Evaluating Employee Performance Appraisal

CHAPTER 7 EVALUATING EMPLOYEE PERFORMANCE
The performance appraisal process can be divided into 10 interrelated steps
Step1: Determine the Reason for Evaluating Employee Performance

 Forced-choice rating scales: a method of performance appraisal in which a
supervisor is given several behaviors and is forced to choose which of them is
most typical of the employee.
 vast majority of performance appraisal systems are not successful
 there are many uses and goals for performance appraisal, the most common
include:
1. Providing Employee Training and Feedback
 Most important use of performance evaluation is to improve employee
performance
 Performance appraisal review: a meeting between a supervisor and a
subordinate for the purpose of discussing performance appraisal
results.
2. Determining Salary Increases

 Be fair
 A numerical rather than narrative format is probably needed
3. Making Promotion Decision

 Promoting the best or most senior employee often results in the so-
called Peter Principle (the idea that organizations tend to promote good
employees until they reach the level at which they are not competent—
in other words, their highest level of incompetence)
 Performance appraisal can provide useful information about an
organization’s strengths and weaknesses
4. Making Termination Decisions
5. Conducting Personnel Research
 ? test ? training ? ? ? ? effective

 important, especially in organizations where union contracts forbid the
use of performance evaluations in personnel decisions.
Step 2: Identify Environmental and Cultural Limitation

 the second step in the performance appraisal process is to identify the
environmental and cultural factors that could affects the system. ? ? ? ? ? ?
? ?
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Step 3: Determine Who Will Evaluate Performance
 360-degree feedback: a performance appraisal system in which feedback is
obtained form multiple sources such as supervisors, subordinates, and peers.
 Is primarily used as a source of training and employee development and is seldom
used in the appraisal process to determine salary increases or to make promotion
and termination decisions.
 Multiple-source feedback: a performance appraisal strategy in which an
employee receives feedback from sources (e.g. clients, subordinates, peers) other
than just his/her supervisor.
 Supervisors
 More than 90%
 ? ? ? ? ? , ? ? ? ? ?
 Peers
 Often see the actual behavior rather than results
 Fairly reliable only when the peers who make the ratings are similar to and
well acquainted with the employees being rated
 Have been successful in predicting the future success of promoted
employees
 Employees tend to react worse to negative feedback from peers than from
experts
 Subordinates
 Also called upward feedback
 Important component of 360-degree feedback
 With exception of students rating teachers
 Customers
 Organizations also seek customer feedback in the form of secret
shoppers---- current customers who have been enlisted by a company to
periodically evaluate the service they receive.
 Self-Appraisal
 Tend to suffer from leniency
 Further research is still needed to investigate potential cultural differences
in self-ratings
 Most accurate when the self-appraisal will not be used for such
administrative purposes as raises or promotions
Step 4: Select the Best Appraisal Methods to Accomplish Your Goals

 Criteria are ways of describing employee success (ex. Attendance, quality of
work, and safety are the three most important criteria for a successful employee)
 Prior to developing the actual performance appraisal instrument, two important
decisions must be made: the focus of the perfromacne appraisal dimensions and
whether to use rankings or ratings
 Decision 1: Focus of the Appraisal Dimensions

 Trait-focused performance dimensions
Honesty, courtesy, responsibility ? ? ?
Poor feedback and thus will not result in employee development and
growth.
 Competency-focused performance Dimensions

Knowledge, skill, and abilities
Easy to provide feedback and suggest the steps necessary to correct
deficiencies
 Task-focused performance dimensions

Usually includes several competencies
Easier to evaluate performance than with the other dimensions
More difficult to offer suggestions for how to correct the deficiency if an
employee scores low on a dimension. (? ? ? ? ? ? ? ? ? ? ? ? , ? ?
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? )
 Goal-focused performance dimensions

Easier for an employee to understand why certain behaviors are expected.
 Contextual performance
The effort an employee makes to get along with peers, improve the
organization, and perform tasks that are needed but are not necessarily an
official part of the employee’s job description
Want employees who will be not only effective performers but good
organizational citizens as well
 Decision 2: Should Dimensions Be Weighted?

 Reduce racial and other biases
 Decision 3: Use of Employee Comparisons, Objective Measures, or Ratings

 Employee Comparisons
Rank order: a method of performance appraisal in which employees are
ranked from best to worst
Paired comparisons: a form of ranking in which a group of employees to
be ranked are compared one pair at a time.
Number of comparisons=n(n-1)/2
Forced distribution method: a performance appraisal method in which a
predetermined percentage of employees are placed into a number of
performance categories. (assume that employee performance is normally
distributed)
 Objective Measures
Quantity of work: (a type of objective criterion used to measure job
performance by counting the number of relevant job behaviors that occur)
(? ? , ? ? ? ? ? , ? ? ? ? ) ( ? ? ? ? ? ? ? ? ? ? ? ? ? )
Quality of work: (a type of objective criterion used to measure job

performance by comparing a job behavior with a standard)
Error: deviation from a standard of quality; also a type of response to
overload that involves processing all information but processing some of it
incorrectly.
Quality is usually measured in terms of errors
? ? ? ? ? ? ? ? ? ? ? ? ? , ? ? ? ? poor performance
Attendance
Safety
 Rating of Performance
Graphic rating scale: a method of performance appraisal that involves
rating employee performance on an interval or ratio scale.
Behavioral checklists: behavioral elements & dimension rating

Behavior-focused & result-focused
Contamination: the condition in which a criterion score is affected by
things other than those under the control of the employee ( ? ? ? ? ? ? ?
? )
After considering the behaviors in the checklist, a supervisor provides an
overall rating of the employee’s performance on each dimension. (rated in
three ways: comparison with other employee, frequency of desired
behaviors, extend to which organizational expectations are met)
 Evaluation of Performance Appraisal Method

 Feedback form behavior-based methods is easier to give and to use to
provide suggestions for improvement
 The greater the employee perception of the fairness of the performance
appraisal system, the greater was their job satisfaction and commitment to
the organization.
Step 5: Train Raters

 Frame-of-reference training: a method of training raters in which the rater is
provided with job-related information, a chance to practice ratings, examples of
ratings made by experts, and the rationale behind the expert ratings.
 The goal is to communicate the organization’s definition of effective performance
and to then get raters to consider only relevant employee behaviors when
making performance evaluations
 The better the employees understand the performance appraisal system, the
greater is their satisfaction with the system.
Step 6: Observe and Document Performance

 Critical incidents: a method of performance appraisal in which the supervisor
records employee behaviors that were observed on the job and rates the
employee on the basis of that record
 Critical incidents should be communicated to the employee at the time they occur.
 ? documents ? ? ? : 1. Documentation forces a supervisor to focus on

employee behaviors rather than traits and provides behavioral examples to use
when reviewing performance rating with employee. 2. Helps supervisors recall
behaviors when they are evaluation performance. 3. Provides examples to use
when reviewing performance ratings with employees. 4. Helps an organization
defend against legal actions taken against it by an employee who was
terminated or denied a raise or promotion.
 Supervisors tend to remember the following: first impressions, recent behaviors,
unusual or extreme behaviors, behavior consistent with the supervisor’s opinion
 Employee performance record: a standardized use of the critical-incident
technique developed at General Motors
Step 7: Evaluate Performance

 Obtaining and reviewing objective data
 It is essential that potential sources of contamination be considered
 Reading Critical-Incident Logs

 Completing the Rating Form
Common rating errors:
 Distribution errors: rating errors in which a rater will use only a certain
part of a rating scale when evaluating employee performance.
Leniency error: a type of rating error in which a rater consistently gives
all employees high ratings, regardless of their actual levels of performance
Conducting frame of reference training should help reduce leniency in
supervisors that don’t know the difference between good and bad
performance.
Central tendency error: a type of rating error in which a rater
consistently rates all employees in the middle of the scale, regardless of
their actual levels of performance.
Strictness error: a type of error in which a rater consistently gives all
employees low ratings, regardless of their actual levels of performance.
 Halo Errors
A halo error occurs when a rater allows either a single attribute or an
overall impression of an individual to affect the ratings that she makes on
each relevant job dimension. (? ? ? ? ? ? ? ? ? ? ? ? ? ? ? , ? ?
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? )
More common in peer ratings than in supervisor ratings of subordinates
Highly correlated between dimensions means occurrence.
 Proximity Errors
Proximity errors occur when a rating made on one dimension affects the
rating made on the dimension that immediately follows it on the rating
scale.
 Contrast Errors
The performance rating one person receives can be influenced by the
performance of a previously evaluated person. ( ? ? ? ? ? ? , ? ? ?
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? , ? ? ? ? ? ? ? ? ? ? ?
? ? ? ? ? ? ? ? ? )
Assimilation : a type of rating error in which raters base their rating of an

employee during one rating period on the ratings the rater gave during a
previous period.
 Low Reliability Across Raters
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
 Sampling Problems
Recency effect: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
Infrequent Observation: the idea that supervisors do not see most of an
employee’s behavior
 Cognitive Processing of Observed Behavior

Observation of Behavior (the greater the time interval between the actual
behavior an the performance rating, the greater the probability that rating
errors will occur)
Emotional State: the amount of stress (perceived psychological pressure)
under which a supervisor operates also affects her performance ratings.
Bias
Affect: feelings or emotion
Gender bias does not seem to be an issue in performance rating.
Age is not related to performance ratings.
Step 8: Communicate Appraisal Results to Employees

Interview
 Prior to the Interview
 Allocating Time: 1h prepare 1h itself
 Scheduling the interview
 Preparing for the interview: review the ratings and the reasons for those
ratings
 During the Interview
Step 9: Terminate Employees
 Employment-at-Will Doctrine: the opinion of courts in most states that

employers have the right to hire and fire an employee at will and without any
specific cause.
 Limitations: state law, provisions of federal or state law, public
policy/interest, contracts, implied contracts, covenants of good faith and fair
dealing
 Employment-at-will statements: statements in employment applications
and company manuals reaffirming an organization’s right to hire and fire at
will.
 Legal Reasons for Terminating Employees

 Probationary period
 Violation of company rules
Rules have to be written, employee has to know the rule, ability of the
employer to prove that an employee actually violated the rule, extent to
which the rule has been equally enforced, the extent to which the
punishment fits the crime.
Progressive discipline: providing employees with punishments of
increasing severity, as needed, in order to change behavior.
 Inability to Perform
 Reduction in force (layoff)
 The Termination Meeting

 Prior to the meeting
Make sure that legal process has been followed
? ? ? ? ? ? ? ?
schedule ? appropriate place and time for the meeting to occur
 During the meeting

Be brief and professional
 After the meeting
Be honest with other employees, ? ? ? ? ? ? ? ? ? ? ? ?
Step 10: Monitor the Legality and Fairness of the Appraisal System
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CHAPTER 7 EVALUATING EMPLOYEE PERFORMANCE

The performance appraisal process can be divided into 10 interrelated steps

Step1: Determine the Reason for Evaluating Employee Performance

2. Determining Salary Increases

3. Making Promotion Decision

4. Making Termination Decisions

5. Conducting Personnel Research

 ? test ? training ? ? ? ? effective

Step 2: Identify Environmental and Cultural Limitation

Step 4: Select the Best Appraisal Methods to Accomplish Your Goals

 Decision 1: Focus of the Appraisal Dimensions

 Competency-focused performance Dimensions

 Task-focused performance dimensions

 Goal-focused performance dimensions

 Decision 2: Should Dimensions Be Weighted?

 Decision 3: Use of Employee Comparisons, Objective Measures, or Ratings

Quality of work: (a type of objective criterion used to measure job

Behavioral checklists: behavioral elements & dimension rating

 Evaluation of Performance Appraisal Method

Step 5: Train Raters

Step 6: Observe and Document Performance

 ? documents ? ? ? : 1. Documentation forces a supervisor to focus on

Step 7: Evaluate Performance

 Reading Critical-Incident Logs

Assimilation : a type of rating error in which raters base their rating of an

 Low Reliability Across Raters

 Cognitive Processing of Observed Behavior

Step 8: Communicate Appraisal Results to Employees

 During the Interview

Step 9: Terminate Employees

 Employment-at-Will Doctrine: the opinion of courts in most states that

 Legal Reasons for Terminating Employees

 The Termination Meeting

schedule ? appropriate place and time for the meeting to occur

 During the meeting

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