Matakuliah : L0064 / Psikologi Industri &
Organisasi 1
Tahun
: 2007 / 2008
PERFORMANCE APPRAISAL
Pertemuan 7 & 8
Learning Objectives
After reading this chapter, you should be able to
1. Define performance appraisal and specify the HR functions affected
by it
2. Describe how to ensure appraisal systems are in compliance with
EEOC guidelines
3. Understand the nature of opposition to appraisal systems from labor
unions, employees, and managers
4. Explain and provide examples of the two approaches to measuring
performance
5. Identify the techniques used to evaluate managerial performance
6. Describe and control for sources of rater error
7. Understand how to improve the effectiveness of performance
appraisal systems and how to best conduct the post-appraisal
interview
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What Is Performance Appraisal?
The periodic, formal evaluation of employee performance
for the purpose of making career decisions
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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
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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
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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
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Reasons for Conducting Performance
Appraisals
• 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
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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 pg. 132
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Performance Appraisal Techniques
• Objective Methods
– Output measures
– Computerized performance monitoring
– Job-related personal data
• Judgmental and qualitative measures
– Written narratives
– Merit rating techniques
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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 to monitor
employee’s on the job activities
– Attitudes toward computer monitoring depend on how
the data are used
– Found to be stressful
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Computerized Monitoring
• Advantages
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Immediate and objective feedback
Reduces rater bias
Helps identify training needs
Facilitates goal setting
May contribute to increases in productivity
• Disadvantages
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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
• Brief essays and numerical rating
procedures
• More prone to personal bias
– Merit rating is an objective rating method designed to
provide an objective evaluation of work performance
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Merit Rating Techniques
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Performance rating scales
Ranking
Paired-comparison
Forced distribution
Forced choice
Behaviorally anchored rating scales (BARS)
Behavioral observation scales (BOS)
Management by objectives (MBO)
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Performance Rating Scales
– Most frequently used technique
– Supervisors indicate how or to what degree a worker
possesses a relevant job characteristic
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Poor
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Average
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5
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
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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
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Forced-Distribution Technique
• Supervisors rate employees according to a
prescribed distribution of ratings, similar to
grading on a curve
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Superior
Better than average
Average
Below average
Poor
10%
20%
40%
20%
10%
• Predetermined categories may not be fair
• Hard to compare across groups
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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. E.g., 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
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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
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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
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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
• MBO technique satisfies fair employment guidelines &
may increase motivation and productivity
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Techniques for 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 (multi-source)
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Common Sources of Error
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Halo effect
Constant or systematic bias
Most-recent-performance error
Inadequate information error
Average rating or leniency error
Rater’s cognitive processes
Role conflict
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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
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Constant or Systematic Bias
• Based on the different standards used by
raters
– Hard rater
Constant or systematic
style of rating
– Easy rater
• Solution: Require distribution of ratings
according to the normal curve
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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
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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
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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
• Solution: Maintain a record of supervisor rating
tendencies
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Rater’s Cognitive Processes
• Category structures
– How workers are categorized - e.g., team player;
similar to halo effect
• Beliefs about human nature
• Interpersonal affect
– One’s feelings toward the other person
– Susceptible to impression management techniques
• Attribution
– Raters attribute positive or negative explanations of
employee behavior
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Role Conflict
• Disparity between job demands and the
employees 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
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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
• Subordinate participation
– Led to increased employee trust and perceptions of accuracy of
evaluation system (Mayer & Davis, 1999)
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Post Appraisal Interviews
• Offers feedback related to appraisal to help
employee improve performance
• Provides employee opportunity to react to
criticism
– Negative feedback can make employees
angry
– Workers react to criticism differently
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Improving Post-Appraisal 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
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Reasons for a Poorly Rated Performance
Appraisal Program
• Managers
– Lack the time to make other than hasty appraisals
• Employees
– Don’t like appraisals
– Uninformed about the criteria (criteria appear biased)
• If correlations between ratings and results-oriented
criteria are low
– Antithetical to purpose of appraisal
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Key Terms
• Attribution
• Average rating (leniency) error
• Behavioral observation scales
(BOS)
• Behaviorally anchored rating
scales (BARS)
• Inadequate information error
• Interpersonal effect
• Management-by-objectives
(MBO)
• Merit rating
• Most-recent-performance error
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Paired-comparison technique
Constant (systematic) bias
Forced-choice technique
Forced-distribution technique
Halo effect
Peer rating
Performance appraisal
Ranking technique
Rating scales
Role conflict
Self-ratings