Psychology and Work Today

Psychology and Work Today
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Learning Objectives
After reading this chapter, you should be able to:
• Define performance appraisal and specify related HR
functions
• Describe how to ensure appraisal systems comply with EEOC
guidelines
• Understand the nature of opposition to appraisal systems from
labor unions, employees, and managers
• Explain and provide examples of the two approaches to
measuring performance
• Identify the techniques used to evaluate managerial
performance
• Describe and control for sources of rater error
• Understand how to improve the effectiveness of performance
appraisal systems and how to best conduct the post-appraisal
interview
What Is Performance Appraisal?
• Performance Appraisal (PA) is the periodic,

formal evaluation of employee performance
for the purpose of making career decisions

Fair Employment Practices
• EEOC guidelines apply to any selection procedure

used for making employment decisions
• Hiring
• Promotion
• Demotion
• Transfer
• Layoff
• Discharge
• Early retirement
• Performance appraisal procedures must be
validated
Protecting Against Bias Claims
• Personnel decisions should be based on a

well-designed performance review program
that includes formal appraisal interviews
• Examples
• Racial bias
• Age bias

Criteria For Compliance
• Performance appraisals should be based on job

analyses to document specific critical incidents
and behaviors related to job performance
• Appraisers should focus on actual job behaviors
rather than personality characteristics
• Supervisors should be well trained
• Notes, records, and documentation should be
retained

Why Conduct PA?
• Validation of selection techniques and

criteria
• Make decisions about that person’s future
with the organization
• Identify training requirements
• Employee improvement
• Pay, promotion, and other personnel
decisions

Critics Of Performance Appraisal
• Labor unions
• Represent approximately 11% of workforce
• Prefer seniority rather than assessment
• Employees
• Prefer not to be told of deficiencies
• Managers
• Dislike playing the role of judge
• Professors
• See “Newsbreak” on p. 108
Performance Appraisal Techniques
• Objective Methods
• Output measures
• Computerized performance monitoring
• Job-related personal data
• Subjective (Judgmental) Methods
• Written narratives
• Merit rating techniques

Output Measures
• Quantity, quality, job experience, and other

environmental factors must be considered
• Job-related personal data
• Computerized performance monitoring
• Computers can be programmed to monitor employee’s
on the job activities
• Attitudes toward computer monitoring depend on how
the data are used
• Favorable if used for development
• Found to be stressful
Computerized Monitoring
• Advantages
• Immediate and objective feedback
• Reduces rater bias
• Helps identify training needs
• Facilitates goal setting
• May contribute to increases in productivity
• Disadvantages
• May be considered an invasion of privacy
• May increase stress
• May reduce job satisfaction
• May lead to focus on quantity at the expense of quality

Written Narratives
• Subjective (judgmental) PA technique

• Brief essays describing employee
performance
• More prone to personal bias than
merit rating techniques
• Can be ambiguous and misleading
• Sometimes this is intentional to avoid giving
negative appraisal

Merit Rating Techniques
• Performance rating scales

• Ranking
• Paired-comparison
• Forced distribution
• Forced choice
• Behaviorally anchored rating scales (BARS)
• Behavioral observation scales (BOS)
• Management by objectives (MBO)
Performance Rating Scales
• Most frequently used technique

• Supervisors indicate how or to what degree a
worker possesses a relevant job characteristic
X
1 2 3 4 5
Poor Average Excellent

Ranking Technique
• Supervisors list the workers in order from

highest to lowest
• Simple to do
• Difficult when there are many employees to
evaluate
• Provides less evaluative data than rating
• Doesn’t allow for listing of similarities
• Doesn’t indicate the extent of difference
between best and worst ratees
Paired-Comparison Technique
• Compares the performance of each worker with that

of every other person in the group
• Number of comparisons
• (N * (N - 1)) / 2
• Advantage
• Accurate and judgmental process is simple
• Disadvantage
• Many comparisons when dealing with a large number of
employees

Forced-Distribution Technique
• Supervisors rate employees according to a

prescribed distribution of ratings, similar to grading
on a curve
• Superior 10%
• Better than average 20%
• Average 40%
• Below average 20%
• Poor 10%
• Predetermined categories may not be fair if there is
small range of scores
• All ratees in group may be above average for their job
• Hard to compare across groups

Forced-Choice Technique
• Raters are presented with groups of descriptive

statements and are asked to select the phrase in
each group that is most descriptive of the worker
being evaluated.
• Example: Choose one of the following:
• Is reliable
• Is agreeable
• One statement is desirable, but the other is
disguised in its appeal
• More costly to develop than other merit rating
methods because each item must be validated
Behaviorally Anchored Rating Scales
(BARS)
• Evaluate performance on basis of behaviors

important to success or failure on job
• Appraisers rate critical employee behavior
• Critical-incident behaviors are established
• These behaviors are used as standards for appraising
effectiveness
• The BARS items can be scored objectively by indicating
whether the employee displays that behavior
• Meet federal fair employment guidelines

BARS for a CEO

Behavioral Observation Scale (BOS)
• Appraisers rate the frequency of critical

employee behaviors
• The ratings are assigned on a five point scale
• The evaluation yields a total score
• As with BARS, BOS meets federal fair
employment standards because it is based
on actual behaviors required for
performance
• Research has not found consistent support
for the superiority of either BARS or BOS
Management By Objective (MBO)
• Involves mutual agreement between employee and

manager on goals to be achieved in a given period
• Two phases
• Goal setting
• Performance review
• Employees may feel pressured to set higher goals
• MBO technique satisfies fair employment guidelines
• Has been found to increase motivation and
productivity

Evaluating Managers
• Assessment centers
• Evaluation by superiors
• Evaluation by colleagues
• Peer ratings tend to be more favorable for career
development than for promotion decisions
• Self-evaluation
• Self-ratings suffer from leniency
• Subordinate evaluation
• Effective in developing leadership & leads to improved
performance
• 360 degree feedback (multisource)
Common Sources of Rating Error
• Halo effect
• Constant or systematic bias
• Most-recent-performance error
• Inadequate information error
• Average rating or leniency error
• Rater’s cognitive processes
• Rater personality
• Role conflict
• Impression Management
Halo Effect
• The tendency to judge all aspects of a person’s

behavior or character on the basis of a single
attribute
• Positive
• Negative
• Solution: Use multiple raters
• Research indicates halo may not be as pervasive
as originally thought
• Does not appear to reduce overall rating
• Often undetectable
• May be illusory
Constant or Systematic Bias
• Based on the different standards used by

raters
• Hard rater Constant
Constantororsystematic
systematic
style
styleof
ofrating
• Easy rater rating
• Solution: Require distribution of ratings

according to the normal curve

Most-Recent-Performance Error
• A rater evaluates a worker’s most recent job

behavior rather than behavior throughout the
period since last appraisal
• False high rating
• False low rating
• Solution: Require more frequent
performance appraisals

Inadequate Information Error
• Supervisors rate subordinates even though

they don’t know enough about them to rate
them fairly or accurately
• Solution: Train raters and allow them to
decline to rate those they don’t know well

Average Rating or Leniency Error
• Average rating error

• The rater is unwilling to assign a very high or very low
score
• Leniency error
• Rater is unwilling to assign other than a favorable
score
• Problem:
• Does not reflect the range of differences that exist
among workers and provides no useful data
• Solution:
• Maintain a record of supervisor rating tendencies

Rater’s Cognitive Processes
Four cognitive variables can influence performance

evaluations:
1.Category structures
• How workers are categorized - e.g., team player; similar to
halo effect
2.Beliefs about human nature
3.Interpersonal affect
• One’s feelings toward the other person
• Susceptible to impression management techniques
4.Attribution
• Raters attribute positive or negative explanations of
employee behavior
Rater Personality
• High self-monitors present themselves in whatever

ways they believe best fits the social situation
around them
• High self-monitors gave more lenient and less
accurate ratings than did low self-monitors
(Jawahar, 2001)
• When both members of a peer rating team scored
high on conscientiousness, they gave each other
significantly higher ratings than those pares who
shared low conscientiousness scores (Antonioni &
Park, 2001)
Role Conflict
• Disparity between job demands and the

employee’s personal standards for right and wrong
• Those high in role conflict tend to rate employees
higher than justified evaluations to
• Establish control over work situation
• Avoid confrontation with subordinates
• Obtain subordinate gratitude and goodwill

Impression Management
• Involves behaving in ways designed to present

ourselves to others in a positive way
• Ingratiation (ch. 3)
• Self-promotion (ch. 3)
• Political Skill - The ability to understand others and
to use that understanding to influence them in ways
designed to support the attainment of our goals
• Harris, Kacmar, Zivnuska, & Shaw (2007) found that
those high in political skill were much more likely to be
perceived by their supervisors as not using ingratiation
behaviors to curry favor for personal gain

Improving Performance Appraisals
• Training
• Create awareness of normal distribution of abilities
and skills
• Develop ability to define objective criteria for work
behaviors
• Providing feedback to raters
• 90% of managers said feedback influenced second
set of ratings (Davis & Mount, 1984)
• Subordinate participation
• Led to increased employee trust and perceptions of
accuracy of evaluation system (Mayer & Davis, 1999)
Postappraisal Interviews
• Offers feedback related to appraisal to help

employee improve performance
• Meta-analysis by DeNisi & Kluger (2000) found
that employees preferred computer- vs.
supervisor-provided postappraisal information
• Provides employee opportunity to react to
criticism
• Negative feedback can make employees angry
• Workers react to criticism differently
Improving Postappraisal Interviews
• Allow employees to participate actively in the

appraisal process
• Interviewer should adopt a supportive attitude
• Focus on specific job problems, not personal
characteristics
• Establish specific goals jointly
• Allow the employee to rebut
• Discussions of changes in salary and rank should
be linked directly to performance criteria
Poor Ratings for PA Programs
• Managers
• Lack the time to make other than hasty appraisals
• 90% of HR managers dissatisfied with their
organization’s PA system
• Employees
• Don’t like appraisals
• Uninformed about the criteria (criteria appear
biased)
• Correlations between ratings and results-
oriented criteria are low due to poor
implementation
Key Terms
• Attribution • Paired-comparison
• Average rating (leniency) technique
error • Constant (systematic) bias
• Behavioral observation • Forced-choice technique
scales (BOS) • Forced-distribution
• Behaviorally anchored technique
rating scales (BARS) • Halo effect
• Inadequate information • Peer rating
error
• Interpersonal effect • Performance appraisal
• Management-by-objectives • Ranking technique
(MBO) • Rating scales
• Merit rating • Role conflict
• Most-recent-performance • Self-ratings
error


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Psychology and Work Today

•Copyright © 2010 Pearson Education, Inc.,

• Performance Appraisal (PA) is the periodic,

•Copyright © 2010 Pearson Education, Inc.,

• EEOC guidelines apply to any selection procedure

• Personnel decisions should be based on a

•Copyright © 2010 Pearson Education, Inc.,

• Performance appraisals should be based on job

•Copyright © 2010 Pearson Education, Inc.,

• Validation of selection techniques and

•Copyright © 2010 Pearson Education, Inc.,

•Copyright © 2010 Pearson Education, Inc.,

• Quantity, quality, job experience, and other

•Copyright © 2010 Pearson Education, Inc.,

• Subjective (judgmental) PA technique

•Copyright © 2010 Pearson Education, Inc.,

• Performance rating scales

• Most frequently used technique

•Copyright © 2010 Pearson Education, Inc.,

• Supervisors list the workers in order from

• Compares the performance of each worker with that

•Copyright © 2010 Pearson Education, Inc.,

• Supervisors rate employees according to a

•Copyright © 2010 Pearson Education, Inc.,

• Raters are presented with groups of descriptive

• Evaluate performance on basis of behaviors

•Copyright © 2010 Pearson Education, Inc.,

•Copyright © 2010 Pearson Education, Inc.,

• Appraisers rate the frequency of critical

• Involves mutual agreement between employee and

•Copyright © 2010 Pearson Education, Inc.,

• The tendency to judge all aspects of a person’s

• Based on the different standards used by

• Solution: Require distribution of ratings

•Copyright © 2010 Pearson Education, Inc.,

• A rater evaluates a worker’s most recent job

•Copyright © 2010 Pearson Education, Inc.,

• Supervisors rate subordinates even though

•Copyright © 2010 Pearson Education, Inc.,

• Average rating error

•Copyright © 2010 Pearson Education, Inc.,

Four cognitive variables can influence performance

• High self-monitors present themselves in whatever

• Disparity between job demands and the

•Copyright © 2010 Pearson Education, Inc.,

• Involves behaving in ways designed to present

•Copyright © 2010 Pearson Education, Inc.,

• Offers feedback related to appraisal to help

• Allow employees to participate actively in the

•Copyright © 2010 Pearson Education, Inc.,

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