Megan Naude December 1, 2011 Psychology 482 Honors Option Paper #3- Performance Appraisal After a selection system

has been designed and employees have been hired, the next major concern is how to evaluate employees performance and provide them with constructive feedback. A performance appraisal system for bank tellers must determine how well the teller interacts with customers and how effectively they handle financial transactions. The feedback produced from the performance evaluations will provide employees with the tools they need to maximize their individual performance, leading to the increased success of the organization as a whole. The performance appraisals will measure how well the tellers interact with customers and take care of their needs. They will also measure how efficiently they process transactions; this will be accomplished by measuring more specific aspects of the tellers performance such as their knowledge of the computer system and their accuracy of monetary procedures. During the first year of employment, performance appraisals will be conducted every six months. When an employee has been a part of the organization for more than one year, the performance appraisals will be conducted on an annual basis. The tellers will be rated using a 360-degree feedback approach, so there will be multiple members of the organization that rate them. First, they will conduct self-evaluations and rate themselves on their own performance. Additionally, customer ratings will be taken into account to get a better idea of how well the tellers fulfill their customer service role. Peer evaluations will also take place; tellers often work side-by-side with each other behind the counter so they are good resources for appraising each others performance. Finally, the teller supervisor is the person responsible for directly managing tellers so they will give supervisory ratings.

Raters will be trained on several different aspects of rating based on the suggestions in the literature. Woehr and Huffcutt (1994) found that raters should be trained on four different dimensions. First, rater error training will be given. This training exposes raters to the errors that they are most susceptible to such as the halo and leniency effects. When raters are aware of these errors and their effects, they are less likely to make the errors while rating. Next, performance dimension training will be given to the raters. This involves familiarizing raters with the rating scales and specifically the different dimensions of the scales. The goal is to prevent raters from making general judgments and instead teach them to make ratings based only on the criteria of performance specified in the scales. Raters will then be given frame-of-reference training. The multiple dimensions of performance will be emphasized, and examples will be given of behaviors that represent each dimension. Finally, the raters will go through behavioral observation training. The focus of this training is on methods of observing and recording behavior so that raters learn not to evaluate performance without having observed a specific behavior to support the evaluation. This comprehensive training will provide raters with the knowledge and expertise to conduct objective and effective ratings of employees. The tellers will begin by compiling a list of goals that they have accomplished since their last performance appraisal or since they joined the organization. They will also come up with goals that they will work to complete by the next performance appraisal. Additionally, they will rate themselves using the graphic rating scale created. This will be composed of several different aspects of the tellers performance that will be rated on a scale of one to five. For example, the teller may be asked to rate their knowledge of the computer system or their accuracy when handling cash. There will also be space for comments to be made on each aspect of performance.

This will be used for notes that may back up or explain the rating given, which should facilitate discussion in the performance appraisal meeting. The tellers will then be asked to rate their colleagues as well using the same scale. Ratings will only be given if the employees have spent sufficient time working together and have been able to observe each others work on many different occasions. These ratings will be turned over to the teller supervisor. The teller supervisor will also rate the tellers on the graphic rating scale and will prepare to meet with each teller by coming up with specific goals, suggestions, and both positive and negative feedback for them. Customer feedback will be collected by the teller supervisor. The supervisor will conduct random samplings from customers as they leave the branch after being helped by a specific teller. These samplings will occur sporadically over time, and the supervisor should make an effort to speak to customers of different ages, genders, etc. so as to get a full range of respondents. Customers will not make any formal ratings on the graphic rating scale; instead the supervisor will ask them if they were satisfied with the specific tellers service and whether they have any comments to make about the particular teller. The supervisor will record these responses and will review them in the performance appraisal meeting. Once all of the ratings have been completed and collected. Each teller will meet with the teller supervisor in a one-on-one setting. The ratings will be reviewed and discussed, and the supervisors goal for the tellers will be compared with the tellers goal for themselves. The supervisor and tellers will address any necessary issues and talk about how the tellers can improve their performance. The supervisor will also give the tellers any positive feedback and let them know how they have impacted the organization. Finally, goals should be set to be completed by the

next performance appraisal meeting. The supervisor should record the details of the meeting so that they may be referred to at the time of the next performance evaluation. There are several benefits to the 360-degree feedback system, as suggested by Pollack and Pollack (1996). First, the employee is given a broader view of their performance since it comes from several different sources. Performance cannot be fully measured by just one aspect, but rather multiple dimensions of the employees role. The 360-degree system addresses any strengths and weaknesses that the employee may have in every area of their job. The multiple sources of feedback may also make the employee more open to changing their self-perception. An employee may be quick to write off a negative opinion from a single supervisor, but observing a consensus among supervisors, peers, and customers may motivate them to change their ways. The selfevaluation aspect of the 360-degree system is also extremely beneficial to an employees performance because it allows them to set goals for themselves and ensure that those goals are in line with their supervisors expectations. The graphic rating scale has also been beneficial to performance appraisal systems. They have been shown to have high ratee satisfaction, which leads to higher effectiveness of performance appraisals. When compared to other forms of appraisal, graphic rating scales also produce highly observable goals and high ratee perception of goals (Tziner, Joanis, & Murphy, 2000). Furthermore, they tend to be easy to use and create (Yun, Donahue, Dudley, & McFarland, 2005). Limitations of the 360-degree feedback system are present and may cause issues in the reliability and validity of performance appraisal. Customer ratings in particular tend to limit this method. Customers may give an employee a negative review based on the rules or limitations of the organization instead of the employees actual performance. For example, if a customer asks a

teller if they can get an overdraft fee refunded and the teller refuses based on the policies of the bank, the customer may give the teller a negative rating even though the issue is with the organization and has nothing to do with how the teller performed. Additionally, customers may believe that the supervisor asking for a review of the teller indicates that there is some negative issue involving the teller. For example, if a customer is leaving the building and the supervisor approaches them and asks what they thought of the teller they just interacted with, the customer may think that the supervisor is considering firing the teller and is asking for feedback for that reason. This may affect the way in which the customer responds. Finally, the customer does not experience any real benefit to providing feedback so they may not be fully motivated to give helpful responses (Pollack & Pollack, 1996). Peer ratings are also not always reliable. In organizations, co-workers often become friendly with each other; employees that have personal relationships with their peers may be particularly susceptible to halo or leniency effects. Additionally, if there is any competition between co-workers, this may lead them to give each other lower ratings in hopes that putting a negative light on their peers will in turn make them look better (Lepsinger & Lucia, 1997). The utility of this performance appraisal system primarily comes in the form of increased employee performance. Providing employees with feedback will make them more aware of what they should continue to do and what they should change about their performance in order to be as productive as possible. Their increased performance ultimately leads to increased success and profits for the organization. When designed correctly, performance appraisals can lead to higher employee satisfaction and lower turnover intention (Poon, 2004). This inevitably saves the organization money, as they end up spending less on training and recruiting new employees. Performance evaluations can also help an organization save money on training and recruitment by

assessing the effectiveness of these tools. If the results from the performance appraisals find that many employees are particularly weak in a certain area such as customer service, this can lead the organization to reconsider their selection and training systems for this criterion. They can then make changes to either system and save themselves from wasting an abundance of funds on ineffective procedures. Huselid (1995) also found evidence suggesting that performance appraisals can directly increase an organizations sales, market value, and profits. Conducting these performance appraisals annually will help tellers realize their full potential at the branch. If the supervisors and employees are all committed to putting their full effort into their ratings and feedback, the system will lead to increased performance and higher job satisfaction. This system will be beneficial to both the organization as a whole and the individual employees.

Works Cited Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity, and corporate financial performance. The Academy of Management Journal, 38(3), 635-672. Lepsinger, R. & Lucia, A. D. (1997). 360 degree feedback and performance appraisal. Training, 34(9), 62-70. Pollack, D. M. & Pollack, L. J. (1996). Using 360 degree feedback in performance appraisal. Public Personnel Management, 25(4), 507-528. Poon, J. M. (2004). Effects of performance appraisal politics on job satisfaction and turnover intention. Personnel Review, 33(3), 322-334. Tziner, A., Joanis, C., & Murphy, K. R. (2000). A comparison of three methods of performance appraisal with regard to goal properties, goal perception, and ratee satisfaction. Group & Organization Management, 25(2), 175-190. Woehr, D. J. & Huffcutt, A. I. (1994). Rater training for performance appraisal: A quantitative review. Journal of Occupational & Organizational Psychology, 67(3), 189-205. Yun, G. J., Donahue, L. M., Dudley, N. M., & McFarland, L. A. (2005). Rater personality, rating format, and social context: Implications for performance appraisal ratings. International Journal of Selection and Assessment, 13(2), 97-107.