Industrial Psychology

Industrial Psychology
Chapters 6 & 7
CHAPTER 6: Employee Selection: References and Testing
“The past is the best predictor of the future.”
Inc. Magazine AUGUST 1990
Checking a job candidate's references has become a perfunctory task for many
managers. Remarks are so general they become virtually meaningless. To find
out what the terms hard worker, detail-oriented, and people person really mean
to someone, managers at Octel Communications Corp., in Milpitas, Calif., spend
up to an hour on the phone with at least three references per candidate,
discussing not just the candidate, but also the reference's own work ethic and
corporate culture.
Reasons for Using References
 Confirming details on the resume.
 Checking for discipline problems.
 Discovering new information about the applicant.
 Predicting future performance.
Problems in Using References: Low reliability = .13
 The text states, “By law, people have the right to see their reference
letters.” This is not entirely true.
 Slander – on the part of the person giving the reference
 Fear of possible litigation
 Negligence – on the part of the person giving the reference
 Effects of gender and race on the leniency of the reference
Knowledge of Applicant
The Trait Approach to Reference Letters
1. Dependability-Reliability
2. Cooperation-Consideration
3. Mental agility
4. Urbanity
5. Vigor
Psychological Testing
Reliability and Validity
 Cost and Error of Use
 Potential Legal Problems
 Scoring Methods
 Objective
 Subjective
Personality Test
 Rorschach Inkblot:
 Holland’s Vocational Counseling Test
 General Aptitude Battery Test (GATB)
 Wonderlic Personnel Test
 Perceptual Ability
 Psychomotor Ability
 Job Knowledge Test
 Integrity Test (honesty test)
 Voice Stress Analyzer
 Polygraph
Physical Agility Test
 Job relatedness
 Passing scores
 When the ability must be present
Assessment Centers
 In Basket Techniques
 Simulations
 Work Samples
 Games
Drug Testing
Handwriting Analysis
CHAPTER 7: Evaluating Employee Performance
 They are frustrating
 They are motivating
It is or should be part of the integrated whole performance structure of the
1. Compensation
2. Promotion
3. Discipline
4. Termination
5. Selection of New Employees
6. Training/Development
7. Strategy
The Case For Performance Appraisals
 Spots performance problems and create a paper trail - weed employees
out or help to develop
 Merit pay
 Can help identify latent leadership traits
 PA's can serve as a crystal ball - looking into the future/history of the
 Involve the employee - information on goals, mission, expectations
 Communication Channel - Feedback
The Case Against Performance Appraisals
 Edwards Deming, noted the devastating effects performance appraisals
have had on performance and why performance reviews and merit
ratings should be eliminated. In his book Out of the Crisis, he writes that
the performance appraisal "nourishes short-term performance,
annihilates long-term planning, builds fear. demolishes teamwork, and
nourishes rivalry and politics."
 Too much work
 Only used as a justification for tough choices
 Doesn't necessarily mean more money
 Distinction between "fired" and "laid off"
 Turnover is high - PA's are not done regularly enough to provide a record
 Employees care less about performance appraisals than they used to
The Equal Employment Opportunity Commission is responsible for administering
and enforcing the Civil Rights Act of 1964. The EEOC issued the Uniform
Guidelines on Employment Selection Procedures in 1978, and these were
intended to be applied to all human resource decisions. As such, these
guidelines definitely have an effect on performance evaluation although the legal
requirements for an appraisal system are less clearly defined by the guidelines;
the guidelines focus heavily on validating selection procedures. Thus, it is
actually more difficult to determine what makes a performance evaluation system
A number of court rulings have focused on the responsibilities of management in
developing and using a performance evaluation system in a legally defensible
way. One of the most important early cases was Brito v. Zia Company (1973) in
which the company was found to be in violation of the law. The court ruled that
the company had not shown that its performance evaluation instrument was valid
in the sense that it was related to important elements of work behavior in the jobs
for which the employees were being evaluated.
The operating manager (the immediate supervisor) does the evaluation in a vast
majority of cases. There are, however, other possibilities as well. Many
corporations will use other raters to supplement the evaluations of the immediate
Rating by a Committee of Several Superiors The supervisors chosen are
those most likely to come in contact with the employee. This approach has the
advantages of offsetting bias on the part of one superior and adding additional
information to the evaluation, especially if it follows a group meeting format.
Rating by the Employee's Peers (Co-Workers) In the peer evaluation system,
the co-workers must know the level of performance of the employee being
evaluated. For this system to work, it is preferable for the evaluating peers to
trust one another and not be competitive for raises and promotions. This
approach may be useful when the tasks of the work unit require frequent working
contact among peers.
Rating by the Employee's Subordinates. It is used more for the developmental
aspects of performance evaluation than are some of the other methods.
Managers are less likely to accept being rated by subordinates if the information
is going to be used for administrative purposes (for example, raises, promotions)
than if it is used for development. This source of rating information is also more
acceptable if the managers believe that the raters (subordinates) are familiar with
the job. Also, subordinates' evaluations should probably be restricted to
"people-oriented" issues such as leadership and delegation, rather than having
them evaluate organizing, planning, and other less easily observed aspects of
the manager's performance.
Rating by Someone outside the Immediate Work Situation Known as the field
review technique, this method uses a specialized appraiser from outside the job
setting, such as a human resource specialist, to rate the employee. This
approach is often costly, so it is generally used only for exceptionally important
jobs. It might be used for the entire work force if accusations of prejudice must be
countered. A crucial consideration is that the outside evaluator is not likely to
have as much data as evaluators in any of the other four approaches, and the
use of an outside evaluator represents a somewhat atypical approach to
appraising performance.
Self-Evaluation In this case, the employee evaluates herself or himself with the
techniques used by other evaluators. This approach seems to be used more
often for the developmental (as opposed to evaluative) aspects of performance
evaluation. It is also used to evaluate an employee who works in physical
Rating by a Combination of Approaches Finally, a combination of approaches
can be used (360 degree). For example, supervisors' ratings can be
supplemented with self-evaluations or peer evaluations. Using self and
supervisor ratings together allows for meaningful discussions of past
performance and areas in which improvement is needed. This kind of open,
two-way communication forms the foundation for the effective use of
performance evaluations as a major source of employee feedback.
A study found that, for white-collar workers, performance factors such as the
following were used by these percentages of organizations surveyed:
quality of work
93 percent
quantity of work
90 percent
job knowledge
85 percent
79 percent
Personality factors used were:
87 percent
87 percent
86 percent
need for supervision 67 percent
1) Observation
2) Checklists and Weighted Checklists Another type of individual evaluation
method is the checklist. In its simplest form, the checklist is a set of objectives or
descriptive statements. If the rater believes that the employee possesses a trait
listed, the rarer checks the item; if not, the rater leaves it blank. A rating score
from the checklist equals the number of checks.
3) Graphic Rating Scale There are several individual evaluation methods used in
business today but the oldest and perhaps the most common one is the graphic
rating scale. Using this technique, the rater is presented with a set of traits and
asked to rate employees on each of the characteristics listed. The number of
characteristics rated varies from a few to several dozen.
4) Critical Incident Technique Simply stated, this technique requires raters to
maintain a log of behavioral incidents that represent either effective or ineffective
performance for each employee being rated. These incidents are critical
incidents. Because these incidents might not be directly comparable for different
ratees, lists of standardized incidents can be prepared by the HR specialist in
consultation with the operating managers. Then, the rating task becomes one of
logging each time a subordinate engages in one of these behaviors.
5) Behaviorally Anchored Rating Scales Smith and Kendall developed what is
referred to as the behaviorally anchored rating scale (BARS) or the behavioral
expectation scale (BES). The BARS approach relies on the use of critical
incidents to serve as anchor statements on a scale. A BARS rating form usually
contains 6 to 10 specifically defined performance dimensions, each with 5 or 6
critical incident anchors.
A BARS usually contains the following features:
1. Six to 10 performance dimensions are identified and defined by raters
and ratees (a group is selected to construct the form).
2. The dimensions are anchored with positive and negative critical
3. Each ratee is then rated on the dimensions.
4. Ratings are fed back using the terms displayed on the form.
6) Essay Evaluation In the essay technique of evaluation, the rater is asked to
describe the strong and weak aspects of the employee's behavior.
By design, the methods of performance evaluation described so far are
supposed to be used for evaluating employees one at a time with no direct
comparisons for an employee with another. In this section, three techniques that
compare one employee's performance to that of one or more others will be
Ranking In their simplest form, rankings ask a supervisor to generate a list of
subordinates in order on some overall criterion. This can be very difficult to do if
the supervisor is asked to rank a large number of subordinates, for example, over
Paired Comparison First, the names of the persons to be evaluated are placed
on separate sheets (or cards) in a predetermined order, so that each person is
paired with all others to be evaluated. The evaluator then checks the person that
is the better performer within each set of two-person pairs.
Forced Distribution The forced-distribution system is similar to grading on a
curve. The rater is asked to rate employees in some fixed distribution of
categories, such as 10 percent in low, 20 percent in low average, 40 percent in
average, 20 percent in high average, and 10 percent in high.
Which Technique to Use
Which technique should be used in a specific instance? The literature on the
shortcomings, strengths, reliabilities, and validities of each of the techniques is
vast. In essence, there are studies showing that each of the techniques is
sometimes good, sometimes poor. The major problems are not with the
techniques themselves, but how they are used and by whom. Untrained raters or
those that have little talent or motivation to evaluate well can destroy or hamper
any evaluation technique. The rater is more critical than the technique in
developing effective evaluation systems.
Evaluation techniques can be judged on a series of criteria, such as costs and
purposes. As noted in the discussion of the approaches to evaluation above, at
least two major purposes are served by evaluation: counseling and personal
development, and evaluation for rewards, such as an aid in promotion decisions.
Some evaluation techniques serve one purpose better than others. Some
systems cost more to develop and operate than others.
Regardless of which technique or system is chosen, there are going to be many
problems encountered trying to use it. None of the techniques is perfect; they all
have limitations. Some of these limitations are common to all of the techniques,
while others are more frequently encountered with certain ones.
System Design and Operating Problems
Rater Problems
 Leniency or harshness.
 Central/tendency error.
 Recency of events error.
 Contrast effects.
 Personal bias (stereotyping; similar to me).
Employee Problems with Performance Evaluation
For the evaluation system to work well, the employees must understand it and
feel that it is a fair way to evaluate performance. In addition, they must believe
that the system is used correctly when making decisions concerning pay
increases and promotions. Thus, for a performance evaluation system to work
well, it should be as simple as possible unnecessary complexity in rating forms or
other evaluation procedures can lead to employee dissatisfaction. The system
should also be implemented in a way that fully informs employees about how it is
going to be used.
The Feedback Interview
Suggestions for Effective Evaluation Interviews: Steps and Skills
1. Raters and ratees should prepare for the meeting and be ready to
discuss the employees's past performance against the objectives for the
2. The rater should put the employee at ease and stress that the interview
is not a disciplinary session, but a time to review past work in order to
improve the employee's future performance, satisfaction, and personal
3. The rater should budget the time so that the employee has
approximately half the time to discuss the evaluation and his or her future
4. The rater should use facts, not opinions. Evidence must be available to
document the claims and counterclaims.
5. The rater should structure the interview as follows: First, open with
specific positive remarks. Second, sandwich performance shortcomings
between two positive result discussions. Third, conclude with positive
comments and overall evaluation results.
6. The rater should guard against overwhelming the ratee with information.
Too much information can be confusing, while too little information can be
frustrating. The rater must balance the amount of information that is
7. The rater should encourage ratee involvement and self-review and
evaluation. Ask the ratee to do his or her own evaluation on a periodic
8. The final aspect of the interview should focus on future objectives and
how the superior can help the employee achieve enterprise and personal
goals. Properly done, the interviews contribute importantly to the purposes
of performance evaluation.
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