Chapter 7 HR

360-degree Feedback Evaluation

Popular performance appraisal method that involves evaluation input from multiple levels within the firm as well as external sources.

PA Interview structure

During performance reviews, managers might ask employees whether their current duties and roles are effective in achieving their goals. In addition to reviewing job-related performance, they might also discuss subjective topics, such as career ambitions. For example, in working on a project, perhaps an employee discovered an unrealized aptitude. This awareness could result in a new goal or serve as a springboard to an expanded role in the organization.

Legal issues

Employee lawsuits may result from negative evaluations. Employees often win these cases, thanks in part to the firm's own performance appraisal procedures. A review of court cases makes it clear that legally defensible performance appraisal systems should be in place. Perfect systems are not expected, and the law does not preclude supervisory discretion in the process. However, the courts normally require an absence of adverse impact on members of protected classes or validation of the process. It also expects a system that keeps one manager from directing or controlling a subordinate's career. There should also be a system whereby the appraisal is reviewed and approved by someone or some group in the organization. Another requirement is that the evaluator must have personal knowledge of the employee's job performance. In addition, the system uses predetermined norms that limit the manager's discretion.

Halo Error

Evaluation error that occurs when a manager generalizes one positive performance feature or incident to all aspects of employee performance, resulting in a higher rating

Performance Appraisal (PA)

Formal system of review and evaluation of individual or team task performance Performance appraisal is a formal system of review and evaluation of individual and team performance. Appraisal is a critical part of performance management because it helps provide feedback, encourage performance improvement, identify training and development needs, and defend personnel decisions. As such, developing an effective performance appraisal system has been, and will continue to be, a high priority for management.

Self-appraisal

If employees understand their objectives and the criteria used for evaluation, they are in a good position to appraise their own performance. Many people know what they do well on the job and what they need to improve. If they have the opportunity, they will criticize their own performance objectively and act to improve it. Many times, employees are tougher on themselves than the supervisor will be. Also, because employee development is self-development, employees who appraise their own performance may become more highly motivated. Self-appraisal provides employees with a means of keeping the supervisor informed about everything they have done during the appraisal period.

Goal Achievement

If organizations consider ends more important than means, goal achievement outcomes become an appropriate factor to evaluate. The outcomes established should be within the control of the individual or team and should be results that lead to the firm's success. At upper levels, the goals might deal with financial aspects of the firm such as profit or cash flow, and market considerations such as market share or position in the market. At lower organizational levels, the outcomes might be meeting the customer's quality requirements and delivering according to the promised schedule.

Responsibility for appraisal

Immediate supervisor Employees Peers and team members Self-appraisal Customer appraisal 360-degree feedback The HR department is usually responsible for coordinating the design and implementation of performance appraisal programs. However, it is essential that line managers are involved from beginning to end. These individuals usually conduct the appraisals; therefore, they should participate in the design of the program if it is to succeed.

Ranking method

The ranking method is the simplest of the four job evaluation methods. In the job evaluation ranking method, the raters examine the description of each job being evaluated and arrange the jobs in order according to their value to the company. The procedure is essentially the same as the ranking method for evaluating employee performance. The only difference is that you evaluate jobs, not people.

Traits, behaviors, competencies

Traits represent an individual's predisposition to think, feel, and behave. Many traits are usually thought of as being biologically created. A personality trait is more ingrained as with a person being introverted or extroverted. Certain employee traits such as appearance and cognitive aptitude may be the basis for some evaluations. Behaviors are typically viewed as resulting from a variety of sources. A behavior may have been learned from parents, significant friends, or from a certain work environment. A behavior can be changed but traits are usually more established. An appropriate behavior to evaluate for a manager might be leadership style. For individuals working in teams, developing others, teamwork and cooperation, or customer service orientation might be appropriate. Desired behaviors may be appropriate as evaluation criteria because if they are recognized and rewarded, employees tend to repeat them. If certain behaviors result in desired outcomes, there is merit in using them in the evaluation process. Competencies include a broad range of knowledge, skills, traits, and behaviors that are needed to perform a job successfully. They may be technical in nature, relate to interpersonal skills, or are business-oriented. For example, analytical thinking and achievement orientation might be essential in professional jobs. In leadership jobs, relevant competencies might include developing talent, delegating authority, and people management skills. The competencies selected for evaluation purposes should be those that are closely associated with job success.

Improvement Potential

When organizations evaluate employees' performance, many of the criteria used focus on the past. From a PM viewpoint, the problem is that you cannot change the past. Unless a firm takes further steps, the evaluation data become merely historical documents. Therefore, firms should emphasize the future, including the behaviors and outcomes needed to develop the employee, and in the process, achieve the firm's goals. This involves an assessment of the employee's potential. Including potential in the evaluation process helps to ensure more effective career planning and development.

Performance management

a goal-oriented process used to maximize the productivity of employees, teams, and the overall organization. Whereas performance appraisal occurs at a specific time, performance management is an ongoing process. Each part of the system, such as training, appraisal, and rewards, is integrated and linked for the purpose of improving organizational effectiveness. To encourage this, performance management systems often include incentives so that workers are rewarded for achieving strategic goals.

Appraisal Interviews

a meeting between a manager and a worker to discuss the quality of someone's work and how well they do their job

Work standards

a performance appraisal technique that compares each employee's performance to a predetermined standard. Firms may apply work standards to virtually all types of jobs, but production jobs generally receive the most attention. An advantage of using this method is that it can be very objective if standards are fair and set in a transparent manner.

Rating scales method

be the most vulnerable target. Yet in all fairness, many of the problems commonly mentioned are not exclusive to this method but rather, reflect improper implementation.

Behaviorally Anchored Rating Scale

combines elements of the traditional rating scales and critical incident methods. A BARS system differs from rating scales because, instead of using terms such as high, medium, and low, it uses behavioral anchors related to the criterion being measured. This clarifies the meaning of each point on the scale and reduces rater bias and error by anchoring the rating with specific behavioral examples based on job analysis information. A drawback is that the behaviors are activity oriented rather than results oriented. Also, the method may not be economically feasible because each job category requires its own rating scale. Yet, among the various appraisal techniques, the BARS method is perhaps the most highly defensible in court because it is based on actual observable job behaviors.

Comparison Systems

evaluate a given employee's performance against that of other employees. Employees are ranked from the best performer to the poorest performer. In simplest form, supervisors rank each employee and establish a performance hierarchy such that the employee with the best performance receives the highest ranking. Employees may be ranked on overall performance or on various traits.

Performance appraisal methods

four broad categories: trait systems, comparison systems, behavioral systems, and results-based systems.

Bias Errors

happen when the rater evaluates the employee based on a personal negative or positive opinion of the employee rather than on the employee's actual performance. Four ways supervisors may bias evaluation results are first-impression effects, positive and negative halo effects, similar-to-me effects, and illegal discriminatory biases.

PA competencies

include a broad range of knowledge, skills, traits, and behaviors that are needed to perform a job successfully. They may be technical in nature, relate to interpersonal skills, or are business-oriented. For example, analytical thinking and achievement orientation might be essential in professional jobs. In leadership jobs, relevant competencies might include developing talent, delegating authority, and people management skills. The competencies selected for evaluation purposes should be those that are closely associated with job success.

Performance Criteria

measures used to determine successful and unsuccessful job performance traits, behaviors, competencies, goal achievement, and improvement potential.

Results-based systems

methods focus on measurable outcomes such as an individual's or team's sales, customer service ratings, productivity, reduced incidence of workplace injuries, and so forth. The selection of results largely depends on two factors. The first factor is the relevance of the results that may be used to judge a company's progress toward meeting its strategic goals. The second factor is the reliability with which results can be measured. The third factor is the extent to which the results measured are truly a measure of performance over which an employee has the resources and latitude to achieve the designated results.

Behavioral systems

rate employees on the extent to which they display successful job performance behaviors. In contrast to trait and comparison methods, behavioral methods rate objective job behaviors. When correctly developed and applied, behavioral models provide results that are relatively free of rater errors and biases. The three main types of behavioral systems are the critical incident technique (CIT), behaviorally anchored rating scales (BARS), and behavioral observation scales (BOS).

Trait systems

raters to evaluate each employee's traits or characteristics (e.g., quality of work, quantity of work, appearance, dependability, cooperation, initiative, judgment, leadership responsibility, decision-making ability, or creativity). Appraisals are typically scored using descriptors ranging from unsatisfactory to outstanding.

Forced Distribution Method

sometimes referred to as a stacked ranking system, assigns employees to groups that represent the entire range of performance. A forced distribution approach, in which the rater must place a specific number of employees into each of the performance groups, can be used with this method. Many companies use forced distribution approaches to minimize the tendency for supervisors to rate most employees as excellent performers.