Performance Evaluation: Functions

Performance Evaluation Basics

• Performance refers to how well a task is carried out under specific conditions, and an employee's behavior while performing their job.
• Performance evaluation comprises identifying, observing, measuring, and improving human resources within an organization.

Functions of Performance Evaluation

• Assessing job fit is matching the individual to the job and determining how well they're doing and adapting.
• Achieving organizational values and goals entails informing new employees about the organization's values, culture, and expected behaviors.
• Evaluations determine how well individuals adhere to these values and exhibit expected behaviors, with steps to correct behavior if needed.
• Feedback for self-improvement involves making employees aware of their performance levels
• Performance evaluations inform employees about necessary improvements.
• Training and career development is achieved via identifying employee strengths and weaknesses.
• Training and development efforts are guided to grow employees effectively.
• Performance-based rewards include pay increases or promotions are determined based on performance
• Performance evaluations help identify high performers and provide objective criteria for salaries, raises, bonuses, and promotions.
• Legal defense comes into play when performance appraisal results serve as legal evidence in hiring, promotion, or termination disputes.
• Employment contracts often assign responsibilities to employees.

Performance Criteria

• Performance criteria are the standards used to determine whether job performance is successful or unsuccessful.
• Objective criteria are measurable indicators like the number of units produced, total sales value, or time per unit.
• An example is the phone calls answered by a bank employee in a day.
• Subjective criteria are assessments including personal judgment or opinions
• Subjective criteria are used when jobs are unsuitable for objective criteria, or objective criteria exist but can't be applied.
• Criterion relevance describes how strongly chosen performance criteria relate to actual job success.
• Criterion contamination occurs when irrelevant or unnecessary factors are included in the evaluation, that have no real impact on job performance.
• Criterion deficiency describes situations where selected criteria fail to fully capture important aspects of job performance.

Determining Evaluators

• Evaluators need knowledge of the job being assessed, familiarity with the organization, and the ability to provide fair and objective assessments.
• The immediate supervisor observes the employee most closely and knows the job well.
• Peers (colleagues) may create conflict, which could harm communication within the organization.
• Subordinates can increase job satisfaction, although evaluations only by subordinates are not commonly welcomed by employees.
• Customer evaluations are relevant in roles with direct customer interaction.
• Self-evaluation is used as a supplement to supervisor evaluations.
• 360-degree feedback uses anonymous evaluations collected from multiple sources.

Performance Appraisal Methods: Comparative Methods

• Ranking Method: Evaluators rank employees from best to worst based on one or more performance traits.
• Capable employees may be unfairly labeled as underperformers if everyone is performing well.
• Paired Comparison Method: Comparisons are made in pairs.
• Can be time-consuming and impractical for larger groups
• Eliminating the "less favorable" employee in each pair can feel unfair or demotivating, especially in close matches.
• Forced Distribution Method: Employees are assigned to predefined categories that range from poor to excellent performance.
• This method prevents common evaluation errors, such as the leniency error

Performance Appraisal Methods: Individual Methods

• Individual methods evaluate employees independently of others.
• Graphic Rating Scale: employees are evaluated individually using a set of predefined criteria based on job dimensions identified through job analysis.
• Behaviorally Anchored Rating Scale (BARS): Rating scales are developed based on critical incident technique.
• BARS is a highly valid and reliable method.
• Narratives: Open-ended written reports are used to describe an employee's performance.
• Since narratives don't produce quantitative data, it's difficult to compare employees directly.

Problems and Pitfalls in Performance Appraisal

• Leniency Error: Evaluators tend to rate employees more positively than deserved.
• Severity Error: Evaluators tend to rate employees more harshly than appropriate.
• Central Tendency Error: Evaluators tend to rate most employees around the middle point of the scale, regardless of actual performance levels.
• Leniency errors may prevent improvement, because weaknesses are not identified clearly.
• Severity or Leniency errors may reduce motivation, as employees feel undervalued.
• Halo Effect: Evaluator fails to distinguish between separate and independent traits, leading to biased judgments.
• Employees are rated positively or negatively across all areas based on a single successful or unsuccessful behavior.
• Factors like physical attractiveness or specific personality traits can also trigger the halo effect.
• Recency Effect: Giving more weight to recent performance and less value to earlier performance.
• The accuracy of the evaluation tends to decrease as the time between the actual performance and the evaluation increases.
• Recency effects aren't always negative.
• When trying to explain someone's behavior, personality traits are referred to and external factors that may have influenced the behavior are ignored.
• Actor-Observer Bias: The actor is the employee while the observer is the evaluator.
• All of these are potential biases and pitfalls that can occur during performance evaluation
• Personal Biases interfere with accurate performance evaluation.
• Common biases involve gender, race, age, and disability status.