Performance Appraisal Technical Report
For the Position of
Merchandise Stocker
For
Costco Wholesale Corporation
Report Prepared by:
Mallory McCord
Daniel Hamm
Performance Appraisal Technical Report: Merchandise Stocker
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Contents
..............................................................................3
Job Description..................................................................................4
Frequency......................................................................................5
Manager Training...............................................................................5
Observation................................................................................5
Rating Errors..............................................................................6
Feedback..................................................................................6
Employee Expectations...........................................................................7
Scale............................................................................................8
Feedback Process................................................................................8
Appeals Process................................................................................10
Comparison to Current Process..................................................................10
Disclaimer.....................................................................................11
Executive Summary
Appendices

Appendix A: Sample Behavior Observation Scale
Performance Appraisal Technical Report: Merchandise Stocker
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Executive Summary
A performance appraisal using a Behavioral Observation Scale (BOS) was created for the
position of merchandise stocker at Costco Wholesale Corporation. This scale requires managers
to rate the frequency that the employee engages in a behavior from 1 (almost never) to 5 (almost
always). The behaviors selected to be observed in order to evaluate the employees were derived
from the task statements of a job analysis of the merchandise stocker position. This
performance appraisal is meant to be given 90 days after an employee is hired into the position.
After this probationary period, the employee will receive the performance appraisal on the
anniversary of their hire date.
This technical report discusses in detail how managers should be trained to properly
administer this performance appraisal. Managers will be trained on how to effectively observe
the measurable behaviors, how to reduce rating errors, and how to give effective feedback. An
appeals process is also included in case the employee feels they were not scored fairly. A brief
comparison and evaluation of the current method of performance appraisal at Costco is also
included. Finally, a sample BOS that would be used to evaluate the employee's performance can
found in the appendix.
Performance Appraisal Technical Report: Merchandise Stocker
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Job Description
Job Title:
Merchandise Stocker
Job Code:
43-5081.01 – Stock Clerks, Sales Floor
Immediate Supervisor:
Wet Department Supervisor
Department:
Wet Department
General Summary:
Stocks shelves, racks, cases, bins, and tables with department merchandise, arranges merchandise attractively
with correct rotation and signage, and ensures the department is clean before the store opens.
Essential Duties and Responsibilities:
1. Stocks and arranges product to make a full display case using proper rotation techniques and grouping
similar products together to ensure an attractive display that does not sell damaged or expired product to
customers.
2. Works closely with the forklift driver to determine what products are needed from the back stock to fill
the display.
3. Operates pallet jacks and carts to move product from back stock to the sales floor.
4. Cleans the floor, displays, and storage racks of dirt, debris, and loose cardboard using cleaning supplies
and equipment to ensure a clean sales floor for customers and a safe working environment.
5. Creates, prints, and attaches correct product signage using a computer and paper cutter to ensure correct
product information is displayed to customers.
6. Answers customer questions about products to ensure customers find what they need.
7. Counts and records the number of units of products in an assigned area on a worksheet to aid in biannual
inventory.
Supplementary Information:
Job incumbents can expect to work in a noisy environment that is potentially hazardous, including exposure to
cold, sharp objects, heavy objects, and chemicals. This job requires extensive standing, walking, bending, and
lifting when stocking products. However, incumbents are highly trained in safety procedures to prevent injury.
Incumbents can expect to be asked to assist in other departments if time permits.
Performance Appraisal Technical Report: Merchandise Stocker
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Frequency
Employees will receive a 90 day performance appraisal. This 90 day period is a
probationary period. If performance does not meet company standards, the employee can be
terminated at the discretion of the manager. Employees who remain with Costco will receive a
performance appraisal every year on the anniversary of their hire date. A more frequent
evaluation is not required due to the low level of development possible within this position.
Additionally, conducting performance appraisals in a shorter frequency would likely not be cost
effective given the number of employees that would need evaluations and the time spent
conducting them. Employees may request an appraisal before their standard annual review if
they desire to be promoted to a position which has become available.
Manager Training
Managers who complete performance appraisals will be trained on the overall appraisal
process, including how to accurately observe behaviors, rate employees, and give feedback.
This will ensure the manager can complete the appraisal process to the best of his or her ability
and also answer questions from employees.
Observation:
It is essential that managers have the ability to accurately observe and recall
employee behaviors that will be evaluated during the performance appraisal. Costco
managers will be involved in a required workshop on frame-of-reference training (FOR)1.
This method of training is useful because it gives managers a set of standards from which
they evaluate employees. Successful FOR training will make managers fairly equivalent
in the meaning of their ratings. The workshop will entail having managers rate three
1
Bernardin, H. J., & Buckley, M. R. (1981). Strategies in rater training. Academy of Management Review, 6(2),
205-212.
Performance Appraisal Technical Report: Merchandise Stocker
vignettes of employees using an abbreviated behavioral observation scale and written
justifications of these ratings. There will be one outstanding, one average, and one poor
vignette. These ratings are compared to accurate ratings based on normative data
collected during the job analysis. Group discussion focuses on rating discrepancies.
Rating Errors:
Rater training has been found to reduce the occurrence of specific rating errors 2.
Managers will be trained specifically in the reduction of rating errors through a required
workshop which focuses on three types of rating errors. This workshop entails the
following: managers will view four short videos of hypothetical employees being
evaluated by a manager. The managers will then rate the hypothetical manager’s
evaluation and also how they themselves would rate the employee. This is followed by a
group discussion about these ratings. Finally, there are brief exercises in regards to three
common rater errors: the similar to me effect, halo error, and contrast error. The
managers watch a short video of a hypothetical manager erroneously appraising an
employee in each of the aforementioned ways. After each video, the managers again rate
the hypothetical manager’s appraisal and their own appraisal. Group discussion follows.
Feedback:
A third important area for training is the feedback situation. Once a performance
appraisal scale has been completed for an employee, this information must be
disseminated to that employee. Managers will be trained in a “feedforward” interview
(FFI) technique. The type of feedback used will be discussed in more detail in the
Feedback section.
The FFI training entails the following:
2
Fay, C. H., & Latham, G. P. (1982). Effects of training and rating scales on rating errors. Personnel
Psychology, 35(1), 105-116.
6
Performance Appraisal Technical Report: Merchandise Stocker
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A 2.5 hour workshop will be used 3. This workshop involves lecture, group
discussion, and role play. Lecture focuses on the concept of FFI and how to probe for
positive experiences. The following questions would be discussed as to how to adapt
them to particular types of employees.
(1) “No matter how bad the past year was that you may have experienced, everyone has
had one or more positive experiences. Please tell me about a specific incident where you
felt especially good about attaining a goal.” (2) “What were the circumstances that
enabled you personally to be effective?” (3) “What exactly did you do that made you feel
full of life and energized?” (4) “What can you do this coming year to create conditions/
circumstances that will enable you to think, feel, and behave on an on-going basis the
way you did in the incident you described?”
Employee Expectations
Performance appraisals, to be most effective, should be combined with feedback and goal
setting 4. Feedback is discussed in its own section. Goal setting is discussed here.
When employees participate in setting work goals, they tend to not only set higher goals
but have higher performance. This is in comparison to workers who are told to vaguely “do
their best” or nothing at all 4. This means it is useful to have employees set goals from point of
hire, and to set new goals once these have been accomplished. Managers should take this goal
setting opportunity to incorporate aspects of behaviors that the employee will be appraised on in
the future, and also organizational goals, such as increased sales or improved customer service.
3
Budworth, M.H., Latham, G.P., & Manroop, L. (in press). Looking forward to performance improvement: A
field test of the feedforward interview for performance management. Human Resource Management.
4
Latham, G. P., Mitchell, T. R., & Dossett, D. L. (1978). Importance of participative goal setting and
anticipated rewards on goal difficulty and job performance. Journal of Applied Psychology, 63(2), 163.
Performance Appraisal Technical Report: Merchandise Stocker
Upon hire, employees will spend approximately 30 minutes with their immediate
supervisor in order to discuss what behaviors will be appraised during the 90 day and annual
performance reviews. This will include an overview of the items on the BOS on which
employees will be rated. Also, this meeting will involve the setting of high, specific goals to be
met by the time of their 90 day performance appraisal. Every feedback session of an annual
performance appraisal will also include the setting of specific high goals to be met by the time
of the next performance appraisal.
Scale
The performance appraisal system for this position will use a Behavioral Observation
Scale. A BOS is reliable and valid and correlates positively with performance outcomes 5 6. In
addition, a BOS is more resistant to rating error 7 and is considered more practical by managers
in comparison to other scales such as a Behaviorally Anchored Rating Scale 7. The included
scale is based on tasks rated as “essential” or “very important” during a job analysis for this
position.
Feedback Process
Feedback will have two parts: a discussion of employee scores on the BOS, and a
developmental portion using the Feedforward Interview and goal setting.
5
Latham, G. P., & Wexley, K. N. (1977). Behavioral observation scales for performance appraisal purposes.
Personnel Psychology, 30(2), 255-268.
6
Taggar, S., & Brown, T. C. (2001). Problem-Solving Team Behaviors Development and Validation of BOS
and a Hierarchical Factor Structure. Small Group Research, 32(6), 698-726.
7
Fay & Latham, 1982
8
Performance Appraisal Technical Report: Merchandise Stocker
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Scores on the BOS can range from 29-145. Managers should go through each item
detailing why the employee received the score that they did. The employee's total score falls
into one of five performance categories, ranging from unsatisfactory to outstanding. This is to
give the employee's score more of a concrete meaning. However, this is just a reference point.
A more detailed developmental feedback process will then follow.
A traditional performance appraisal with feedback typically focuses on negative
experiences 8 and how to not make the same mistake twice 9. However, this type of feedback
can be ineffective in improving job performance 10 partly because the employee becomes
defensive when given negative feedback which can lead to decreased motivation 11.
Costco managers will instead be trained in a new method called the Feedforward
Interview (FFI) 8. The FFI consists of a two way conversation between manager and employee
of positive experiences, successes, and strengths of the employee and how to recreate these
experiences in the future. The idea behind FFI is that the recreation of these experiences will
lead to higher performance. Research supports the use of the FFI and its effectiveness over time
12
.The feedback conversation will also include goal setting as discussed under employee
expectations.
Official performance appraisals occur annually after the initial probationary review. Due
to this large gap in time, managers will be responsible for providing verbal feedback on a
8
Kluger, A. N., & Nir, D. (2010). The feedforward interview. Human Resource Management Review, 20(3),
235-246.
9
Ilgen, D., & Davis, C. (2000). Bearing bad news: Reactions to negative performance feedback. Applied
Psychology, 49(3), 550-565.
10
Smither, J. W., London, M., & Reilly, R. R. (2005). Does performance improve following multisource
feedback? A theoretical model, meta-analysis, and review of empirical findings. Personnel psychology, 58(1),
33-66.
11
Roberts, L. M., Dutton, J. E., Spreitzer, G. M., Heaphy, E. D., & Quinn, R. E. (2005). Composing the
reflected best-self portrait: Building pathways for becoming extraordinary in work organizations. Academy of
Management Review, 30(4), 712-736.
12
Budworth, Latham, & Manroop, in press.
Performance Appraisal Technical Report: Merchandise Stocker
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regular basis (at least weekly). This feedback can be positive or negative, but must be
constructive. This means that the behavior and consequences must be identified. If necessary, a
brief plan on how to improve poor behavior will be discussed.
Appeals Process
Employees will have 30 days to appeal their performance appraisal from the date they
receive it. This appeal should be made in writing to the manager who completed the
performance appraisal. Appeals will be reviewed by the human resources department and a
written response sent to the employee within 60 days.
Comparison to the Current Process
New employees are evaluated at 30 days to ensure bad working habits are not reinforced.
At this time a manager completes an appraisal form, which is a set scale with the option to add
in comments. A feedback session occurs with the employee to discuss his or her work in
general, and specific points on the form. The pattern of feedback is to begin with a positive
overview before discussion points to work on. The employee is asked if he or she is aware of
the less than optimal performance incident and how they will change. The employee is
evaluated again at the end of their 90 day probationary period using the same appraisal process.
Thereafter, employees receive an appraisal once a year from their date of hire. The appraising
manager can be any level (immediate supervisor, department manager, assistant store manager),
although one year appraisals tend to be given by an ASM. Employees typically receive
continuous feedback on their performance by senior peers within their department. If there is
disagreement about the content of the appraisal, the employee must take his or her complaint to
the next level of management. The resolution process is unknown.
The system has a whole is set up well. However, shortcuts made by appraising managers
undermine the process. First, more accurate observations can be made if the appraising manager
Performance Appraisal Technical Report: Merchandise Stocker
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works side by side with an employee at regular intervals. Few managers, if any, do this. A
manager who does not spend a noticeable amount of time with his employees is not seen as
credible by the employee. Second, ratings are inflated to serve various purposes. For example,
one employee was given all 5’s on his appraisal so that he could transfer easily to another store
location. However, this employee did not perform at an all 5 level.
Disclaimer
This performance appraisal system was developed by two students in a graduate level
Industrial/Organizational psychology performance appraisal class as part of a project.
Therefore, this performance appraisal system is purely a recommendation and should not be
implemented at this time. Additional time needs to be spent with the organization to develop the
most effective system.
What We Learned
It is not easy or even practical to apply every sound performance appraisal theory in the
work place. Developing a performance appraisal, from the scale to appeals, is much more
complicated than it seems. Even though the BOS shows evidence in the literature as being an
effective tool for measuring performance, it is still not a perfect system. Typically, it is difficult
for managers to observe the behaviors and recall the frequency, especially over longer
durations. However, we found that a "blue collar" job is much easier to observe and rate the
frequency of behaviors than jobs consisting of more cognitive processes. We also realized
motivation needs to be built in for managers to ensure they follow through with this process.
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Appendix A
Costco Performance Appraisal
for Merchandise Stocker
Employee: ____________________________
Department: _______________________________
Supervisor: ___________________________
Period of Observation: ___________________________
Please check the box that best describes the frequency of the behavior
Accountability & Dependability: Takes personal
responsibility for the quality and timeliness of
work
Almost
Never
1
Sometimes
2
3
2
Sometimes
3
4
Almost
Always
5
4
Almost
Always
5
4
Almost
Always
5
Clocks-in by the specified time for assigned
shifts
Shows up and completely works assigned shifts
Attention to Detail: Diligently attends to details
and pursues quality in accomplishing tasks
Almost
Never
1
Examines and inspects stock items for wear or
defects to ensure damaged items are not sold
to customers
Inspects all product of assignment department
for freshness to prevent selling spoiled product
to customers
Arranges products neatly and facing forward in
order to have a display that is visually appealing
Rearranges products to fill gaps or holes in the
display when the store is open to ensure a full,
visually pleasing display
Cleaning: Engages in and follows proper
cleaning procedures
Scrubs floor with push floor scrubber in
preparation for corporate visits
Gathers all loose cardboard that has
accumulated during stocking into a cart to
ensure a clean sales floor
Notifies maintenance immediately of spills so
that the hazard can be removed
Almost
Never
1
Sometimes
2
3
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Cleans racks with rags and cleaning agents to
remove dirt weekly
Returns leftover product to its original location
to ensure a clean sales floor
Sweeps floor with broom to remove dirt and
debris
Communication: Communicates effectively
with others; Understands and learns from what
others say
Almost
Never
1
Sometimes
2
3
4
Almost
Always
5
4
Almost
Always
5
4
Almost
Always
5
4
Almost
Always
5
Listens and adheres to the department
manager's instructions for product layout
Communicates with forklift drivers about what
specific products need to be pulled from the
shelves
Notifies the department manager of any delays,
missing product, etc.
Teaches job tasks and responsibilities to new
department employees
Customer Service: Builds and maintains
customer satisfaction with the products and
services offered
Almost
Never
1
Sometimes
2
3
Answers customer questions about products to
ensure the customer finds what they need
Assists customers with lifting product between
their cart and the cashier belt
Decision Making & Judgment: Makes timely,
informed decisions that take into account the
facts, goals, constraints, and risks
Almost
Never
1
Sometimes
2
3
Arranges products so that similar items are
grouped together
Identifies what product need to be replenished
in order to know what to pull from stock
Confers with the forklift drivers’ about what
excess product should be stocked in order to
limit expired product
Safety Focus: Adheres to all workplace and
safety laws, regulations, standards, and
practices
Wears gloves to protect the hands from cuts
and scrapes
Almost
Never
1
Sometimes
2
3
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Wears a company provided jacket when
working in the cooler to prevent cold injuries
Disposes of damaged or defective items
Exercises proper lifting procedures when
handling heavy objects to prevent injury
Arranges product in assigned department with
newest product in the back and oldest product
in the front
Self Management: Manages own time,
priorities, and resources to achieve goals
Almost
Never
1
Sometimes
2
Monitors working pace with a clock to ensure
assigned stocking will be complete before the
store opens
Notifies department manager of intent to clock
out for a break to ensure stocking efficiency
remains on task
Provides assistance or direction to coworkers or
supervisors when requested to ensure efficient
preparation of the store before opening
Item Total:
Total Score:______________
Performance Level
Score range
Unsatisfactory
29-52
Fair
53-76
Satisfactory
77-100
Good
101-124
Outstanding
125-145
3
4
Almost
Always
5
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Additional Comments:
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
Supervisor Signature: ___________________________________
Date:___________________
*By signing this document, I am giving confirmation that my manager has taken time to go over this
performance evaluation and has given me valuable, specific, and achievable feedback in order to meet, or
continue to meet above satisfactory performance. I also realize that if I am not satisfied with the delivery of this
performance evaluation that I have 30 days to give a written statement to Human Resources describing any
issues.
Employee Signature:___________________________________
Date:____________________