PERFORMANCE APPRAISALPertemuan 7 & 8

Matakuliah : L0064 / Psikologi Industri & Organisasi 1Tahun : 2007 / 2008

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After reading this chapter, you should be able to1. Define performance appraisal and specify the HR functions

affected by it2. Describe how to ensure appraisal systems are in

compliance with EEOC guidelines3. Understand the nature of opposition to appraisal systems

from labor unions, employees, and managers4. Explain and provide examples of the two approaches to

measuring performance5. Identify the techniques used to evaluate managerial

performance6. Describe and control for sources of rater error7. Understand how to improve the effectiveness of

performance appraisal systems and how to best conduct the post-appraisal interview

Learning Objectives

3

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The periodic, formal evaluation of employee performance for the purpose of making career decisions

What Is Performance Appraisal?

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Fair Employment Practices

• EEOC guidelines apply to any selection procedure used for making employment decisions– Hiring– Promotion– Demotion– Transfer– Layoff– Discharge– Early retirement

• Performance appraisal procedures must be validated

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Protecting Against Bias Claims

• Personnel decisions should be based on a well-designed performance review program that includes formal appraisal interviews

• Examples– Racial bias– Age bias

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Criteria For Compliance

• Performance appraisals should be based on job analyses to document specific critical incidents and behaviors related to job performance

• Appraisers should focus on actual job behaviors rather than personality characteristics

• Supervisors should be well trained• Notes, records, and documentation should be

retained

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Reasons for Conducting Performance Appraisals

• Validation of selection techniques and criteria

• Make decisions about that person’s future with the organization

• Identify training requirements• Employee improvement• Pay, promotion, and other personnel

decisions

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Critics Of Performance Appraisal

• Labor unions– Represent approximately 11% of workforce– Prefer seniority rather than assessment

• Employees– Prefer not to be told of deficiencies

• Managers– Dislike playing the role of judge

• Professors– See “Newsbreak” on pg. 132

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Performance Appraisal Techniques

• Objective Methods– Output measures– Computerized performance monitoring– Job-related personal data

• Judgmental and qualitative measures– Written narratives– Merit rating techniques

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Output Measures• Quantity, quality, job experience, and other

environmental factors must be considered• Job-related personal data• Computerized performance monitoring

– Computers can be programmed to to monitor employee’s on the job activities

– Attitudes toward computer monitoring depend on how the data are used

– Found to be stressful

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Computerized Monitoring

• Advantages– Immediate and objective feedback– Reduces rater bias– Helps identify training needs– Facilitates goal setting– May contribute to increases in productivity

• Disadvantages– May be considered an invasion of privacy– May increase stress– May reduce job satisfaction– May lead to focus on quantity at the expense of

quality

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Written Narratives

• Brief essays and numerical rating procedures

• More prone to personal bias– Merit rating is an objective rating method

designed to provide an objective evaluation of work performance

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Merit Rating Techniques

• Performance rating scales• Ranking• Paired-comparison• Forced distribution• Forced choice• Behaviorally anchored rating scales (BARS)• Behavioral observation scales (BOS)• Management by objectives (MBO)

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Performance Rating Scales

– Most frequently used technique– Supervisors indicate how or to what degree a

worker possesses a relevant job characteristic

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1 2 3 4 5Poor Average Excellent

Ranking Technique

• Supervisors list the workers in order from highest to lowest

• Simple to do• Difficult when there are many employees to

evaluate• Provides less evaluative data than rating• Doesn’t allow for listing of similarities

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Paired-Comparison Technique

• Compares the performance of each worker with that of every other person in the group

• Number of comparisons– (N * (N - 1)) / 2

• Advantage– Accurate and judgmental process is simple

• Disadvantage– Many comparisons when dealing with a large

number of employees

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Forced-Distribution Technique

• Supervisors rate employees according to a prescribed distribution of ratings, similar to grading on a curve– Superior 10%– Better than average 20%– Average 40%– Below average 20%– Poor 10%

• Predetermined categories may not be fair• Hard to compare across groups

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Forced-Choice Technique

• Raters are presented with groups of descriptive statements and are asked to select the phrase in each group that is most descriptive of the worker being evaluated. E.g., choose one of the following:– Is reliable– Is agreeable

• One statement is desirable, but the other is disguised in its appeal

• More costly to develop than other merit rating methods

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Behaviorally Anchored Rating Scales (BARS)

• Evaluate performance on basis of behaviors important to success or failure on job

• Appraisers rate critical employee behavior– Critical-incident behaviors are established– These behaviors are used as standards for

appraising effectiveness– The BARS items can be scored objectively by

indicating whether the employee displays that behavior

• Meet federal fair employment guidelines

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Behavioral Observation Scale (BOS)

• Appraisers rate the frequency of critical employee behaviors– The ratings are assigned on a five point

scale– The evaluation yields a total score

• As with BARS, BOS meets federal fair employment standards because it is based on actual behaviors required for performance

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Management By Objective (MBO)

• Involves mutual agreement between employee and manager on goals to be achieved in a given period

• Two phases– Goal setting– Performance review

• Employees may feel pressured• MBO technique satisfies fair employment guidelines

& may increase motivation and productivity

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Techniques for Evaluating Managers

• Assessment centers• Evaluation by superiors• Evaluation by colleagues

– Peer ratings tend to be more favorable for career development than for promotion decisions

• Self-evaluation• Self-ratings suffer from leniency• Subordinate evaluation

– Effective in developing leadership & leads to improved performance

• 360 degree feedback (multi-source)Bina Nusantara

Common Sources of Error

• Halo effect• Constant or systematic bias• Most-recent-performance error• Inadequate information error• Average rating or leniency error• Rater’s cognitive processes• Role conflict

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Halo Effect

• The tendency to judge all aspects of a person’s behavior or character on the basis of a single attribute– Positive– Negative

• Solution: Use multiple raters• Research indicates halo may not be as

pervasive as originally thought– Does not appear to reduce overall rating– Often undetectable– May be illusory

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Constant or Systematic Bias

• Based on the different standards used by raters– Hard rater– Easy rater

• Solution: Require distribution of ratings according to the normal curve

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Constant or systematic style of rating

Constant or systematic style of rating

Most-Recent-Performance Error

• A rater evaluates a worker’s most recent job behavior rather than behavior throughout the period since last appraisal– False high rating– False low rating

• Solution: Require more frequent performance appraisals

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Inadequate Information Error

• Supervisors rate subordinates even though they don’t know enough about them to rate them fairly or accurately

• Solution: Train raters and allow them to decline to rate those they don’t know well

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Average Rating or Leniency Error

• Average rating error– The rater is unwilling to assign a very high or very low

score

• Leniency error– Rater is unwilling to assign other than a favorable score

• Solution: Maintain a record of supervisor rating tendencies

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Rater’s Cognitive Processes

• Category structures– How workers are categorized - e.g., team player;

similar to halo effect

• Beliefs about human nature• Interpersonal affect

– One’s feelings toward the other person– Susceptible to impression management

techniques

• Attribution– Raters attribute positive or negative

explanations of employee behaviorBina Nusantara

Role Conflict

• Disparity between job demands and the employees personal standards for right and wrong

• Those high in role conflict tend to rate employees higher than justified evaluations to– Establish control over work situation– Avoid confrontation with subordinates– Obtain subordinate gratitude and goodwill

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Improving Performance Appraisals

• Training– Create awareness of normal distribution of abilities and

skills– Develop ability to define objective criteria for work

behaviors

• Providing feedback to raters• Subordinate participation

– Led to increased employee trust and perceptions of accuracy of evaluation system (Mayer & Davis, 1999)

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Post Appraisal Interviews

• Offers feedback related to appraisal to help employee improve performance

• Provides employee opportunity to react to criticism– Negative feedback can make employees

angry– Workers react to criticism differently

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Improving Post-Appraisal Interviews

• Allow employees to participate actively in the appraisal process

• Interviewer should adopt a supportive attitude• Focus on specific job problems, not personal

characteristics• Establish specific goals jointly• Allow the employee to rebut• Discussions of changes in salary and rank should

be linked directly to performance criteria

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Reasons for a Poorly Rated Performance Appraisal Program

• Managers – Lack the time to make other than hasty appraisals

• Employees– Don’t like appraisals– Uninformed about the criteria (criteria appear biased)

• If correlations between ratings and results-oriented criteria are low– Antithetical to purpose of appraisal

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Key Terms• Attribution• Average rating (leniency)

error• Behavioral observation

scales (BOS)• Behaviorally anchored

rating scales (BARS)• Inadequate information

error• Interpersonal effect• Management-by-objectives

(MBO)• Merit rating• Most-recent-performance

error

• Paired-comparison technique

• Constant (systematic) bias• Forced-choice technique• Forced-distribution

technique• Halo effect• Peer rating• Performance appraisal• Ranking technique• Rating scales• Role conflict• Self-ratings

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