Few things supervisors do are fraught with more peril than appraising subordinates’ performance.
Performance appraisal plays a big role in managing people.
Performance appraisal means evaluating an employee’s current and/or past performance relative to
his or her performance standards. You may equate forms with “performance appraisal,” but
appraisal involves more than forms. Many employers still base pay and promotions on employee
appraisals.
Stripped to its essentials, performance appraisal always involves the three-step performance
appraisal process:
(1) Setting work standards;
(2) Assessing the employee’s actual performance relative to those standards (this usually
involves some rating form); and
(3) Providing feedback to the employee with the aim of helping him or her to eliminate
performance deficiencies or to continue to perform above par.
Effective appraisals actually begin before the actual appraisal, with the manager defining the
employee’s job and performance criteria. Defining the job means making sure that you and your
subordinate agree on his or her duties and job standards and on the appraisal method you will use.
Why Appraise Performance?
There are five reasons to appraise subordinates’ performance.
● First, most employers base pay, promotion, and retention decisions in large part on the
employee’s appraisal.
● Appraisals play a central role in the employer’s performance management process. Performance
management means continuously ensuring that each employee’s performance makes sense in terms
of the company’s overall goals.
● The appraisal lets the manager and subordinate develop a plan for correcting any deficiencies, and
to reinforce the subordinate’s strengths.
● Appraisals provide an opportunity to review the employee’s career plans in light of his or her
exhibited strengths and weaknesses.
● Finally, appraisals enable the supervisor to identify if there is a training need, and the remedial
steps required.
Defining the Employee’s Goals and Performance Standards
The performance appraisal should compare “what should be” with “what is.”
Managers use one or more than one bases—goals, job dimensions or traits, and behaviors or
competencies—to establish ahead of time what the person’s performance standards will be.
Who Should Do the Appraising?
Appraisals by the immediate supervisor are still the heart of most appraisal processes. Getting a
supervisor’s appraisal is relatively straightforward and makes sense. The supervisor is usually in the
best position to observe and evaluate the subordinate’s performance, and is responsible for that
person’s performance. The human resources department serves an advisory role. Generally, they
provide the advice on what appraisal tool to use, but leaves final decisions on procedures to
operating managers. The human resource team should also train supervisors to improve their
appraisal skills, monitor the appraisal system’s effectiveness, and ensure that it complies with EEO
laws.
Relying only on supervisors’ appraisals isn’t advisable. Managers have several options:
1. Peer Appraisals. People often come across differently to their peers than they do to their
boss. Peer appraisals—appraisals by one’s peers—are therefore increasingly popular.
2. Rating Committees. A rating committee usually consists of the employee’s immediate
supervisor and three or four other supervisors. Using multiple raters is advantageous. It
helps cancel out problems such as bias on the part of individual raters.
3. Self-Ratings. Some employers obtain employees’ self-ratings, usually in conjunction with
supervisors’ ratings. The basic problem, of course, is that employees usually rate themselves
higher than do their supervisors or peers.
4. Appraisal By Subordinates. Many employers have subordinates rate their managers, usually
for developmental rather than for pay purposes. Anonymity affects the feedback. Managers
who receive feedback from subordinates who identify themselves view the upward feedback
process more positively. However, subordinates who identify themselves tend to give
inflated ratings. The evidence suggests that upward feedback improves managers’
performance.
5. 360-Degree Feedback With 360-degree feedback, the employer collects performance
information all around an employee—from his or her supervisors, subordinates, peers, and
internal or external customers—generally for developmental rather than pay purposes.
Traditional Tools for Appraising Performance
Next we will learn the pros and cons of performance appraisal methods.
We will see that many employers use online tools to automate the appraisal/performance
management process. With their digital dashboards, these tools monitor, report, and correct
performance deviations in real time. Yet, many employers still use traditional performance appraisal
tools like the following:
1. The Graphic Rating Scale is the simplest and most popular method for appraising performance.
You’ll find several varieties. A scale that lists a number of traits and range of performance for each.
The employee is then rated by identifying the score that best describes his or her level of
performance for each trait. A competency- (or skill- or behavior-) based graphic rating scale is
another option. Finally, the scale might rate how well the employee did with respect to achieving
specific goals.
2. The Alternation ranking method involves ranking employees from best to worst on a particular
trait, choosing highest, then lowest, until all are ranked.
3. The Paired comparison method ranks employees by making a chart of all possible pairs of the
employees for each trait and indicating which is the better employee of
the pair.
4. The Forced distribution method is similar to grading on a curve; predetermined percentages of
rates are placed in various performance categories.
5. The Critical incident method involves keeping a record of uncommonly good or undesirable
examples of an employee’s work-related behavior and reviewing it with the employee at
predetermined times.
6. Narrative Forms – All or part of the written appraisal may be in narrative form. This is when a
person’s supervisor assesses the employee’s past performance and required areas of improvement.
The supervisor’s narrative assessment helps the employee understand where his or her performance
was good or bad, and how to improve that performance.
7. A Behaviorally Anchored Rating Scale (BARS) – An appraisal method that aims at combining the
benefits of narrative critical incidents and quantified ratings by anchoring a quantified scale with
specific narrative examples of good and poor performance.
8. Management by Objectives – The term management by objectives (MBO) usually refers to a
multistep companywide goal-setting and appraisal program. MBO requires the manager to set
specific measurable, organizationally relevant goals with each employee, and then periodically
discuss the latter’s progress toward these goals.
Dealing with Rater Error Appraisal Problems
Understanding problems to avoid gives managers guidance when it’s time to appraise their
subordinates’ performance. We now turn to appraisal problems and how to solve them, and to
several other appraisal issues.
In a perfect world, all employers would use performance appraisal systems with clear goals, fair
appraisals, swift feedback, and useful coaching. Alas, that is rarely the case. Let’s examine some
potential rating problems…
Unclear Standards occurs when an appraisal is too open to interpretation. Table 9-2 in the text
illustrates this. The way to fix this problem is to include descriptive phrases defining each trait.
The Halo Effect in performance appraisal occurs when a supervisor’s rating of a subordinate on one
trait biases the rating of that person on other traits.
Central Tendency is a tendency to rate all employees the same way, such as rating them all average.
Leniency/Strictness is the problem that occurs when a supervisor has a tendency to rate all
subordinates either high or low.
Recency Effects means letting what the employee has done recently blind you to what his or her
performance has been over the year. The main solution is to accumulate critical incidents all year
long.
The Problem of Bias
Biased appraisals have a variety of causes. One study of bias (the tendency for individual differences
to affect judgments) focused on rater personality. Raters who scored higher on “conscientiousness”
tended to give their peers lower ratings—they were stricter, in other words; those more “agreeable”
gave higher ratings—they were more lenient. Managers also tend to be more lenient when
appraising subordinates for administrative purposes like pay raises then for development purposes.
Furthermore, “performance ratings amplify the quality of the personal relationship between boss
and employee. Good relationships tend to create good [appraisal] experiences, bad relationships
bad ones.”
Unfortunately, subordinates’ demographic traits (age, race, gender, and so on) also affect ratings. A
36-year-old supervisor ranked a 62-year-old subordinate at the bottom of the department’s
rankings, and then fired him. The court held that the younger boss’s discriminatory motives might
have prejudiced the dismissal decision. In one study, promoted women had to have received higher
performance ratings than promoted men to be promoted, “suggesting that women were held to
stricter standards for promotion.” In another study, raters penalized successful women for their
success. The point is that the appraisal often says more about the appraiser than about the
appraisee. (Or, as one researcher said, “Rater idiosyncratic biases account for the largest percentage
of the observed variances in performance ratings.”) Potential bias is one reason to use multiple
raters, have the supervisor’s boss review the rating, and/or have “calibration” meetings where
supervisors discuss their reasons for the appraisals they gave each of their subordinates.
Ensure Fairness and Effective Supervision
some managers ignore accuracy and honesty in performance appraisals. Instead, they use the
process for political
purposes (such as encouraging employees with whom they don’t get along to quit).The employees’
standards should be clear, they should understand on what basis you will appraise them, and the
appraisals should be objective
Managing the Appraisal Interview
The traditional periodic appraisal typically culminates in an appraisal interview. Here the manager
and the subordinate review the appraisal and make plans to remedy deficiencies and reinforce
strengths. These interviews are often uncomfortable. Few people like to receive—or give—negative
feedback. Adequate preparation and effective implementation are essential.
How to Conduct the Appraisal Interview
Useful interviews begin before the interview. Beforehand, review the person’s job description,
compare performance to the standards, and review the previous appraisals. Give the employee at
least a week’s notice to review his or her work. Set a time for the interview. Interviews with lower
level personnel like clerical workers should take less than an hour. Interviews with management
employees often take 1 or 2 hours. Conduct the interview privately with no interruptions.
Preparation means understanding the problem and the employee. Here the manager will watch the
employee to see what he or she is doing, review productivity data, and observe the workflow.
Planning the solution is next. This requires reaching agreement on the problem, and laying out a
change plan in the form of steps to take, measures of success, and date to complete.
With agreement on a plan, the manager can then start the actual coaching.
Guidelines to Conducting the Appraisal Interview
Useful guidelines in conducting the appraisal interview include:
1. Talk in terms of objective work data. Use examples such as absences, tardiness, and productivity.
2. Don’t get personal. Don’t say, “You’re too slow producing those reports.” Instead, compare the
person’s performance to a standard. (“These reports should normally be done within 10 days.”)
Similarly, don’t compare the person’s performance to that of other people. (“He’s quicker than you
are.”)
3. Encourage the person to talk. Stop and listen to what the person is saying; ask open-ended
questions (such as, “What do you think we can do to improve the situation?”). Use a command such
as “Go on.” Restate the person’s last point as a question, as in, “You don’t think you can get the job
done?”
4. Get agreement. Make sure the person leaves knowing specifically what he or she is doing right
and doing wrong and with agreement on how things will be improved, and has an action plan with
targets and dates.
How to Criticize a Subordinate
Performance Management
Performance appraisal is fine in theory, but in practice, appraisals don’t always go smoothly.
Employees should know what their goals are, performance feedback should be useful, and if there is
a problem, the time to take action is right away, not six months later.
