Chapter 11: Performance Appraisals Flashcards
Summarize what you learn from the textbook regarding the role of performance appraisals in compensation decisions (p.386).
• Used for a wide variety of decisions and organizations, guides the allocation of merit increases.
• Link between performance ratings and these outcomes is not always strong.
o Common to make a distinction between performance judgments and performance ratings.
• Performance ratings - the things we enter into an employee’s permanent record - are influenced by a host of factors besides the employee’s behavior observed by the raters. Such as, organizational values, competition among departments, differences in status between departments, economic conditions - these all influence the way raters rate employees.
• Performance ratings can be attributed to a general performance factor that is present across a wide variety of jobs and situations. Employees often voice frustration about the appraisal process:
o Goals not clearly defined.
o don’t know how their performance was evaluated.
o don’t believe their last performance review guided them on how to improve.
o don’t think the reviews could differentiate among good, average and poor performers.
o A good job is not recognized.
• employees unhappy with the appraisal process are less satisfied with the firm less committed and more likely to leave (turnover).
• Appraisals are subjective, good leader is key to making an employee believe that pay is linked to individual performance.
• Performance metrics - quantitative measures of job performance.
o Critics of subjective measures want performance measures (metrics) that are fair to employees and reflect value for the organization.
Describe the balanced scorecard approach (p.388)
• A corporate-wide, overall performance measure typically incorporates financial results, process improvements, customer service, and innovation.
• Is a way to look at what contributes value in an organization.
• Data suggests that implementation of a balanced scorecard can have positive impacts on the bottom line and on rating accuracy.
What are the two general categories of evaluation formats?
Ranking and rating
Ranking evaluation format
• Ranking format: a type of performance appraisal format that requires that the rater compare employees against each other to determine the relative ordering of the group on some performance measure.
o The straight ranking procedure is just that: employees are ranked relatively to each other.
o The alternation ranking recognizes that raters are better at ranking people extreme ends of the distribution. Raters are asked to indicate the best employee and the worst employee. Working at the two extremes permit a rater to get more practice prior to making the harder distinctions in the vast middle ground of employees.
o The paired comparison ranking method simplifies the ranking process by forcing raters to make judgments about discrete pairs of people. Each individual is compared separately with all others in the work group. The person who “wins” the most. Comparison is ranked top in the group and so on.
Rating evaluation format
• Rating format: a type of performance appraisal format that requires that raters evaluate employees on absolute measurement scales that indicate varying levels of performance.
o More popular of the ranking system. The various rating formats have two elements in common:
1. ranking formats require raters to evaluate employees on some absolute standard rather than relative to other employees.
2. each performance standard is measured on a scale whereby appraisers can check the point that best represents the employee’s performance.
o Standard Rating Scale: appraisal system characterized by 1: one or more performance standards being developed and defined by the appraiser and 2: each performance standard having a measurement scale indicating varying levels of performance on that dimension. Appraisers rate the appraisee by checking the point on the scale that best represents the appraisee’s performance level. Rating scales vary in the extent to which anchors along the scale are defined.
o Behaviorally Anchored Rating Scales (BARS): variance on standard rating scales in which the various scales levels are anchored with behavioral descriptions directly applicable to jobs being evaluated.
Define Management by Objective (MBO) and list the components of a successful MBO program
• Management by Objective (MBO): an employee planning, development, and appraisal procedure in which a supervisor and a subordinate. Or group of subordinates. Jointly identifying established common performance goals. Employee performance on the absolute standards is evaluated at the end of the specified period.
• Components of a successful MBO program:
o goals and objectives should be specific.
o goals and objectives should be defined in terms of measurable results.
o individual goals should be linked to overall organizational goals.
o objectives should be reviewed periodically.
o the time period for goal accomplishment should be specified.
o wherever possible, the indicator of the result should be quantified; And otherwise, it should be at least verifiable.
o objectors should be flexible; Changed as conditions warrant.
o objectives should include a plan of action for accomplishing the results.
o objective should be assigned priorities of weight.
When evaluating performance appraisal formats, list five dimensions usually shared by “good” ones (p.395).
• Employee development potential/employee development criterion:
o Does the method can communicate the goals and objectives of the organization? Is feedback to employees and natural outgrowth of the evaluation format. So, the employee development needs are identified and can be attended to readily?
o Feedback has positive impact on job performance.
o different kinds of feedback have different effects.
o employees respond better to feedback that tells them what went wrong on the task and how to improve.
• Administrative ease/administrative criterion:
o how easily can evaluation results be used for administrative decisions concerning wage increases, promotion, demotions, terminations, and transfers?
o Comparison among individuals for personnel action require some common denominator, typically a numerical rating of performance.
• Personnel research potential/Personnel research criterion:
o does the instrument lend itself well to validating employment test? Can applicants predicted to perform well be monitored through performance evaluation, can the success of various employees and organizational development programs be traced to impacts on employee performance?
o Needs to be quantitative to permit the statistical tests so common in personnel research.
• Cost/cross criterion:
o does the evaluation form initially require a long time to be developed? Is it time consuming for supervisors to use the form and rating their employees? is it expensive to use? all of these increase the cost
• Validity/validity criterion:
o most research on formats recently focus on reducing error and improving accuracy.
o decisions based on performance ratings could be made with increased confidence.
What are the common errors in the appraisal process?
Halo, horn, first impression, recency, leniency, severity, central tendency, clone and spillover
Halo error
Halo error: an appraiser giving favorable ratings to all job duties based on impressive performance and just one job function. For example, a rater who hates tardiness rates a prompt subordinate high across all performance dimensions exclusively because of this one characteristic.
Horn error
horn error: the opposite of Halo error. Down grading an employee across all performance dimensions exclusively because of poor performance in one dimension.
First impression error
first impression error: Developing a negative or positive opinion of an employee early in the review period and allowing that to negatively or positively influence all later perceptions of performance.
Recency error
recency error: The opposite of first impression error. Allowing performance, either good or bad, at the end of the review period to play too large a role in determining an employee’s rating for the entire period.
Leniency error
leniency error: Consistently writing someone higher than it is deserved.
Severity error
severity error: The opposite of leniency error. Rating individuals consistently lower than is deserved.
Central tendency error
central tendency error: avoiding extremes and rating across employees.
