Employee Appraisal
CHAPTER OVERVIEW
• Performance appraisal is a powerful tool to
help the supervisor meet the objectives of the
department and organization.
– The benefits of conducting performance
appraisals include providing information necessary
for improving performance and motivating
employees.
– Performance appraisals also provide important
records for the company.
• Managers use this information for decisions on raises,
promotions, and discipline.
• There are systematic steps in appraising
performance.
– First, performance and results expectations and
standards of performance are established and
communicated to employees.
– The supervisor then observes behavior and
performance results, comparing them to the
standards set.
– Finally, the supervisor provides reinforcement for
acceptable or excellent performance and works
with employees to develop remedies for
inadequate performance.
• It is impossible for different supervisors to
evaluate employees in exactly the same way.
– A supervisor may have a tendency to select some
specific ratings or identify certain behaviors as
problematic over others.
– Biases about specific people and groups of people
can affect the appraisal process.
• For example, supervisors who fail to keep good records
may rely on recent events when evaluating an employee.
• A supervisor may give a more favorable appraisal to
someone who is similar to the supervisor and appraise
more negatively a person who is different from the
supervisor.
• Another bias comes from the halo effect, which
leads people to generalize one positive or
negative trait to a person’s entire performance.
• There are several types of appraisals
used to evaluate performance.
– Supervisors usually do not choose the type
of form to use, rather it is selected by the
human resources department or upper
management.
• The goal of some appraisal forms is to
make the process easy and consistent
for all employees.
– Ideally, the form focuses on behavioral
performance and results to reduce bias ant
increase objectivity.
• The graphic rating scale is an example of this
type of appraisal form.
• However, this type of form is susceptible to lack
of consistency from supervisor to supervisor.
• Another type of appraisal is the pairedcomparison approach, which measures
the relative performance of employees
in a group.
– This form rank orders all employees to find
the best employees.
• Therefore, it reflects negatively on other
employees.
• The appraisal interview provides
feedback to the employee and allows
the employee to join in the process of
performance improvement.
– The interview should follow careful and
thoughtful completion of the appraisal form,
and should be in a private place with plenty
of time for the employee to discuss issues
raised in the interview.
• The final outcome of the interview
should be agreement between the
supervisor and employee about what
improvements need to be made and the
method for achieving the improvement
goals.
Benefits of Conducting a
Performance Appraisal
• Performance Appraisal: Formal feedback
on how well an employee is performing his or
her job.
– Performance appraisals may be accomplished
with the use of a standard form, which includes
questions or items to guide the process.
– On the other hand, performance appraisal can be
accomplished without a standard form.
• In either case, the evaluation should be based on
predetermined performance expectations that are
communicated to employees.
• Performance appraisals provide information
necessary for employees to improve the
quality of their work.
– It can help motivate employees.
• Employees like to hear how they are doing, and
behaviors that are evaluated or measured tend to get
more attention from individuals.
– Therefore, when it is useful to the organization to
have special attention directed at a goal, it is
useful to have that item on a formal appraisal.
• For example, if the quality of a product or service is
important, it is worthwhile to have a section on the
performance appraisalon quality.
• Another reason for conducting performance
appraisals is that they provide important
records for the organization.
– They are a useful source of information when
deciding on raises, promotions, and discipline, and
they provide evidence that these were
administered fairly.
– In the case of employee behavior or performance
problems, an appraisal documents the problem.
Systematically Appraising
Performance
• For appraisals to deliver their potential
benefits, they must be as fair and
accurate as possible.
– Supervisors should be systematic in
appraising performance.
Appraisal Process
• Establish and communicate
expectations for performance.
• Observe and measure individual
performance against standards.
• Reinforce performance to provide
remedies
Establish and Communicate
Expectations
• During the planning process and related
action plans, the supervisor spells out
who is to do what in order to accomplish
the department objectives.
– This information will indicate what each
employee must do in order to help the
department or work group meet its
objectives.
• One approach is to list three to five major
responsibilities of each position; then focus on
these responsibilities.
• It is important that each employee
knows and understands what is
expected.
– The supervisor must communicate the
objectives effectively.
– Employees are most likely to understand
and be committed to objectives when they
have a say in developing.
Observe and Measure Individual
Performance
• Through the control process, the
supervisor should continuously gather
information about each employee’s
performance.
– This is an ongoing process, not something
the supervisor saves to do when filling out
appraisal forms.
• Performance appraisals should focus on
behavior and results.
– Focusing on behavior means the appraisal
should describe specific actions or patterns
of behaving.
– Focusing on results means describing the
extent to which the employee has satisfied
the objective for which he or she is
responsible.
• Sometimes a supervisor needs to
appraise personal characteristics, for
example, an employee’s dependability
or attitude.
– While such ratings are necessarily
subjective, the supervisor can try to base
them on observations about behavior and
results.
Reinforce Performance
• To keep employees motivated and
informed, the supervisor needs to tell
them when they are doing something
right, not just when they are making a
mistake.
– Reinforce good performance by pointing
out to employees the areas in which their
performance is good.
• In areas where the employee falls short
of the standards, he or she needs to
know how to improve.
– An effective way to help the employee is
for the supervisor and employee to work
together in solving performance problems.
– To move beyond discussing symptoms to uncover the
underlying problems, the supervisor can ask which of the
following kinds of causes led to the poor performance:
• (1) Inadequate skills.
– The supervisor should see that the employee gets the necessary
training.
• (2) Lack of effort.
– The supervisor may need to apply the principles of motivation.
• (3) External Additions.
– If the problem is something beyond the control of the supervisor
and employee, such as a poor economy or lack of cooperation
from another department, the appraisal standards and ratings
should be adjusted so that they are fair to the employee.
• (4) Personal problems.
– The supervisor should handle the situation as described in
Chapter 14.
Avoiding Discrimination in
Performance Appraisals
• The Equal Employment Opportunity
Commission (EEOC) is the government
agency charged with enforcing federal
laws against discrimination.
– The EEOC has published the Uniform
Guidelines of Employee Selection
Procedures, which include guidelines for
designing and implementing performance
appraisals.
• In general, the behaviors or
characteristics measured by a
performance appraisal should be
related to the job and to succeeding on
the job.
• The supervisor and others responsible
for the content of performance
appraisals should make sure that what
they measure is still relevant to a
particular job.
– Ratings of performance should not be
discriminatory.
• That is, they should not be based on the
employee’s race, sex, or other protected
category, but on whether the employee meets
standards of performance.
Types of Appraisals
• Types of commonly used performance
appraisal techniques include:
– Graphic rating scales.
– Paired-comparison approach.
– Forced-choice approach.
– Essay appraisal.
Graphic Rating Scale
• Graphic Rating Scale: A performance
appraisal that rates the degree to which the
employee has achieved various
characteristics.
– The graphic rating scale is the most common type
of appraisal used.
– Various characteristics such as job knowledge or
punctuality are rated by the degree of
achievement.
• The rate usually receives a score of 1 to 5, with 5
representing excellent performance.
• Some forms allow for additional comments.
• The advantage of this type of appraisal
is that it is relatively easy to use.
– However, the ratings themselves are
subjective.
• What one supervisor considers “excellent” may
seem just “average” to someone else.
• Also, many supervisors tend to rate everyone
as being at least a little bit above average.
• Additional descriptive information is an attempt
to overcome these problems.
• Paired-comparison Approach: A
performance appraisal that measures the
relative performance of employees in a
group.
– This is a method of performance evaluation that
results in a rank ordering of employees to come
up with a best employee.
– This type of approach measures the relative
performance of employees in a group.
• Employees are ranked by comparing the first
two employees on the list.
– The supervisor places a check mark next to the
name of the employee whose performance is
better.
– The process is repeated, comparing the first
employee’s performance with that of the other
employees.
– Then the supervisor compares the second
employee on the list with all the others, and so on
until each pair of employees has been compared.
– The employee with the most check marks is
considered the most valuable.
• The paired-comparison approach is
appropriate when the supervisor needs
to find one outstanding employee in a
group for a promotion or special
assignment.
– The fact that paired comparison makes
some employees look good at the expense
of others makes this technique less useful
as a method of providing feedback to
individual employees.
Forced-Choice Approach
• Forced-choice Approach: A
performance appraisal that presents the
appraiser with sets of statements
describing employee behavior; the
appraiser must choose which statement
is most characteristic of the employee
and which is least characteristic.
• This type of appraisal form gives the
supervisor sets of statements describing
employee behavior.
– For each set of statements, the supervisor must
select the one that is most and the one that is
least characteristic of the employee.
• These questionnaires prevent the supervisor from saying
only positive things about employees. It is used when an
organization finds that supervisors have been rating an
unbelievably high proportion of employees as above
average.
Essay Appraisal
• Sometimes the supervisor must write a
description of the employee’s performance.
– The essay appraisal is often used along with other
types of appraisals, notably graphic rating scales.
– They provide an opportunity for supervisors to
describe aspects of performance not thoroughly
covered by an appraisal questionnaire.
– The disadvantage of this method is that their
quality depends on the supervisor’s writing skills.
Behaviorally Anchored Rating
Scales
• Behaviorally Anchored Rating Scales: A
performance appraisal in which the employee is rated
on scales containing statements describing
performance in several areas.
– This is a method of performance appraisal that is tailored to
the organization and positions within that organization.
– Some organizations pay behavioral scientists or
organizational psychologists to create behaviorally anchored
rating scales.
– These scales rate employee performance in several areas.
– The supervisor selects the statement that best describes
how the employee performs.
– Each job title in the organization has a different set of rating
statements.
• The advantage of using this technique
is that it is tailored to the organization’s
objectives for employees.
• It also tends to be less subjective than
some other approaches.
• However, developing the scales is timeconsuming and therefore relatively
expensive.
Checklist Appraisal
• A checklist appraisal is a record of
performance, not an evaluation by the
supervisor.
• It contains a series of questions about
the employee’s performance.
– The supervisor checks boxes to answer
the questions yes or no.
– The human resources department has a
key for scoring the items resulting in a
rating of the employee’s performance.
• The advantage of this type of appraisal
is that it is easy to complete.
• However, it has several disadvantages.
– The checklist can be difficult to prepare,
and each job category will probably require
a different set of questions.
– Also, there is no way for the supervisor to
adjust the answers for any special
circumstances that affect performance.
Critical-Incident Appraisal
• Critical-incident Appraisal: A
performance appraisal in which the
supervisor keeps a record of incidents
that show positive and negative ways
the employee has acted; the supervisor
uses this record to assess the
employee’s performance.
• To conduct a critical-incident appraisal, the
supervisor keeps a written record of incidents
that show positive and negative ways in
which the employee has acted.
– The record should include dates, people involved,
actions taken, and any other details that are
relevant.
– At the time of the appraisal, the supervisor reviews
the record to reach an overall evaluation of the
employee’s behavior.
– During the appraisal interview, the employee has a
chance to respond to each of the incidents
recorded.
• The advantage of this method is that it
focuses on actual behaviors.
– However, the recordkeeping is timeconsuming, and since negative behaviors
are more likely to be recorded than positive
behaviors, it can be overly harsh.
• Work Standards Approach: A performance
appraisal in which the appraiser compares
the employee’s performance to objective
measures of what an employee should do.
– This type of appraisal requires the supervisor to
establish objective measures of performance.
• A typical work standard would be the quantity produced
by an assembly-line worker.
• The supervisor then compares the employee’s actual
performance with the standards.
• This approach works best with production workers.
Management by Objectives
(MBO)
• In organizations where MBO is used to set
goals and objectives for employees, the
supervisor will use this approach for
performance appraisal also.
– The appraisal is based on whether or not the
employee has met his or her objectives.
– The advantage is that employees know what to
expect.
– The supervisor focuses on results rather than
more subjective criteria.
Agents by Someone Other than
the Supervisor
• 360-degree Feedback: Performance appraisal that
combines assessment from several sources.
• Because the supervisor cannot know all of an
employee’s behaviors and their impact on others in
the organization, the supervisor may combine his or
her appraisal with self-assessments by the employee
or with appraisals by peers or subordinates.
– Combining several sources of appraisals is called 360degree feedback.
– The self-assessment may be done before the interview.
– Then the supervisor and employee can compare the
employee’s appraisal with his or her own evaluation.
• Peer Reviews: Performance appraisals
conducted by an employee’s coworkers.
• Peer appraisals are less common.
• In organizations that use teams, the
members may appraise the
performance of their team members.
• There are many techniques for appraising
performance.
– Usually the human resources department or
higher-level management dictates which type(s)
the supervisor will use.
– All supervisors will likely use the same approach
because it is easier to keep records showing
performance over time.
– The supervisor may be able to supplement the
appraisal format with other techniques if they
seem helpful by using the “Comment” section of
the form or an attached addition.
• An increasing number of major
companies are having subordinates rate
how well their bosses manage.
• The purpose is to give managers
information they can use to supervise
more effectively and make their
corporations more competitive.
Bias in Appraising
Performance
• Performance appraisals should be free
of bias, but this is impossible.
– There are several identifiable biases in the
performance appraisals by supervisors.
• Harshness Bias: Rating employees more
severely than their performance merits.
• Leniency Bias: Rating employees more
favorably than their performance merits.
• Harshness bias tends to frustrate and
discourage workers who resent the unfair
assessments of their performance.
• At the other extreme is the leniency bias,
where supervisors rate their employees more
favorably than the performance merits.
– Employees who receive favorable ratings may see
it as an advantage.
• However, it cheats them and the department of the
benefits of truly developing and coaching employees.
• There are also supervisors who tend to
select ratings that are related to the
structuring of answers on the
questionnaire.
– A tendency may be to select ratings in the
middle of the scale, which is called central
tendency.
• This type of bias misses important opportunities
to praise or correct employees.
• Proximity bias, or assigning similar scores to
items that are near each other on a
questionnaire, can result in misleading
appraisals.
– If the supervisor is uncertain about specific
questions or wants to adjust a low score, he or
she may resort to making random choices.
– This should be avoided by trying to apply objective
criteria.
• Personal preferences of the supervisor will
bias performance appraisals also.
– There is a tendency to judge others more
positively when they are like oneself.
– There is also a tendency to place most weight on
the events that have occurred most recently.
• This is called recency syndrome.
• The supervisor should be careful to consider events and
behaviors that occurred throughout the entire period
covered by the review.
• Similarity Bias: The tendency to judge
others more positively when they are like
oneself.
• The halo effect refers to the tendency to
generalize one positive or negative aspect of
a person to the person’s entire performance,
resulting in either a higher or lower rating
than the employee deserves.
• Finally, the supervisor’s prejudices about
various types of people can unfairly influence
a performance appraisal.
– The supervisor must remember that each
employee is an individual, not just a representative
of a group.
– This is especially important in light of the EEOC
guidelines discussed earlier in the chapter.
Purpose of Conducting
Performance Appraisals
• The interview between the supervisor
and employee is where performance is
reinforced or remedies are provided.
– The supervisor describes what he or she
has observed and discusses this appraisal
with the employee.
– Together they agree on areas for
improvement and development.
• Supervisors often dread conducting
appraisal interviews.
– Pointing out another person’s
shortcomings can be unpleasant at best.
• To overcome these feelings, if helps to focus on
the benefits of appraising employees.
• The purpose of holding an appraisal interview
is to communicate information about the
employee’s performance.
• An interview is an appropriate setting
because if sets aside time to focus on and
discuss the appraisal in private.
• It is a two-way communication with the
supervisor and employee working together to
devise ways to improve performance.
Preparing for a Performance
Appraisal
• Preparation for the interview begins with
completing the appraisal form.
– The supervisor should allow enough time
to complete the form carefully and
thoughtfully.
– The supervisor should think about how the
employee is likely to react to the appraisal
and should plan how to handle the
employee’s reaction.
– Also be ready with some ideas for how to
correct problems noted in the appraisal.
• Notify the employee ahead of the time
of the interview.
– Arrange for a private place to hold the
interview.
– Make arrangements to prevent
interruptions.
• This is a very important event for both the
supervisor and the employee--treat it as such.
• In preparation for the appraisal interview, it is
also useful for the supervisor to review for
himself or herself why appraisals are
important for the organization, department,
and most of all for the supervisor to be
competent at the job.
• When the supervisor is convinced the
performance is a positive enterprise and that
it can be a win-win situation, it will be easier
to do the interview.
Guidelines for Conducting the
Interview
• Begin the interview session by an attempt to put the
employee at ease.
– A refreshment and small talk may help break the ice.
• Review the employee’s self-evaluation first, if there is
one.
– Ask for reasons for the various ratings.
– Then the supervisor describes his or her evaluation of the
employee.
• Start with an overall impression, then explain the contents of
the appraisal forms.
• Most employees are waiting for the “bad news,” so it is
probably most effective to describe areas for improvement first.
• Then describe the employee’s strengths.
• Allow time for the employee to respond
to the performance appraisal.
– The employee should be allowed to agree
or disagree with the supervisor’s
conclusions, as well as to ask questions.
– It is important for the supervisor to keep an
open mind and listen to the employee.
• When the supervisor and employee
understand each other’s point of view, they
should reach a decision on how to solve
problems described in the appraisal.
– At the end of the interview, the supervisor and
employee are usually required to sign the
appraisal form.
– By doing so, they acknowledge that the interview
has been conducted and that the employee has
read and understood the form.
• After the interview is over, the
supervisor continues to appraise
performance.
• Training and coaching for improvement
should ensue.
• The follow-up is an ongoing process.