HRMN DQ 6

Appraising Employee Performance

One of the most stressful times of the year at work for many employees is when they have their

annual appraisal. Appraisals are also a very stressful time for many managers. If appraisals are

done properly, they should not be a stressful time for anyone. Making appraisals effective and

relaxed involves constant, day-to-day effort.

Too many organizations and managers see appraisals as a one-shot, once-a-year effort. Effective

appraisals involve a constant management presence so that the managers are aware of what the

employees are doing and the employees are aware of what the managers expect. It seems to be

common sense that if we want employees to produce more, we should let them know what they

are doing right and what they can improve. If managers are constantly present, they can be

providing constant consultation for the employees rather than giving criticism and praise only

once a year.

Appraisals may be ineffective for a number of theoretical reasons:

• Appraisals are often based on the assumption that the employee has had adequate and proper training. It may be unfair for the organization to criticize the individual if the

organization has not provided that training.

• The quest for good appraisals, especially if those appraisals are associated with raises or promotions, can become a political quest by employees. In this case, the employee who

is rewarded is not always the employee who performs best; it may be the employee who

knows how to work the organizational politics best.

• Some of the performance of positions in organizations is dependent on the performance of other individuals. This may lead to an individual being criticized, or praised, for things

over which the individual has no control.

• Appraisals emphasize the contributions of individuals over the performance of the organization or team. This can lead to individual actions that make that individual look

good at the cost of overall productivity.

In reality, employees need feedback to perform at their best. Broadly interpreted, appraisals

provide that feedback. Among managers and employees, however, the word appraisal has come

to mean the more formal aspects of that feedback. One of the reasons for this is the need to

keep records that satisfy legal needs.

Legal Considerations with Appraisals

Appraisals are formal documents that go into an employee's record. This makes them important

documents whenever there is a question as to the employee's performance.

Many managers give good appraisals to avoid conflict with employees, especially if they believe

that a particular employee would create conflict if he or she were to receive a poor appraisal. It

is a common occurrence in organizations for an employee to receive good appraisals but then

have to be disciplined for poor performance. If the employee contests that discipline, the

organization is in a very difficult legal position because the formal appraisals do not support the

discipline.

Appraisals are also important documents when dealing with EEO considerations. It is important

that all managers who are doing appraisals receive training in EEO and diversity issues and are

aware of all EEO laws and regulations. Legal issues with EEO are more likely to be an issue if

there is an overall trend for any of the protected statuses to have lower, or higher, appraisal

scores than the organization's nonprotected-status employees.

To be legally sound, appraisals must:

• be objective

• be uniformly applied

• be job-related

• be specific to the individual

• be specific as to the behaviors being assessed

• be done by a supervisor who is familiar with the employee's performance

• be communicated to the employee

• give the employee access to the appraisals

• provide for employee comments on the appraisal form

• have a defined appeal process

Ways to Measure Performance

A number of ways have been developed to measure performance and communicate the results of

that measurement to the employee.

One of the most common performance appraisal measurement methods uses categories. Using

the graphic rating scale, the supervisor places the employee's performance level on a scale

that is often based on a 1-to-5 or a 1-to-7 continuum. Different tasks or performance

expectations are listed, and the supervisor evaluates the employee on how they "rate" on each

task or expectation. Another category rating method is the checklist, in which the supervisor

checks the statements in a list that apply to the employee. These methods are popular because

they are quick and easy for the supervisor, and they require less training of the rater than other

methods.

Other methods compare the performance of employees. The ranking method ranks all of the

employees from highest to lowest, either on specific job functions or on overall performance. The

forced distribution method usually uses a bell-shaped curve to make sure that only a few

employees are rated at the highest and lowest levels, with most employees being rated

somewhere in the middle. The paired-comparisons method is similar to a tournament ranking

in sports. Individuals are paired against each other, with the better-performing individual being

compared with another better-performing individual until a determination of the best-performing

individual(s) is (are) obtained.

Managers are required to write an evaluation of the individual performance in the essay

method. While the essay method can be more effective in communicating strengths and

weaknesses of the individual's performance to the individual, essays are not easily quantified and

so are less useful in comparing employees in the organization or in proving that legal

requirements have been met. The critical-incident method requires raters to write a

statement when something favorable or unfavorable happens with the employee's performance.

The accumulated statements can be used in an overall appraisal of the employee's performance.

Behaviorally based methods usually involve the rater either writing observations of an employee's specific behaviors in defined areas or the rater rating how the employee performed

on different dimensions of the job as defined by behavioral statements. Behaviorally based

appraisals provide insights to an employee's performance but are difficult to develop and

validate. There may be legal problems in using behaviorally based appraisals if those appraisals

do not have validated anchors that are job-related.

Management by objectives (MBO) is designed to be a method of managing employees but

may be used effectively as an appraisal method. In MBO, the supervisor and the employee set

specific and measurable objectives for the employee to achieve. The objectives should be related

to the overall organizational goals and the employee's function in that organization. Because the

goals are specific and measurable, they provide a benchmark to see if the employee is

performing as was agreed upon by the employee and his or her supervisor. The most difficult

part of MBO is in the original setting of the objectives. MBO may also be difficult to implement for

employees who have goals that are difficult to measure.

Potential Rating Errors

One of the major problems in organizations is that the organizational culture affects how ratings

are viewed. In the leniency effect, the appraisal process may be seen as having a potential for

conflict between the supervisor and the employee. In many organizations this leads to the

supervisor giving everyone very high ratings to avoid conflict. This means that the appraisal is

not very effective because it does not give an honest rating of the employee's performance.

In some organizations the opposite occurs, causing a severity effect. The managers want to

give employees a reason to improve and build a paper trail in case an employee must be

disciplined, so they tend to give everyone low ratings. A related concept is the central

tendency effect, in which the rater tends to rate employees toward the middle of the rating

scale to avoid any extremes. When central tendency occurs, everyone in the organization tends

to be rated as average, even if they have performed superbly or poorly.

Other rater problems are the recency effect and the primacy effect, in which the most recent

performance or the first performance observed has too high a weight in the rater's appraisal of

the employee. The halo effect and the horns effect occur when a rater lets an employee's

good or bad performance on just one aspect of the job affect the overall rating they receive on

their appraisal.

The most damaging rater errors occur when raters allow bias to creep into their ratings of

employees. This bias is often unintentional, and raters are often unaware of their bias. The bias

can be expressed in terms of stereotyping individuals who are members of a protected status

as fitting an impression that the rater has of people who are members of that protected status.

This bias may show up in ways such as, for example, the rater seeing women as not being good

at decision-making, or Vietnam veterans as being mentally unstable. A bias may also show up

when a rater subconsciously rates people higher if they look and act like the rater. It can also

occur if an organization pushes a supervisor to have employees who look and act a certain way

or "fit" the organization's image. There are many cultural and organizational biases that raters

may have to be aware of so they can be sure they are not basing their employee appraisals on

these biases.

One of the best ways to protect against potential problems with employee appraisals is to have

well-defined and job-related elements that a rater can use for the appraisals. Another good

strategy is to have well-trained raters.

Formal performance appraisals are important for legal and organizational reasons. The most effective way to do appraisals is to have informal communications between managers and

employees on a regular basis. If the frequent informal appraisals are effective and are conducted

by well-trained managers, the formal and legal aspects of an appraisal system will easily follow.