EVALUATING EMPLOYEE

PERFORMANCE

Week 6
 LEARNING OBJECTIVES WEEK 6

• Understand the performance appraisal process

• Able to explain the performance appraisal process.

• Able to identify performance appraisal dimensions.

• Understand how to measure and rate performance

appraisal dimensions.
 Performance appraisal process

1. Determine purpose of appraisal

2. Identify environmental and cultural limitations
3. Determine who will evaluate performance
4. Select the best appraisal methods
5. Train raters
6. Observe and document performance
7. Evaluate performance
8. Communicate appraisal results to the employees
9. Make personnel decisions
10. Monitor the fairness of the appraisal process
Source: Aamodt (2016)
 Step 1: Determine the Reason for
Evaluating Employee Performance

• There are many reasons why the organization need to evaluate its
employees performance.

a) Providing Employee Training and Feedback

• to improve employee performance by providing feedback about
what employees are doing right and wrong.

• Use performance appraisal review where it is a meeting between

a supervisor and a subordinate for the purpose of discussing their
strength and weaknesses.
 Step 1: Determine the Reason for
Evaluating Employee Performance

b) Determining Salary Increase

• The organization has evaluated employees’ salary based on the job
descriptions such as level of education and degree of responsibility
to perform the job.

• However, it is not enough as the employees develop extra KSAO as

they gain experience during their employment with the current
organization.

• Organization needs to evaluate these KSAO as these criteria relate

to work performance and to differentiate those who poor-
performing with excellent-performing employees.
 Step 1: Determine the Reason for
Evaluating Employee Performance

c) Making Promotion Decisions

• Promotion can be done through 2 ways:
– Promoting employee based on the seniority
– Promoting employee based on job performance

• If performance evaluations is used to promote employees, care

should be taken to ensure that the employee is evaluated well on
the job dimensions that are similar to those new positions.

Salesperson Sales manager

Client rapport Communication skills Motivational ability

Sales volume Accuracy of Employee rapport

paperwork
 Step 1: Determine the Reason for
Evaluating Employee Performance

• Promoting to the next level of position should be done

systematically and based on the ratio provided as too many
promotion will end up Peter Principle.

• Peter Principle refers to the idea that organizations tend to

promote good employees until they reach the level they are not
competence.
 Step 1: Determine the Reason for
Evaluating Employee Performance

d) Making Termination Decisions

• Termination of employees can be based on the
evaluation of employees’ performance as the
organization has provided constructive feedback,
counseling and proper training.
 Step 1: Determine the Reason for
Evaluating Employee Performance

e) Conducting Personnel Research

• Research can be done by examine whether the methods used
in evaluation of performance need to be improved or change.

• Employment must be validated and one way this can be done

is by correlating test scores with some measure of job
performance.

• Apart from that, the result of performance evaluation can be

used to determine the effectiveness of training programs.
 Step 2: Identify Environmental and
Cultural Limitations

• Identify the environmental and cultural factors

that could influence the development of
performance evaluations.

• For example, if the work culture emphasize

teamwork, the type of evaluation should include
peer ratings.
 Step 3: Determine Who Will Evaluate
Performance

• Who observes employee performance?

• Can evaluation been made solely by
supervisors?

• 360-degree feedback or Multiple-source

feedback is a performance appraisal system in
which feedback is obtained from multiple
sources such as supervisors, subordinates and
peers.

• This system is used primarily for training and

employee development and not for promotion,
salary increases and termination decisions.
 Step 3: Determine Who Will Evaluate
Performance

a) Supervisor
• Most common source of performance appraisal where survey
by Society for Human resource Management showed that 74%
employee evaluation came from the direct supervisor.

b) Peers
• Peer ratings usually come from employees who work directly
with an employee.

• Research has shown that peer ratings are fairly reliable only
when the peers who make the ratings are similar to and well
acquainted with the employees being rated.
 Step 3: Determine Who Will Evaluate
Performance

c) Subordinates
• Subordinates also known as
upward feedback where the
managers or supervisors are being
evaluated of their performance.

• However, subordinate ratings can

be difficult to obtain because the
employees fear a backlash if they
unfavorably rate their supervisor.
 Step 3: Determine Who Will Evaluate
Performance

d) Customers
• Informally, customers provide feedback on employee performance
by filling complaints or complimenting a manager about one of her
employees.

e) Self-Appraisal
• Allowing an employee to evaluate her own behavior and
performance is a technique used by an increasing number of
organizations.

• Self-appraisals of performance appear to be most accurate when

the self-appraisal will not be used for such administrative purposes
as raises or promotions.
 Step 4: Select the Best Appraisal Methods

The next step in performance appraisal process is to

select the performance criteria that are ways of
describing employee success.

Prior to developing the actual performance

instrument, 2 important decisions must be made:
i. The focus of the performance appraisal
dimensions.
ii. How to measure and rate those dimensions.
 Step 4: Select the Best Appraisal Methods

i. The focus of the performance appraisal

dimensions.
Competency-
Focused
Trait-Focused

Performance
Appraisal
Dimensions

Task-Focused
Goal-Focused
 Step 4: Select the Best Appraisal Methods

Trait-Focused Performance Dimensions

It focused on employee attributes such as
dependability, honesty and courtesy.

This type of instruments are not a good idea

because it provides poor feedback as employees
may react defensively and not job-related
performance.
 Step 4: Select the Best Appraisal Methods

Competency-Focused Performance Dimensions

It focused on the employee’s knowledge, skills and
abilities.

The advantage to organizing dimensions by

competencies is that it is easy to provide feedback
and suggest the steps necessary to correct
deficiencies.
 Step 4: Select the Best Appraisal Methods

Task-Focused Performance Dimensions

It is organized based on the similarity of tasks that are
performed.

A task-focused dimension usually includes several

competencies.

For example, to receive high rating on the dimension of

sales rating, the salesman need the competencies of
communication skills, knowledge of the products, ability to
convince and influence.
 Step 4: Select the Best Appraisal Methods

Goal-Focused Performance Dimensions

It focused on the basis of goals to be accomplished
by the employee.

The advantage of a goal-focused approach is that it

makes it easier for an employee to understand why
certain behaviors are expected.
 Step 4: Select the Best Appraisal Methods

ii. How to measure and rate?

Evaluation of Work Performance
Employee Objective Measures Ratings of
Comparisons Performance
• Quantity of work
• Rank order • Quality of work • Graphic Rating
• Paired comparison • Attendance Scale
• Forced distribution • Safety • Behavioral
method Checklists
 Step 4: Select the Best Appraisal Methods

Employee Comparison
Rank order
Employees are ranked in order by their judged
performance for each relevant dimension.

Paired comparison
A form of ranking in which a group of employees to be
ranked are compared one pair at a time.

Forced distribution method

A performance appraisal method in which a
predetermined percentage of employees are placed into
a number of performance categories
Example of Ranking Method
Example of Paired-Comparison method
Example of Force-Distribution method
 Step 4: Select the Best Appraisal Methods

Objective
Measures

Quality of Work
Quantity of Work
Attendance Safety
A type of objective
A type of objective
criterion used to Can be categorized Employees who
criterion used to
measure job under 3 criteria: follow safety rules
measure job
performance by • Absenteeism and who have no
performance by
comparing a job • Tardiness occupational
counting the
behaviors with • Tenure accidents.
number of relevant
standard.
job behaviors that
occur.
 Graphic Rating Scale
A method of performance appraisal that
involves rating employee performance on an
interval or ratio scale.

Ratings of
Performance

Behavioral Checklists
This checklist consist of a list of behavioral,
expectations or results for each dimension.
 Step 5: Train Raters

• Few organization spend time and resources to train

supervisors to evaluate performance.

• Frame-of-reference training provides rater with job-related

information, practice in rating, examples of ratings made by
experts as well as the rationale behind those expert ratings.

• Training increases rater accuracy and reduced rater errors.

• The better employee understand the performance appraisal

system, the greater is their satisfaction with the system.
 Step 6: Observe and Document
Performance

• This is the step where supervisors need to

observe employee behavior and document
critical incidents as they occur.

• Critical incidents refers to a method of

performance appraisal in which the supervisor
records employee behaviors that were observed
on the job and rates the employee on the basis of
that record.
 Step 6: Observe and Document
Performance

• Documentation is important because:

i. Documentation forces a supervisor to focus on employee behaviors rather
than traits and provides behavioral examples to use when reviewing
performance ratings with employees.

ii. Documentation helps supervisor to recall behaviors when they are

evaluating performance.

iii. Documentation provides example to use when reviewing performance

ratings with employees.

iv. Documentation helps an organization defend against legal actions taken

against it by an employee who was terminated or denied a raise of
promotion.
 Step 7: Evaluate Performance

• When it is time to appraise an employee’s performance,

a supervisor should obtain and review the objective
data relevant to the employee’s behavior.

• After obtaining data, the supervisor should go back and

read all of the critical incidents written for an employee.

• Once critical-incident logs have been read and objective

data reviewed, the supervisor is ready to assign
performance appraisal ratings.
 Step 7: Evaluate Performance

Leniency Error Strictness Error

A type of rating error in A type of rating error in
which a rater consistently which a rater consistently
gives all employees high- gives all employees low-
rating, regardless of their ratings, regardless of their
actual levels of Types of Distribution actual levels of
performance. Errors performance.
Rating errors in which a
rater will use only certain
part of a rating scale when
evaluating employee
performance.
Central Tendency Error
A type of rating error in
which a rater consistently
rates all employees in the
middle of the scale,
regardless of the scale,
regardless of their actual
levels of performance.
 Step 8: Communicate Appraisal Results to
Employees

• The use of performance-evaluation data to provide

feedback to the employee and assess her strengths and
weaknesses so that further training can be implemented.

• Research suggests that certain techniques can be used to

make the performance appraisal interview more
effective:
– Allocate Time
– Scheduling the Interview
– Preparation for the Interview
 Step 9: Make personnel decision

• Performance appraisal results used to make

personnel decisions such as:

a) Employees training program

b) Raises and promotions
c) Employees termination
 Step 9: Make personnel decision

• There are 4 reasons that an employee can be

legally terminated:

1. Probationary period
2. Violation of company rules
3. Inability to perform
4. Reduction in force (layoff)