EVALUATING

EMPLOYEE
PERFORMANCE
PERFORMANCE
APPRAISAL
The regular review of an employee’s job performance
and overall contribution to the company.

Can be divided into 10 interrelated steps.

STEP 1: DETERMINING THE REASON
FOR EVALUATING EMPLOYEE
PERFORMANCE
Forced-Choice Rating Scale: a supervisor is given several
behaviors and is forced to choose which of them is most
typical of the employee
Providing Employee Training and Feedback: providing
feedback about what employees are doing right and wrong
Performance Appraisal Review: discuss performance
appraisal results
Determining Salary Increase: used to provide a fair basis on
which to determine an employee’s salary increase
STEP 1: DETERMINING THE REASON
FOR EVALUATING EMPLOYEE
PERFORMANCE
Making Promotion Decisions: used to determine which
employees will be promoted
Making Termination Decisions: negative results of
performance review might suggest that the best course of
action is to terminate the employee
Conducting Personnel Research: an accurate measure of
performance must be available for use in determining
whether a performance increases as a result of training
STEP 2: IDENTIFY ENVIRONMENT AND
CULTURAL LIMITATIONS
If supervisors are highly overworked, time-consuming
performance appraisals will not be successful
In an environment in which there is no money available for
merit pay, developing a numerically complex system will
become frustrating, and the results of the evaluation may
not be taken seriously
In an environment in which employees are very cohesive,
the use of peer ratings might reduce the cohesiveness
STEP 3: DETERMINE WHO WILL
EVALUATE PERFORMANCE
360 Feedback: a performance appraisal system in which
feedback is obtained from multiple sources such as
supervisors, subordinates, and peers. Excellent source for
improving employee performance
Multisource Feedback: a performance appraisal strategy in
which an employee receives feedback from sources other
than just their supervisors
Supervisors: most common source of performance
appraisal. They may not always see the employee’s
behavior but they do see the end result
STEP 3: DETERMINE WHO WILL
EVALUATE PERFORMANCE

Peers: They often see the actual behavior of the

employee
Subordinates/Upward Feedback: They can provide
different views about a supervisor’s behavior
Customers: Through “secret shoppers”
Self-appraisal: An employee evaluating his or her own
behavior and performance
STEP 4: SELECT THE BEST APPRAISAL
METHODS TO ACCOMPLISH YOUR
GOALS
Focus of the Appraisal Dimensions
Trait-focused Performance Dimensions: employee
attributes such as dependability, honesty, and courtesy.
Provides poor feedback
Competency-focused: employee’s knowledge and skills.
Easy to provide feedback
Task focused: organized by similarity of tasks
Goal focused: organized the appraisal as the basis of
goals to be accomplished by the employee
STEP 4: SELECT THE BEST APPRAISAL
METHODS TO ACCOMPLISH YOUR
GOALS
Focus of the Appraisal Dimensions
Contextual performance: efforts an employee makes to
get along with peers, improve the organization, and
perform tasks that are not part of the employees job
description
Should Dimensions be weighted?
Weighing dimensions make good philosophical sense, as
some dimensions might be more important to an
organization than others. It may reduce racial and other
biases
STEP 4: SELECT THE BEST APPRAISAL
METHODS TO ACCOMPLISH YOUR
GOALS
Use of employee comparisons, objective measures or
ratings
Employee Comparisons: Employees can be compared
with one another instead of being rated individually on a
scale
Rank Order: Ranked in order by their judged
performance for each relevant dimension
Paired Comparisons: Comparing each possible Pair
of Employees and choosing which one of each pair is
the better employee
STEP 4: SELECT THE BEST APPRAISAL
METHODS TO ACCOMPLISH YOUR
GOALS
Forced Distribution: A predetermined percentage of
employees are placed into a number of performance
categories. Also called the “rank and yank system”
Objective Measures
Quantity of work: Counting the number of relevant job
behaviors that take place
Quality of work: Measure job performance by comparing
a job behavior with a standard; measured in terms of
error
STEP 4: SELECT THE BEST APPRAISAL
METHODS TO ACCOMPLISH YOUR
GOALS
Attendance: The action or state of being present at work
Safety: Employees should follow safety rules and have no
occupational accidents
Ratings of Performance
Graphic Rating Scale: Most common rating scale. Rating employee
performance on an interval or ratio scale
Behavioral Checklists: a list of behaviors, expectations or results
for each dimension
Comparison with other employees: Comparing the employee’s
level of performance with that of other employees
STEP 4: SELECT THE BEST APPRAISAL
METHODS TO ACCOMPLISH YOUR
GOALS
Frequency of desired behaviors: behaviors can be rated based
on the frequency with which they occur
Extent to which organizational expectations are met: Allows
high levels of feedback and can be applied to most types of
employee’s behavior
STEP 5: TRAIN RATERS

Frame of Reference Training: Rater is provided with job

related information, a chance to practice ratings,
examples of ratings made by experts, and the rationale
behind the expert ratings
STEP 6: OBSERVE AND DOCUMENT
PERFORMANCE
Critical Incidents: The supervisor records employee behaviors
that were observed on the job and rates the employee based on
that record
Employee performance record: a standardized use of the
critical incident technique
STEP 7: EVALUATE PERFORMANCE
Obtaining and Reviewing Objective Data
Reading critical-incident logs
Completing the Rating form
Distribution Errors: a rater will only use a certain part of a
rating scale when evaluating employee performance
Leniency error: a rater consistently gives all
employees high ratings, regardless of their actual
levels of performance
Central Tendency error: a rater consistently rates all
employees in the middle of the scale
STEP 7: EVALUATE PERFORMANCE
Strictness error: a rater consistently gives all
employees low ratings
Halo errors: allows overall impression to affect the ratings
Proximity error: a rating made on one dimension affects
the rating made on the dimensions that immediately
follows it on the rating scale
Contrast errors: performance rating one person receives
can be influenced by the performance of a previously
evaluated person
Assimilation: raters base their rating of an employee
during one rating period on the ratings the rater gave
during a previous period
STEP 7: EVALUATE PERFORMANCE
Low Reliability across raters
Sampling Problems
Recency effect: recent behaviors are given more
weight than behaviors that occured during the first
few months of evaluation
Infrequent observation: The idea that supervisors do
not see most of an employee’s behavior
Cognitive processing of Observed Behavior
Observation of behavior
Emotional State
Bias
STEP 8: COMMUNICATE APPRAISAL
RESULTS TO EMPLOYEES
Prior to the Interview
Allocating time
Scheduling the interview
Preparing for the Interview
During the Interview
STEP 9: TERMINATE EMPLOYEES
Employee-at-Will Doctrine: The opinion of courts in most
states that employers have the right to hire and fire
employees at will and without any specific cause
Employee at Will Statements: Statement s om employment
applications and company manuals reaffirming an
organizations right to hire and fire at will
Legal Reasons for Terminating Employees
Probationary Period
Violation of Company Rules
Progressive Discipline
Inability to Perform
Reduction in Force (Layoff)
STEP 9: TERMINATE EMPLOYEES
The Termination Meeting
Prior to the Meeting
During the Meeting
After the Meeting
STEP 10: MONITOR THE LEGALITY
AND FAIRNESS OF THE APPRAISAL
SYSTEM
Performance Ratings should be analyzed by 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 they are just due to discrimination
Likewise, the personnel decisions based on the performance
appraisal settinngs should be analyzed to ensure discrimination
does not occur in the raises, bonuses, promotions, and
terminations that result from the performance ratings