Module 4. Evaluating Employee Performance

Prior to the Meeting

first step is to ensure that the legal process has been followed, An important responsibility for human resources professionals is to ensure that a termination decision is legally defensible.

feedback sandwich

in which the negative feedback is sandwiched between positive feedback. Liberal use of positive feedback not only helps employees accept the negative feedback, but also helps supervisors who tend to avoid providing negative feedback in an effort to reduce the chance of interpersonal conflict

performance appraisal review

is an excellent time to meet with employ-ees to discuss their strengths and weaknesses. But more important, it is the time to determine how weaknesses can be corrected.

Determining Salary Increases

is determined by many factors, including the degree of responsibility and level of education required to perform the job. But the difference in compensation between two individuals within the same job is a func-tion of both tenure and job performance. to provide a fair basis on which to determine an employee's salary increase.

Quantity of work

is obtained by simply counting the number of relevant job behaviors that take place. although appear to be objective, they are often misleading

Step 1: Determine the Reason for Evaluating Employee Performance

is to determine the reasons your organization wants to evaluate employee performance. That is, does the organization want to use the results to improve performance? Give raises on the basis of performance? This determination is important because the various performance appraisal techniques are appropriate for some purposes but not for others

Making Promotion Decisions

is to determine which employees will be promoted

Providing Employee Training and Feedback

is to improve employee per-formance by providing feedback about what employees are doing right and wrong

Quality of work

is usually measured in terms of errors, which are defined as deviations from a standard. Thus, to obtain a measure of quality, there must be a standard against which to compare an employee's work.

Observation of Behavior

just because an employee's behavior is observed does not guarantee that it will be properly remembered or recalled during the performance appraisal review research indicates that raters recall those behaviors that are consistent with their general impression of an employee raters who are familiar with the job being evaluated recall more judgments about performance but fewer behaviors than do raters who are unfamiliar with the job

Scheduling the Interview

location should be in a neutral place that ensures privacy and allows the supervisor and the employee to face one another without a desk between them as a communication barrier

Employee Performance Record

more formal method for using critical incidents in evaluating performance was developed by Flanagan and Burns (1955) for use by General Motors consists of a two- color form, half of the sheet is used to record examples of good behaviors, and the other half to record examples of poor behaviors

Supervisors

most common source of performance appraisal is the supervisor rating 74% of organizations, sole source of an employee's evaluation. Though they may not see every minute of an employee's behavior, they do see the end result.

Multisource feedback

most effective when the feedback indicates that the employee needs to change his or her behavior, the employee perceives that the changes are feasible, and the employee is open to receiving constructive feedback

Proximity Errors

occur when a rating made on one dimension affects the rating made on the dimension that immediately follows it on the rating scale Because the second dimension is physically located on the rating form next to the first, there is a tendency to provide the same rating on both the first and second dimensions. The difference between this error and halo error is in the cause of the error and the number of dimensions affected With halo error, all dimensions are affected by an overall impression of the employee. but with this, only the dimensions physically located nearest a particular dimension on the rating scale are affected; the reason for the effect, in fact, is the close physical proximity of the dimension rather than an overall impression.

Inability to Perform

organization will need to prove that the employee could not perform the job and that progressive discipline was taken to give the employee an opportunity to improve it must first demonstrate that a reasonable standard of performance was communicated to the employee. The organization must next demonstrate that there was a documented failure to meet the standard.

Task-Focused Performance Dimensions

organized by the similarity of tasks that are performed advantage of this approach is that because supervisors are concentrating on tasks that occur together and can thus visualize an employee's performance, it is often easier to evaluate performance than with the other dimensions. it is more difficult to offer suggestions for how to correct the deficiency if an employee scores low on a dimension

Step 8: Communicate Appraisal Results to Employees

perhaps the most important use of performance evaluation data is to provide feedback to the employee and assess her strengths and weaknesses so that further training can be implemented. Although this feedback and training should be an ongoing process, the semiannual evaluation might be the best time to formally discuss employee performance

union contracts

personnel research is still important, especially in organizations where ______________ forbid the use of performance evaluations in personnel decisions. In those situations, performance evaluations are still needed for effective personnel research.

Customers

provide feedback on employee performance by filing complaints or complimenting a manager about one of her employees provide feedback by completing evaluation cards

Frame-of-reference training

provides raters with job-related information, practice in rating, and examples of ratings made by experts as well as the rationale behind those expert ratings The goal is to communicate the organization's definition of effective performance and to then get raters to consider only relevant employee behaviors when making performance evaluations

strictness error

rates every employee at the low end of the scale. For example, on our five-point scale, our supervisor rates everyone a 1 or 2. You have probably encountered such errors in your academic career when you took classes from "easy graders" or "hard graders."

Prior to the Interview Allocating Time

should be allowed at least an hour to prepare before an interview and at least an hour for the interview itself.

Graphic Rating Scale (GRS)

such scales are fairly simple, with 5 to 10 dimensions accompanied by words such as excellent and poor anchoring the ends of the scale. The obvious advantage is their ease of construction and use, but they have been criticized because of their susceptibility to such rating errors as halo and leniency.

Recent behaviors

supervisors tend to recall the most recent behavior that occurred during the evaluation period.

Contextual Performance

that is, the effort an employee makes to get along with peers, improve the organization, and perform tasks that are needed but are not necessarily an official part of the employee's job description they want employees who will be not only effective performers but good organizational citizens as well.

Recency Effect

that recent behaviors are given more weight in the performance evaluation than behaviors that occurred during the first few months of the evaluation period. Such an effect penalizes workers who performed well during most of the period but tailed off toward the end, and it rewards workers who saved their best work until just before the evaluation.

Goals of Performance Appraisal

the most common include providing employee feedback and training, determining salary increases, making promotion decisions, making termination decisions, and conducting personnel research.

After the meeting

the natural reaction of the supervisor is to feel guilty. To relieve some of this guilt, a supervisor should review the facts—she gave the employee every chance to improve, but the employee chose not to.

Decision 3: Use of Employee Comparisons, Objective Measures, or Ratings

the next decision is whether to evaluate performance by comparing employees with one another (ranking), using objective measures such as attendance and number of units sold, or having supervisors rate how well the employee has performed on each of the dimensions.

During the Meeting

the supervisor should get to the point about terminating the employee. The employee usually knows why she has been called in, and there is no reason to prolong the agony. should rationally state the reasons for the decision, express gratitude for the employee's efforts (if sincere), and offer what-ever assistance the organization intends to provide.

Preparing for the Interview

the supervisor should review the ratings she has assigned to the employee and the reasons for those ratings. his step is important because the quality of feedback given to employees will affect their satisfaction with the entire performance appraisal process

360-degree feedback and multiple-source feedback

to obtain an accurate view of the teller's performance, these other sources can be used to provide feedback. The buzzwords for using multiple sources to appraise performance primarily used as a source of training and employee development and is seldom used in the appraisal process to determine salary increases or to make promotion and termination decisions supervisors, peers, sub-ordinates, customers, and self- appraisal.

rater's feelings or affect

toward an employee may interfere with the cognitive processing of actual performance information

Step 4: Select the Best Appraisal Methods to Accomplish Your Goals

two important decisions must be made: the focus of the performance appraisal dimensions and whether to use rankings or ratings

Low Reliability Across Raters

two people rating the same employee seldom agree with each other 1. raters often commit the rating errors previously discussed 2. raters often have very different standards and ideas about the ideal employee. 3. two different raters may actually see very different behaviors by the same employee.

Goal-Focused Performance Dimensions

type of performance dimension is to organize the appraisal on the basis of goals to be accomplished by the employee is that it makes it easier for an employee to understand why certain behaviors are expected.

Halo Errors

when a rater allows either a single attribute or an overall impression of an individual to affect the ratings that she makes on each relevant job dimension. occur especially when the rater has little knowledge of the job and is less familiar with the person being rated is also more common in peer ratings than in supervisor ratings of subordinates is statistically determined by correlating the ratings for each dimension with those for the other dimensions. If they are highly correlated, halo error is often said to have occurred.

contamination

when reviewing objective data, it is essential that potential sources of _______________________ are be considered (e.g., shift, equipment, training, coworkers, geographic area)

central tendency error

which results in a supervisor rating every employee in the middle of the scale. For example, in our five-point scale, the supervisor rates everyone a 3

Documentation

1. forces a supervisor to focus on employee behaviors rather than traits and provides behavioral examples to use when reviewing performance ratings with employees 2. helps supervisors recall behaviors when they are evaluating performance 3. These data, when combined with critical-incident logs, provide a solid basis on which to rate an employee. 4. helps an organization defend against legal actions taken against it by an employee who was terminated or denied a raise or promotion. 5. provides examples to use when reviewing performance ratings with employees.

Peers

1. often see the actual behavior ratings usually come from employees who work 2. directly with an employee 3. are fairly reliable only when the peers who make the ratings are similar to and well acquainted with the employees being rated 4. have been successful in predicting the future success of promoted employees, as they correlate highly with supervisor ratings

Violation of Company Rules

1. the first factor is that a rule against a particular behavior must actually exist. Though this may seem obvious, organizations often have "unwritten" rules governing employee behavior. These unwritten rules, however, will not hold up in court 2. If a rule exists, a company must prove that the employee knew the rule. Rules communicated in handbooks are the most legally defensible. To prove that an employee knew a rule, organizations require employees to sign statements that they received information about the rule, read the rule, and understand the rule.

contamination

A problem with result-focused statements is that an employee can do everything asked of her by an organization and still not get the desired results due to factors out-side of her control By considering the potential areas of ____________, a different picture emerges of relative performance.

Objective Measures

A second way to evaluate performance is to use what are commonly called objective, or hard, criteria. Common types of objective measures include quantity of work, quality of work, attendance, and safety.

forced distribution method

Also called "rank and yank," forced distributions were a favorite method of Jack Welch, the former chief executive officer of General Electric, who required managers to fire the bottom-performing 10% of their employees each year. rank-and-yank systems result in increased levels of organizational productivity, especially during the first few years in which the system is in place systems are much easier to use than the other two employee comparison methods, but they also have a drawback. To use the method, one must assume that employee performance is normally distributed, that is, that there are certain percentages of employees who are poor, average, and excellent.

Step 5: Train Raters

Although training supervisors to evaluate performance is essential to a sound and legal performance appraisal system survey found that few organizations spend the time and resources necessary to do this properly. This lack of training is surprising given that research has indicated that training supervisors to become aware of the various rating errors and how to avoid them often increases accuracy and reduces rating errors

Frequency of Desired Behaviors

As part of our performance appraisal system, supervisors are asked to decide whether their employees "always," "almost always," "often," "seldom," or "never" follow the rules. As you can imagine, it is often difficult for a supervisor to distinguish between levels such as "almost always" and "often."

Provisions of federal or state law

Employees cannot be fired for reasons protected by federal or state For example, an employer cannot fire an employee because she is female, pregnant, nonwhite, or over the age of 40

Public policy/interest

Employers cannot terminate an employee for exercising a legal duty such as jury duty or refusing to violate the law or professional ethics

Implied contracts

Employment-at-will is nullified if an employer implies that an employee "has a job for life" or can be fired only for certain reasons

Peter Principle

Even though promoting employees on the basis of performance or tenure seems fair, it may not always be smart. The best employee at one level is not always the best at the next level. Promoting the best or most senior employee often results in the so called

Step 2: Identify Environmental and Cultural Limitations

For example, if supervisors are highly overworked, an elaborate, time-consuming performance appraisal system will not be successful. In an environment in which there is no money available for merit pay, developing a numerically complex system will become frustrating, and the results of the evaluation may not be taken seriously. In an environment in which employees are very cohesive, the use of peer ratings might reduce the cohesiveness.

due process

From a legal perspective, courts are more interested in the ______________ afforded by a performance appraisal system than in its technical aspects.

numerical

If performance appraisal results are to be used to determine salary increases, a _________________ rather than narrative format is probably needed.

Legal Reasons for Terminating Employees

In situations not covered by employment-at-will, there are only four reasons that an employee can be legally terminated: probationary period, violation of company rules, inability to perform, and an economically caused reduction in force (layoffs).

Employment-at-Will Doctrine

In the private sector, allows employers freedom to fire an employee without a reason—at will. In the public sector, an employee can be fired only for cause. The idea behind is that because employees are free to quit their jobs at will, so too are organizations free to terminate an employee at will. Though is more common in the United States, countries such as France enforce the restriction that no employee can be fired unless it is for cause.

rank order

In this approach, employees are ranked in order by their judged performance for each relevant dimension the ranks are then averaged across each dimension to yield an overall rank are easily used when there are only a few employees to rank, but they become difficult to use with larger numbers

Cognitive Processing of Observed Behavior

Observation of Behavior Emotional State Bias

Step 7: Evaluate Performance

Obtaining and Reviewing Objective Data Reading Critical-Incident Logs Completing the Rating Form Distribution Errors Halo Errors Proximity Errors Contrast Errors Low Reliability Across Raters. Recency Effect Infrequent Observation

Contracts

Obviously, if an individual employee has a signed employment contract stipulating a particular period of employment, an organization cannot fire the employee without cause.

Completing the Rating Form

Once critical-incident logs have been read and objective data reviewed, the supervisor is ready to assign performance appraisal ratings. While making these ratings, the supervisor must be careful not to make common rating errors involving distribution, halo, proximity, and contrast.

Decision 2: Should Dimensions Be Weighted?

Once the type of dimension has been determined, the next decision is whether the dimensions should be weighted so that some are more important than others. makes good philosophical sense, as some dimensions might be more important to an organization than others

Behavior consistent with the supervisor's opinion

Once we form an opinion of someone, we tend to look for behaviors that confirm that opinion confirmation bias The opposite would be true for a supervisor who disliked an employee. Once you get on someone's bad side, it is hard to get off of it.

Extent to which organizational expectations are met

Perhaps the best approach is to rate employees on the extent to which their behavior meets the expectations of the organization such an approach allows for high levels of feedback and can be applied to most types of employee behavior. Some behaviors, however, are not suitable for such a scale.

Probationary Period

Period in which to prove that they can perform well. Though most probationary periods last three to six months Employees can be terminated more easily during the probationary period than at any other time.

bias

Raters who like the employees being rated may be more lenient and less accurate in their ratings than would raters who neither like nor dislike their employees

Sampling Problems

Recency Effect Infrequent Observation

primacy effect

Research from many areas of psychology indicates that we remember our first impression of someone supervisors recall behaviors that are consistent with their first impression of an employee, even though those first behaviors may not have been representative of the employee's typical performance

Comparison with other employees

Supervisors can rate performance on a dimension by comparing the employee's level of performance with that of other employees Though this approach will reduce such problems as overly lenient or overly strict ratings, it potentially forces a supervisor to rate employees who are performing well as being worse than other employees.

Unusual or extreme behaviors

Supervisors tend to remember unusual behaviors more than they remember common behaviors

longer

The __________________ an employee has been with an organization, the greater the number of steps that must be taken to correct her behavior

Emotional State

The amount of stress under which a supervisor operates also affects her performance ratings. raters who were placed in a stressful situation produced ratings with more errors than did raters who were not under stress.

progressive discipline

The fifth and final factor is the extent to which the punishment fits the crime. Employees in their probationary period (usually their first six months) can be immediately fired for a rule infraction. For more tenured employees, however, the organization must make a reasonable attempt to change the person's behavior through

appropriate place and time

The final step is to schedule an __________________________ for the meeting to occur. The meeting should be held in a neutral, private location. To avoid potential damage caused by a hostile reaction to the termination decision, the meeting should not be held in a supervisor's office should be held on a Monday or Tuesday

equally enforced

The fourth factor considered by the courts is the extent to which the rule has been ________________. That is, if other employees violated the rule but were not terminated, terminating an employee for a particular rule violation may not be legal

Ratings of Performance

The most commonly used option in evaluating performance is to have supervisors rate how well the employee performed on each dimension

Step 6: Observe and Document Performance

The next step in the performance appraisal process is for supervisors to observe employee behavior and document critical incidents as they occur

help

The next step is to determine how much _____________, if any, the organization wants to offer the employee. Forms of help can include references, severance pay, and out-placement assistance. Usually, greater levels of help are given to employees who sign agreements not to sue the organization.

Contrast Errors

The performance rating one person receives can be influenced by the performance of a previously evaluated person rater compares an individual, not against an objective standard, but against other employees

Proof

The third factor is the ability of the employer to prove that an employee actually violated the rule.

State Law

There are some limitations to the employment-at-will doctrine States such as California, Montana, and New York have laws that an employee can be fired only for cause—for example, breaking a rule, demonstrating an inability to perform.

paired comparisons

This method involves comparing each possible pair of employees and choosing which one of each pair is the better employee

equally

Though differential weighting of dimensions makes sense and has some advantages, many organizations choose to weight all performance dimensions _____________ because it is administratively easier to compute and to explain to employees.

Covenants of good faith and fair dealing

Though employers are generally free to hire and fire at will, the courts have ruled that employers must still act in good faith and deal fairly with an employee.

behavioral methods

Though many of the _____________ yield similar results, the same is not true when comparing subjective and objective methods.

employmentat-will statements

To protect their right to use a policy of employment-at-will

Step 3: Determine Who Will Evaluate Performance

Traditionally, employee performance has been evaluated solely by supervisors. Organizations, however, have realized that supervisors see only certain aspects of an employee's behavior.

Making Termination Decisions

Unfortunately, providing feedback, counseling, and training to employees does not always increase performance or reduce discipline problems. When performance management techniques are not successful, the results of a performance review might suggest that the best course of action is to terminate the employee. Methods for doing this and the legal issues that surround such decisions will be discussed in great detail at the end of this chapter.

Step 9: Terminate Employees

Unfortunately, there are times when managers have to terminate an employee's employment. Over the next few pages, we will discuss the legal aspects of terminating an employee.

results

When creating the statements for each dimension, one should carefully consider whether to write the statements in the form of behaviors or in the form of ________________

Employee Performance Record

advantage of this format is that supervisors are allowed to record only job-relevant behaviors. At the end of the performance appraisal period (every six months), the supervisor has a record of job-relevant behaviors recorded in an organized fash-ion

Subordinates

also called upward feedback) is an important component of 360-degree feedback, as subordinates can provide a very different view about a supervisor's behavior can be difficult to obtain because employees fear a backlash if they unfavorably rate their supervisor, especially when a supervisor has only one or two subordinates.

Infrequent Observation

another problem that affects performance appraisals is that many managers or supervisors do not have the opportunity to observe a representative sample of employee behavior 1. managers are often so busy with their own work that they have no time to "walk the floor" and observe their employees' behavior. Instead, they make inferences based on completed work or employee personality traits

Self-Appraisal

appear to be most accurate when the self-appraisal will not be used for such administrative purposes as raises or promotions also more accurate when employees understand the performance appraisal system and when employees believe that an objective record of their performance is available with which the supervisor can compare

Critical incidents

are examples of excellent and poor employee performance. Such documentation is usually written in a critical incident log —formal accounts of excellent and poor employee performance that were observed by the supervisor

During the Interview

are often anxious about performance reviews, it is a good idea to begin the interview with some small talk until the jitters go away 1. the role of performance appraisal 2. how the performance appraisal was conducted; 3. how the evaluation process was accomplished; 4. the expectation that the appraisal interview will be interactive; and 5. the goal of understanding and improving performance.

behavioral checklists

are only slightly more psycho-metrically sound, they still have some advantages over graphic rating scales. Because employees are directly involved in creating them, they tend to see performance-evaluation results as being more fair.

Step 10: Monitor the Legality and Fairness of the Appraisal System

are subject to the same legal standards as are employ-ment tests and other employment decisions. As such, performance ratings should be analyzed each rating period to determine if there are gender, race/ethnicity, or age differences. If there are such differences, the organization should determine whether the differences are justified by factors such as experience or if the differences are due to discrimination.

leniency error

because certain raters tend to rate every employee at the upper end of the scale regardless of the actual performance of the employee. For example, on our five-point scale, the supervisor rates everyone a 4 or 5. can in part be explained by the discomfort felt by supervisors about giving low rating

Attendance

can be separated into three distinct criteria: absenteeism, tardiness, and tenure. Both absenteeism and tardiness have obvious implications for the performance appraisal process. The weight that each has in the overall evaluation of the employee largely depends on the nature of the job.

Behavioral Checklist

checklists consist of a list of behaviors, expectations, or results for each dimension. This list is used to force the supervisor to concentrate on the relevant behaviors that fall under a dimension. are constructed by taking the task statements from a detailed job description (e.g., "Types correspondence") and converting them into behavioral performance statements representing the level at which the behavior is expected to be performed

Distribution Errors

common type of error in evaluating employee performance involves the distribution of ratings on a rating scale are made when a rater uses only one part of a rating scale. For example, on a five-point scale, a supervisor might rate all of her employees a 4 or a 5

Result-focused statements

concentrate on what an employee accomplished as a result of what she did. they evaluate employees on their contribution to the bottom line: Did their behavior on the job result in a tangible outcome for the organization?

Trait-Focused Performance Dimensions

concentrates on such employee attributes as dependability, honesty, and courtesy. Though commonly used, trait-focused performance appraisal instruments are not a good idea because they provide poor feedback and thus will not result in employee development and growth

secret shoppers

current customers who have been enlisted by a company to periodically evaluate the service they receive. In exchange for their ratings, secret shoppers get a few dollars and a free meal.

Competency-Focused Performance Dimensions

dimensions concentrate on the employee's knowledge, skills, and abilities. easy to provide feedback and suggest the steps necessary to correct deficiencies. That is, if an employee is evaluated as having poor writing skills, the obvious corrective measure would be for the employee to take a writing course

Safety

employees who follow safety rules and who have no occupational accidents do not cost an organization as much money as those who break rules, equipment, and possibly their own bodies. with tenure, is usually used for research purposes, but it can also be used for employment decisions such as promotions and bonuses

Conducting Personnel Research

employment tests must be validated, and one way this can be done is by correlating test scores with some measure of job performance , an accurate and reliable measure of job performance must be available. The same is true in evaluating the effectiveness of training programs. To determine effectiveness an accurate measure of performance must be available for use in determining whether performance increases as a result of training.