Performance Appraisal

Performance Appraisal • Overview • The Criterion Problem • Sources of Performance Data • Specific Performance Appraisal Methods • The Performance Appraisal Interview

Performance Appraisal • Performance appraisal is… • the formalized means of assessing worker performance in comparison to certain established organizational standards. • the process used by an organization to evaluate the extent to which its workers are doing their jobs satisfactorily.

Uses of Performance Data Training Job Analysis Compensation Administration Placement Criterion Development Promotions Discharge Performance Appraisal System Personnel Research Development and Use of Performance Appraisal

Uses of Performance Appraisal • Between-person uses - salary administration, promotion, retention/termination, recognition of individual performance, layoff, and identification of poor performers. • Within-person uses - identification of individual training needs, performance feedback, determining transfers and assignments, and identifying individual strengths and weakness. • System maintenance uses - workforce planning, determining organization training needs, evaluating goal achievement, evaluating personnel practices.

Performance Criteria • Performance criteria are measures used to determine successful and unsuccessful job performance. • The Criterion Problem - How should we judge worker performance? • Objective performance measures - quantitative indicators of work outcomes. • Judgmental (subjective) performance - ratings/rankings made by some knowledgeable individual.

Performance Criteria • Three different levels of criteria • The ultimate criterion - an abstract, idealized concept of the criterion. • The conceptual criterion - the various concepts that together make up the ultimate criterion. • The operational criterion - the manner in which the operational criteria are measured. • The match between the operational criterion to the conceptual criterion determines the relevance of the criteria

Conceptual Criterion Criterion Deficiency Operational Criterion Criterion Relevance Criterion Contamination Performance Criteria

Sources of Performance Data • Personnel Data - work-related information that is regularly recorded • e.g., absenteeism, tardiness, # of accidents, letters of commendation or reprimand • Advantages • Relatively easy to obtain • Do not require subjective interpretation • Disadvantages • Assess mostly negative behaviors • Many aspects of job performance are not measured • Contextual factors may influence personnel records

Sources of Performance Data • Results-oriented (“hard”) criteria - direct measures of job performance, productivity • e.g., dollar volume of sales, number of words typed, units produced • Advantages • Face Validity • Disadvantages • Aspects of job performance may not be measured • Contextual factors may influence “hard” criteria

Sources of Performance Data • Judgmental (“Soft”) criteria - ratings or rankings of job performance • Advantages • Ratings scales are flexible and can used to measure many different aspects of job performance. • Disadvantages • Rating errors and biases can result in criterion contamination.

Who Rates Job Performance? • Supervisors • Self-appraisals • Peer appraisals • Subordinate appraisals • Customer appraisals • 360-degree feedback is a method of gathering performance ratings from supervisors, subordinates, peers, and customers.

Rating Errors • Rating errors are unintentional rating inaccuracies. • Leniency - the tendency to give ratings that are overly high • Severity - the tendency to give ratings that are overly low • Central Tendency - the tendency to use the midpoint of the scale too often

Rating Errors • Halo - the tendency to use an overall impression of someone when making ratings on specific performance dimensions. • Attributional errors - the tendency to underestimate situational factors that may constrain the ratees performance. • Personal biases - unintentional discrimination based on age, sex, race, etc. • Recency effect - the tendency to give greater weight to recent performance and lesser weight to earlier performance.

Reducing Rating Errors • Train performance raters • Rater error training (RET) - making raters aware of unintentional rating errors • Rater accuracy training (RAT) - train the rater in what constitutes good or poor performance and practice rating (videotaped) work samples and get feedback on accuracy. • Use more than one performance rater • Improve the rating process • e.g., structuring observations, changing rating scale format

Rating Biases • Rating biases are intentional rating inaccuracies. • Longenecker et al. (1987), The politics of performance appraisal. • Interviewed executives familiar with rating performance to investigate the thought processes they used when rating performance • Revealed that distortion of ratings was an acceptable means of accomplishes various ulterior goals. • “Accurately rating performance is not as important as keeping things cooking.”

Rating Biases • Seven common reasons for inflating ratings: • Pain-in-the-neck factor • To get more bonuses/raises for the unit • To promote someone out of the unit • Boost morale • Underdog factor • Dirty laundry factor • Recognition of recent improvements

Rating Biases • Four common reasons for deflating ratings: • Give a ‘kick in the pants’ to someone who is coasting • Pay is linking to performance and the budget is tight • Show them who’s the boss • In an effort to provide justification for future firing

Reducing Rating Biases • Reward supervisors who rate accurately • Limit access to performance appraisal information • Make managers aware of the benefits of accurate performance ratings and the detrimental affects of inaccurate performance ratings • Redesign organizational systems that promote intentional distortion

Specific Performance Appraisal Methods • Narrative Evaluations • An essay describing the employees performance over some time period. • Used as either the only performance appraisal method or to supplement a more structured approach (i.e., ratings/ranking). • Used in self-, peer, subordinate, customer, and supervisor performance appraisals.

Specific Performance Appraisal Methods • Narrative Evaluations • Advantages • May provide specific behavioral examples of job performance • Fill in gaps • Few development demands (i.e., up-front time)

Specific Performance Appraisal Methods • Narrative Evaluations • Disadvantages • Time consuming • Requires good communication and writing skills on the part of the assessor • May not address all of the aspects of job performance (especially if it is the only method used) • Affected by error and bias • No quantitative information and therefore difficult to compare across employees

Specific Performance Appraisal Methods • Graphic Rating Scales • Performance appraisal methods using a predetermined scale to rate the worker on important job dimensions. • It usually consists of: • a list and description of job related performance dimensions/traits • numerical anchoring system (typically 5-9 points) or • verbal anchoring system (e.g., good/poor,

Specific Performance Appraisal Methods • Graphic Rating Scales • Advantages • Quantifies job performance • Relatively easy to develop • Disadvantages • Affected by error and bias • Often ambiguous and therefore different raters infer different meanings • Often generic and may not represent job very well

Specific Performance Appraisal Methods • Behaviorally Anchored Rating Scales (BARS) • Using ratings scales with labels or anchors reflecting examples of poor, average, and good behavioral incidents • Four step development process • Critical incidents are generated • One group of SMEs clustered the critical incidents into performance dimensions • Another group of SMEs confirms the performance and • Rates each critical incident (effective/ineffective)

Specific Performance Appraisal Methods • Behaviorally Anchored Rating Scales (BARS) • Advantages • Performance dimensions are clearly defined • Based on job analysis and therefore job relevant and legally defensible • Useful for feedback purposes • High content and face validity (if it is well developed) • The development process may promote buy-in a frame-of-reference for evaluating performance

Specific Performance Appraisal Methods • Behaviorally Anchored Rating Scales (BARS) • Disadvantages • Development is time-consuming and expensive • Affected by error and bias • If anchors are too representative of a particular employee’s performance this may result in rating errors

Specific Performance Appraisal Methods • Behavioral Observation Scales (BOS) • Requires appraisers to rate how often a worker has been observed performing key work behaviors (critical incidents) • Values on the rating scale can reflect specific percentages of time • 5 = 95-100% • 4= 87-94% • 3 = 75-84% • 2 = 65-74% • 1 = 0-64%

Specific Performance Appraisal Methods • Behavioral Observation Scales (BOS) • Advantages • It is (supposedly) measuring observations of behavior and therefore lessening subjective judgement • Based on job analysis and therefore job relevant and legally defensible • Very useful for feedback purposes • High content and face validity (if well developed) • The development process may promote buy-in a frame-of-reference for evaluating performance

Specific Performance Appraisal Methods • Behavioral Observation Scales (BOS) • Disadvantages • A supervisor cannot always be observing the workers he or she is rating • Appraisers cannot remember how often very specific periods of time over any extensive time period (certainly not 6 to 12 months) • Affected by error and bias

Specific Performance Appraisal Methods • Comparative Approaches • Rankings - involve a simple rank ordering workers from best to worse • Paired Comparison - comparing each worker with each other worker in the group • Forced Distribution - assigning workers to established categories of poor to good performance with fixed limitations on how many employees can be assigned to each category • Relative Percentile Method - indicating the percentage of other employees performing at or below level demonstrated by a worker

Specific Performance Appraisal Methods • Comparative Approaches • Advantages • Relatively simple to develop (however, certain methods may involve critical incidents) • Easy for raters and ratees to understand • Forces raters to make distinction among ratees

Specific Performance Appraisal Methods • Disadvantages • Most methods make it difficult to compare across work groups • Provides no information about an absolute level of performance -- a problem with work groups of exceptionally good or poor performers • Usually not very descriptive of performance behaviors • Using for performance feedback may be difficult

The Performance Appraisal Interview • At some point there is typically (and preferably) a face-to-face interview between the rater and the ratee at which the results of the performance appraisal are discussed. • There shouldn’t be surprises in the interview.The ratee should understand the appraisal process and should be receiving feedback frequently. • There should be a review of job responsibilities and goals how well they’ve been met • Goals for future performance should be identified

The Performance Appraisal Interview • Performance feedback should: • focus on activities under the worker’s control • should be timely • describe the situation and behavior in specific terms • should allow for two-way communication • typically should balance the recognition of good performance with the identification of areas for improvement • should be constructive, not manipulative • should be used to motivate the worker

The Performance Appraisal Interview • Characteristics promoting perceptions that the performance appraisal system is fair (Greenburg, 1986) • Soliciting the ratee’s input prior to the performance appraisal and using it • Two-way communication • Opportunity to challenge/rebut the evaluation • The rater’s degree of familiarity with the ratee’s work • Consistent application of performance standards

Content Recommendations for Legally Sound Performance Appraisals • Appraisal criteria should be: • should be job-related and based on job analysis • should be based on behaviors rather than traits • should be within the control of the ratee • should relate to specific functions, not global assessments • should be communicated to ratees in advance

Content Recommendations for Legally Sound Performance Appraisals • Appraisal procedures should: • be standardized and uniform for all employees in a work group • be formally communicated to employees • allow employees to review appraisal results • provide formal appeal mechanisms • use multiple, diverse, and unbiased raters • provide written instructions for training raters • require thorough and consistent documentation • establish a system for detecting error and bias

Performance Appraisal