Chapter 7

Performance Appraisal

INP3004/MAN3360

Dr. Steve
 Performance Appraisals

How do performance appraisals benefit the

organization?
1. Help orgs make decisions about promotions and
firing
2. Provide feedback to employees that serves to
motivate or convince poor workers to leave
3. Improve commitment and satisfaction
4. Provide documentation in case an employee
sues for wrongful termination
 Performance Appraisal
Development and Applications
Job Analysis

Criterion Development

Performance Appraisal
Personnel Training
Wage Determination
Placement
Promotion
Discharge
Personnel Research
 Performance Appraisal
Applications
1. Personnel Training Determine employees
strengths & weaknesses to determine need for
training
Diagnostic tool to help employee improve
2. Determining Wages Determine who should get
a raise and how much
This issue may interfere with employee development,
employees may become defensive to protect salary
Possible solution: intermediate appraisals for diagnosis,
and year end for wage determination
3. Placement Use P.A. data to re-assign workers to
tasks they are best suited for
 Performance Appraisal
Applications (continued)
4. Promotion Typically based on performance
(P.A.), seniority, and available opening
Good P.A. needed to legally defend choice of
employee for promotion
5. Discharge Organization that fires an
employee may be asked to defend appraisal
system
Should demonstrate firing was last alternative
6. Personnel research Provides database for
determining level of performance expected
Establish criteria for training and selection validities
 Performance Appraisal Systems

Performance Appraisal Systems should:

Be relevant to the job
Not be used to assess non-observable behavior
Not be overly vague
Not show adverse impact
Use job analysis for establishing criteria
Show construct validity
Be used by supervisors trained in its proper use
Provide employees opportunity to appeal evaluation
and opportunity to improve before discharge
Performance Appraisal
Employee Data

Conceptual
Criterion
Objective Personnel
Data Data
Judgmental
Data
 Performance Appraisal
Employee Data
Objective data
Ex: # cars sold, time to completion, efficiency, etc
Criterion Deficiency: Conceptual Criteria:
total revenue Salesmanship
Problem: Criterion contamination
profit
markup
repeat customers
time spent on customer. Actual Criteria:
# cars sold/month

Criterion Contamination:
Geographic region worker is assigned
 Performance Appraisal
Employee Data
Personnel data
Absenteeism - # of days missed from work
How well does absences discriminate good from bad employee?
Are unexcused absences more harmful than excused?
Voluntary (requested time off) vs Involuntary (medical)
Turnover how long employee stays on job
Voluntary (quit) vs Involuntary (discharged)
Why appraise length of time workers stay?
May be a reflection of management, procedures, pay, etc
Accidents cost to the company in terms of damage and time off
work
Typically used for truckers, machinists, production workers, etc.

Problem: Criterion Deficiency

Appear to be only measures of poor performance
 Performance Appraisal
Employee Data
Judgmental data subjective ratings
Majority of performance appraisal systems
Can be used in any type of job
May be correlated with other measures (objective
or personnel)

Problem: Rater must be skilled at identifying

relevant behaviors
 Performance Appraisal
Methods
Graphic Rating Scales rate worker on
number of different dimensions by checking a
box, circling a #, Likert scale, etc.
Examples:

Job Knowledge: X
5 4 3 2 1

Quality of Work: X
Superior Above Average Below Unacceptable
Average Average
 Performance Appraisal
Methods

Graphic Rating Scales (continued)

Common Problems:
Halo Errors Overall impression of worker
biases individual ratings
Leniency Errors Particularly hard grader
(negative) or easy grader (positive)
Central Tendency Errors Tendency to select
the mid point of scale particularly when unsure
 Performance Appraisal
Methods
Rank-Order rank all employees from best to worst on
performance (ordinal scale)
Ex:
1. Sally
2. Charlie
3. Lucy
4. Linus
5. PigPen

Problems:
Employee rankings are relative to each other rather than a standard.
Difficult with large number of workers
 Performance Appraisal
Methods
Paired Comparison compare each employee
to every other employee
Example:
* Sally-Charlie Charlie-Lucy * * Lucy-Linus
Sally-Lucy * *
Charlie-Linus* Lucy-PigPen
Sally-Linus * Charlie-PigPen * * Linus-PigPen

* Sally-PigPen Lucy 3 PigPen 2

Linus 3 Charlie - 0
Sally 2
Problem: # comparisons = n(n-1) / 2
 Performance Appraisal
Methods
Forced
20
18
Distribution Use normal curve to place
workers
16 into categories of performance
14Useful when large number of workers
Frequency

12
10Forces distribution to be normal, so that most workers
8are average
6
4
2
0
Lowest 10% Next 20% Middle 40% Next 20% Highest 10%

Problem: No reason to believe distribution to be normal

Poor performers are weeded out
 Performance Appraisal
Methods using Specified Behaviors
Critical Incidents Those behaviors that are
particularly important for doing the job
Supervisor keeps a running list of employees critical
incidents as they relate to various job-related
behaviors such as job knowledge, decision making,
leadership, etc.
Used mainly as a diagnostic tool
Examples:
Failed to complete report
Decision to use fluorescent bulbs instead of
incandescent saved company $600 on years
electric bill
 Performance Appraisal
Methods using Specified Behaviors
Weighted Checklists Takes critical incidents
and weights each one according to importance
SMEs list of critical incidents from good to bad for
completing the job.
Supervisor then uses scale to identify behaviors worker
engaged in, then computes score
 Weighted Checklist
Position: Secretary
Critical Incident Scale Value
- Knows the difference between correcting the +6.5
grammar in the bosss letter and correcting writing style
- Knows various postal rates and mails material in +4.2
a cost-efficient manner
- Knows what typing is to be done on plain vs. company letterhead +3.1
- Keeps a running count on the use of office supplies +2.5
- Opens all mail whether or not it is marked confidential -1.9
- Confuses priorities on typing that needs immediate attention -3.8
and projects that have no established deadlines
- Files away correspondence so that it can rarely be found for -5.2
later reference
- Leaves many mistakes in typing from failing to proofread the -7.1
typed copy
 Behaviorally Anchored Rating Scales
BARS
BARS Rating scale which uses specific behaviors
as anchor points
Five step development process:
1. Create list of critical incidents
2. Group incidents into meaningful dimensions
3. Sort incidents (assess goodness of fit in groups)
and discard inconsistent ones
4. Rate remaining incidents on representativeness of
the dimension (those with low inter-rater agreement
are discarded)
5. Incidents are placed on scale according to their
rating
 Behaviorally Anchored Rating Scales
BARS Example
Position: Patrol officer
Job Knowledge: Awareness of procedures, laws, and court
rulings and changes in them
Could be expected to follow 9 Very High
correct procedures for
8 Could be expected to be fully
evidence preservation at scene
7 aware of recent court rulings and
of crime
conduct him/herself accordingly
Could be expected to know 6
Could be expected to
s/he could break down locked
door while in hot pursuit and 5 Moderate occasionally have to ask
other officers about points
thus arrest fleeing suspect 4 of law
Could be expected to 3 Could be expected to search
misinform public on legal 2 suspects car two hours after
matters through lack of suspect was booked
knowledge 1 Very Low
 Behavioral-Observation Scales
BOS
BOS Supervisor rates employee on frequency of
how often each critical incident occurs

Position: Student
Never Seldom Sometimes Generally Always
1. Comes to class on time 1 2 3 4 5
2. Asks intellectual questions 1 2 3 4 5
3. Does not interrupt class 1 2 3 4 5
4. Takes detailed notes 1 2 3 4 5
 Performance Appraisals
Other Factors
1. Rater Training try to minimize errors such as
leniency, halo, central tendency, etc.
Perhaps videotaped performance with known rating
(est by SMEs) and have rater match ratings to
expert opinion
2. Rater Motivation provide motivation for
giving accurate ratings
Are supervisors rewards tied to performance of
subordinate ratees?
Performance Appraisal
Rater Motivation
 Other Types of Appraisals
1. Self Assessment appraise oneself on how well
you think you are doing.
Likely positive leniency
People generally acknowledge their weaknesses when
not tied to monetary considerations
Can help diagnose training needs
2. Peer Assessment evaluate co-workers
a. Peer Nomination nominate specified # of top
coworkers
b. Peer Ratings rate co-workers on various dimensions
c. Peer Rankings rank co-workers from top to bottom
 Performance Appraisal Follow-Up

Post-appraisal interview with subordinate to

discuss evaluation
Identify both strengths and weaknesses
Set goals for improvement (motivate)
Factors affecting motivation of appraisal
Does employee agree with assessment?
Does employee approve and accept the goals?
 Performance Appraisal Acceptance

Seven things that contribute to employee acceptance of

their evaluations as fair
1. Was input solicited from employee and used in appraisal?
2. Was there 2-way communication in feedback interview?
3. Was there opportunity for employee to challenge
evaluation?
4. Was rater well-acquainted with employees work?
5. Are performance standards applied uniformly?
6. Are ratings based on actual performance (not
personality)?
7. Are salary & promotion decisions based on ratings?
 Top 10 Military Performance
Appraisal Comments
1. Got a full 6-pack, but lacks the plastic thingy to hold it all
together
2. This man is depriving a village somewhere of an idiot
3. He has the wisdom of youth and the energy of old age
4. Wheel is turning but the hamster is dead
5. Was left on the tilt-whirl too long as a baby
6. If he were any more stupid, hed have to be watered twice a
week
7. She sets low personal standards and consistently fails to
achieve them
8. So dense, light bends around him
9. Got into the gene pool while the lifeguard wasnt watching
10. A prime candidate for natural de-selection