These are Resources/ Materials     Module Four: Managing and Appraising Employee Performance   Module Overview In the last module, you looked at training needs assessment and the processes organizations use to ensure their employees have the knowledge, skills, and abilities they will need

Subject:ManagementPrice: Bought3

Share With

These are Resources/ Materials

 

 

Module Four: Managing and Appraising Employee Performance

 

Module Overview

In the last module, you looked at training needs assessment and the processes organizations use to ensure their employees have the knowledge, skills, and abilities they will need. This module’s focus is a natural progression of these topics: performance management systems, or the methods employers use to evaluate employee performance. If you have worked full time, you have likely been through your company’s performance appraisal or performance evaluation process.

While evaluating employee performance seems to be a straightforward process, there are many tasks managers need to perform to ensure employees receive the feedback, support, and encouragement they need to succeed. Watch this video,  Performance Appraisals Gone Bad! , and make a list of the mistakes you see the manager make when conducting the appraisal meeting. Be sure to keep in mind the concepts you have covered in previous modules. 

 - The captioned version of this video may be accessed in the following link:   OL-211: Performance Appraisal Gone Bad!! (CC)

Setting Performance Objectives: Long before the performance evaluation form is completed, the manager and employee set performance objectives which become the basis for the performance appraisal. How the objectives relate to the performance evaluation varies, depending on the type of evaluation used. The evaluation process may be directly based on the objectives, as it supposedly was in the video. While it was not stated, the company portrayed may have been using management by objectives (MBO), which is described in this module’s textbook reading. Other types of appraisals are based more on the employee’s behavior or traits, giving the performance objectives a more indirect influence. No matter what form the performance evaluation takes, the performance objectives need to be clearly stated at the start of the appraisal period. Did you notice in the video that the employee’s performance objectives did not follow the SMART approach, resulting in confusion and frustration for the employee?

During the Performance Period: The performance period, the time frame during which the employee’s performance is evaluated, is most often 12 months. Employees new in their roles may be evaluated after 30 or 90 days, and some organizations have semi-annual appraisals. As the term implies, performance management is an active, ongoing process. Managers need to give regular informal feedback, including both praise and correction, throughout the appraisal period. Done well, this helps the employee succeed and ensures that the content of the written performance appraisal never comes as a surprise to the employee. Do you recall in the video that the employee directly asked the manager why he did not give her feedback immediately after she fell short of her objectives? He also neglected to praise her after the director meeting, so she did not know to repeat her behavior.

Preparing the Performance Appraisal: As you will see in this module’s resources, there are many types of performance appraisals. When it is time to complete the performance evaluation, many people may be involved in giving feedback besides the employee’s manager. Others to give input may include the employee and people they interact with such as peers, customers, and subordinates, if the employee manages other people. These individuals need to be trained and given ample time to complete the appraisal form. The employee’s manager then reviews whatever feedback was solicited and completes the evaluation form. Did you catch in the video that the manager never located the self-appraisal the employee had sent weeks before their meeting? In addition, the meeting logistics were not handled properly. The time frame of the session was not clear, and the room had not been reserved. While the film presented these blunders lightheartedly, oversights such as these send a powerful message to employees that the manager does not value the appraisal process. It essential that managers see the benefit of effective performance evaluation and convey this understanding through all of their actions.

Conducting the Performance Appraisal Meeting: Many employees dread receiving their performance appraisal. Based on the video, it is easy to see why. With effective communication during the performance period and effective planning on the manager’s part, however, the performance evaluation session should be a positive experience for both parties most of the time. In the video, did you observe the manager’s lack of consideration toward the employee? It was clear that she did not feel valued as he took a personal phone call, looked at his watch while she was talking, dismissed her concerns repeatedly, ignored her questions and requests for clarification, talked over her, contradicted the established process, and then asked her to type up her finalized performance appraisal.

For some tips and a demonstration of how to conduct a successful performance appraisal meeting, view this video on  How to Do Effective Performance Appraisals . In this video, you are able to see some key points illustrated, such as how to open and close the session, how to ask for and respond to the employee’s input, ways to give praise, and how to give negative feedback. Notice that the focus of the negative situation is on how to correct it. There is no hint of corrective action. When an employee’s performance is not meeting standards, it needs to be addressed during the performance period. Module Six covers the employee relations aspect of HRM, including correcting employee performance problems.

 - The captioned version of this video may be accessed in the following link:  OL-211: How to do Effective Performance Appraisals (CC)

It takes training for managers to become skilled at performance appraisals. Untrained evaluators can fall prey to a host of rating errors, which can be avoided with awareness. Here is a summary of the most common rating errors, any of which can be detrimental to a performance management process:

Error	Description
Halo Effect	When the rater allows one positive aspect of an employee’s performance to positively influence the rating of all other aspects of their performance (Armstrong, 2012)
Horns Effect, also known as the Pitchfork Effect	The opposite of the halo effect; when one negative aspect of the appraisal negatively colors the entire evaluation (Armstrong, 2012)
Recency	When the rater uses only recent behavior as the basis for the entire appraisal, often because they did not document and do not remember earlier performance (Armstrong, 2012)
Central Tendency	The tendency for a rater to cluster everyone in the middle performance categories, avoiding extreme ratings of either good or bad (Armstrong, 2012)
Bias	When the rater allows a personal bias about something (eg., race, national origin, sex, religion, age, veterans’ status, disability, hair color, weight, height, intelligence) to influence the rating (Armstrong, 2012)
Favoritism	The tendency to rate a favorite person or a popular employee highly (Armstrong, 2012)
Sunflower Effect, also known as Leniency	When a rater evaluates everyone as high, either to look good or to be able to give higher raises (Armstrong, 2012)
Severity	The opposite of leniency; when the rater evaluates everyone harshly, believing that no one should score the highest rating (College of William and Mary, n.d.)
Length of Service Bias	When the evaluator gives credit for longevity or penalizes an employee for being new (College of William and Mary, n.d.)
Holding a Grudge	The tendency to base an appraisal on an employee’s poor behavior not relevant to the appraisal or outside the appraisal period (Armstrong, 2012)
Guilt by Association	When the rater judges an employee by the company they keep rather than their performance (Armstrong, 2012)

 References

Armstrong, S. (2012, April 11). 10 rating errors to avoid in performance reviews. Retrieved from http://hr.blr.com/HR-news/Performance-Termination/Performance-Employee-Appraisal/zn-10-Rating-Errors-Avoid-in-Performance-Reviews#

College of William and Mary. (n.d.). Common rating errors. Retrieved from http://www.wm.edu/offices/hr/documents/compensation-perf-

 

 

Learning Objectives

By the end of this module, you will be able to:

· Describe HRM’s role in the performance management process and how HRM can ensure the process aligns with an organization’s strategic plan

· Identify and describe a variety of performance rating scales that can be used in organizations that include graphical scales, letter scales, and numeric scales

· Compare and contrast the three types of performance evaluation methods and how to identify best suited appraisals based on employee job duties

Reading and Resources

Textbook:  Managing Human Resources, Section 8.1: Performance Management Systems through Section 8.1a; Section 8.2a: What Are the Performance Standards?; Section 8.2c: Who Should Appraise an Employee’s Performance? and Section 8.2d: Putting It All Together: 360-Degree Evaluations; and Section 8.3: Performance Evaluation Methods

 

Click the Managing Human Resources e-text link in this module to access this resource.

Article: Performance Management: Which performance rating scale is best, and what should an employer consider in adopting a performance rating scale?

This brief SHRM article describes the differences in and uses of the rating scales employers use.

 

Optional Resources

Peer Feedback Boosts Employee Performance This article discusses the value of peer feedback as an essential part of performance evaluation.

Peer Feedback Boosts Employee Performance

Here is the article: Employee performance improves when organizations foster a culture of peer feedback and capture how employees add value to others work.

Serena has 10 direct reports to evaluate, and she is finding it difficult. Her team faces ever-faster project cycles and the people best able to adapt at speed — the employees she values most and wants to incentivize — aren’t scoring well on the company’s ratings for specific job goals and behaviors. Serena’s problem is common in today’s complex business environment, where the demands on employees evolve rapidly and employees add value to each other’s work.

Some organizations might consider scrapping performance ratings altogether in  today’s changing workplace , but that would likely undermine employee performance. Instead, companies can bolster performance management in three ways: Provide ongoing, not episodic, performance feedback; make performance reviews forward-looking, not backward-looking; and include peer, not just manager, feedback in evaluating performance.

“ High-quality peer input has become an essential part of effective performance feedback ”

Of those three tactics, research by Gartner shows peer feedback can have a particularly strong impact, boosting employee performance by as much as 14%.

“As work becomes more interdependent and managers have less direct visibility into the day-to-day of their teams, high-quality peer input has become an essential part of effective performance feedback,” says Jessica Knight, research director at Gartner.

Evaluate network relationships

To improve the quality and accuracy of peer feedback, managers should identify sources of feedback based on who has knowledge of an employee’s work, rather than the employee’s formal relationships. The possible sources of 360-degree feedback include these peers:

· Enablers who have the same roles/skills as the employee and work on the same projects as the employee

· Coaches who have similar roles/skills as the employee but work on different projects

· Collaborators who make different contributions to the same projects as the employee

· Mentors who have different roles/skills from the employee and work on different projects

One global professional services company asks its employees to recognize the contribution colleagues have made to their success through a point system, rather than evaluating their cognitive behaviors. For example, of 10 points, an employee might assign 1 point to a peer who provided encouragement during a challenging project but 4 points to a colleague who introduced a solid prospect based on their understanding of the business.

“ It is important to set the tone for open and honest conversations ”

A material science company asks employees to rank peers based on the impact and effectiveness of their contributions, and whether the peer’s behavior aligns with enterprise values when make a contribution. Employees make qualitative comments to justify their rankings. For example, one peer might get a 1 for streamlining an existing process or cutting costs, but a 3 for pioneering a new approach to solving a strategic challenge.

Foster a culture of feedback

There are do’s and don’ts for an effective peer-to-peer feedback program that ensure integrity in the process. Employees shouldn’t review peers they don’t know well enough to evaluate, should only focus on their own (not secondhand) experience of peers, should never focus on personal traits that aren’t related to work and should never share their comments with colleagues.

To review peers effectively, employees should:

· Remain objective and describe behaviors in terms of their impact on the team, project or organization.

· Be as specific as possible about actions and behaviors the peer displayed.

· Suggest ways a peer can improve on a development area or build on a strength.

· Provide both positive feedback and developmental feedback.

· Highlight traits or tasks they see as a peer to which manager may not be exposed.

Employees initially may be uncomfortable providing feedback, especially to those who are senior to them in the organization. It is important to set the tone for open and honest conversations, maybe even train employees to give high-quality feedback. One global food company clearly sets objectives for the peer reviews in general and specific guidelines for upward reviews. It urges employees to focus on what is already working, not just what needs to be improved, to give concrete examples, focus on the future not the past, and avoid being judgmental.

Ultimately, the aim is to frame all observations in a constructive way that helps engage others and encourage the network of peers to listen to each other’s ideas and solve problems together in a way that drives continuous performance improvement

 

This article discusses the value of peer feedback as an essential part of performance evaluation.

Performance Appraisal Self Assessment As a SHRM member, you may find this self assessment of benefit.

 

· Managing Human Resources, Chapter 8

External Learning Tool

Click to access Cengage. Read:

· Section 8.1: Performance Management Systems through Section 8.1a

· Section 8.2a: What Are the Performance Standards?

· Section 8.2c: Who Should Appraise an Employee’s Performance?

· Section 8.2d: Putting It All Together: 360-Degree Evaluations

· Section 8.3: Performance Evaluation Methods

8.1Performance Management Systems

LO 1

We have discussed some of the ways that you as a manager can acquire top-notch employees and train and develop them. But how do you know if your efforts are really paying off in terms of what the employees are contributing once they are on the job?

Performance management  is the process of creating a work environment in which people can perform to the best of their abilities in order to meet a company’s goals. It is an entire work system that flows from a company’s goals. Figure 8.1 shows the elements of a performance management process.

Apply What You Learned: Steps in the Performance Management Process

Complete the following activity.

Copyright © Cengage Learning. All Rights Reserved.

Performance reviews  are the result of a process by which a manager evaluates an employee’s performance relative to the requirements of his or her job, the goals set with his or her manager, and then uses the information to show the person where improvements can be made and how. The reviews are a tool organizations can use to develop employees. Performance reviews are also referred to as performance appraisals and performance evaluations.

Typically performance reviews are delivered annually, biannually, or sometimes on a quarterly basis. However, firms are finding that more frequent short reviews that provide employees with feedback regularly are more effective. At RoundPegg, a hiring startup that develops social applications, all employees have quarterly reviews, or “feedback sessions,” that last just 20 minutes. “My job here isn’t just to make sure everyone is crossing their T’s and dotting their I’s,” says Brent Daily, RoundPegg’s cofounder and chief operating officer. “My job is to remove the obstacles they face and allow them to do what they do best.”

In Figure 8.1, the performance review is just part of the performance management process. Aligning the goals of employees with those of the firm, providing workers with continual on-the-job feedback, and encouraging and rewarding them for a job done well are critical, too.

Steps in the Performance Management Process

Goals set to align with higher level goals

HR decision making (e.g., pay, promotion, etc.)

Performance appraised by manager

Behavioral expectations and standards set and then aligned with employee and organizational goals

Formal review session conducted

On-going performance feedback provided during cycle

 

You might compare a performance review to taking a test in college. Do tests motivate you? Do they make you want to truly excel, or do you just want to get through them? Now compare your test-taking experience with an experience in which your instructor talked to you about your career plans, complimented you on your performance, and offered you suggestions for improving it. That probably motivated you more.

We hope you can see the analogy we are making. Employers have to look at how well you are doing on the job, just as your university has to test you to be sure you graduate with the qualifications people in society expect. But your performance in either scenario consists of so much more than that. This is why organizations need to look at the performance management system as a whole, to motivate and foster the growth of employees so they can contribute the maximum value to the firm. Reviews are simply a logical extension of the day-to-day performance management process, not the end goal.

 

8.1aThe Purposes of Performance Management

Figure 8.2 shows the other two most common purposes of performance management programs—developmental and administrative. Next, let’s look at each purpose.

Figure 8.2Purposes of a Performance Review

 

Developmental Purposes

A performance management system gives managers a concrete framework they can use to gather information about the performance of employees, provide them with feedback, and discuss their goals and how they align with the organization’s goals. The goal is to build on a person’s strengths, eliminate potential weaknesses, and further his or her career while improving the performance of the organization as well. By taking a developmental approach to the performance management process, managers help employees understand that the feedback they are getting is designed to improve their future competencies and further their careers, and are not being conducted simply to judge them. Companies such as GE and Microsoft are among the organizations that have redesigned their performance management programs to focus more on ongoing employee feedback, support, development, and learning. The idea is to shift the role of manager from that of “judge” to one of “coach.”

 

Administrative Purposes

Performance management programs provide input that can be used for the entire range of HRM activities, such as determining the relative worth of jobs, recruiting criteria, validating selection tests, promotions, transfers, layoffs, and pay decisions. “Pay-for-performance” systems—basing employees’ pay on their achievements—is found in all types of organizations. Studies have shown employees who earn performance-based pay are more satisfied. Performance management programs also provide input for talent reviews: strategic meetings to determine if a company has the human resources it needs to compete in the future. Performance data can also be used for HR planning.

 

Yet another purpose of having a performance management system is to document HRM actions that can result in legal action. Equal employment opportunity and affirmative action directives require employers to maintain accurate, objective employee performance records. Without them, firms will be unable to defend themselves against possible discrimination charges when it comes to promotions, salaries, and terminations. Finally, the success of the entire HR program depends on knowing how the performance of employees compares with the goals established for them.

8.2aWhat Are the Performance Standards?

Performance standards should be based on job-related requirements derived from a job analysis and reflected in an employee’s job description and job specifications. Establishing SMART goals can be very helpful for this purpose.  SMART goals  are goals that are specific, measurable, attainable, realistic, and time-based—hence, the abbreviation SMART. Realistic and specific performance standards that are actually attainable in a certain amount of time (given the firm’s current resources and employee’s abilities), measurable, and written down communicate precise information to employees. For example, “the ability and willingness to handle customer orders” is not as good a performance standard as “all customer orders will be filled in 4 hours with a 98 percent accuracy rate in 2019.” When the standard is expressed in specific, measurable terms, comparing an employee’s performance against it results in more accurate feedback. The ultimate goal is to create effective goals that will work for your employees, says Gary Foster, customized training program manager at Minnesota’s Ridgewater College. “It’s not an easy task; it’s not a short task, but it can be done.”

SMART goals can help improve the performance of employees as well as remove the vagueness and subjectivity of performance reviews.

 

 

marekuliasz/Shutterstock

As Figure 8.4 shows, there are four basic elements that must be considered when establishing performance standards: strategic relevance, criterion deficiency, criterion contamination, and reliability.

Figure 8.4Establishing Performance Standards

 

 

Strategic Relevance

Strategic relevance refers to the extent to which the performance standards relate to the strategic objectives of the organization. For example, if an organization has established a standard that “95 percent of all customer complaints are to be resolved in one day,” then it is relevant for the firm’s customer service representatives to be held to this standard when evaluated. Companies such as 3M and Buckman Laboratories have strategic objectives to the effect that a certain percent of their sales are to be generated from recently developed products. These objectives are then translated into performance standards for their employees. General Motors and Whirlpool’s strategic objectives include cost, quality, and speed, and the two companies have developed metrics to identify and compare their performance around the world on these measures. A strategy-driven review process also provides the documentation HR managers require to justify training expenses needed to close any gaps between employees’ current skills and those they will need in the future to execute the firm’s strategy. Moreover, because they provide evidence of a person’s performance, review metrics based on a firm’s strategy are more defensible in court.

 

Criterion Deficiency

The performance standards should capture the entire range of an employee’s performance. When they focus on a single criterion (such as sales revenues) to the exclusion of other important but less quantifiable performance dimensions (such as customer service), then the performance management system is said to suffer from criterion deficiency.

Criterion Contamination

Just as performance criteria can be deficient, they can also be contaminated. There are factors outside an employee’s control that can influence his or her performance. A comparison of performance of production workers, for example, should not be contaminated by the fact that some work with newer machines than others do. A comparison of the performance of traveling salespeople should not be contaminated by the fact that territories differ in terms of their sales potential.

Reliability

As we discussed in Chapter 6, reliability refers to the stability or consistency of a standard or the extent to which individuals tend to maintain a certain level of performance over time. Reliability can be measured by correlating two sets of ratings made by a single rater or by two different raters. For example, two managers would rate the same individual. Their ratings would then be compared to determine interrater reliability.

To make sure managers are rating employees consistently, some companies use a process called  calibration . During calibration meetings, a group of supervisors, led by their managers and facilitated by an HR professional, discuss the performance of individual employees to ensure all managers apply similar standards to all of the firm’s employees. The supervisors begin the process by rating employees whose performances are especially good or especially poor. They then attempt to rate employees who are more in the middle and try to achieve a consensus on their performance. Initially, the ratings are likely to vary considerably simply because some managers are hard raters and others are not. Over subsequent review periods and calibration meetings, however, the ratings should begin to converge, or become more similar.

As we will discuss, calibration meetings can be particularly helpful when it comes to training new managers to appraise employees. The meetings can also be very useful after a merger or acquisition—especially one that is global. Why? Because differences in the corporate cultures and performance standards of the formerly separate companies can cause the same employees to be rated quite differently. When Lawson Software, a Minnesota-headquartered firm, grew from 1,400 employees in 3 countries to 4,000 employees in 30 countries, it successfully used calibration to be sure its managers across the globe were assessing employees accurately.

Fairness and Acceptability

One of the main concerns employees have about performance management systems in general and reviews is fairness. Organizational politics, a firm’s culture, the orientation of its managers, history, and current competitive conditions can all affect how managers view how well their employees are doing on the job as well as rate them. Sometimes managers inflate reviews because they want to obtain higher salaries for their employees or because higher ratings for their subordinates make them look good as supervisors.

 

Even when reviews are supposed to be confidential, employees often have a keen sense about whether the process is fair or not, or at least they think they do. Employees who believe the system is unfair are likely to consider the process a waste of time or feel frustrated and cynical. As we discussed earlier in the section on developing a management performance system, if employees are allowed input as to what constitutes a good performance and how the performance management system operates, they are more likely to believe it’s fair, and the program is more likely to be successful.

Acceptability relates to how hard or difficult it is to administer and use the performance management system. If using it is time consuming or difficult, or if it’s hard to see how it’s really helping the organization, the system is likely to fail.

8.2cSources of Performance Review Information

Given the complexity of today’s jobs, it’s unrealistic to presume that one person can fully observe and evaluate an employee’s performance. At IBM, employees are regularly reviewed by a broad cross section of the company’s leaders, not just their immediate bosses. As Figure 8.5 shows, the raters can include supervisors, peers, team members, employees themselves, their subordinates, customers, vendors, and suppliers.

Figure 8.5Alternative Sources of Reviews

 

Manager/Supervisor

The  manager and/or supervisor evaluation  has traditionally been used to evaluate the performance of employees. Supervisors are in the best position to perform this function, although it may not always be possible for them to do so. Managers with many subordinates often complain they don’t have time to fully observe the performance of each of them. The managers must then rely on the employees’ performance records. If reliable and valid measures are not available, the review is likely to be less than accurate as a result. (Recall our earlier discussion of criterion deficiency and criterion contamination.) In addition, research has shown that the ratings managers give employees they have known for less than 1 year are less reliable, which can be a drawback of relying solely on information from managers.

The Employee

In many firms, employees are asked to provide feedback on self-evaluation forms. A  self-evaluation  can increase an employee’s involvement in the review process and get the employee thinking about his or her strengths and weaknesses. In other words, self-evaluations serve as a catalyst for discussion. The employee and his or her manager then discuss the employee’s job performance and agree on a final evaluation.

It’s not uncommon for employees to present themselves highly favorably in self-evaluations or believe they will give them more influence over their performance ratings. If that expectation is not met, an employee can become frustrated. For this reason, self-evaluations are often best used for developmental purposes rather than for administrative decisions.

Subordinates

Subordinate evaluations  have been used by both large and small organizations to give managers feedback on how their subordinates view them. Subordinates are in a good position to provide feedback to their managers because they are in frequent contact with their superiors and occupy a unique position from which to observe many performance-related behaviors, such as their leadership ability, ability to delegate, employee supportiveness, and so on. The information gathered is often used for developmental rather than administrative purposes. Evidence suggests that when managers heed the advice of their subordinates, their own performance can improve substantially. To avoid any problems with retaliation, subordinate evaluations should be submitted anonymously and the results combined in a single report. The manager’s supervisor then uses the information as part of the person’s final evaluation.

Peers

Individuals of equal rank who work together are increasingly asked to evaluate each other using a  peer evaluation . With peer evaluations, coworkers complete a review on the employee. The information is then usually combined and given to the employee’s supervisor for use in the person’s final evaluation. One advantage of peer evaluations is that they can sometimes provide more accurate and valid information about employees. Supervisors often see employees putting their best foot forward. Those who work together on a regular basis may see a more realistic picture. Peers can readily identify the leadership and interpersonal skills of their coworkers along with their other strengths and weaknesses. For example, a superior asked to rate a patrol officer on a dimension such as “dealing with the public” might not have had much opportunity to observe it. Fellow officers, on the other hand, likely would have.

For employees who have trouble confronting their coworkers about problems, the reviews provide a forum in which to address issues and resolve conflicts. They also provide an opportunity to hand out praise. However, peer evaluations alone should not be used to make administrative decisions related to salaries, bonuses, promotions, and other major decisions about an employee. They should also be kept confidential, so interpersonal rivalries or hurt feelings don’t result among coworkers. Instead of listing individual comments and ratings from an employee’s peers, the ratings should be tallied to arrive at a composite score, and the comments summarized by the worker’s supervisor.

 

Team Members

An extension of the peer evaluation is the  team evaluation . In a team setting, it may be nearly impossible to distinguish one individual’s contribution. To address this issue, organizations such as Google, Boeing, and Apple have used team evaluations to evaluate the performance of their teams as a whole. These companies believe that team evaluations can help break down barriers between individual employees and encourage a joint effort on their part.

Frequently, the system is complemented by the use of team incentives or group variable pay (see Chapters 10 and 16). When Apple developed the iOS 10 (operating system), team rewards were used. No one member of the 600-person team could receive an exceptional performance review unless the entire team did.

Customers

Customer evaluations  are another source of performance review information. FedEx, Best Buy, and Isuzu are among the companies that have utilized external customers to provide feedback for their employees’ evaluations. Other companies survey their vendors and suppliers as part of the review process. By including the firm’s business partners in the performance reviews, managers hope to produce more objective reviews, more effective employees, more satisfied customers, and a better business performance.

In contrast to external customers, internal customers include anyone inside the organization who depends on an employee’s work output. For example, managers who rely on the HR department for selecting and training employees would be candidates for conducting internal customer evaluations of employees in the department or the department as a whole. For both developmental and administrative purposes, internal customers can provide extremely useful feedback about the value added by an employee or team of employees.

8.2dPutting It All Together: 360-Degree Evaluations

Companies such as Intel, Morgan Stanley, and Disney are among the many organizations that have used a multiple-rater approach—or  360-degree evaluation —that combines various sources of performance review information. Jobs are multifaceted, and different people see different things. As the name implies, 360-degree feedback is intended to provide employees with as accurate a view of their performance as possible by getting input from all angles: supervisors, peers, subordinates, customers, and the like. The information is then compiled into a single document, which is synthesized by the employee’s manager as part of the overall evaluation. Figure 8.6 shows a list of the advantages and disadvantages of a 360-degree review.

Figure 8.6

 

Pros and Cons of 360-Degree Reviews

PROS
•	The system is more comprehensive because feedback is gathered from multiple perspectives.
•	It may lessen bias and prejudice since feedback comes from more people, not one individual.
•	The feedback from peers and others may improve an employees’ self-development.
CONS
•	The system is complex in combining all the responses.
•	The feedback can be intimidating and cause resentment if employees feel the respondents have “ganged up” on them.
•	There may be conflicting opinions, though they may all be accurate from the respective standpoints.
•	Raters must undergo some training.
•	Employees may collude or “game” the system by giving invalid evaluations to one another.
•	Raters may not feel accountable if their reviews are anonymous.

 

Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, “Has 360-Degree Feedback Gone Amok?” Academy of Management Executive 12, no. 2 (May 1998): 86–94; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, “Does 360-Degree Feedback Negatively Affect Company Performance?” HRMagazine 47, no. 6 (June 2002): 54–59; Maury Peiperl, “Getting 360-Degree Feedback Right,” Harvard Business Review 79, no. 1 (January 2001): 142–147; Joyce E. Bono and Amy E. Colbert, “Understanding Responses to Multi-Source Feedback: The Role of Core Self-Evaluations,” Personnel Psychology 58, no. 1 (Spring 2005): 171–205.

 

 

 

8.3Performance Review Methods

LO 3

Now that you understand more about performance management, the question is, How do you go about measuring, or appraising, it? Performance review methods can be broadly classified as measuring traits, behaviors, or results. Trait approaches based on people’s characteristics continue to be used despite their subjectivity. Behavioral approaches provide more action-oriented information to employees and may be best for development. The results-oriented approach has become more popular because it focuses on the measurable contributions that employees make to the organization.

8.3aTrait Methods

Trait approaches are designed to measure the extent to which an employee possesses certain characteristics—such as dependability, reactivity, initiative, and leadership—that are viewed as important for the job and the organization in general. Trait methods became popular because they are easy to develop. However, if not designed carefully on the basis of job analysis, trait evaluations can be notoriously biased and subjective.

Graphic Rating Scales

In the  graphic rating scale method , each trait or characteristic to be rated is represented by a scale on which a rater indicates the degree to which an employee possesses that trait or characteristic. An example of this type of scale is shown in Highlights in HRM 2. In HRM 2, the dimensions are defined briefly, and some attempt is made to define the points on the scale. Defining them precisely helps reduce subjectivity.

Highlights in HRM 2

A Graphic Rating Scale with Comments

 

 

Mixed-Standard Scales

Rather than evaluating traits according to a single scale, with a  mixed-standard scale method , the rater is given three specific randomly sequenced descriptions of each trait: superior, average, and inferior. As Highlights in HRM 3 shows, supervisors evaluate employees by indicating whether their performance is better than, equal to, or worse than the standard for each behavior.

Highlights in HRM 3

 

Example of a Mixed-Standard Scale

DIRECTIONS: Indicate whether the individual’s performance is above (1), equal to (0), or lower than (2) each of the following standards.

1.  Employee uses good judgment when addressing problems and provides workable alternatives; however, at times does not take actions to prevent problems. (medium PROBLEM-SOLVING)

2.  Employee lacks supervisory skills; frequently handles employees poorly and is at times argumentative. (low LEADERSHIP)

3.  Employee is extremely cooperative; can be expected to take the lead in developing cooperation among employees; completes job tasks with a positive attitude. (high COOPERATION)

4.  Employee has effective supervision skills; encourages productivity, quality, and employee development. (medium LEADERSHIP)

5.  Employee normally displays an argumentative or defensive attitude toward fellow employees and job assignments. (low COOPERATION)

6.  Employee is generally agreeable but becomes argumentative at times when given job assignments; cooperates with other employees as expected. (medium COOPERATION)

7.  Employee is not good at solving problems; uses poor judgment and does not anticipate potential difficulties. (low PROBLEM-SOLVING)

8.  Employee anticipates potential problems and provides creative, proactive alternative solutions; has good attention to follow-up. (high PROBLEM-SOLVING)

9.  Employee displays skilled direction, effectively coordinates unit activities, is generally a dynamic leader, and motivates employees to high performance. (high LEADERSHIP)

Forced-Choice Method

The  forced-choice method  requires the rater to choose from statements, often in pairs, that appear equally favorable or equally unfavorable but are designed to distinguish between successful and unsuccessful performance. For example, forced-choice pairs might include the following:

1.	(a) Works hard	(b) Works quickly
2.	(a) Shows initiative	(b) Is responsive to customers
3.	(a) Work is reliable	(b) Performance is good

The rater then selects one statement from the pair without knowing which statement correctly describes successful job behavior. Because it’s not immediately clear which response results in a higher rating, less bias results.

Essay Method

 

The  essay method  requires the rater to write a description of the employee’s performance and make recommendations for his or her development. Often the method is combined with other rating methods because it provides additional descriptive information about an employee’s performance that can’t be described with a rating scale. Essays also provide an excellent opportunity for supervisors to point out the unique characteristics of employees, including their promotability, special talents, skills, strengths, and weaknesses. A limitation of the essay method is that it can be subjective.

8.3bBehavioral Methods

As you have learned, trait-oriented performance reviews can be vague and subjective. In contrast, behavioral methods specifically describe which actions should (were or were not) be exhibited on the job. Let’s look at some behavioral methods.

Critical Incident Method

Recall from Chapter 4 that a critical incident occurs when employee behavior results in unusual success or failure. The manager keeps a log or diary for each employee throughout the review period and notes specific critical incidents related to how well they perform. The critical incident method can also help a manager counsel employees when they are having performance problems. It also increases the objectivity of the review by requiring the rater to use job performance criteria to justify the ratings.

Behavioral Checklist Method

 

The behavioral checklist method requires the rater to check statements on a list that describe characteristics of the employee’s behavior. A checklist developed for salespeople who sell electronic products might include the following:

· Questions customers about their needs.

· Identifies products that meet customers’ needs.

· Keeps abreast of new developments in technology.

· Processes orders correctly.

Behaviorally Anchored Rating Scale

A  behaviorally anchored rating scale (BARS)  consists of a series of five to ten vertical scales—one for each important dimension of performance. These dimensions are “anchored” by behaviors identified through a critical incident job analysis. The critical incidents are placed along the scale and are assigned point values according to the opinions of experts. A BARS for a job dimension for firefighters is shown in the upper portion of Highlights in HRM 4.

Highlights in HRM 4

BARS and BOS Examples

Example of a BARS for Firefighters

FIREFIGHTING STRATEGY: Knowledge of Fire Characteristics. This area of performance assesses the ability of a firefighter to understand fire characteristics to develop the best strategy for fighting a fire.

HIGH	7	—Finds the fire when no one else can
	6	—Correctly assesses the best point of entry for fighting fire
	5	—Uses the type of smoke as indicator of type of fire
AVERAGE	4	—Understands basic hydraulics
	3	—Cannot tell the type of fire by observing the color of flame
	2	—Cannot identify the location of the fire
LOW	1	—Will not change the firefighting strategy in spite of flashbacks and other signs that accelerants are present

Source: Adapted from Landy, Jacobs, and Associates. Reprinted with permission.

Sample Items from Behavior Observation Scales

For each behavior observed, use the following scale:

5 represents almost always	95–100% of the time
4 represents frequently	85–94% of the time
3 represents sometimes	75–84% of the time
2 represents seldom	65–74% of the time
1 represents almost never	0–64% of the time
SALES PRODUCTIVITY	NEVER				ALWAYS
1.	Reviews individual productivity results with manager	1	2	3	4	5
2.	Suggests to peers ways of building sales	1	2	3	4	5
3.	Uncovers specific needs for each contact	1	2	3	4	5
4.	Keeps account plans updated	1	2	3	4	5
5.	Follows up on customer leads	1	2	3	4	5

A BARS is typically developed by a committee that includes both subordinates and managers. Employee participation can lead to greater acceptance of the performance review process and of the performance measures that it uses. The procedures followed in developing a BARS also result in scales that have a high degree of content validity.

Behavior Observation Scale

A  behavior observation scale (BOS)  is similar to a BARS in that they are both based on critical incidents. However, the lower portion of Highlights in HRM 4 shows that rather than asking the evaluator to choose the most representative behavioral anchor, a BOS is designed to measure how frequently each of the behaviors has been observed.

 

 

 

 

 

 

 

 

 

 

 

This is the work

4-1 Discussion: When to Use a 360-Degree Appraisal

 

Previous  Next 

While 360-degree appraisals have many advantages, they are not for every employer or every type of employee.

Read Sections 8.2c Who Should Appraise an Employee’s Performance? and 8.2d Putting It All Together: 360-Degree Evaluations in your textbook.

For your initial post, imagine you are an HR manager for a company that has a large call center. The call center manager wants your help initiating a 360-degree appraisal for his call center representatives. In your initial post, discuss whether you would encourage or discourage this and why. Describe what conditions would need to be in place in order for a 360-degree appraisal process to be effective with the call center staff.

Include at least one citation and reference in your initial post and respond to at least two of your classmates’ posts.