INDUSTRIAL PSYCHOLOGY

CHAPTER 5: PERFORMANCE APPRAISALS

PERFORMANCE APPRAISAL
 Your pay raises, promotions, and job duties affect not only affect your income and standard of living, but also your
self-esteem, emotional security, and general satisfaction with life
 Determine whether you keep your job
 Can be beneficial to you as to your company
 Can help you assess your competence and personal development on the job
 Reveal your strengths and weaknesses
 Enhance your self-confidence in some areas and motivating you to improve your performance in others

FAIR EMPLOYMENT PRACTICES

 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION (EEOC) – apply to any selection procedure that is used for
making employment decisions, not only for hiring but also for promotion, demotion, transfer, layoff, discharge, or
early retirement
 Most performance evaluation programs are based on supervisor ratings which are subjective human judgments
that can be influenced by personal factors and prejudices
 Woman had to work harder and perform better than men to earn a promotion
 Older workers tend to receive significantly lower ratings than do younger workers on measures of self-
development, interpersonal skills, and overall job performance
 Job proficiency does not necessarily decline with age
 Raters may be basing their assessment on their EXPECTATIONS of an older worker’s skills rather than on the
worker’s actual job performance
 Provide opportunities for unfair treatment in terms of pay, promotion, and other job outcomes
 Should be based on job analyses to document specific critical incidents and behaviors that are related to successful
job performance
 Should focus on these actual job behaviors rather than on personality characteristics
 Should review the ratings with the employees who are being evaluated and offer training and counseling to
employees who are not performing well
 Appraisers should be trained in their duties, have detailed written instructions about how to conduct the
evaluation, and observe the workers on the job
 All relevant notes, records, and supporting documentation be well organized and maintained to ensure the
accuracy and objectivity of the appraisals and to support the company’s position in any future legal challenges from
workers who claim they were treated unfairly

WHY PERFORMANCE APPRAISAL?

 Provide an accurate and objective measure of how well a person is performing the job
 Decisions will be made about the employee’s future with the organization
 Used to evaluate specific selection techniques
o ADMINISTRATIVE – for use with personnel decisions such as pay increases and promotions
o RESEARCH – usually for validating selection instruments
 In order to establish the validity of employee selection devices, the devices must be correlated with some measure
of job performance
 They examine the subsequent performance of the workers who were selected and hired on the basis of those
techniques
 Provide information for validating employee selection techniques
 Can uncover weaknesses or deficiencies in knowledge, skills, and abilities  can be corrected through additional
training
 Can lead to the redesign of the training program for new workers and the retraining of current workers to correct
the shortcomings
 Can be used to assess the worth of a training program by determining whether job performance improved after the
training period
 Should provide feedback to employees about their job competence and their progress within the organization
 Maintaining employee morale
 Suggest how employees might change certain behaviors or attitudes to improve their work efficiency
 A worker’s shortcomings can be altered through self-improvement rather than through formal retraining
 Rewards are in the form of salary increases, bonuses, promotions, and transfers to positions providing greater
opportunity for advancement
 Changes must be based on a systematic evaluation of employee worth
 Provide the foundation of these career decisions and help to identify employees with the potential and talent for
contributing to the company’s growth

OPPOSITION TO PERFORMANCE APPRAISAL

 LABOR UNIONS
o 11% of the US workforce require that SENIORITYY rather than the assessment of employee merit be taken as
the basis for promotion
o Length of job experience alone is no indication of the ability to perform a higher-level job
o They must qualify for that promotion because of their abilities, not solely because of length of service
 EMPLOYEES
o Not many people are so confident of their skills that they expect consistently to receive praise from their
superiors
o Many of us would rather not be assessed and be told of our weaknesses or deficiencies, we may react with
suspicion or hostility to the idea of performance appraisals
 MANAGERS
o With inadequate or poorly designed appraisal programs may be skeptical about their usefulness
o Dislike playing the role of judge
o Unwilling to accept responsibility for making decisions that affect the future of their subordinates
o Inflate their assessments of the worker’s job performance, giving higher rating than deserved
o May be uncomfortable providing negative feedback to employees and may lack the skills to conduct the
postappraisal interview properly

OBJECTIVE PERFORMANCE APPRAISAL TECHNIQUES

 The specific technique used depends of the type of work being evaluated
 Must reflect the nature and complexity of the job duties
 OBJECTIVE PERFORMANCE AND OUTPUT MEASURES – proficiency on production jobs is more readily appraised
 JUDGMENTAL AND QUALITATITVE MEASURES – assessing competence on nonproduction, professional, and
managerial jobs
 OUTPUT MEASURE
o Even though we have corrected the output data to compensate for the different quality of performance, we
must also consider the possibility that other factors can influence or distort the performance measure
o It would be unfair to assign performance ratings without correcting for differences in office environment and
level of difficulty of the job tasks
o Contaminating factor: LENGTH OF JOB EXPERIENCE
o The longer employees are on a job, the greater is their productivity
o Many factors have to be recognized in evaluating performance on production jobs
o More of these influences that must be taken into account, the less objective is the final appraisal
o Impact of these extraneous factors requires raters to make personal judgments
o May not always be completely objective straightforward record of quantity and quality of output may suffice
as a measure of job performance
 COMPUEROZED PERFORMANCE MONITORING
o ELECTRONIC SUPERVISOR – machine that is always watching  detects and remembers everything
o A lot of employees, perhaps the majority, are not bothered by electronic performance monitoring
 o A person’s reaction to electronic monitoring depends on how the data compiled on their job performance are
ultimately applied
o When the information is used to help employees develop and refine job skills
o Most workers report a favorable attitudes toward computerized monitoring
o It ensures that their work will be evaluated objectively, not on the basis of how much their supervisor may like
or dislike them
o Can provide support for their requests for pay raises or promotions
o The monitoring of an individual’s job performance is far more stressful for that employee than in monitoring
the performance of the work group as a whole
o People who work alone experience greater stress from computerized monitoring than people who work as a
part of a cohesive group
o Social support provided by the other members of a close-knit work group helps to reduce the stress
o Knowledge of continuous monitoring, of knowing that every action one takes or fails to take is being recorded,
can lead workers to focus more on the quantity of their output than the quality
o The stress of computerized monitoring may result in a reduction of work quality  have a negative effect on
overall job performance and satisfaction
o Provides immediate and objective feedback
o Reduces rater bias in performance evaluations
o Helps identify training needs
o Facilitates goal setting
o May contribute to increases in productivity
o Invades workers’ privacy
o May increase stress and reduce job satisfaction, may lead workers to focus on quantity of output at the
expense of quality
 JOB-RELATED PERSONAL DATA
o Absenteeism, earnings history, accidents, and advancement rate
o Easier to compile job-related personal information from the files in the human resources office than it is to
measure and assess production of the job
o Provide little information about an individual worker’s ability on the job
o Can be used to distinguish good from poor employees
o Useful in assessing the relative worth of employees to an organization, but they are not a substitute for
measures of job performance

SUBJECTIVE (JUDGMENTAL) PERFORMANCE APPRAISAL TECHNIQUES

 Jobs on which employees do not produce a countable product are more difficult to assess
 Worker performance in complex jobs is much more strongly influenced by environmental factors
 Much more difficult to evaluate their performance as objectively as performance in less complex jobs
 Observing work behavior over a period of time and rendering a judgment about its quality
 Ask people who are familiar with the person and the work
 WRITTEN NARRATIVES
o Brief essays describing employee performance, to appraise performance, most apply numerical rating
procedures
o Subjective
o More prone to personal bias
o Can be ambiguous or misleading when describing an employee’s job performance
o Inadvertent but sometimes they are deliberate to avoid giving a negative appraisal
 MERIT RATING TECHNIQUES
o To provide greater objectivity for judgmental performance appraisals
o More formalized and specific because job-related criteria are established to serve as standards for comparison
o Designed to yield an objective evaluation of work performance compared with established standards
o RATING SCALES – most frequently used merit rating technique
 Each employee is compared with his or her past performance or with a company standard
  To specify how or to what degree the worker possess each of the relevant job characteristics
 Rate employees on specific job duties and on broader factors such as COOPERATION, SUPERVISORY SKILLS,
TIME MANAGEMENT, COMMUNICATION SKILLS, JUDGEMENT AND INITIATIVE, AND ATTENDANCE
 Many organizations compare current employee performance with their past evaluations, asking supervisors
to indicate whether employees have improved, worsened, or shown no change since the last appraisal
 Notes any particular strengths and to explain extenuating circumstances that might have affected a
worker’s performance
 Employees add their own written comments to the evaluation form
 Relatively easy to construct
 Attempt to reduce personal bias
 It is difficult to eliminate totally the influence of personal bias against the person being rated
o RANKING SCALE – supervisors list their workers in order from highest to lowest or best to worst on specific
characteristics and abilities and on overall job proficiencies
 Each employee is compared with all other in the work group or department
 Not as direct a measure of job performance as is rating
 SIMPLICITY – no elaborate forms or complicated instructions are required
 Quick
 Technique is usually accepted by supervisors as a ROUTINE TASK
 Supervisors are not being asked to judge workers on factors/qualities that they may not be competent to
assess
 When there are a large number of employees to appraise
 Difficult and tedious to rank them in order of ability or merit
 Less evaluative data than does rating
 Worker strengths and weaknesses cannot be readily determined by ranking
 There is little feedback or information to provide to workers about how well they are doing how they might
improve their task performance
 Makes it difficult for supervisors to indicate similarities among workers
 Crude measure of performance appraisal
 Usually applied only when a small number of workers are involved and when little information is desired
beyond an indication of their relative standing
o PAIRED-COMPARISON TECHNIQUE
 Requires that each worker be compared with every other worker in the work team
 Similar to ranking
 The result is a rank ordering of workers but the comparative judgments are more systematic and controlled
 Comparisons made between two people at a time
 Judgment is made about which of the pair superior
 An objective ranked list is obtained that is based on the work on the worker’s score in each comparison
 Judgmental process is simpler
 It is possible to give the same rank to those of equal ability
 Lies in the large number of comparisons that are required when dealing with many employees
 Necessarily restricted to small groups or to a single ranking of overall job effectiveness
o FORCED-DISTRIBUTION TECHNIQUE
 Useful with somewhat larger groups
 Supervisors rate their employees in fixed proportions, according to a predetermined distributions of ratings
 It compels a supervisor to use predetermined rating categories that might not fairly represent that
particular group of workers
o FORCED-CHOICE TECHNIQUE
 Raters are aware of whether they are assigning good or poor ratings to employees
 May permit their personal biases, animosities, or favoritism to affect the ratings
 Prevents raters from knowing how favorable or unfavorable the ratings they are giving their employees are
 Raters are presented with groups of descriptive statements and are asked to select the phrase in each
group that best describes an employee or is least applicable to that employee
 Less likely to deliberately assign favorable or unfavorable ratings
  Found to discriminate between more efficient and less efficient workers
 Limits the effect of personal bias and controls for deliberate distortion
 Considerable research is necessary to determine the predictive validity for each item
 More costly
 Instructions can be difficult to understand
 Task of choosing between similar alternatives in large number of pairs is tedious
o BEHAVIORALLY ANCHORED RATING SCALES (BARS) – attempts to evaluate job performance in terms of specific
behaviors that are important to success or failure on the job rather than in terms of general attitudes or factors
 CRITICAL INCIDENTS TECHNIQUE as a method of job analysis
 Can be scored objectively by indicating whether the employee displays that behavior or by selecting on a
scale the degree to which the employee displays that behavior
 Depends on the observational skill of the supervisors in identifying behaviors that are truly critical to
successful or unsuccessful performance on the job
 Meet federal fair employment guidelines
o BEHAVIORAL OBSERVATION SCALE (BOS) – employees are also evaluated in terms of critical incidents
 Rate subordinates on the FREQUENCY of the critical incidents as they are observed to occur over a given
period of time
 Ratings are assigned on a 5-point scale
 Through identification by supervisors or other subject matter experts
 Meets equal employment opportunity guidelines

MANAGEMENT BY OBJECTIVES (MBO) – mutual agreement between employees and managers on goals to be achieved
in a give time period
 Focuses on RESULTS – on how well employees accomplish specified goals
 Emphasis is on what employees do rather than on what their supervisors think of them or perceive their behaviors
to be
 Actively involves employees in their own evaluations
 Two phases:
1. GOAL SETTING – employees meet individually with supervisors to determine the goals for which they will strive
in the time before their next appraisal
 Must be REALISTIC, SPECIFIC, and OBJECTIVE
2. PERFORMANCE REVIEW – employees and supervisors discuss the extent to which the goals were met
 May feel pressured to set higher goals with each appraisal to show evidence of improvement
 Not useful for jobs that cannot be quantified
 Satisfies fair employment guidelines and has been found to be effective in increasing employee motivation
and productivity

PERFORMANCE APPRAISAL METHODS FOR MANAGERS

 Merit rating technique are often used to evaluate low- and middle-level managerial personnel, but additional
appraisal methods are required
 EVALUATION TECHNIQUES
o ASSESSMENT CENTERS (EMPLOYEE SELECTION TECHNIQUE)
 Popular method of managerial performance appraisal
 Do not assess actual job behavior but, rather, a variety of activities that are like those encountered on the
job
 Have high validity when used for performance appraisal purposes
o EVALUATION BY SUPERIORS
 Assessment by their superiors in the organization
 Raters write a brief descriptive essay about the person’s job performance
o EVALUATION BY COLLEAGUES: PEER RATING – having managers or executives at the same level assess one
another in terms of their general ability to perform the job and their specific traits and behaviors
 Show a lower inter-rater reliability
 Generally positive attitude
  Developed in the 1940s
o SELF-EVALUATION – to ask people to assess their own abilities and job performance
 Tend to be higher than evaluations by superiors and to show greater leniency
 Focus more on interpersonal skills
 Leniency can be reduced if raters are told their self-evaluations will be validated against more objective
criteria
 Can have a motivating effect for people who tend to overestimate their job performance
 Feedback from subordinates influenced the supervisors’ view of their leadership ability
o EVALUATION BY SUBORDINATES – upward feedback
 360-DEGREE FEEDBACK – combining evaluations from several sources into an overall appraisal
o It combines gather full circle ratings from all sources – superiors, subordinates, peers, self, and even evaluation
by the organization’s customers or clients who have dealings with the person being rated
o Can provide information that would not otherwise be available about the people being rated
o May reduce many forms of bias
o Can be made with greater confidence
o More willing to accept criticism because it comes from sources other than the immediate supervisor
o Self-ratings were the least discriminating and correlated poorly with the other training sources
o More effective in individualistic cultures where is less formal social stratification than in collectivist cultures that
have a rigid social hierarchy
o More costly than using appraisals from a single source
o Growing in popularity

SOURCES OF BIAS IN PERFORMANCE APPRAISAL

 Performance appraisal still involves one person judging, assessing, or estimating the characteristics
 Can distort performance appraisals
 THE HALO EFFECT – familiar tendency to judge all aspects of person’s behavior or character on the basis of a SINGLE
characteristic
o Likely to occur when a high rating is given on one or two traits and the other traits to be rated are difficult to
observe, unfamiliar, or not clearly defined
o MUST have more than one person to rate a worker
o Supervisors rate all subordinates on one trait or characteristic at a time instead of rating each person on all
items at once
o Does not appear to diminish the overall quality of ratings, often cannot be detected, or be illusory
 CONSTANT OR SYSTEMATIC BIAS – has its basis in the standards or criteria used by raters
o Expect more than others from their employees
o Expect more than others from their employees
o Means that a top rating given by one supervisor may not be equivalent to a top rating given by another
supervisor
o Requiring supervisors to distribute ratings in accordance with the normal curve
 MOST-RECENT-PERFORMANCE ERROR – to base ratings on workers’ most recent behavior , without considering
their performance throughout the entire rating period since the last appraisal
o Require more frequent appraisals
o By shortening the time between performance reviews, there is less of a tendency for supervisors to forget a
worker’s usual behavior
 INADEQUATE INFORMATION ERROR – whether or not they know enough about the employees to do so fairly and
accurately
o to educate raters about the value of performance appraisals and the harm done by ratings based on
incomplete information
 AVERAGE RATING OR LENIENCY ERROR – reluctant to assign extreme scores in either direction
o The range of abilities indicated is restricted, and the range of ratings are so close that it is difficult to distinguish
between good and poor workers
 o Does not reflect the range of differences that exist among workers, and the ratings provide no useful
information to the company or to employees
 COGNITIVE PROCESSES OF RATERS - the cognitive though processes of raters underlie their judgments of worker
effectiveness
o CATERGORY STRUCTURES – when an appraiser thinks about a worker as belonging to a particular category, the
information he or she recalls about that worker will be biased toward that category
o BELIEFS – ideas can lead raters to make evaluations in terms of how they view people in general rather than in
terms of a specific worker’s characteristics and behaviors
o INTERPERSONAL AFFECT – influenced by the personal relationship between rater and rate
 Raters who have positive emotions or affect toward the persons they are rating give higher remarks than
do raters who have negative affect
o ATTRIBUTION – one person forms an impression of the abilities and characteristics of another
 The rater mentally attributes or assigns reasons to the worker’s behavior
 Can be influenced by interpersonal affect
 The managers appear to believe that the poor performance of the workers they do not like is the fault of
the workers themselves
 Can be reduced by having supervisors spend time performing the job they are evaluating
 PERSONALITY OF RATERS
o SELF-MONITORING – way people act to control the image that they choose to display in public
o The degree of personality similarity between rater and rater influenced subsequent evaluations
 ROLE CONFLICT – disparity or contradiction between the job’s demands and the supervisor’s standards of right and
wrong
o Sometimes the nature of a job requires supervisors to compromise those standards
 IMPRESSION MANAGEMENT – involves behaving in ways designed to present ourselves to others in a favorable ,
positive way
o INGRATIATION
o SELF-PROMOTION
o POLITICAL SKILL – the ability to understand others and to use that understanding to influence then ub wats
designed to support the attainment of our goals

WAYS TO IMPROVE PERFORMANCE APPRAISALS

 TRAINING
o Creating an awareness that abilities and skills are usually distributed in accordance with the normal curve, so
that it is acceptable to find broad differences within a group of workers
o Developing the ability to define objective criteria for worker behaviors – the standards or average performance
levels against which workers can be compared
o Can reduce errors in performance appraisal (halo effects and leniency errors)
 PROVIDING FEEDBACK TO RATERS
o Information about how each manager’s ratings differed from the ratings given by other managers
 SUBORDINATE PARTICIPATION
o Allowing employees to have a say in how their job performance is assessed significantly increases satisfaction
with and acceptance of the organization’s performance appraisal system
o Leads to heightened belief in the fairness and usefulness of the appraisal process and to an increase in
motivation to improve job performance

THE POSTAPPRAISAL INTERVIEW

GOALS:
1. Supply information to management for personnel decisions
2. Diagnose strengths and weaknesses for employees and provide them with the means for self-improvement
 OFFERING FEEDBACK
o Usually accomplished during a postappraisal interview between the worker and supervisor, a situation that can
easily become antagonistic, even hostile, especially when a performance evaluations contains criticisms
 o Eliminating the face-to-face interview situation reduced any personal antagonism between the worker and the
supervisor that might otherwise have interfered with the employee’s acceptance of criticism

 REACTING TO CRITICISM
o Stimulate employees to improve their job performance
 IMPROVING POSTAPPRAISAL INTERIEWS
o They can be structured to fulfill the purposes for which they are intended
o Employees should be allowed to participate ACTIVELY in the appraisal process
o The postappraisal interviewer should adopt a positive, constructive, and supportive attitude
o The interviewer should focus on a specific job problems rather than on the employee’s personal characteristics
o The employee and the supervisor should establish jointly specific goals to be achieved in the period before the
next appraisal
o The employee should be given the opportunity to questions, challenge and rebut the evaluation without fear of
retribution
o Discussions of changes in salary and rank should be linked directly to the performance appraisal criteria

PERFORMANCE APPRAISAL: A POOR RATING?

 Performance appraisal may be one of the least popular features of modern organizational life
 “PERFORMANCE MANAGEMENT”
 A POOR RATING FROM MANAGERS
o Performance ratings are made by managers or supervisors
o Requires their considerable time and effort, in addition to their other job duties
o Spend many hours observing subordinates to develop sufficient knowledge on which to base their assessment
o Evaluations are often not thorough and systematic but are compiled in haste
o Loathe the idea of judging employees and taking responsibility for their progress in the organization
o Supervisors may deliberately delay providing feedback
o They may inflate the ratings or suppress unfavorable information
 A POOR RATING FROM EMPLOYEES
o They express concern about the effect of performance assessments on their career
o They are apprehensive that a supervisor will use the appraisal to exaggerate misunderstandings or highlight
personality clashes that have nothing to do with job competence
o Not sufficiently informed about the criteria by which they are being judged or even precisely what is expected
of them on the job
o May be given low ratings for faults that lie within the organization or in the job way jobs are structured
o Are never used to help make decisions about promotions or to help employees improve their skills
o Relatively low
o Necessary s