Lesson 6

Evaluating Employee Performance

 Introduction
Have you ever felt
that your teacher has
given you a grade you
do not deserve?
Process of Performance Appraisal
Step 1: Determine the Reason for
Evaluating Employee Performance
1. Providing Employee Training and Feedback- feedback
about what employees are doing right and wrong.
2. Determining Salary Increases- to provide a fair basis
on which to determine an employee’s salary increase.
3. Making Promotion Decisions- to determine which
employees will be promoted.
Step 1: Determine the Reason for
Evaluating Employee Performance
4. Making Termination Decisions- when performance
management techniques are not successful, the result of a
performance review might suggest that the best course of
action is to terminate the employee.
5. 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.
Step 2: Identifying Environmental
and Cultural Limitations
• Identifying the environmental and cultural factors that could
affect the system.
 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 cohesiveness.
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.
 a branch manager might observe only 30% of a
teller’s work behavior; the rest is observed by
customers, peers, and support staff in other parts of the
bank.
Step 3: Determine Who Will
Evaluate Performance
• Consequently, 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 are 360-degree feedback and multiple-
source feedback.
 about 34% of large US organizations use some form
of multiple-source feedback (Mercer Consulting,
2013).
Step 3: Determine Who Will
Evaluate Performance
• Sources of relevant
information about employee
performance include
supervisors, peers,
subordinates, customers, and
self-appraisal
Step 3: Determine Who Will
Evaluate Performance
• Supervisors
 by far, the most common source of performance
appraisal is the supervisor rating.
 a 2013 survey by the Society for Human Resource
Management (SHRM) found that in 74% of
organizations rely on supervisor ratings.
 though supervisors may not see every minute of an
employee’s behavior, they do see the end result.
 Step 3: Determine Who Will Evaluate
Performance
• Peers
 whereas supervisors see the results of an employee’s efforts,
peers often see the actual behavior.
 peer ratings usually come from employees who work directly
with an employee.
 research has shown that peer ratings are fairly reliable only
when the peers who make the ratings are similar to and well-
acquainted with the employees being rated (Mumford, 1983)
 Research suggests that certain employees are more lenient in
their peer ratings than are other employees
Saavedra and Kwun (1993) found that high performers
evaluate their peers more strictly than do low performers.
Step 3: Determine Who Will
Evaluate Performance
• Subordinates
 subordinate feedback (also called upward feedback) is an
important component of 360-degree feedback, as subordinates
can provide a very different view about supervisor’s behavior.
 subordinate ratings 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.
Step 3: Determine Who Will Evaluate
Performance
• Customers
 customers provide feedback
on employee performance
by filing complaints or
complimenting a manager
about one of her employees.
 formally, customers
provide feedback by
completing evaluation cards.
Step 4: Select the Best Appraisal
Methods to Accomplish Your Goals
• Prior to developing the actual performance appraisal instrument,
two important decisions must be made

 Decision 1: Focus on the appraisal dimensions. The appraisal

dimensions can focus on traits, competencies, task types, or
goals.

 Decision 2: Should Dimensions Be Weighted?

• Whether the dimensions should be weighted so that some
are more important than others.
Decision 1: Focus of the Appraisal
Dimensions
Competency Focus Task Focus
Report-writing skills Crime prevention
Driving skills Arrest Procedure
Public-speaking skills Court Testimony
Knowledge of the law Use of vehicle
Decision-making skills Radio procedures
Physical ability skills Following rules and regulations
Decision 1: Focus of the Appraisal
Dimensions
Goal Focus Trait Focus
Prevent crimes from occurring Honesty
Arrest /cite law breakers Courtesy
Finish shift without personal injury Responsibility
Have arrest and citations stand-up in Dependability
court
Minimize citizen complaints Assertiveness
Ensure public safety Cooperation
Use of Employee Comparisons,
Objective Measures, or Ratings
• Once the types of dimensions have been considered, the
next decision is whether to:
1. Evaluate performance by comparing employees with
one another (ranking),
2. Using objective measures such as attendance and
number of units sold or
3. Having the supervisor rate how well the employee
has performed on each of the dimensions.
Employee Comparisons: Ranking
Method
• To reduce leniency, employees can be compared with
one another instead of being rated individually on a
scale. The easiest and most common of these methods
is the rank order.
 employees are ranked in order by their judged
performance for each relevant dimension.
 Dimensions
Employee Knowledge Dependability Quality Total

Barrino 1 1 1 1.00
Underwood 2 3 2 2.33
Hicks 3 2 3 2.67
Sparks 4 5 4 4.33
Cook 5 4 5 4.67
 Employee Comparisons: Paired
Comparisons
• This method involves
comparing each possible
pair of employees and
choosing which one of
each pair is the better
employee.
 Employee Comparisons: Forced
Distribution
• A predetermined percentage of employees are placed in
each of the five categories.
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.
 Ratings of Performance: Graphic
Rating Scale
Initiative Poor 1 2 3 4 5 Excellent
Cooperation Poor 1 2 3 4 5 Excellent
Dependability Poor 1 2 3 4 5 Excellent
Attendance Poor 1 2 3 4 5 Excellent
Step 5: Train Raters
• Frame-of-reference training provide raters with job-
related information, practice in rating, and examples of
ratings made by experts as well as the rationale behind
those expert ratings
 It increases rater accuracy and reduced rater errors
 The better that employees understand the
performance appraisal system, the greater is their
satisfaction with the system
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.
 Critical incidents are examples of excellent and poor
employee performance.
 Critical incidents should be communicated to the
employee at the time they occur
 Step 6: Observe and Document
Performance
• The importance of documentation:
1. Documentation forces a supervisor to focus on
employee behaviors rather than traits
2. Documentation helps supervisors recall behaviors
when they are evaluating performance
3. Documentation provides examples to use when
reviewing performance ratings with employees
4. Documentation helps an organization defend against
legal actions taken against it by an employee.
 Step 6: Observe and Document
Performance
• Common sources of error when not documenting
performance
 First impressions (primacy effect)
 Recent behaviors (recency effect)
 Unusual or extreme behaviors
 Behavior consistent with the supervisor’s opinion
 Step 7: Evaluate Performance
• Obtaining and Reviewing Objective Data
- a supervisor should first obtain and review the
objective data relevant to the employee’s behavior
• Reading Critical-Incident Logs
- reading these incidents should reduce errors of
primacy, recency, and attention to unusual information
Step 7: Evaluate Performance
• Completing the Rating Form
oOnce critical-incident logs have been read and
objective data reviewed, the supervisor is ready to
assign performance appraisal ratings.
oWhile making these ratings, the supervisor must be
careful not to make common rating errors involving
distribution, halo, proximity, and contrast
Distribution Errors
• 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.
• Central Tendency Error- results in a supervisor rating
every employee in the middle of the scale.
• Strictness Error- rates every employee at the low end of
the scale.
Halo Errors
• A halo error occurs 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.
Proximity Errors
• 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.
Contrast Errors
• The performance rating one person receives can be
influences by the performance of a previously evaluated
person.
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 strength and weaknesses so that further
training can be implemented
• Normally, in most organizations, a supervisor spends a
few minutes with employees each year to tell them
about the scores they receives during the most recent
evaluation period.
Step 8: Communicate Appraisal
Results to Employees
• Dealing with negative feedback
 Feedback sandwich- negative feedback is sandwiched
between positive feedback
Step 9: Terminate Employees
Legal Reasons for Terminating Employees
• Probationary Period
• Violation of Company Rules
 Rule against a particular behavior must actually exist
 If a rule exists, a company must prove that the
employee knew the rule
 Ability of the employer to prove that an employee
actually violated the rule.
 Rule has been equally enforced
Step 9: Terminate Employees
Legal Reasons for Terminating Employees
• Inability to Perform
 An 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.
 The organization must next demonstrate that there was a
documented failure to meet the standard. Such documentation
can include critical-incident logs and work samples
Step 9: Terminate Employees
Legal Reasons for Terminating Employees
• Reduction in Force (Layoff)
 Employees can be terminated if it is in the best
economic interests of an organization to do so.
Thank you and God
speed!