Name: Chrisyl Bea E.

Paculanan Subject: PSY112

Instructor: Jenan M. Anwar Date: 04-04-2024

Chapter 7 Evaluating Employee Performance

Written Summary Report

There are ten steps as in evaluating employee performance and these are the following steps.

Step 1: Determine the Reason for Evaluating Employee Performance

The performance appraisal process begins with identifying the organization's objectives
for evaluating employee performance, such as improving performance or determining salary
raises. Different techniques suit different purposes, for instance, forced-choice rating scales are
good for compensation decisions but not for training. Similarly, while 360-degree feedback aids
performance improvement, it's unsuitable for deciding salary raises. Despite the significance,
many organizations lack specific goals for their performance appraisal systems, contributing to
their overall failure rates. Common uses of performance appraisals include providing feedback
and training, determining salary increases, making promotion or termination decisions, and
conducting personnel research. Feedback and training are crucial aspects, focusing on identifying
strengths and weaknesses to enhance performance. Salary increases are often tied to performance
evaluations to ensure fairness and motivation among employees. Using numerical formats for
appraisal results can facilitate salary decisions more objectively.

Performance appraisals are also utilized to make promotion decisions, although this
process isn't always straightforward. While promoting the best-performing or most senior
employees might seem fair, it can lead to the "Peter Principle," where individuals are promoted
to a level of incompetence. Careful evaluation is required to match job dimensions between
current and prospective positions. Performance appraisal data can also inform training needs
analysis, highlighting organizational strengths and weaknesses. In cases where performance
management efforts fail to improve performance or discipline issues persist, termination
decisions may be necessary based on appraisal results. Legal considerations surrounding
terminations are important to address. Additionally, performance evaluation data can be valuable
for conducting personnel research, aiding in the validation of employment tests and assessment
of training program effectiveness. Even in organizations where union contracts prevent using
performance evaluations for personnel decisions, they remain essential for effective personnel
research.

Step 2: Identify Environmental and Cultural Limitations

The second step in the performance appraisal process involves identifying environmental
and cultural factors that could impact the system's effectiveness. For instance, if supervisors are
overworked, implementing a complex appraisal system might not be successful. Similarly, in
environments where there's no budget for merit pay, a sophisticated system might not be valued.
Additionally, in cohesive work environments, using peer ratings could potentially undermine
cohesion. Understanding these contextual factors is crucial for designing a suitable appraisal
system.

Step 3: Determine Who Will Evaluate Performance

Traditionally, employee performance evaluations relied solely on supervisor assessments,

despite supervisors observing only a portion of an employee's behavior. Recognizing this
limitation, organizations have adopted 360-degree feedback systems, leveraging input from
various sources like peers, subordinates, customers, and self-appraisal to provide a more
comprehensive view of performance. While supervisors remain the primary evaluators in most
organizations, peer ratings offer valuable insights into actual behaviors and can predict future
success, especially when the peers are similar and well-acquainted with the employee. Research
indicates that high performers tend to provide stricter peer ratings, possibly due to self-
comparison. However, employees may react negatively to peer feedback compared to expert
evaluations, although certain personality traits like high self-esteem and low individualism may
moderate these reactions.

Subordinate Feedback:

Subordinate feedback, also known as upward feedback, offers valuable insights into a
supervisor's behavior in 360-degree feedback systems. However, formal methods for obtaining
such feedback are uncommon and often poorly received by managers. Subordinate ratings can be
challenging to acquire due to fears of backlash from employees, particularly when supervisors
have only a few subordinates. Encouraging subordinate feedback involves fostering an open
environment, ensuring anonymity, using feedback for development purposes, and ensuring
employees feel competent and safe to provide honest ratings.

Multisource Feedback:

Multisource feedback, including feedback from direct reports, peers, and supervisors, can
lead to performance improvement. Feedback from direct reports tends to result in greater
performance changes compared to feedback from peers or supervisors.Effective multisource
feedback relies on indicating necessary behavior changes, employees perceiving changes as
feasible, and employees being open to constructive feedback. Performance improvement
workshops facilitated by feedback facilitators can enhance the impact of feedback.

Customer Feedback:

While organizations typically don't use formal performance appraisal instruments for
customers, they value customer feedback. Customers provide feedback informally through
complaints or compliments, and formally through evaluation cards or secret shopper programs.
Secret shopper programs enlist customers to evaluate service quality in exchange for rewards.

Self-Appraisal:
 Employee self-evaluation is increasingly common in organizations.Self-appraisals often
exhibit leniency and moderate correlation with actual performance. Clear rating standards and
social comparison information can improve agreement between self- and supervisor-ratings.
Cultural differences exist in self-ratings, with modesty seen in some Asian countries and
leniency in others.Self-appraisals are most accurate when not tied to administrative decisions like
raises or promotions, when employees understand the appraisal system, and when objective
performance records are available for comparison.

Step 4: Select the Best Appraisal Methods to Accomplish Your Goals

The performance appraisal process involves selecting criteria and methods to achieve
specific goals.

1. *Criteria Selection*:

Criteria define employee success, such as attendance, quality of work, and safety. Methods
for measuring criteria must be chosen, e.g., attendance tracking, quality assessments, safety
records.

2. *Appraisal Dimensions Focus*:

Trait-Focused: Emphasizes personal attributes like dependability and honesty, but often leads
to vague feedback and defensiveness. Competency-Focused: Centers on knowledge, skills, and
abilities, offering clear feedback and suggesting corrective actions, such as training courses.
Task-Focused: Organizes dimensions by similar tasks performed, facilitating performance
evaluation but challenging to provide specific corrective measures. Goal-Focused: Organizes
appraisal based on goals to accomplish, making behavioral expectations clearer and tying them
to important purposes.

3. *Contextual Performance*:

Recent focus on contextual performance includes efforts to get along with peers, improve the
organization, and perform additional tasks. Contextual performance is essential for
organizational success and can be different from technical job performance. Organizations often
include rating scales for both technical and contextual aspects to ensure well-rounded employees.

Overall, understanding the focus of appraisal dimensions is crucial for designing effective
performance appraisal systems tailored to organizational goals and employee development.

Decision 2: Should Dimensions Be Weighted?

After determining the type of dimensions for performance appraisal, the next decision is
whether to assign weights to them, making some dimensions more important than others. This
concept is akin to grading systems in education, where certain exams or projects carry more
weight than others. Weighting dimensions can align with organizational priorities, emphasizing
critical aspects over others. For instance, patient care might outweigh professional appearance
for nurses. It may also reduce biases. However, some organizations opt for equal weighting due
to administrative simplicity.
Decision 3: Use of Employee Comparisons, Objective Measures, or Ratings

After considering dimension types, the method of evaluation must be chosen.

Options include:

1. Employee Comparisons: Ranking employees against each other or using objective measures
like attendance.

- Methods such as rank orders or paired comparisons can be employed, although they become
complex with a large number of employees. Forced distribution methods allocate a
predetermined percentage of employees to each performance category. Forced distributions,
though efficient, are often perceived as unfair by employees.

2. Objective Measures: Assessing performance using quantitative or qualitative criteria like

quantity or quality of work. Issues like contamination (external factors affecting results) should
be considered. For instance, exceeding quality standards can be detrimental if it incurs
unnecessary costs.

3. Ratings of Performance: Having supervisors rate employee performance on predefined

dimensions. Methods include graphic rating scales or behavioral checklists. The latter offers
specific feedback but may still be prone to rating errors like halo or leniency. While various
methods may yield similar technical results, the fairness and perceived objectivity of the
appraisal system greatly influence employee satisfaction and commitment. Subjective and
objective methods yield slightly correlated results, with legal considerations emphasizing due
process and fairness in performance evaluation.

Overall, selecting the appropriate appraisal method involves balancing organizational priorities,
fairness, and practicality to ensure effective performance evaluation and employee development.

Step 5: Train Raters

Training supervisors to evaluate employee performance is crucial for an effective and

legally sound performance appraisal system. Despite this importance, a 2010 survey by ERC
revealed that many organizations fail to allocate adequate time and resources for this training.
Research suggests that proper training can enhance accuracy, reduce rating errors, increase the
validity of tests aligned with ratings, and improve employee satisfaction with the appraisal
process. Training methods involving discussion, practice, and feedback are particularly effective
compared to lecture-based approaches. However, the effectiveness of training may diminish over
time and could even introduce new errors if not supplemented with ongoing training and
feedback.

Frame-of-reference training is a recommended method that provides raters with job-

related information, practice in rating, examples of expert ratings, and the rationale behind those
ratings. This approach aims to align raters' understanding with the organization's definition of
effective performance, leading to increased accuracy and reduced errors in performance
evaluations.

Moreover, it's essential to ensure that employees understand the performance appraisal
system. Research indicates that better employee comprehension of the system correlates with
higher satisfaction with the process. Therefore, clear communication and explanation of the
appraisal system to employees are crucial for its successful implementation.

Step 6: Observe and Document Performance

In this step of the performance appraisal process, supervisors observe and document
employee behavior as it occurs. Critical incidents, which are examples of both excellent and poor
performance, are recorded in a critical incident log. This log serves several important purposes:

1. Focusing on behaviors: Documentation forces supervisors to concentrate on specific employee

behaviors rather than general traits, providing concrete examples for performance evaluation.

2. Enhancing recall: Documentation helps supervisors recall behaviors accurately during

performance evaluation, counteracting tendencies to rely on first impressions, recent events,
extreme behaviors, or biases.

3. Providing examples for feedback: Documented critical incidents offer specific examples that
can be used when discussing performance ratings with employees, facilitating clearer
communication about areas for improvement.

4. Legal defense: Documentation serves as evidence to defend against legal actions by

employees challenging termination, denial of raises, or promotions. Courts scrutinize the
accuracy of performance ratings and rely on documented behaviors as proof.

A structured method for documenting critical incidents is the Employee Performance

Record, initially developed by Flanagan and Burns for General Motors. This method involves
using a two-color form to record examples of both good and poor behaviors, organized by
relevant performance dimensions. Supervisors maintain separate records for each employee,
recording job-relevant behaviors throughout the appraisal period. Despite initial concerns about
time consumption, the actual time spent on recording incidents is minimal, yielding positive
outcomes such as reduced disciplinary warnings, increased suggestions, and improved
productivity at General Motors.

Step 7: Evaluate Performance

1. *Obtaining and Reviewing Objective Data*: Before appraising an employee's

performance, supervisors should gather and assess objective data relevant to the employee's
behavior, such as productivity metrics or customer feedback. Combining this data with critical
incident logs provides a solid foundation for performance evaluation, with attention to potential
sources of bias or contamination.

2. *Reading Critical-Incident Logs*: Supervisors should thoroughly review critical

incident logs to mitigate errors of primacy, recency, and attention to unusual information. These
logs offer specific examples of employee behavior, aiding in fair and accurate performance
assessment.

3. *Completing the Rating Form*: After reviewing critical incident logs and objective
data, supervisors assign performance ratings. They must avoid common rating errors related to
distribution, halo, proximity, and contrast, ensuring fairness and accuracy in evaluations.

*Distribution Errors*: These occur when raters use only a portion of the rating scale,
leading to leniency, central tendency, or strictness errors.

*Halo Errors*: Raters allow a single attribute or overall impression to influence ratings on
multiple dimensions.

*Proximity Errors*: Ratings on one dimension affect ratings on adjacent dimensions due to their
physical proximity on the rating scale.

*Contrast Errors*: Previous evaluations influence current ratings, causing employees to be rated
relative to others rather than against an objective standard.

4. *Low Reliability Across Raters*: Different raters often disagree due to various factors,
including rating errors, differing standards, and varied observations of employee behavior.
Training can help reduce errors and increase reliability.

5. *Sampling Problems*: Performance appraisals are susceptible to the recency effect, where
recent behaviors carry more weight than earlier ones. Infrequent observation and differing
perspectives of raters contribute to this bias.

6. *Cognitive Processing of Observed Behavior*: Raters may recall behaviors consistent with
their overall impression of an employee, leading to distortion in performance evaluations.
Factors like stress and affect toward employees can also influence ratings.

7. *Racial and Gender Bias*: Research on bias in performance evaluations is mixed. While some
studies suggest racial bias, particularly in real organizational settings, others find no significant
gender bias. However, biases can influence performance ratings and must be addressed to ensure
fairness.

Step 8: Communicate Appraisal Results to Employees

*Importance of Feedback:*
 Performance evaluation data are crucial for providing feedback to employees, identifying
strengths and weaknesses, and implementing further training. Semiannual evaluations offer a
formal opportunity to discuss employee performance, benefiting both the employee and the
organization legally.

*Process Preparation:*

Adequate time allocation and scheduling ensure both supervisor and employee have time to
prepare for and engage in the review interview. Interviews should occur in a neutral, private
setting without a desk barrier. Semiannual reviews are standard, with informal progress checks
throughout the year.

*Preparation Steps:*

The supervisor reviews assigned ratings and reasons, while the employee self-rates using
the same format and prepares examples and ideas for personal development.

*During the Interview:*

- Begin with small talk to ease tension, then communicate the purpose and process of the
appraisal.

- Encourage the employee to share their self-ratings and justifications, fostering active
engagement.

- Provide feedback on behavior and performance rather than personal traits, utilizing the
"feedback sandwich" approach (positive-negative-positive).

- Address any discrepancies between self-ratings and supervisor ratings, discussing reasons for
differences.

- Acknowledge external factors affecting performance and collaboratively seek solutions.

- Separate discussions of appraisal results and improvement strategies to allow for reflection and
discussion of future options.

- Conclude by mutually setting goals for future performance and behavior, ensuring clarity on
how these goals will be achieved.

*Conclusion:*

- Effective communication of appraisal results involves careful preparation, candid feedback,

acknowledgment of external factors, and collaborative goal-setting between supervisor and
employee.
Step 9: Terminate Employees

*Introduction:*

Performance appraisal results are primarily used for feedback, raises, and promotions, but
there are occasions when termination is necessary. The employment-at-will doctrine in the
United States allows employers to terminate employees without specific cause in the private
sector, while the public sector requires cause for termination.

*Legal Considerations:*

Limitations to employment-at-will include state laws, federal or state protections, public

policy, contracts, implied contracts, and covenants of good faith and fair dealing. Employment-
at-will statements affirm an organization's right to hire and fire at will and are included in job
applications and company manuals.\

*Legal Reasons for Termination:*

1. *Probationary Period:* Employees can be terminated more easily during probationary periods,
typically lasting three to six months.

2. *Violation of Company Rules:* Courts consider factors like the existence of a rule, employee
awareness of the rule, proof of violation, consistency of enforcement, and appropriateness of
punishment.

3. *Inability to Perform:* Employees can be terminated for failing to meet performance

standards, but organizations must prove communication of standards and document failure to
meet them.

4. *Reduction in Force (Layoff):* Layoffs can occur for economic reasons, but proper
notification under the WARN Act is required for large layoffs or plant closings.

*The Termination Meeting:*

- *Preparation:* Ensure legal process compliance, decide on assistance for the terminated
employee, and schedule a neutral, private meeting.

- *During the Meeting:* Briefly explain the termination, express gratitude if sincere, offer
assistance, handle administrative tasks, and escort the employee out.
- *After the Meeting:* Review the facts to alleviate guilt, maintain honesty with other employees
without disparaging the terminated employee.

*Conclusion:*

Terminating employees is a challenging task requiring legal adherence, proper preparation,

professionalism during the meeting, and transparency afterward to maintain trust within the
organization

Step 10: Monitor the Legality and Fairness of the Appraisal System

*Introduction:*

Performance appraisal systems are subject to legal standards similar to those for
employment tests and decisions. Regular analysis of performance ratings is essential to ensure
fairness and legality in the appraisal system.

*Key Considerations:*

1. *Analysis of Performance Ratings:*

- Identify gender, race/ethnicity, or age differences in ratings.

- Determine if these differences are justified by factors like experience or indicate

discrimination.

- Evaluate personnel decisions (raises, bonuses, promotions, terminations) based on appraisal

ratings to prevent discrimination.

2. *Monitoring Questions:*

- Have supervisors received training on evaluating performance, communicating results,

mentoring underperforming employees, and making decisions based on appraisals?

- Are there disparities in performance ratings based on gender, race, ethnicity, disability, or
age? If so, are they backed by actual performance differences?

- Are employees with similar ratings receiving similar outcomes (raises, promotions,
discipline, training)?

- Are opportunities for improvement provided equally to employees of different demographic

groups?

- Are employees with historically high ratings suddenly receiving low ratings? If so, is it due to
actual performance decline or potential discrimination?
*Conclusion:*

Regular monitoring of the appraisal system is necessary to ensure compliance with legal
standards and promote fairness in evaluating employee performance. It involves analyzing
ratings, assessing personnel decisions, and asking key questions to address any disparities and
prevent discrimination.

Chapter 8 Designing and Evaluating Training Systems

Written Summary Report

Chapter 8 discusses the importance of designing and evaluating training systems to

improve employee performance. It emphasizes that training is crucial for organizations to ensure
that employees have the necessary knowledge and skills for their jobs. The chapter outlines the
process of determining training needs through needs analysis, which involves organizational
analysis, task analysis, and person analysis. Organizational analysis involves assessing factors
that affect training effectiveness within the organization, such as funding, employee availability,
and organizational goals. Task analysis identifies the specific tasks and competencies required
for each job, determining which tasks require training and how employees learn them. Person
analysis focuses on identifying individual employees who need training and assessing their
readiness and specific training needs. Methods for conducting needs analysis include
performance appraisal scores, surveys, interviews, skill and knowledge tests, and critical
incidents. Performance appraisal scores can indicate areas where training may be needed, but
they may be subject to rating errors. Surveys allow employees to express their own perceived
training needs, while interviews provide more in-depth insights but may be harder to analyze.
Skill and knowledge tests can objectively assess training needs, although constructing them can
be time-consuming. Finally, the critical incident technique identifies areas for training based on
examples of poor performance. Overall, the chapter highlights the importance of effectively
assessing training needs to develop training programs that enhance employee performance and
contribute to organizational success.

After conducting needs analyses, the next step in developing a training program involves
establishing clear goals and objectives. These goals determine the resources allocated, delivery
methods, and evaluation criteria for the training. Goals should be realistic and aligned with the
organization's constraints and objectives. Clear objectives should state what learners are expected
to do, under what conditions, and to what level of proficiency. Once goals are established,
choosing the appropriate training method becomes crucial. Lectures are effective for imparting
knowledge but may not be suitable for skill development. Case studies provide opportunities to
apply knowledge to real or hypothetical workplace problems. Simulation exercises allow trainees
to practice new skills in a controlled environment, while role-plays facilitate interpersonal skill
development. Behavior modeling involves observing correct behaviors, practicing them, and
receiving feedback, which is particularly effective for skill acquisition.

Motivating employees to attend training is essential. Strategies include relating training to

immediate job relevance, making it interesting, involving employees in the training selection
process, providing incentives such as certificates or promotions, offering food during sessions,
and reducing the stress associated with attending through workload reductions or staffing
assistance. These approaches help ensure employee participation and engagement in training
programs. The text discusses various methods of conducting training, focusing on distance
learning, on-the-job training (OJT), coaching, mentoring, and performance appraisal.

1. **Distance Learning**: Organizations use asynchronous or synchronous technologies for

distance learning. Asynchronous learning allows employees to learn at their own pace using
materials like printed materials, videos, or web-based programs. Synchronous learning requires
employees to learn at the same time, often through live sessions like webinars or teleconferences.
Examples include Life of Virginia's modular training program and H. E. Butt Grocery
Company's interactive video training.

2. **On-the-Job Training (OJT)**: OJT involves informal training by experienced peers and
supervisors during job tasks. It includes learning by modeling others, job rotation, apprentice
training, coaching, and mentoring. Modeling involves learning by watching and imitating the
behavior of others, while job rotation allows employees to perform various jobs within an
organization. Apprentice training combines formal coursework with on-the-job training,
typically found in trades like construction. Coaching involves experienced employees guiding
new employees, while mentoring pairs a veteran employee with a new employee to help them
adjust and advance in the organization.

3. **Performance Appraisal**: Performance appraisal is also used for training purposes, where
supervisors identify strengths and weaknesses in employees' performance and determine
appropriate training methods to improve job knowledge or skills.

The text emphasizes the importance of choosing appropriate training methods based on
the organization's needs and the employees' learning styles, and it provides examples of
successful training programs implemented by various companies. To motivate employees to
learn during training, providing incentives, ensuring the training is interesting, giving feedback,
and facilitating the transfer of training to the job are essential.

1. **Incentives for Learning**: Employees are more motivated to learn when they perceive
incentives such as pay raises, job advancement, job security, self-improvement, or fun associated
with the training. Skill-based pay, where employees receive compensation for mastering specific
job-related skills, is a common method used by organizations.

2. **Interest in Training**: Training programs should be designed to be interesting and relevant

to employees' lives. Trainers should employ various techniques, activities, humor, and audience
participation to make training engaging.

3. **Feedback**: Providing specific feedback on performance during training is crucial for

improvement. Positive feedback reinforces correct behavior, while negative feedback,
accompanied by suggestions for improvement, helps correct errors.

4. **Transfer of Training**: Strategies to enhance the transfer of training to the workplace

include using realistic training programs that simulate actual job situations, providing ample
opportunities for practice, and encouraging employees to apply what they've learned on the job.
Management support and goal setting also play vital roles in ensuring the application of training
knowledge and skills in the workplace.