Avoiding common pitfalls in performance

appraisal
Industrial Management, Nov-Dec, 1992 by Peter Allan
Appraisal of employee performance is one of the most widely used human resource
management practices of American employers. The overwhelming majority of employers,
whether private, public or not-for-profit, have some kind of performance appraisal system.
Among the reasons usually advanced for the widespread adoption of performance appraisal is
that it may be used to:
* Encourage supervisors to observe subordinates more closely and carefully, and to do a
better job of coaching;
* Motivate employees by providing them with feedback on their performance;
* Provide information for improving employee work performance;
* Provide information for personnel decisions on pay, promotion, job assignments, training,
layoffs, etc.;
* Identify employees with the potential for advancement;
* Give employees the opportunity to express their job expectations, ambitions, satisfactions
and dissatisfactions;
* Provide documentation for possible legal challenges by disgruntled employees;
* Help the enterprise in its human resource planning; and
* Provide data for personnel research, e.g., validating employment tests, evaluating training
programs.
Even though performance appraisal has many actual or potential benefits, it has nevertheless
been frequently criticized and found wanting. Dissatisfaction with performance appraisal has
been expressed by human resource management professionals, line managers responsible for
appraisals, employees who are the subjects of appraisals, top managements of enterprises and
judges rendering decisions in court cases involving appraisal of employee performance. Some
critics have gone so far as to advocate doing away with employee appraisals altogether.
Why has performance appraisal been subjected to so much criticism? The answer lies in the
failure of appraisals to deliver what has been expected of them. This failure may be
attributable to two fundamental weaknesses that have often underlined appraisals: faulty
design of appraisal systems and failures in system administration.
Weaknesses in system design
Performance appraisal systems are sometimes criticized for measuring or evaluating the
wrong job behaviors or results, or for focusing on employees' personal characteristics rather
than on job performance. In some cases, standards for evaluating employee performance are
not related to the duties required of job incumbents; in others, the standards reflect relatively
minor, incidental, or unimportant job duties, not the critical ones. Employees are not likely to
be receptive to a system that is supposed to evaluate how well they are doing if, in fact,
performance standards are not based on their actual work or fail to emphasize its really
important aspects. Also, the standards may not keep up with changes in jobs and employees
may be appraised on the basis of standards that are no longer relevant. Furthermore, all too
frequently standards tend to focus on the person's personality or other characteristics, rather
than on job performance.
To deal with the lack of job relatedness, a job analysis should be performed; courts have
frowned on performance appraisal instruments that have not been based on job analysis. The
human resource management staff of the organization in question is probably best equipped
to carry out this task. The analysis should help develop performance standards that are job-
specific and applicable to the job in question, not to jobs in general.
The analysis should reveal the most essential job duties and work behaviors, as well as those
of lesser importance. It may also yield the knowledge, skills, abilities and other employee
characteristics needed to perform the job. As far as possible, the standards should be
concrete, objective and measurable.
The job analysis may already have been conducted in connection with some other human
resource management functions such as employee selection. In such a case, a review of
existing job information may be all that is needed. If no job analysis has been previously
carried out or has not been done in recent years, it would be a good idea to do one.
It may not be necessary to conduct a full or extensive analysis to identify the job duties or
work behaviors critical for successful job performance. In any event, sufficient information
must be obtained about the job to determine exactly what incumbents are expected to do.
Information about job requirements should also be communicated to incumbents so that they
may understand the basis on which they are to be appraised. It should also be understood that
employees are to be evaluated only on factors over which they have control and not on those
over which they have no say or which they cannot change.
To evaluate subordinates' performance, a manager must know how well they are doing their
jobs. In many, if not most, cases it is important for managers to actually observe their
subordinates on the job. Court rulings have indicated that if managers are to evaluate
employee performance they should be in a position to observe their subordinates at work.
Also, observation and recording of job performance requires certain skills that raters may not
possess and that may require a good deal of time, a commodity that is usually in short supply
for supervisors. The situation is generally worse for supervisors who are responsible for large
numbers of people.
This weakness may be overcome, at least in part, if supervisors do their observations
efficiently. Supervisors could be trained in techniques for observing employees
systematically, not haphazardly, and in how to identify, sample and record work behaviors,
especially critical ones, that will provide sufficient information on which to base appraisals.
This does not mean that subordinates have to be supervised closely or continuously. But a
supervisor should be able to demonstrate that a subordinate's appraisal was based on
behaviors that the supervisor observed and that the supervisor could confidently state that the
subordinate did or did not exhibit work behaviors that were required of him or her.

Supervisors understandably resent and resist time-consuming procedures and seemingly

unnecessary forms and reports. The information asked of supervisors may be duplicated
elsewhere or be of questionable value. Consequently, they may delay in completing the
appraisals or give them short shrift. The system may be perceived as more of a hindrance
than a help and may eventually die a slow death as the result of supervisory hostility,
indifference or neglect.
This weakness is best dealt with at the time the system is being designed. It is probably no
more difficult to design a simple system that is easy to administer and to live with than a
complex one. A system that is easy to understand, that contains few procedural requirements
and that calls for little in the way of paperwork will allow supervisors to do the really
important things needed for an effective job of appraisal: observing behavior, evaluating it,
giving employees feedback on how well they are doing and helping them to improve their
performance. These should be the real aims of the system, not the completion of endless
numbers of forms.
Weaknesses in system administration
All too often supervisors allow personal values or biases to influence appraisals of their
subordinates. Conscious or subconscious factors may interfere with objectivity in appraisals.
An appraisal may be affected by a subordinate's age, sex, race, national origin, political
viewpoint or other irrelevant variables. A supervisor may take a personal dislike to some
employees while employees similar in background or characteristics to the supervisor may be
given more favorable appraisals.
This problem may seem intractable because biases are often deeply rooted. However, studies
have shown that supervisors can be trained to reduce subjectivity and bias in appraisals. They
can be trained to be aware of, and to be on guard against, personal values and biases that may
influence appraisals unfairly. Use of role plays, workshops, cases and other experiential
training activities can be effective in helping to heighten awareness of undesirable rating
influences.
However, the training cannot be a one-time effort. Periodic retraining of supervisors and
reinforcement by higher level managers of desired supervisory rating behaviors are also
important components of a program to eliminate or at least to minimize biased appraisals.
Higher level managers and the human resource management staff can also play useful roles
by carefully monitoring appraisals to identify problem areas.
An employee's ratings may be influenced merely by virtue of being assigned to one
supervisor or work unit rather than to another. Ideally, two employees who have the same
duties and who perform equally well should receive the same performance rating even though
they work for two different supervisors. Yet one may receive different ratings simply because
one supervisor is generally more demanding (or more lenient) than the other. Some
supervisors are tough and give relatively low ratings to all or almost all of their subordinates,
while others give relatively high ratings to everyone.
In other situations, very competent employees who happen to work in units staffed by
outstanding performers may be given relatively low ratings if their performance is compared
with those of the outstanding members. Conversely, a very competent employee who is
assigned to a group made up of mediocre or barely adequate performers would shine by
comparison and might be accorded an outstanding rating.
In still other situations supervisors may not give deservedly high ratings to valued
subordinates for fear of losing them through promotions or reassignments. Other supervisors,
instead of putting their own interests ahead of the careers of their subordinates, may give
them the ratings they have truly earned.
A variety of indicators may point to the existence of this weakness. The human resource
management staff can audit appraisals to detect rating patterns and trends that could indicate
where the problem might exist. For example, a question may be raised if employees who had
consistently high (or low) ratings in their previous assignments are given dramatically lower
(or higher) ratings when they are transferred to new but similar assignments. Higher
managerial levels may also see signs of a problem in their reviews of appraisals prepared at
lower levels. Evidence may also be obtained from employees who appeal their ratings to
higher authority.
Solutions for dealing with this problem could include training supervisors to apply rating
standards in a relatively uniform manner and to use the full range of rating categories when
warranted. Another solution involves basing appraisals on whether or not an individual
achieved pre-established results rather than on a comparison with the performance of others.
The problem could also be addressed by structuring a supervisors' rewards to reflect their
success in developing subordinates into valued employees for the organization (as manifested
by subordinates' promotions or assignments to more challenging positions).
Supervisors sometimes give undeservedly high ratings to relatively ineffective subordinates
in order to avoid antagonizing them. They are reluctant to give low ratings to poor performers
because they must work with these people day in and day out and because they depend on
their subordinates to get out the work.
Another reason for supervisory leniency in ratings is that salary increases are often keyed to
performance appraisals. In situations where employees can receive pay increases only if they
have satisfactory or superior ratings, a supervisor may feel obliged to give inflated appraisals
because of a reluctance to deprive subordinates of what they perceive to be needed or well-
earned raises. This practice is especially likely to be found in times of steep increases in the
cost of living.
In addition to its impact on pay increases, supervisory leniency can be a critical factor in
situations involving employees who have been discharged or denied promotion because of
poor job performance. They may go to court claiming that they are the victims of
discrimination or unfair treatment and that their performance has not been unsatisfactory. If
the employees' supervisors have given undeservedly high ratings in their written appraisals
rather than appropriately low ones, then the employer's position is weakened, thereby
increasing the likelihood that the litigants will emerge victorious.
Evidence of leniency in ratings can be discovered through monitoring distributions of
appraisals by the human resource management staff and through reviews of appraisals by
alert higher level managers.
This weakness may be overcome through training of supervisors to demonstrate that lenient
ratings could harm the employer in employment-at-will lawsuits, and that such ratings
mislead subordinates and might hurt them in their careers. Focusing the training on proper
application of performance standards and on use of the entire range of rating categories may
also help curb supervisory tendencies toward leniency.
Another mechanism is to decouple review of performance ratings from granting of salary
increases. If salary reviews and discussions of performance ratings are held at different times,
supervisors may be more inclined to give low ratings for relatively poor performance and
may feel less pressure to give high ratings that will support pay increases for subordinates.
In some situations, supervisors give all or almost all of their subordinates the same
performance rating. Just about everyone is rated as "average" or "satisfactory" or "good" or
some similar label that is used in the specific system. Cases have been reported in which 95
percent or more of the employees in an organization have received the same rating. Some of
the reasons for this practice may be that supervisors simply do not want to take the time and
effort needed to assign appropriate ratings, or they do not wish to offend less effective
performers, or they may find it very difficult to differentiate among employees because of
vague performance standards. Whatever the reason, failure to differentiate among levels of
performance may cause a system to lose its credibility and its usefulness to the organization.
By analyzing appraisal records to detect trends and patterns in rating, the human resource
management unit should be able to pinpoint this type of problem. Similarly, in their review of
appraisals given by lower level managers, higher level ones may be able to discover identical
or very similar ratings for groups of employees.
If analysis reveals that this problem stems from vague or unworkable performance standards,
they should be revised to make them usable. If the problem is one of supervisory laziness,
indifference or reluctance to offend subordinates, coaching by the appraisers' superiors may
be the answer.
In some cases employees do not know what standards of performance are being used to
evaluate them. Either the standards are not well defined by management or, if they are,
employees are not told about them. Sometimes employees are told only in general terms what
performance is expected of them. These practices are patently unfair to employees and are
certainly not in the organization's own best interests. How can employees reasonably be
expected to achieve levels of performance that are not clear or that have not been
communicated to them? Under such circumstances it is no wonder that performance appraisal
leaves employees disappointed, disgruntled, resentful and suspicious. Court decisions have
also taken a dim view of performance appraisal systems that do not provide for informing
employees of performance standards.
If employees who are the subjects of the appraisals are to get anything out of the process then
they must be brought into it. They should know at the start of the rating period exactly what it
is that they are expected to achieve. It is also highly desirable to give subordinates a voice in
establishing their standards of performance.
Even if a performance appraisal system is well designed, the entire process may flounder if
the appraisal interview is handled poorly or not conducted at all. The interview is of crucial
importance because it is the point at which employees become acutely aware of the system. If
handled well, the interview can leave the employee with a positive impression of the system
and the employer. Through the interview employees can find out where they stand, can
receive guidance to improve their performance, and can express how they feel about their
jobs and the organization.
Most organizations do require the supervisor to discuss the appraisal with the employee or, at
least, to show the completed appraisal form to the employee. But supervisors may not know
how to conduct the interview, may not prepare adequately for it or may lack confidence.
Interviews sometimes are perfunctory, with a supervisor only going through the motions of
conducting them. Sometimes interviews are carried out hurriedly, thereby conveying the
impression that they are a chore that a supervisor must perform, and something that is to be
gotten over with quickly. Employees may be put on the defensive or may not even be given
the opportunity to express their views. Other times, interviews are scheduled with little notice
given to employees and with little or no indication as to how they might prepare for them.
Although conducting an appraisal interview may seem to be a daunting task, there are ways
of helping supervisors to do an effective job. Formal training programs can be designed to
provide instruction in preparing for the interview, practice in carrying it out and feedback
(including videotapes of the interview) on how well the practice interview was handled. The
training will have a greater likelihood of success if it features small group sessions that use
experiential techniques such as role playing to give trainees ample opportunity to practice
new behaviors and to be critiqued in a non-threatening environment. It is also desirable to
provide periodic re-training to ensure that the learned skills have not atrophied through
disuse.
It would also be beneficial to instruct subordinates to deal with the appraisal interview,
including the purpose of the interview and what they can do to prepare for it. If an employee
knows what to expect at the interview and is prepared for it, then the interview can be a
constructive experience.
Conclusion
Performance appraisal is generally viewed as an important management function, which can
supply information for managerial decisions. However, the complaints and criticisms that
have been voiced about the process indicate that it frequently falls far short of its promise.
Some of the dissatisfaction stems from flaws in the design of the appraisal system and some
from the way it is administered. There are two types of suggestions for improvement of these
weaknesses.
The first group features recommendations for offsetting weaknesses in system design. These
suggestions include: when designing a performance appraisal system, be sure to keep it
simple, with a minimum of procedural requirements and forms to be completed; use job
analyses to determine relevant and realistic performance standards; and, build into the system
provisions for preparing supervisors to observe employee behaviors. The other types of
suggestions are recommendations for dealing with flaws in system administration.
These lists of suggestions are by no means comprehensive. Undoubtedly others could be
proposed. However, if these suggestions are implemented, they can go a long way toward
making performance appraisal a much more effective process and, consequently, a more
valuable management tool.
Peter Allan is professor of management at the Pace University Graduate School of Business.
He was formerly with the New York City Department of Personnel both as deputy city
personnel director and director of research. He holds a Ph.D. degree from the New York
University Graduate School of Business. His publications have appeared in Personnel
Journal, Personnel Administrator, Public Personnel Management, Academy of Management
Journal, Public Administration Review and Journal of Employment Counseling.
RECOMMENDATIONS FOR DEALING WITH FLAWS IN SYSTEM
ADMINISTRATION
* Establish clear and objective performance standards to guide supervisors in making
appraisals and to let subordinates know what is expected of them. To the degree possible,
subordinates should be involved in establishing standards. Employee involvement will help
ensure acceptability of the system.
* Train raters and ratees in the philosophy, purposes and procedures of the system.
* Provide raters with guidance in how to give appropriate and accurate ratings. Raters should
be instructed to be aware of and to guard against biases, to apply performance standards
uniformly, to use the full range of rating categories as warranted and to discuss expected
standards of performance with subordinates in advance of the rating period. Such training
may need to be repeated periodically.
* Encourage line management to coach raters in making appropriate performance appraisals
and to reinforce desired rater behavior.
* Train raters in how to prepare for and how to conduct the appraisal interview. Refresher
training will probably have to be conducted periodically because interviewing skills tend to
be forgotten if they are not used.
* Give ratees guidance in preparing for the appraisal interview.
* Have supervisors conduct separate performance reviews and salary reviews.
* Require monitoring of the system by the human resource management staff, in cooperation
with line management, to identify possible problem areas.
COPYRIGHT 1992 Institute of Industrial Engineers, Inc. (IIE)

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