EVALUATING EMPLOYEE appropriate for determining salary

PERFORMANCE increases.

LEARNING OBJECTIVES PROVIDING EMPLOYEE TRAINING AND

FEEDBACK
1. Determine The Reason For Evaluating
Employee Performance By far, the most important use of
2. Identify Environmental And Cultural performance evaluation is to improve
Limitations employee performance by providing
3. Who Will Evaluate The Performance feedback about what employees are doing
4. Select The Best Appraisal Methods To right and wrong.
Accomplish Your Goals
PERFORMANCE APPRAISAL REVIEW:
5. Train Raters A meeting between a supervisor and a
6. Observed and Document Performance subordinate for the purpose of discussing
7. Evaluate Performance performance appraisal results. an excellent
8. Communicate Appraisal Results to time to meet with employees to discuss their
Employees strengths and weaknesses. But more
9. Terminate Employees importantly, it is the time to determine how
10. Monitor the Legality and Fairness of the weaknesses can be corrected.
Appraisal System
DETERMINING SALARY INCREASES

STEP 1: DETERMINE THE REASON FOR One important reason for evaluating
EVALUATING EMPLOYEE employee performance is to provide a fair
PERFORMANCE basis on which to determine an employee’s
salary increase.
Know the reason why you are conducting
an Evaluation of Employee Performance. ● it would not seem fair to pay a
poor-performing employee the same
FORCED CHOICE RATING SCALE amount as an excellently performing
A method of performance appraisal in which one.
a supervisor is given several behaviors and ● If performance appraisal results are
is forced to choose which of them is most to be used to determine salary
typical of the employee. increases, a numerical rather than
narrative format is probably needed.
● excellent for determining
compensation but terrible for training MAKING PROMOTION DECISIONS
purposes. ● Promoting the best employee for a
new position.
360-DEGREE FEEDBACK ● PETER PRINCIPLE: the promotion
This is an excellent source for improving of employees until they reach their
employee performance but is not highest level of incompetence.
 ● If performance evaluations are used frustrating, and the results of the evaluation
to promote employees, care should may not be taken seriously. In an
be taken to ensure that the environment in which employees are very
employee is evaluated well on the cohesive, the use of peer ratings might
job dimensions that are similar to reduce the cohesiveness.
those of the new position.
STEP 3: DETERMINE WHO WILL
MAKING TERMINATION DECISIONS EVALUATE PERFORMANCE

When performance management Traditionally, employee performance has

techniques are not successful, the results of been evaluated solely by supervisors.
a performance review might suggest that Organizations, however, have realized that
the best course of action is to terminate the supervisors see only certain aspects of an
employee. employee’s behavior.

CONDUCTING PERSONNEL RESEARCH 360-DEGREE FEEDBACK: A performance

appraisal system in which feedback is
As discussed in previous chapters, obtained from multiple sources such as
employment tests must be validated, and supervisors, subordinates, and peers.
one way this can be done is by correlating
test scores with some measure of job ● primarily used as a source of training
performance. and employee development and is
seldom used in the appraisal
Although not the most important reason for process to determine salary
evaluating employee performance, increases or to make promotion and
personnel research is still important, termination decisions.
especially in organizations where union
contracts forbid the use of performance MULTIPLE-SOURCE FEEDBACK: A
evaluations in personnel decisions. performance appraisal strategy in which an
employee receives feedback from sources
STEP 2: IDENTIFY ENVIRONMENTAL (e.g., clients, subordinates, peers) other
AND CULTURAL LIMITATIONS than just his or her supervisor.

The second step in the performance SUPERVISOR

appraisal process is to identify the ● By far the most common source of
environmental and cultural factors that could performance appraisal is the
affect the system. For example, if supervisor rating.
supervisors are highly overworked, an ● Though supervisors may not see
elaborate, time-consuming performance every minute of an employee’s
appraisal system will not be successful. behavior, they do see the end result.

In an environment in which there is no PEERS

money available for merit pay, developing a ● Peer ratings usually come from
numerically complex system will become employees who work directly with an
 employee and often see the actual by filing complaints or complimenting
behavior. a manager about one of her
● Research has shown that peer employees.
ratings are fairly reliable only when ● Formally, customers provide
the peers who make the ratings are feedback by completing evaluation
similar to and well acquainted with cards.
the employees being rated
(Mumford, 1983).
● SECRET SHOPPERS: current
SUBORDINATES customers who have been enlisted
by a company to periodically
● (also called Upward Feedback) is an evaluate the service they receive.
important component of 360-degree
feedback, as subordinates can SELF-APPRAISAL
provide a very different view of a
supervisor’s behavior. ● Allowing an employee to evaluate
● Subordinate ratings can be difficult her own behavior and performance
to obtain because employees fear a is a technique used by an increasing
backlash if they unfavorably rate number of organizations.
their supervisor
● Subordinates’ feedback can be ● Self-appraisals of performance
encouraged if: appears to be most accurate when
the self- appraisal will not be used
- supervisors appear open to for such administrative purposes as
employee comments (Baumgartner, raises or promotions (Atwater,
1994); 1998). They are also more accurate
- if the ratings are made anonymously when employees understand the
(Antonioni, 1994); performance appraisal system
- if the ratings are used for (Williams & Levy, 1992) and when
developmental purposes (Avis & employees believe that an objective
Kudisch, 2000); record of their performance is
- if the employee feels competent to available with which the supervisor
make the rating, feels there will be can compare the self-appraisal (Farh
no retaliation for making honest & Werbel, 1986).
ratings, and will somehow benefit by
providing honest ratings (Smith &
Fortunato, 2008).
STEP 4: SELECT THE BEST APPRAISAL
METHODS TO ACCOMPLISH YOUR
GOALS
CUSTOMERS
CRITERIA: these are ways of describing
● Informally, customers provide employee success.
feedback on employee performance
Prior to developing the actual performance ● Task-focused dimensions are
appraisal instrument, two important organized by the similarity of tasks
decisions must be made: the focus of the that are performed.
performance appraisal dimensions and ● The advantage of this approach is
whether to use rankings or ratings. that because supervisors are
concentrating on tasks that occur
DECISION 1: together and can thus visualize an
Focus of the Appraisal Dimensions employee’s performance, it is often
DECISION 2: easier to evaluate performance than
Should Dimensions Be Weighted? with the other dimensions.
DECISION 3: ● The disadvantage is that it is more
Use of Employee Comparisons, difficult to offer suggestions for how
Objective Measures, or Ratings to correct the deficiency if an
employee scores low on a
dimension.
DECISION 1: FOCUS OF THE
APPRAISAL DIMENSIONS Goal-Focused performance Dimension

Trait-Focused Performance Dimensions Another performance dimension is to

organize the appraisal on the basis of goals
A trait-focused system concentrates on to be accomplished by the employee.
such employee attributes as dependability,
honesty, and courtesy. The advantage of a goal-focused approach
is that it makes it easier for an employee to
Though commonly used, trait-focused understand why certain behaviors are
performance appraisal instruments are not a expected.
good idea because they provide poor
feedback and thus will not result in Contextual-Focused Performance
employee development and growth. Dimensions

Competency-Focused Performance ● The effort an employee makes to get

Dimensions along with peers, improve the
Competency-focused dimensions organization, and perform tasks that
concentrate on the employee’s knowledge, are needed but are not necessarily
skills, and abilities. an official part of the employee’s
job description.
The advantage of organizing dimensions by
competencies is that it is easy to provide ● Contextual performance is important
feedback and suggest the steps necessary because not only are these prosocial
to correct deficiencies. organizational behaviors important
to the success of an organization,
Task-focused Performance Dimensions but they also tend to be similar
across jobs, whereas the
 dimensions involved in task employee has performed on each of the
performance differ across jobs dimensions.
(Borman & Motowidlo, 1997).
Furthermore, the selection tests that ● Employee Comparisons
might best predict task performance ● Objective Measures
(e.g., cognitive ability, job ● Ratings of Performance
knowledge) are not the same tests
that might predict contextual Employee Comparisons
performance (e.g., integrity tests, To reduce leniency, employees can be
personality inventories). compared with one another instead of being
rated individually on a scale.
DECISION 2: SHOULD DIMENSIONS BE ● RANK ORDER: A method of
WEIGHTED? performance appraisal in which
employees are ranked from best to
Once the type of dimension has been worst. Rank orders are easily used
determined, the next decision is whether the when there are only a few
dimensions should be weighted so that employees to rank, but they become
some are more important than others. difficult to use with larger numbers.
● PAIRED COMPARISON: A form of
Weighting dimensions makes good ranking in which a group of
philosophical sense, as some dimensions employees to be ranked are
might be more important to an organization compared one pair at a time. This
than others. Another advantage to method involves comparing each
differentially weighting dimensions is that it possible pair of employees and
may reduce racial and other biases choosing which one of each pair is
(McFarland, Wolf, & Nguyen, 2005). the better employee.
● FORCED DISTRIBUTION
Though differential weighting of dimensions METHOD: A performance appraisal
makes sense and has some advantages, method in which a predetermined
many organizations choose to weight all percentage of employees are placed
performance dimensions equally because it into a number of performance
is administratively easier to compute and to categories. With this method, a
explain to employees. predetermined percentage of
DECISION 3: USE OF EMPLOYEE employees are placed in each of the
COMPARISONS,OBJECTIVE five categories.
MEASURES, OR RATINGS ● Also called as "Rank and Yank"
● Forced distribution systems are
Once the types of dimensions have been much easier to use than the other
considered, the next decision is whether to two employee comparison methods
evaluate performance by comparing but they also have a drawback. To
employees with one another (ranking), use the method, one must assume
using objective measures such as that employee performance is
attendance and number of units sold, or normally distributed, that is, that
having supervisors rate how well the there are certain percentages of
 employees who are poor, average, involves processing all information
and excellent. but processing some of it incorrectly.

Objective Measures ● ATTENDANCE: can be separated

into three distinct criteria:
QUANTITY OF WORK absenteeism, tardiness, and
tenure.
● A type of objective criterion used to ● Both absenteeism and tardiness
measure job performance by have obvious implications for the
counting the number of relevant job performance appraisal process.
behaviors that occur. ● Tenure as a criterion, however, is
● Evaluation of a worker’s used mostly for research purposes
performance in terms of quantity is when evaluating the success of
obtained by simply counting the selection decisions.
number of relevant job behaviors
that take place. ● SAFETY: employees who follow
safety rules and who have no
● Although quantity measures appear occupational accidents do not cost
to be objective measures of an organization as much money as
performance, they are often those who break rules, equipment,
misleading. It is important to realize and possibly their own bodies.
that many factors determine the
quantity of work other than an Ratings of Performance
employee’s ability and performance. The most commonly used option in
Furthermore, for many people’s jobs, evaluating performance is to have
it might not be practical or possible supervisors rate how well the employee
to measure quantity. performed on each dimension. Though
there are many variations of how these
QUALITY OF WORK rating scales can be created, the two most
● A type of objective criterion used to common are the graphic rating scale and
measure job performance by the behavioral checklist
comparing a job behavior with a
standard.
● Quality is usually measured in terms GRAPHIC RATING SCALE
of errors, which are defined as
deviations from a standard. Thus, to The most common rating scale is the
obtain a measure of quality, there graphic rating scale. The obvious advantage
must be a standard against which to of graphic rating scales is their ease of
compare an employee’s work. construction and use, but they have been
criticized because of their susceptibility to
● ERROR: Deviation from a standard such rating errors
of quality; also a type of response to
communication overload that BEHAVIORAL CHECKLIST
Behavioral checklists consist of a list of “often,” “ seldom,” or “ never” follow the
behaviors, expectations, or results for each rules.
dimension. This list is used to force the
supervisor to concentrate on the relevant EXTENT TO WHICH ORGANIZATIONAL
behaviors that fall under a dimension. EXPECTATIONS ARE MET
Behavioral checklists are constructed by
taking the task statements from a detailed The best approach is to rate employees on
job description and converting them into the extent to which their behavior meets the
behavioral performance statements expectations of the organization. Such an
representing the level at which the behavior approach allows for high levels of feedback
is expected to be performed. and can be applied to most types of
employee behavior.
BEHAVIOR-BASED STATEMENTS:
increased amount of specific feedback that EVALUATION OF PERFORMANCE
can be given to each employee. APPRAISAL METHODS
RESULTS-BASED STATEMENTS:
concentrate on what an employee Although techniques such as behavioral
accomplished as a result of what she did. checklists are only slightly more
CONTAMINATION: A problem with psychometrically sound, they still have
result-focused statements is that an some advantages over graphic rating
employee can do everything asked of her by scales. Because employees are directly
an organization and still not get the desired involved in creating them, they tend to see
results due to factors outside of her control. performance evaluation results as being
fairer. Furthermore, many supervisors who
COMPARISON WITH OTHER make such ratings prefer many of the
EMPLOYEES behavioral approaches (Dickenson &
Zellinger, 1980).
Supervisors can rate performance on a
dimension by comparing the employee’s STEP 5: TRAIN RATERS
level of performance with that of other
employees. It is important to note that when Although training supervisors to evaluate
such scale anchors as “below average,” performance is essential to a sound and
“average,” and “above average” are used, legal performance appraisal system, a 2010
the evaluation involves rating employee ERC survey found that few organizations
performance in comparison with other spend the time and resources necessary to
employees. do this properly.

FREQUENCY OF DESIRED BEHAVIORS FRAME-OF-REFERENCE TRAINING:

provides raters with job-related information,
Behaviors can be rated based on the practice in rating, and examples of ratings
frequency with which they occur. As part of made by experts as well as the rationale
our performance appraisal system, behind those expert ratings (Hauenstein &
supervisors are asked to decide whether Foti, 1989). The goal of frame-of-reference
their employees “ always,” “ almost always,” training is to communicate the
organization’s definition of effective EMPLOYEE PERFORMANCE RECORD: A
performance and to then get raters to standardized use of the critical-incident
consider only relevant employee behaviors technique developed at General Motors. A
when making performance evaluations more formal method for using critical
(Uggerslev & Sulsky, 2008) incidents in evaluating performance.

STEP 6: OBSERVE AND DOCUMENT STEP 7: EVALUATE PERFORMANCE

PERFORMANCE
OBTAINING AND REVIEWING
● CRITICAL INCIDENTS: A method of OBJECTIVE DATA
performance appraisal in which the When it is time to appraise an employee’s
supervisor records employee performance, a supervisor should first
behaviors that were observed on the obtain and review the objective data
job and rates the employee on the relevant to the employee’s behavior. when
basis of that record. reviewing objective data, it is essential that
● Critical incidents are examples of potential sources of contamination (e.g.,
excellent and poor employee shift, equipment, training, coworkers,
performance. geographic area) be Considered.

Documentation is important for four READING CRITICAL INCIDENT LOGS

reasons: After obtaining objective data, the
supervisor should go back and read all of
● documentation forces a supervisor the critical incidents written for an
to focus on employee behaviors employee. Reading these incidents should
rather than traits and provides reduce errors of primacy, recency, and
behavioral examples to use when attention to unusual information.
reviewing performance ratings with
employees. Completing the Rating Form
● documentation helps supervisors Once critical-incident logs have been read
recall behaviors when they are and objective data reviewed, the supervisor
evaluating performance. is ready to assign performance appraisal
● First Impressions, Recent Behaviors, ratings. While making these ratings, the
Unusual or Extreme Behavior, and supervisor must be careful not to make
Behavior consistent with the common rating errors involving distribution,
Supervisor's opinion halo, proximity, and contrast.

● documentation provides examples to DISTRIBUTION ERRORS

use when reviewing performance
ratings with employees. Rating errors in which a rater will use only a
● documentation helps an organization certain part of a rating scale when
defend against legal actions taken evaluating employee performance.
against it by an employee who was Distribution errors are made when a rater
terminated or denied a raise or uses only one part of a rating scale.
promotion.
LENIENCY ERRORS: A type of rating error The performance rating one person
in which a rater consistently gives all receives can be influenced by the
employees high ratings, regardless of their performance of a previously evaluated
actual levels of performance. person (Bravo & Kravitz, 1996).
CENTRAL TENDENCY ERROR: A type of
rating error in which a rater consistently ASSIMILATION: A type of rating error in
rates all employees in the middle of the which raters base their rating of an
scale, regardless of their actual levels of employee during one rating period on the
performance. ratings the rater gave during a previous
STRICTNESS ERROR: A type of rating period.
error in which a rater consistently rates all
employees in the middle of the scale, LOW RELIABILITY ACROSS RATERS
regardless of their actual levels of Two people rating the same employee
performance. seldom agree with each other (Conway &
Huffcut, 1997; Viswesvaran, Ones, &
HALO ERRORS Schmidt, 1996). There are three major
A halo error occurs when a rater allows reasons for this lack of reliability:
either a single attribute or an overall ● raters often commit the rating errors
impression of an individual to affect the previously discussed (e.g., halo,
ratings that she makes on each relevant job leniency).
dimension. Halo error is also more common ● raters often have very different
in peer ratings than in supervisor ratings of standards and ideas about the ideal
subordinates (Viswesvaran, Schmidt, & employee.
Ones, 2005). ● two different raters may actually see
very different behaviors by the same
PROXIMITY ERRORS employee.
Proximity errors occur when a rating made
on one dimension affects the rating made SAMPLING PROBLEMS
on the dimension that immediately follows it
on the rating scale. RECENCY EFFECT: recent behaviors are
given more weight in the performance
The difference between this error and the evaluation than behaviors that occurred
halo error is in the cause of the error and during the first few months of the evaluation
the number of dimensions affected. With period.
halo error, all dimensions are affected by an
overall impression of the employee. With INFREQUENT OBSERVATION: another
proximity error, only the dimensions problem that affects performance appraisals
physically located nearest a particular is that many managers or supervisors do
dimension on the rating scale are affected; not have the opportunity to observe a
the reason for the effect, in fact, is the close representative sample of employee
physical proximity of the dimension rather behavior.
than an overall impression.
● Managers are often so busy with
Contrast Error their own work that they have no
 time to “ walk the floor” and observe Both the supervisor and the employee must
their employees’ behavior. have time to prepare for the review
● Employees often act differently [Link] should be allowed at least an
around a supervisor than around hour to prepare before an interview and at
other workers. least an hour for the interview itself.

COGNITIVE PROCESSING OF SCHEDULING THE INTERVIEW

OBSERVED BEHAVIOR The interview location should be in a neutral
place that ensures privacy and allows the
OBSERVATION OF BEHAVIOR: just supervisor and the employee to face one
because an employee’s behavior is another without a desk between them as a
observed does not guarantee that it will be communication barrier. Performance
properly remembered or recalled during the appraisal review interviews should be
performance appraisal review. scheduled at least once every six months
for most employees and more often for new
EMOTIONAL STATE: The amount of stress employees.
under which a supervisor operates also
affects her performance ratings. raters who PREPARING FOR THE INTERVIEW
were placed in a stressful situation The supervisor should review the ratings
produced ratings with more errors than did she has assigned to the employee and the
raters who were not under stress. reasons for those ratings. Meanwhile, the
employee should rate her own performance
BIAS: Raters who like the employees being using the same format as the supervisor
rated may be more lenient (Lefkowitz, 2000; (Roberts, 2003).
Sutton, Baldwin, Wood, & Hoffman, 2013)
and less accurate in their ratings than would DURING INTERVIEW
raters who neither like nor dislike their
employees (Cardy & Dobbins, 1986). The ● Begin the interview with some small
rater may overcompensate in an effort to be talk until the jitters go away.
“fair.” ● the supervisor should communicate
the following:
● The role of performance
STEP 8: COMMUNICATE APPRAISAL appraisal—that making decisions
RESULTS TO EMPLOYEES about salary increases and
terminations is not its only purpose;
Normally, in most organizations, a ● How the performance appraisal was
supervisor spends a few minutes with conducted;
employees each year to tell them about the ● How the evaluation process was
scores they received during the most recent accomplished;
evaluation period. ● The expectation is that the appraisal
interview will be interactive; and
PRIOR TO THE INTERVIEW ● The goal of understanding and
improving performance.
ALLOCATING TIME
FEEDBACK SANDWICH: the negative employee can be fired only for cause. The
feedback is sandwiched between positive idea behind employment at will is that
feedback. because employees are free to quit their
jobs at will, so too are organizations free to
It is essential to discuss the reasons an terminate an employee at will.
employee’s performance is not considered
to be perfect. The supervisor’s EMPLOYMENT-AT-WILL STATEMENTS:
acknowledgment that there may be external Statements in employment applications and
reasons for an employee’s poor company manuals reaffirming an
performance can increase the employee’s organization’s right to hire and fire at will.
satisfaction with the review and enable her
to perceive the feedback and evaluation as LEGAL REASONS FOR TERMINATING
accurate and helpful. EMPLOYEES

Once the problems have been identified, the PROBATIONARY PERIODS: employees
next and most difficult task is to find are given a probationary period in which to
solutions. What can the supervisor do to prove that they can perform well.
help? What can the organization do? What Employees can be terminated more easily
can the employee do? during the probationary period than at any
other time.
At the conclusion of the interview, goals
should be mutually set for future VIOLATION OF COMPANY RULES: Courts
performance and behavior, and both consider five factors in determining the
supervisor and employee should legality of a decision to terminate an
understand how these goals will be met. employee for violating company rules:

● A rule against a particular behavior

must actually exist.
● If a rule exists, a company must
prove that the employee knew the
rule.
STEP 9: TERMINATE EMPLOYEES ● the ability of the employer to prove
that an employee actually violated
EMPLOYMENT-AT-WILL DOCTRINE the rule.
● the extent to which the rule has been
The opinion of courts in most states is that equally enforced.
employers have the right to hire and fire an ● the extent to which the punishment
employee at will and without any specific fits the crime.
cause.
PROGRESSIVE DISCIPLINE: Providing
In the private sector, the employment-at-will employees with punishments of increasing
doctrine in most states allows employers the severity as needed, in order to change
freedom to fire an employee without a behavior.
reason—at will. In the public sector, an
INABILITY TO PERFORM: Employees can
also be terminated for an inability to perform The final step is to schedule an appropriate
the job. an organization will need to prove place and time for the meeting to occur. The
that the employee could not perform the job meeting should be held in a neutral, private
and that progressive discipline was taken to location.
give the employee an opportunity to
improve. A properly designed performance DURING THE MEETING
appraisal system is the key to legally
terminating an employee (Martin, Bartol, & The supervisor should get to the point about
Kehoe, 2000). terminating the employee.

REDUCTION IN FORCE (LAYOFF): The supervisor should rationally state the

Employees can be terminated if it is in the reasons for the decision, express gratitude
best economic interests of an organization for the employee’s efforts (if sincere), and
to do so. In cases of large layoffs or plant offer whatever assistance the organization
closings, the Worker Adjustment and intends to provide.
Retraining Notification Act (WARN)
requires that organizations provide workers Finally, the employee is asked to gather
with at least 60 days’ notice. Though personal belongings and is escorted out
layoffs are designed to save money, the door.
research indicates not only that force
reductions have a devastating effect on Terminating an employee is a difficult task,
employees (Leana & Feldman, 1992), but and there is little that can be done
that they often do not result in the desired to make it pleasant.
financial savings (Cascio, 2002).
AFTER TO THE MEETING
Once the meeting is over, the natural
reaction of the supervisor is to feel guilty.

When an employee is fired, other

employees will be tense. Consequently, it is
THE TERMINATION MEETING important, to be honest with the other
employees about what happened; at the
PRIOR TO THE MEETING same time, negative statements about the
terminated employee’s character must be
The first step is to ensure that the legal avoided.
process has been followed. An important
responsibility for human resources STEP 10: MONITOR THE LEGALITY AND
professionals is to ensure that a termination FAIRNESS OF THE APPRAISAL SYSTEM
the decision is legally defensible.
Performance appraisal systems are subject
The next step is to determine how much to the same legal standards as employment
help if any, the organization wants to offer tests and other employment decisions. As
the employee. such, performance ratings should be
analyzed each rating period to determine if
there are gender, race/ethnicity, or age
differences. If there are such differences,
the organization should determine whether
the differences are justified by factors such
as experience or if the differences are due
to discrimination.

Likewise, the personnel decisions that are

based on the performance appraisal
ratings should be analyzed to ensure
discrimination does not occur in the raises,
bonuses, promotions, and terminations that
result from the performance ratings.