Performance Appraisal

• Performance appraisal is a powerful tool to help

the supervisor meet the objectives of the
department and organization.
– The benefits of conducting performance appraisals
include providing information necessary for improving
performance and motivating employees.
– Performance appraisals also provide important
records for the company.
• Managers use this information for decisions on raises,
promotions, and discipline.
• There are systematic steps in appraising
performance.
– First, performance and results expectations and
standards of performance are established and
communicated to employees.
– The supervisor then observes behavior and
performance results, comparing them to the
standards set.
– Finally, the supervisor provides reinforcement for
acceptable or excellent performance and works with
employees to develop remedies for inadequate
performance.
• It is impossible for different supervisors to
evaluate employees in exactly the same way.
– A supervisor may have a tendency to select some
specific ratings or identify certain behaviors as
problematic over others.
– Biases about specific people and groups of people can
affect the appraisal process.
• For example, supervisors who fail to keep good records may
rely on recent events when evaluating an employee.
• A supervisor may give a more favorable appraisal to someone
who is similar to the supervisor and appraise more negatively
a person who is different from the supervisor.
• Another bias comes from the halo effect, which leads
people to generalize one positive or negative trait to a
person’s entire performance.
• There are several types of appraisals used to
evaluate performance.
– Supervisors usually do not choose the type of
form to use, rather it is selected by the human
resources department or upper management.
• The goal of some appraisal forms is to make
the process easy and consistent for all
employees.
– Ideally, the form focuses on behavioral
performance and results to reduce bias and
increase objectivity.
• The graphic rating scale is an example of this type of
appraisal form.
• However, this type of form is susceptible to lack of
consistency from supervisor to supervisor.
• Another type of appraisal is the paired-
comparison approach, which measures the
relative performance of employees in a
group.
– This form rank orders all employees to find the
best employees.
• Therefore, it reflects negatively on other
employees.
• The appraisal interview provides feedback to
the employee and allows the employee to join
in the process of performance improvement.
– The interview should follow careful and thoughtful
completion of the appraisal form, and should be in
a private place with plenty of time for the
employee to discuss issues raised in the interview.
• The final outcome of the interview should be
agreement between the supervisor and
employee about what improvements need to
be made and the method for achieving the
improvement goals.
 Benefits of Conducting a Performance
Appraisal

• Performance Appraisal: Formal feedback on how

well an employee is performing his or her job.
– Performance appraisals may be accomplished with the
use of a standard form, which includes questions or
items to guide the process.
– On the other hand, performance appraisal can be
accomplished without a standard form.
• In either case, the evaluation should be based on
predetermined performance expectations that are
communicated to employees.
• Performance appraisals provide information
necessary for employees to improve the quality of
their work.
– It can help motivate employees.
• Employees like to hear how they are doing, and behaviors that
are evaluated or measured tend to get more attention from
individuals.
– Therefore, when it is useful to the organization to have
special attention directed at a goal, it is useful to have
that item on a formal appraisal.
• For example, if the quality of a product or service is important,
it is worthwhile to have a section on the performance
appraisalon quality.
• Another reason for conducting performance
appraisals is that they provide important records for
the organization.
– They are a useful source of information when deciding on
raises, promotions, and discipline, and they provide
evidence that these were administered fairly.
– In the case of employee behavior or performance
problems, an appraisal documents the problem.
Systematically Appraising Performance
• For appraisals to deliver their potential
benefits, they must be as fair and accurate as
possible.
– Supervisors should be systematic in appraising
performance.
 Appraisal Process
• Establish and communicate expectations for
performance.
• Observe and measure individual performance
against standards.
• Reinforce performance to provide remedies
Establish and Communicate Expectations

• During the planning process and related

action plans, the supervisor spells out who
is to do what in order to accomplish the
department objectives.
– This information will indicate what each
employee must do in order to help the
department or work group meet its objectives.
• One approach is to list three to five major
responsibilities of each position; then focus on
these responsibilities.
• It is important that each employee knows and
understands what is expected.
– The supervisor must communicate the objectives
effectively.
– Employees are most likely to understand and be
committed to objectives when they have a say in
developing.
 Observe and Measure Individual
Performance
• Through the control process, the supervisor
should continuously gather information about
each employee’s performance.
– This is an ongoing process, not something the
supervisor saves to do when filling out appraisal
forms.
• Performance appraisals should focus on
behavior and results.
– Focusing on behavior means the appraisal should
describe specific actions or patterns of behaving.
– Focusing on results means describing the extent
to which the employee has satisfied the objective
for which he or she is responsible.
• Sometimes a supervisor needs to appraise
personal characteristics, for example, an
employee’s dependability or attitude.
– While such ratings are necessarily subjective, the
supervisor can try to base them on observations
about behavior and results.
 Reinforce Performance
• To keep employees motivated and informed,
the supervisor needs to tell them when they
are doing something right, not just when they
are making a mistake.
– Reinforce good performance by pointing out to
employees the areas in which their performance is
good.
• In areas where the employee falls short of the
standards, he or she needs to know how to
improve.
– An effective way to help the employee is for the
supervisor and employee to work together in
solving performance problems.
– To move beyond discussing symptoms to uncover the underlying
problems, the supervisor can ask which of the following kinds of
causes led to the poor performance:
• (1) Inadequate skills.
– The supervisor should see that the employee gets the necessary
training.
• (2) Lack of effort.
– The supervisor may need to apply the principles of motivation.
• (3) External Additions.
– If the problem is something beyond the control of the supervisor and
employee, such as a poor economy or lack of cooperation from another
department, the appraisal standards and ratings should be adjusted so
that they are fair to the employee.
• (4) Personal problems.
– The supervisor should handle the situation as described in Chapter 14.
 Avoiding Discrimination in Performance
Appraisals
• The Equal Employment Opportunity
Commission (EEOC) is the government agency
charged with enforcing federal laws against
discrimination.
– The EEOC has published the Uniform Guidelines of
Employee Selection Procedures, which include
guidelines for designing and implementing
performance appraisals.
• In general, the behaviors or characteristics
measured by a performance appraisal should
be related to the job and to succeeding on the
job.
• The supervisor and others responsible for
the content of performance appraisals
should make sure that what they measure
is still relevant to a particular job.
– Ratings of performance should not be
discriminatory.
• That is, they should not be based on the employee’s
race, sex, or other protected category, but on
whether the employee meets standards of
performance.
 Types of Appraisals
• Types of commonly used performance
appraisal techniques include:
– Graphic rating scales.
– Paired-comparison approach.
– Forced-choice approach.
– Essay appraisal.
 Graphic Rating Scale

• Graphic Rating Scale: A performance appraisal

that rates the degree to which the employee has
achieved various characteristics.
– The graphic rating scale is the most common type of
appraisal used.
– Various characteristics such as job knowledge or
punctuality are rated by the degree of achievement.
• The rate usually receives a score of 1 to 5, with 5 representing
excellent performance.
• Some forms allow for additional comments.
• The advantage of this type of appraisal is
that it is relatively easy to use.
– However, the ratings themselves are
subjective.
• What one supervisor considers “excellent” may
seem just “average” to someone else.
• Also, many supervisors tend to rate everyone as
being at least a little bit above average.
• Additional descriptive information is an attempt to
overcome these problems.
• Paired-comparison Approach: A performance
appraisal that measures the relative performance of
employees in a group.
– This is a method of performance evaluation that results in
a rank ordering of employees to come up with a best
employee.
– This type of approach measures the relative performance
of employees in a group.
• Employees are ranked by comparing the first two
employees on the list.
– The supervisor places a check mark next to the name
of the employee whose performance is better.
– The process is repeated, comparing the first
employee’s performance with that of the other
employees.
– Then the supervisor compares the second employee
on the list with all the others, and so on until each pair
of employees has been compared.
– The employee with the most check marks is considered
the most valuable.
• The paired-comparison approach is
appropriate when the supervisor needs to
find one outstanding employee in a group
for a promotion or special assignment.
– The fact that paired comparison makes some
employees look good at the expense of others
makes this technique less useful as a method
of providing feedback to individual employees.
 Forced-Choice Approach
• Forced-choice Approach: A performance
appraisal that presents the appraiser with sets
of statements describing employee behavior;
the appraiser must choose which statement is
most characteristic of the employee and
which is least characteristic.
• This type of appraisal form gives the supervisor
sets of statements describing employee behavior.
– For each set of statements, the supervisor must select
the one that is most and the one that is least
characteristic of the employee.
• These questionnaires prevent the supervisor from saying only
positive things about employees. It is used when an
organization finds that supervisors have been rating an
unbelievably high proportion of employees as above average.
 Essay Appraisal
• Sometimes the supervisor must write a description
of the employee’s performance.
– The essay appraisal is often used along with other types of
appraisals, notably graphic rating scales.
– They provide an opportunity for supervisors to describe
aspects of performance not thoroughly covered by an
appraisal questionnaire.
– The disadvantage of this method is that their quality
depends on the supervisor’s writing skills.
Behaviorally Anchored Rating Scales

• Behaviorally Anchored Rating Scales: A performance

appraisal in which the employee is rated on scales
containing statements describing performance in several
areas.
– This is a method of performance appraisal that is tailored to the
organization and positions within that organization.
– Some organizations pay behavioral scientists or organizational
psychologists to create behaviorally anchored rating scales.
– These scales rate employee performance in several areas.
– The supervisor selects the statement that best describes how the
employee performs.
– Each job title in the organization has a different set of rating
statements.
• The advantage of using this technique is that it
is tailored to the organization’s objectives for
employees.
• It also tends to be less subjective than some
other approaches.
• However, developing the scales is time-
consuming and therefore relatively expensive.
 Checklist Appraisal

• A checklist appraisal is a record of

performance, not an evaluation by the
supervisor.
• It contains a series of questions about the
employee’s performance.
– The supervisor checks boxes to answer the
questions yes or no.
– The human resources department has a key for
scoring the items resulting in a rating of the
employee’s performance.
• The advantage of this type of appraisal is that
it is easy to complete.
• However, it has several disadvantages.
– The checklist can be difficult to prepare, and each
job category will probably require a different set
of questions.
– Also, there is no way for the supervisor to adjust
the answers for any special circumstances that
affect performance.
 Critical-Incident Appraisal
• Critical-incident Appraisal: A performance
appraisal in which the supervisor keeps a
record of incidents that show positive and
negative ways the employee has acted; the
supervisor uses this record to assess the
employee’s performance.
• To conduct a critical-incident appraisal, the
supervisor keeps a written record of incidents
that show positive and negative ways in which the
employee has acted.
– The record should include dates, people involved,
actions taken, and any other details that are relevant.
– At the time of the appraisal, the supervisor reviews the
record to reach an overall evaluation of the employee’s
behavior.
– During the appraisal interview, the employee has a
chance to respond to each of the incidents recorded.
• The advantage of this method is that it
focuses on actual behaviors.
– However, the recordkeeping is time-consuming,
and since negative behaviors are more likely to be
recorded than positive behaviors, it can be overly
harsh.
• Work Standards Approach: A performance
appraisal in which the appraiser compares the
employee’s performance to objective measures of
what an employee should do.
– This type of appraisal requires the supervisor to
establish objective measures of performance.
• A typical work standard would be the quantity produced by an
assembly-line worker.
• The supervisor then compares the employee’s actual
performance with the standards.
• This approach works best with production workers.
 Management by Objectives (MBO)

• In organizations where MBO is used to set goals

and objectives for employees, the supervisor will
use this approach for performance appraisal also.
– The appraisal is based on whether or not the employee
has met his or her objectives.
– The advantage is that employees know what to expect.
– The supervisor focuses on results rather than more
subjective criteria.
 Agents by Someone Other than the
Supervisor

• 360-degree Feedback: Performance appraisal that

combines assessment from several sources.
• Because the supervisor cannot know all of an employee’s
behaviors and their impact on others in the organization,
the supervisor may combine his or her appraisal with self-
assessments by the employee or with appraisals by peers
or subordinates.
– Combining several sources of appraisals is called 360-degree
feedback.
– The self-assessment may be done before the interview.
– Then the supervisor and employee can compare the employee’s
appraisal with his or her own evaluation.
• Peer Reviews: Performance appraisals
conducted by an employee’s co-workers.
• Peer appraisals are less common.
• In organizations that use teams, the members
may appraise the performance of their team
members.
• There are many techniques for appraising
performance.
– Usually the human resources department or higher-
level management dictates which type(s) the
supervisor will use.
– All supervisors will likely use the same approach
because it is easier to keep records showing
performance over time.
– The supervisor may be able to supplement the
appraisal format with other techniques if they seem
helpful by using the “Comment” section of the form or
an attached addition.
• An increasing number of major companies are
having subordinates rate how well their
bosses manage.
• The purpose is to give managers information
they can use to supervise more effectively and
make their corporations more competitive.
 Bias in Appraising Performance
• Performance appraisals should be free of bias,
but this is impossible.
– There are several identifiable biases in the
performance appraisals by supervisors.
• Harshness Bias: Rating employees more severely than
their performance merits.
• Leniency Bias: Rating employees more favorably than
their performance merits.
• Harshness bias tends to frustrate and discourage
workers who resent the unfair assessments of their
performance.
• At the other extreme is the leniency bias, where
supervisors rate their employees more favorably
than the performance merits.
– Employees who receive favorable ratings may see it as an
advantage.
• However, it cheats them and the department of the benefits of
truly developing and coaching employees.
• There are also supervisors who tend to select
ratings that are related to the structuring of
answers on the questionnaire.
– A tendency may be to select ratings in the middle
of the scale, which is called central tendency.
• This type of bias misses important opportunities to
praise or correct employees.
• Proximity bias, or assigning similar scores to items
that are near each other on a questionnaire, can
result in misleading appraisals.
– If the supervisor is uncertain about specific questions or
wants to adjust a low score, he or she may resort to
making random choices.
– This should be avoided by trying to apply objective criteria.
• Personal preferences of the supervisor will bias
performance appraisals also.
– There is a tendency to judge others more positively when
they are like oneself.
– There is also a tendency to place most weight on the
events that have occurred most recently.
• This is called recency syndrome.
• The supervisor should be careful to consider events and behaviors
that occurred throughout the entire period covered by the review.
• Similarity Bias: The tendency to judge others more
positively when they are like oneself.
• The halo effect refers to the tendency to generalize
one positive or negative aspect of a person to the
person’s entire performance, resulting in either a
higher or lower rating than the employee deserves.
• Finally, the supervisor’s prejudices about various
types of people can unfairly influence a performance
appraisal.
– The supervisor must remember that each employee is an
individual, not just a representative of a group.
– This is especially important in light of the EEOC guidelines
discussed earlier in the chapter.
 Purpose of Conducting Performance
Appraisals
• The interview between the supervisor and
employee is where performance is reinforced
or remedies are provided.
– The supervisor describes what he or she has
observed and discusses this appraisal with the
employee.
– Together they agree on areas for improvement
and development.
• Supervisors often dread conducting appraisal
interviews.
– Pointing out another person’s shortcomings can
be unpleasant at best.
• To overcome these feelings, if helps to focus on the
benefits of appraising employees.
• The purpose of holding an appraisal interview is to
communicate information about the employee’s
performance.
• An interview is an appropriate setting because if sets
aside time to focus on and discuss the appraisal in
private.
• It is a two-way communication with the supervisor
and employee working together to devise ways to
improve performance.
 Preparing for a Performance
Appraisal

• Preparation for the interview begins with

completing the appraisal form.
– The supervisor should allow enough time to
complete the form carefully and thoughtfully.
– The supervisor should think about how the
employee is likely to react to the appraisal and
should plan how to handle the employee’s
reaction.
– Also be ready with some ideas for how to
correct problems noted in the appraisal.
• Notify the employee ahead of the time of the
interview.
– Arrange for a private place to hold the interview.
– Make arrangements to prevent interruptions.
• This is a very important event for both the supervisor
and the employee--treat it as such.
• In preparation for the appraisal interview, it is also
useful for the supervisor to review for himself or
herself why appraisals are important for the
organization, department, and most of all for the
supervisor to be competent at the job.
• When the supervisor is convinced the
performance is a positive enterprise and that it
can be a win-win situation, it will be easier to do
the interview.
 Guidelines for Conducting the
Interview
• Begin the interview session by an attempt to put the
employee at ease.
– A refreshment and small talk may help break the ice.
• Review the employee’s self-evaluation first, if there is one.
– Ask for reasons for the various ratings.
– Then the supervisor describes his or her evaluation of the
employee.
• Start with an overall impression, then explain the contents of the
appraisal forms.
• Most employees are waiting for the “bad news,” so it is probably
most effective to describe areas for improvement first.
• Then describe the employee’s strengths.
• Allow time for the employee to respond to the
performance appraisal.
– The employee should be allowed to agree or
disagree with the supervisor’s conclusions, as well
as to ask questions.
– It is important for the supervisor to keep an open
mind and listen to the employee.
• When the supervisor and employee understand each
other’s point of view, they should reach a decision on
how to solve problems described in the appraisal.
– At the end of the interview, the supervisor and employee
are usually required to sign the appraisal form.
– By doing so, they acknowledge that the interview has been
conducted and that the employee has read and
understood the form.
• After the interview is over, the supervisor
continues to appraise performance.
• Training and coaching for improvement should
ensue.
• The follow-up is an ongoing process.