepare a list of additional questions for the employee's consideration. • fosters more direct interaction between supervisors and employees. and . • describe their career goals or skills and abilities they believe are not being used fully. orally or in writing. which can aid agreement on workable goals. Self-appraisal works especially well with highly motivated. and • can produce additional information that helps all parties view individual jobs more objectively in the context of the entire organization.
which elicit responses ranging from “always” to “never. they do not have total anonymity— the person(s) responsible for reviewing and compiling MSA forms must be able to contact raters about illegible responses. Questions should focus on behaviors that are observable and can be changed. accurately capture raters' opinions. Whatever scale is used. MSA elicits specific. The MSA process must protect raters' identities to guard against inflated rankings and ensure truthful. Some questionnaires include an open-ended section so raters can provide written comments to support. raters might fear that honest responses will damage relationships with co-workers or result in repercussions by managers. While raters remain anonymous to the person undergoing appraisal. constructive feedback from a variety of knowledgeable sources. objective. Next. the employer should develop questions related to the behaviors and outcomes to include in the rating questionnaire. should undergo training that covers these key points: • Assurance of anonymity. multirater assessment. For some employers. supervisors. clarify. and internal and/or external customers.• devise solutions to any problems and commit to a developmental action plan and follow-up. For other employers. selecting and training raters. the existing performance appraisal system. not on personality traits or characteristics. Establishing a rating scale. individuals selected as raters should have worked directly with the ratee.” or an agreement scale with responses ranging from “strongly agree” to “strongly disagree. candid feedback. Six choices generally are considered sufficient to eliminate ambiguity. creating a response scale. MSA can be used with self-directed. and providing feedback to the individual appraised once all MSA ratings are analyzed. MSA supports. and measure subtle behavioral changes over time. team-based work groups or with traditionally hierarchical relationships. Developing a questionnaire. particularly if raters will have a large number of employees to evaluate using the questionnaire. serving to open up a dialogue between raters and ratees that enhances career growth. especially those participating in the process for the first time. and three-dimensional or full-circle appraisal. MSA is an integral part of management and leadership development programs. standardized responses to questions. Raters should be able to complete a questionnaire in no more than 15 or 20 minutes. Implementation Guidelines Successful implementation of MSA involves developing a questionnaire. with the goal of more accurately assessing how an employee is doing. rather than replaces. peers. raters should have the option of indicating “not applicable” or “don't know” when appropriate. possible bias in scoring. or qualify their ratings. Selecting raters. Self-appraisal also is a common part of MSAs. The first step in designing an MSA rating form is to identify the behaviors and outcomes the employer values and wants to measure. Raters can include the appraised employee's subordinates. distributing MSA forms. including 360-degree feedback. The employer should identify the individuals will complete rating forms and one or more reviewers who will analyze and compile ratings into a feedback report. To provide a complete and accurate assessment. Most questionnaires use either a satisfaction scale with responses ranging from “very satisfied” to “very dissatisfied. Raters. Employers need to create a response scale that provides quantifiable. Without confidentiality assurances.” Frequency scales. Multisource Assessment Multisource assessment is known by a variety of names. and other issues that might require clarification. direct reports. . Employers also need to consider how many questions to include.” are not considered as helpful. MSA primarily relies on information gleaned from written forms that contain a series of statements or questions to which raters respond.
job-related qualities and skills to uncover behaviors that need to be changed. and detect systemic biases against a particular employee or all employees in a protected-status group. Follow-up. return envelope and instructions that clearly specify the deadline for completion. the data must be analyzed and compiled into reports for the person evaluated. along with information on how ratings will be collected and used. coaching. • Instructions on the MSA process. Distributing MSA forms. upward appraisals are particularly valuable for assessing how well a supervisor provides direction. Raters should receive an overview of the MSA process and its purposes. The reports should be presented to the ratee in a timely fashion. guard against collusion among respondents. Staggering the distribution of forms helps to ensure more reliable and complete feedback and makes the tasks of compiling. Questionnaires should be coded with each ratee's name or employee number and the rating source. Once all forms have been collected. For example. Employers that use SAM generally conduct a traditional topdown appraisal as well. supervisors are reviewed by the employees they supervise.• Rater accountability. in the form of coaching and counseling. Subordinate Appraisal of Managers In subordinate appraisal of managers. Upward appraisal involves gathering information on specific. observable. delegates responsibility. subordinate feedback might indicate that a supervisor is not keeping employees apprised of progress toward performance goals or delegating assignments in a way that fosters teamwork. Providing feedback. For example. . analyzing. and reporting the information less daunting. for example. The MSA process should incorporate scoring and review procedures that eliminate clearly invalid responses. NOTE: Some experts warn against using MSA on too many employees at one time. communication. supplies resources. employers can: • publicize the potential advantages and benefits—better employee involvement. avoid common errors. and submit completed forms. fosters teamwork. commonly referred to as SAM or upward appraisal. Raters should understand that the anonymity safeguard does not give them license to act on personal grudges or biases that have little to do with work. Raters should understand that they likely will be asked by HR or the person in charge of compiling MSA forms to explain ratings that are consistently at the top or bottom of the scale or significantly different from other respondents' scores. To ensure the validity of feedback. Implementation Guidelines To ensure that upward appraisal works as intended. Although upward appraisal is not a particularly popular with supervisors. When summarizing written responses to open-ended questions. makes timely decisions. Reports ideally should reflect the views of three to five raters and present information in a format corresponding to the appraisal categories and questions. communicates policies or work procedures. peer or direct report. and teamwork. or coaches employees. it can be an efficient approach to evaluate certain aspects of the supervisor's performance. evaluators should know that the MSA process includes a review of all response forms to detect anomalous ratings. All questionnaires should be accompanied by a labeled. The training should instruct raters on how to complete the questionnaire. is essential to ensure that the MSA process continues to produce meaningful information for personnel decisions. employers should take care not to delete or misinterpret crucial information or create the impression that information has been censored. leadership skills. • Fairness safeguards. code their responses.
not supervisors. and valid feedback from a consistent number of sources. experts discount this concern. However. • consider having supervisors designate raters and distribute forms to ensure anonymity. • require another party. but it can be adapted to almost any work setting. and are relatively unencumbered by issues of power. Peer review often is used by employers that support self-directed work teams. Peer Review The peer review method rests on the concept that individuals who perform similar work are in the best position to judge an employee's performance. pointing out that all ratings. and • follow up assessments with meetings to discuss results and devise a plan for further action. promotions. whether the supervisor invites employees' input on how to improve quality—instead of personality traits. such as a higher-level supervisor or an HR representative. are influenced to some extent by the evaluator's feelings about the person assessed. employee confidence in the method can be eroded. and control. and taking time to share results with ratees. thereby serving as strong predictors of future job performance. Upward appraisal is an employee-empowering strategy that invites employee participation and gives them a say in how they are managed. and • easing supervisors' fears that employees' direct participation will undermine their authority. and aptitudes.• explain how such evaluations can reveal opportunities for further development of managerial strengths. dominance. When supervisors' behaviors do not change as a result of employees' feedback. pick raters—to select peers who have the most knowledge about the employee's job. employers should: • specify a minimum and maximum number of evaluation forms to distribute for each ratee. share common concerns. to review each ratee's distribution list. distributing large numbers of forms. candid assessments without fear of reprisal. only to dash them. Peers understand the nature of the job. • ensure that subordinates' evaluations are not used to make decisions about compensation. and morale and productivity can decline. • overcoming employee resistance to being judged by co-workers who might have less experience or time on the job. . • describe how confidentiality will be maintained so employees feel free to offer honest. • encourage each employee—when employees. are familiar with the worker's activities. • ask questions that target specific. Some experts also have found that peer ratings tend to focus on results achieved rather than effort invested. or demotions. observable skills—for example. reliable. collecting and interpreting data. this process can backfire if it raises employees' expectations. However. Other issues to address when implementing peer review include: • managing the administrative aspects—for example. skills. One advantage of peer appraisal is that it can generate regular. whatever the source. fearing that employees will be too lenient in their evaluations or overrate their friends while downgrading co-workers they dislike. Implementation Guidelines To minimize potential problems with peer appraisals. Employers often are reluctant to adopt peer review.
cooperation. two levels are inadequate for merit pay purposes because average performance and truly meritorious performance cannot be differentiated. and how to complete evaluation forms without making common rating errors. dependability. Common rating techniques include: • graphic rating scales. quantity of work. • narrative essays. initiative. Computer-based appraisal also has extremely limited or no use in rating the qualitative aspects of any position—such as communication skills. Some companies use only two levels—satisfactory and unsatisfactory. teamwork. The scoring system typically offers a continuum of three to five possible ratings. • management by objectives. • insist on confidentiality and discipline employees who share and compare ratings. judgment.• allow raters to opt out of the rating process once they have received a certain number of forms to complete. such as amount of time spent on various tasks. The principal disadvantage of computer-based appraisal is that relatively few positions involve only quantifiable tasks that are readily monitored and evaluated by computer. • behaviorally anchored rating scales. how peer review relates to individual performance goals and company objectives. . Rating Techniques Types of Techniques Besides selecting an appraisal method. However. Rating scales provide a list of traits or characteristics—for example. quality of work. and • train supervisors and employees about objective observation techniques. Computer-based appraisal can improve employee accountability because outputs are measured directly. and creativity—and the rather is required to evaluate the employee on each trait. employers must decide on an appropriate rating technique. Graphic Rating Scales Graphic rating scales—also known as continuous score scales—are the most widely used technique to evaluate performance. Computer appraisals tend to be objective because they are not subject to human biases. quantifiable tasks—for example. • make it clear to employees that peer ratings are only one source of feedback used to assess performance. • forced choices. It also can provide ongoing feedback on performance problems and improvements. leadership. appearance. the purpose and uses of peer review. and other characteristics. responsibility. Computer-Based Appraisal Computer-based appraisal involves using a computer to monitor and evaluate employee performance. leadership. making it difficult for employees to cover up errors or blame others for work not done. • periodically review evaluation forms to make sure performance criteria are objective and current. This method is used mostly for judging performance in jobs involving repetitive. • comparison rankings. decision-making ability. with descriptors ranging from unsatisfactory to outstanding. A rating technique is the instrument the appraiser uses to assess the employee's performance. Each of these techniques is discussed below. and • critical incidents. data entry.
This problem can be mitigated somewhat if the traits are well-defined and examples are given to illustrate different ratings. they assume that every rater has the same perception of a given trait and particular rating. and accuracy. but not as well for large groups or employees who perform different jobs. For example. Feedback is more meaningful to employees because of the use of job-related critical statements. Forced Choices The forced-choice technique generally presents several—typically two or four—statements for each job characteristic or activity and requires the appraiser to select the one statement most or least applicable to the employee. Exhaustive job analysis is necessary to create rating scales appropriate to different aspects of different job functions. rating scales are easy to quantify for merit pay purposes if enough descriptive levels are in the scoring system. so these evaluations are not helpful in setting objective performance goals. However. The choices should describe clear differing levels of performance. two usually describe different degrees of favorable performance while the other two . The advantage of the BARS technique is that it correlates performance to key elements of a job. comparison rankings can be helpful when training supervisors to recognize differences among employees or when deciding how to allot bonuses or merit pay among staff. the numbers correspond to more detailed statements about performance. neatness. First. categorizing 10 percent as top performers. 40 percent as average performers. with each one requiring a separate rating scale. The rater compares each employee against every other employee. Comparison rankings work best for small groups of employees who perform the same or similar jobs. if an evaluation covers certain subjective personality traits—such as leadership ability—rather than objective job performance data. if four statements are used. Scores are totaled. 20 percent as above-average performers. Qualifiers. this type of system is vulnerable to rater errors. • Forced distribution ranking. a typical job might have eight to 10 such aspects. time-consuming. Comparison Rankings Comparison rankings evaluate a given employee's performance against the performance of other employees. “quality of work” can be clarified by adding “thoroughness. which describes the level of effectiveness. This can be done in several ways: • Individual ranking. such as “excellent” or “unsatisfactory” are not used.The main advantages of rating scales are that they are easy to construct and use in a wide range of jobs. and costly to develop. and 10 percent as unsatisfactory performers. Behaviorally Anchored Rating Scales Behaviorally anchored rating scales are rating scales with examples of behaviors used to define points on the scale. The rater is given a list of employees' names and asked to rank them from best to worst. Rating scales can present several drawbacks. In addition. for example. • Paired comparison ranking. instead. 20 percent as below-average performers. and each employee is ranked according to his or her score in relation to the other employees. The rater reads each statement and then places an “x” beside the appropriate numeric rating. comparison rankings provide little useful information on individual strengths and weaknesses. no score is assigned to the poorer performer.” Even so. Rankings can be based on overall performance or on specific traits. Using the same performance benchmarks also helps ensure consistency among raters. The rater must distribute employees along a set scale. A positive score is assigned to the better performer. selecting the better or more valuable of the pair. The chief drawback of BARS is that it is complex. This technique also is ill-suited to jobs that emphasize teamwork and cross-training to ensure all employees are equally skilled and capable of filling in for each other. The main advantage of this technique is also its key disadvantage: Comparison ranking forces distinctions between employees and ensures that no employee can receive the same rating as a coworker. As a result. For example.
At the end of the rating period. as are the evaluative measures.capture unfavorable aspects of performance. Like rating scales. On the plus side. not on how goals are accomplished. Because CIT requires extensive documentation and identification of successful and unsuccessful job performance behaviors. In-depth job analysis is not required to tailor objectives to individual positions. Essays also are time-consuming for raters to prepare. the rater usually is not privy to the actual numbers assigned each statement. objective. negative actions tend to garner more attention than do positive behaviors. An advantage of this technique is that it describes specific types of performance instead of assuming that all raters define a performance characteristic in the same way. Workers should have an opportunity to offer their explanations of recorded incidents. As a result. promotion potential. the employee writes a report explaining his or her progress toward meeting the objectives. and the appraiser can expand on areas that cannot be completely explained by a simple rating. job-relevant observations might record biased information that could create legal problems for employers. A disadvantage is that MBO requires more time and communication—from employees and supervisors alike—than other evaluation techniques. This focus on outcomes makes it difficult to use MBO as the only evaluation method for jobs requiring a significant degree of experimentation. or interpersonal skills—are not evaluated. Expectations are defined in advance. and training or development needs. . which can result in a lopsided view of performance. employees generally find written appraisals easy to understand and helpful. supervisors might resist using forced choice because they do not know the scoring system. In addition. The supervisor then appraises the employee's performance based on his or her progress. cooperation. the essay has an advantage over rating scales because its format is open-ended. MBO encourages a good relationship between supervisor and employee. However. supervisors who have not been trained to make factual. MBO evaluations focus only on goal achievement. The main disadvantage of the essay method is that an employee's evaluation can be helped or harmed by the appraiser's writing ability and style. On the downside. unknown factors and unanticipated events can make the objectives too easy or even impossible to achieve. so work behaviors—such as teamwork. the employee and supervisor set objectives—usually ones tied to the company's or department's strategic plan—to achieve during the rating period and develop an action plan outlining specific steps with target dates for accomplishing the objectives. In addition. However. Each statement has a weight or number that later is used to score responses. or innovation. essays generally are based on certain traits or characteristics. Employees are rated on how often they display successful performance behaviors. and they can have difficulty interpreting and explaining rankings to workers. The supervisor then observes employees and records their performance of these critical job behaviors. Another drawback is that CIT demands continuous and close observation of the employee and extensive recordkeeping. At the beginning of the rating period. It also attempts to eliminate bias by forcing raters to select a descriptive statement without knowing the exact weight or score given that statement. creativity. however. strengths and weaknesses. this technique enjoys widespread acceptance because it allows employees to participate actively in setting goals. and the employee knows what performance is expected. Setting appropriate goals and deadlines in advance can be difficult. CIT is almost always used in conjunction with another rating technique to support documented actions or inactions. behaviors—that distinguish successful and unsuccessful performance. it generally is valid and reliable. comparisons of employee performance are difficult because the contents of one essay are not likely to correspond to points emphasized in another appraiser's review. Management by Objectives Management by objectives is a rating technique mainly used for managerial and professional employees. and their views need to be incorporated in the record. In addition. In addition. Critical Incidents The critical incident technique is a behaviorally based system that requires job incumbents and supervisors to identify performance incidents—that is. Essays The essay technique requires appraisers to write a report or answer a series of questions designed to elicit information about an employee's past performance.
a training session on how to conduct the appraisal interview could begin with a lecture on the topic.F. Training sessions should use other techniques.R. trainees could discuss mistakes the supervisor made during the appraisal and ways the appraisal could have been improved. color. Employers also must determine if appraisals for all employees will be conducted at the same time of the year or if they will be conducted on the employee's anniversary date. § 1607). see. such as videos and discussions. sex. followed by a video of a performance appraisal interview. Because a negative performance appraisal can affect an employee's employment status—for example. sex. Appraisals should be reviewed to determine whether rater biases or errors are taking place. For new supervisors or those who feel uncomfortable in making judgments. Training should include sessions on: • setting goals. The department should maintain documentation of all performance appraisals and corrective action taken. However. Rater Training For a performance appraisal program to be effective. and discharges—appraisals must be based on job-related factors and not on discriminatory factors. statistics should be kept on average performance appraisal results by race. • completing the rating form. roleplaying allows them to practice and improve their appraisal skills. The effectiveness of performance appraisals can be improved if informal. Legal Considerations Nondiscrimination Requirements U.S. and • conducting the appraisal interview. The HR department also has an important role in the appraisal process. employers must show that a selection device is valid for the particular job. Under the guidelines. national origin. Monitoring Raters Performance appraisals should be monitored by the rater's supervisor to ensure that all appraisals have been completed when required and conducted in a fair and consistent manner. all selection procedures—including performance appraisals when they are used in making promotion decisions—must be valid for the job for which they are used. • avoiding rater errors.Implementation Considerations Scheduling Appraisals Most employers conduct performance appraisals on an annual basis. Role-playing allows trainees to practice what they have learned. and disability. promotions. abbreviated appraisals are scheduled throughout the year. This decision depends to a great extent on the number of employees. In particular. religion. At the end of the video. For example. to illustrate and reinforce the subject matter. In addition. • coaching employees. Training that includes only lectures generally is not effective. age. and other factors to determine whether illegal discrimination is occurring (for more information. pay levels and increases. Larger employers might find it an administrative burden for both the supervisors conducting the appraisal and the HR department processing the appraisals if all reviews take place at the same time. Those procedures that have an “adverse impact” on the employment opportunities of any race. Such an approach encourages communication between the employee and supervisor and allows the supervisor to provide regular feedback. Role-playing is another effective tool for training purposes. such a schedule requires employees and supervisors to focus on performance only once a year. raters must be trained in the skills necessary to evaluate employee performance effectively. • providing feedback. The Equal Employment Opportunity Commission's Uniform Guidelines on Employee Selection Procedures provide guidance to employers subject to Title VII of the Civil Rights Act of 1964 on the proper use of tests and other policies or practices (29 C. civil rights laws protect an employee from discrimination based on race. sex. or ethnic group are considered discriminatory—and therefore illegal—unless the .
sex. When employee promotions are based on past performance appraisals. the leadership dimension might be valid if such a trait is required in the new position. The major types of rater errors are: • bias errors. • Predictive validity. religion. • Similar-to-me bias. Employers should review their performance appraisal methods to ensure that they adequately reflect the key behaviors necessary for effective job performance. Data are used to show that the performance appraisal measures the degree to which employees have identifiable characteristics that are important for successful job performance. • Construct validity. The rater favorably judges an employee perceived as similar in terms of attitude. or national origin is less than four-fifths or 80 percent of the rate for the group that has the highest selection rate. Each of these errors is discussed below. for promotional purposes. One way to judge inter-rater reliability is to evaluate how susceptible an appraisal plan is to rater errors— that is. The most common types of bias errors include: • First-impression bias. Errors are inherent in performance appraisal because subjective judgments always are made. or interests. such as leadership qualities for a manager. Content validity refers to the relevance of the appraisal factors to the job. For example. color. • contrast errors.employer can show that the procedure measures a trait related to successful performance on the job or if the employer eliminates the features that cause the adverse impact. A procedure has an adverse impact if the final selection rate for any race. errors can be minimized by carefully choosing a rating technique and training raters to recognize and avoid certain common errors. a strong likelihood that two separate raters appraising the same employee will give identical or nearly identical scores. evaluating an entry-level employee on leadership ability would not be valid for compensation purposes if the employee never is required to display leadership qualities in his or her position. For example. However. and • leniency or strictness errors. background. • Positive or negative halo bias. However. typing speed and error rates would be content-valid factors on which to appraise a typist's performance. . those with poor appraisals in the past currently are poor performers and those with high appraisals are top performers. Both are representative of the job and relevant to the job. Bias Errors Bias errors occur when the rater evaluates an employee based on a negative or positive opinion of the employee rather than on the employee's actual performance. The important aspect is the reasonableness of the behavior or trait for the particular job. Such a system has a high degree of inter-rater reliability—that is. Determining Validity Validity refers to the extent to which the performance appraisal measures actual job performance. Showing a definitive relationship between past appraisal scores and current performance scores is difficult if only a small sample of people is used. values. The rater generalizes the good or bad behavior shown in one aspect of the job to all aspects of the job. Predictive validity is difficult to prove because large numbers of people are required at one time to conduct such an analysis. the performance appraisal should have predictive validity—that is. • central tendency errors. The rater makes an initial favorable or unfavorable judgment about an employee and then ignores or distorts the employee's actual performance based on this impression. Reliability and Rater Errors A performance appraisal system is reliable if it provides consistent data regardless of who conducts it. Different methods for determining validity include: • Content validity. errors in judgment made by those performing the appraisal.
One way of eliminating this type of error is to require justification at every level of the scale and not just the extremes. The rater discriminates against an employee because of race. regardless of actual performance. religion. age. national origin. Central Tendency Errors Central tendency errors occur when the rater rates all employees average or close to the midpoint of the scale. Leniency or Strictness Errors Leniency or strictness errors occur when the rater rates everyone at the high or low end of the scale. (BNA. Contrast Errors Contrast errors occur when the rater compares the employee to other employees rather than to the job's performance standards. they should receive satisfactory ratings. color. This is often the case when raters are forced to justify only high or low ratings with a written explanation. 12/08) . even if every other employee in the job category is performing at outstanding or above-average levels. or disability. sex. respectively.• Illegal discriminatory bias. As long as employees perform at minimum acceptable levels.
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