Evaluating Employee Performance PDF

Evaluating Employee Performance STEP 1: DETERMINE THE REASON FOR EVALUATING EMPLOYEE PERFORMANCE - The first step in the performance appraisal process is to determine the reasons your organization wants to evaluate employee performance. - This determination is important because the var...

Evaluating Employee Performance STEP 1: DETERMINE THE REASON FOR EVALUATING EMPLOYEE PERFORMANCE - The first step in the performance appraisal process is to determine the reasons your organization wants to evaluate employee performance. - This determination is important because the various performance appraisal techniques are appropriate for some purposes but not for others. - Most organizations do not have specific goals for their performance appraisal systems. As a result, several national surveys found that the vast majority of performance appraisal systems are not successful. - Though there are many uses and goals for performance appraisal, the most common include (1) providing employee feedback and training, (2) determining salary increases, (3) making promotion decisions, (4) making termination decisions, and (5) conducting personnel research. A. PROVIDING EMPLOYEE TRAINING AND FEEDBACK - The most important use of performance evaluation is to improve employee performance by providing feedback about what employees are doing right and wrong. - Even though employee training should be an ongoing process, the semiannual performance appraisal review is an excellent time to meet with employees to discuss their strengths and weaknesses. But more important, it is the time to determine how weaknesses can be corrected. B. DETERMINING SALARY INCREASES - One important reason for evaluating employee performance is to provide a fair basis on which to determine an employee’s salary increase. - If performance appraisal results are to be used to determine salary increases, a numerical rather than narrative format is probably needed. C. MAKING PROMOTION DECISIONS - Another reason for evaluating performance is to determine which employees will be promoted. Although it would seem only fair to promote the best employee, this often does not occur. o For example, the policy in some organizations is to promote employees with the most seniority. - Promoting the best or most senior employee often results in the so-called Peter Principle – the promotion of employees until they reach their highest level of incompetence. - If performance evaluations are used to promote employees, care should be taken to ensure that the employee is evaluated well on the job dimensions that are similar to those of the new position. - Another use of performance appraisal data is in training-needs analysis. - If many employees score poorly on a performance appraisal dimension, an increase or change in training is probably necessary for all employees. If only a few employees have low scores, training at an individual level is indicated. - Thus, performance appraisal can provide useful information about an organization’s strengths and weaknesses. D. MAKING TERMINATION DECISIONS - When performance management techniques are not successful, the results of a performance review might suggest that the best course of action is to terminate the employee.  E. CONDUCTING PERSONNEL RESEARCH - A final reason for evaluating employees is for 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. To do this, however, an accurate and reliable measure of job performance must be available. - The same is true in evaluating the effectiveness of training programs. To determine effectiveness, an accurate measure of performance must be available for use in determining whether performance increases as a result of training. - Although not the most important reason for evaluating employee performance, personnel research is still important, especially in organizations where union contracts forbid the use of performance evaluations in personnel decisions. STEP 2: IDENTIFY ENVIRONMENTAL AND CULTURAL LIMITATIONS - The second step in the performance appraisal process is to identify the environmental and cultural factors that could affect the system. - 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 the 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. - The buzzwords for using multiple sources to appraise performance are 360-degree feedback and multiple- source feedback. o 360-degree feedback: feedback is obtained from multiple sources such as supervisors, subordinates, and peers. o Multiple-source feedback: an employee receives feedback from sources (e.g., clients, subordinates, peers) other than just his or her supervisor. - It is important to note that 360-degree feedback is primarily used as a source of training and employee development and is seldom used in the appraisal process to determine salary increases or to make promotion and termination decisions. - Sources of relevant information about employee performance include (1) supervisors, (2) peers, (3) subordinates, (4) customers, and (5) self-appraisal. A. 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, the direct supervisor is the sole source of an employee’s evaluation. - Though supervisors may not see every minute of an employee’s behavior, they do see the end result. o For example, a supervisor may not actually see a teller sign up customers for Visa cards but will review the daily sales totals. o Likewise, a professor does not see a student actually research and write a paper but infers the levels of these behaviors by viewing the results – the finished term paper. B. 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. However, other employees in the organization, those who often come in contact with the employee, can also provide useful information. - 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. - peer ratings have been successful in predicting the future success of promoted employees, as they correlate highly with supervisor ratings. - 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. - This difference in ratings is probably because employees compare others to themselves. - Though peers may provide a unique view of performance, employees tend to react worse to negative feedback from peers than from experts. - Employees who score high in self-esteem, high in self-monitoring, and low in individualism react most favorably to peer rating. C. SUBORDINATES - Subordinate feedback (also called upward feedback) is an important component of 360-degree feedback, as subordinates can provide a very different view about a 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. - Subordinates’ feedback can be encouraged if: o supervisors appear open to employee comments; o the ratings are made anonymously; o the ratings are used for developmental purposes; and o the employee feels competent to make the rating, feels there will be no retaliation for making honest ratings, and will somehow benefit by providing honest ratings - Multisource feedback is most effective when the feedback indicates that (1) the employee needs to change his or her behavior, (2) the employee perceives that the changes are feasible, and (3) the employee is open to receiving constructive feedback. - Performance increases can be enhanced when the feedback is provided in a workshop conducted by a feedback facilitator rather than by a direct supervisor. - Though supervisor performance might increase from upward feedback, such feedback does not appear to improve the overall performance or stock value of an organization. D. CUSTOMERS - Informally, 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 card. - Organizations also seek customer feedback in the form of secret shoppers – current customers who have been enlisted by a company to periodically evaluate the service they receive. In exchange for their ratings, secret shoppers get a few dollars and a free meal. E. SELF-APPRAISAL - Allowing an employee to evaluate her own behavior and performance is a technique used by an increasing number of organizations.  - Employee self-appraisals tend to suffer from leniency and correlate only moderately with actual performance and poorly with subordinate and management ratings. - Self-appraisals of performance appear to be most accurate when the self-appraisal will not be used for such administrative purposes as raises or promotions. - They are also more accurate when employees understand the performance appraisal system and when employees believe that an objective record of their performance is available with which the supervisor can compare the self-appraisal STEP 4: SELECT THE BEST APPRAISAL METHODS TO ACCOMPLISH YOUR GOALS - The next step in the performance appraisal process is to select the performance criteria and appraisal methods that will best accomplish your goals for the system. - Criteria are ways of describing employee success. - Prior to developing the actual performance appraisal instrument, two important decisions must be made: (1) the focus of the performance appraisal dimensions and (2) whether to use rankings or ratings. A. DECISION 1: FOCUS OF THE APPRAISAL DIMENSIONS 1. Trait-Focused Dimensions - A trait-focused system concentrates on such employee attributes as dependability, honesty, and courtesy. - Trait-focused performance appraisal instruments are not a good idea because they provide poor feedback and thus will not result in employee development and growth. 2. Competency-Focused Performance Dimensions - Competency-focused dimensions concentrate on the employee’s knowledge, skills, and abilities. - For example, competency-focused dimensions might include writing skills, oral presentation skills, and driving skills. - The advantage to organizing dimensions by competencies is that it is easy to provide feedback and suggest the steps necessary to correct deficiencies. 3. Task-Focused Performance Dimensions - Task-focused dimensions are organized by the similarity of tasks that are performed. - A task-focused dimension usually includes several competencies. - The advantage of this approach is that because supervisors are concentrating on tasks that occur together and can thus visualize an employee’s performance, it is often easier to evaluate performance than with the other dimensions. - The disadvantage is that it is more difficult to offer suggestions for how to correct the deficiency if an employee scores low on a dimension. 4. Goal-Focused Performance Dimensions - Organize the appraisal on the basis of goals to be accomplished by the employee. - The advantage of a goal-focused approach is that it makes it easier for an employee to understand why certain behaviors are expected. 5. Contextual Performance - The effort an employee makes to get along with peers, improve the organization, and perform tasks that are needed but are not necessarily an official part of the employee’s job description.  - Many organizations include rating scales addressing the technical aspects of the job as well as the contextual aspects. That is, they want employees who will be not only effective performers but good organizational citizens as well. - Contextual performance is important because not only are these prosocial organizational behaviors important to the success of an organization, but they also tend to be similar across jobs, whereas the dimensions involved in task performance differ across jobs. B. DECISION 2: SHOULD DIMENSIONS BE WEIGHTED? - Once the type of dimension has been determined, the next decision is whether the dimensions should be weighted so that some are more important than others. o Grading systems in the classes you have taken provide good examples of weighting dimensions. - Weighting dimensions makes good philosophical sense, as some dimensions might be more important to an organization than others. - Another advantage to differentially weighting dimensions is that it may reduce racial and other biases. - Though differential weighting of dimensions makes sense and has some advantages, many organizations choose to weight all performance dimensions equally because it is administratively easier to compute and to explain to employees. C. DECISION 3: USE OF EMPLOYEE COMPARISONS, OBJECTIVE MEASURES, OR RATINGS - Once the types of dimensions have been considered, the next decision is whether to evaluate performance by (1) comparing employees with one another (ranking), (2) using objective measures such as attendance and number of units sold, or (3) having supervisors rate how well the employee has performed on each of the dimensions. 1. Employee Comparisons - 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. o In this approach, employees are ranked in order by their judged performance for each relevant dimension. o The ranks are then averaged across each dimension to yield an overall rank. - Rank orders are easily used when there are only a few employees to rank, but they become difficult to use with larger numbers. - To make this process easier, paired comparisons can be used. This method involves comparing each possible pair of employees and choo sing which one of each pair is the better employee. - With large numbers of employees, the time necessary to make all of the comparisons becomes prohibitive. - To determine how many comparisons must be made, we can use the following formula: - The final type of employee comparison system is called the forced distribution method. With this method, a predetermined percentage of employees are placed in each of the five categories. - Also called “rank and yank,” forced distributions were a favorite method of Jack Welch, the former chief executive officer of General Electric, who required managers to fire the bottom- performing 10% of their employees each year.  o Though such systems seem harsh, the limited research on the topic suggests that rank- and-yank systems result in increased levels of organizational productivity. - Forced distribution systems are much easier to use than the other two employee comparison methods, but they also have a drawback. o To use the method, one must assume that employee performance is normally distributed, that is, that there are certain percentages of employees who are poor, average, and excellent. However, employee performance probably is not normally distributed because of restriction of range - Perhaps the greatest problem with all of the employee-comparison methods is that they do not provide information about how well an employee is actually doing. 2. 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 (1) quantity of work, (2) quality of work, (3) attendance, and (4) safety. - Quantity of Work: a type of objective criterion used to measure job performance by counting the number of relevant job behaviors that occur. o Although quantity measures appear to be objective measures of performance, they are often misleading. o It is important to realize that many factors determine quantity of work other than an employee’s ability and performance. o Furthermore, for many people’s jobs it might not be practical or possible to measure quantity; computer programmers, doctors, and firefighters are examples. - Quality of Work: a type of objective criterion used to measure job performance by comparing a job behavior with a standard. o Quality is usually measured in terms of errors, which are defined as deviations from a standard. o For example, a seamstress’s work quality would be judged by how it compares with a “model” shirt. o Note that the definition of an error is any deviation from a standard. Thus, errors can even be work quality that is higher than a standard. - Attendance: a common method for objectively measuring one aspect of an employee’s performance by looking at the attendance. o Attendance can be separated into three distinct criteria: (1) absenteeism, (2) tardiness, and (3) tenure. o Both absenteeism and tardiness have obvious implications for the performance appraisal process. o Tenure as a criterion, however, is used mostly for research purposes when evaluating the success of selection decisions - Safety: employees who follow safety rules and who have no occupational accidents do not cost an organization as much money as those who break rules, equipment, and possibly their own bodies. o Safety is usually used for research purposes, but it can also be used for employment decisions such as promotions and bonuses 3. Ratings of Performance - The most commonly used option in evaluating performance is to have supervisors rate how well the employee performed on each dimension. - Though there are many variations of how these rating scales can be created, the two most common are (1) the graphic rating scale and (2) the behavioral checklist. - Graphic Rating Scale: a method of performance appraisal that involves rating employee performance on an interval or ratio scale. o The obvious advantage of graphic rating scales is their ease of construction and use, but they have been criticized because of their susceptibility to such rating errors as halo and leniency - Behavioral Checklists: consist of a list of behaviors, expectations, or results for each dimension. This list is used to force the supervisor to concentrate on the relevant behaviors that fall under a dimension. o Behavioral checklists are constructed by taking the task statements from a detailed job description (e.g., “Types correspondence”) and converting them into behavioral performance statements representing the level at which the behavior is expected to be performed (e.g., “Correspondence is typed accurately and does not contain spelling or grammatical errors”). o When creating the statements for each dimension, one should carefully consider whether to write the statements in the form of behaviors or in the form of results. o The obvious advantage to a behavior-focused system is the increased amount of specific feedback that can be given to each employee o Result-focused statements concentrate on what an employee accomplished as a result of what she did. o A problem with result-focused statements is that an employee can do everything asked of her by an organization and still not get the desired results due to factors outside of her control. These factors are referred to as contamination. o It is essential to identify as many sources of contamination as possible and to determine ways to adjust performance ratings to account for these contamination sources. o After considering the behaviors in the checklist, a supervisor provides an overall rating of the employee’s performance on each dimension. o Employees can be rated in three ways: (1) how they compared with other employees, (2) the frequency with which they performed certain behaviors, and (3) the extent to which the behaviors met the expectations of the employer. o Comparison with Other Employees: supervisors can rate performance on a dimension by comparing the employee’s level of performance with that of other employees. ▪ Though this approach will reduce such problems as overly lenient or overly strict ratings, it potentially forces a supervisor to rate employees who are performing well as being worse than other employees. o Frequency of Desired Behaviors: behaviors can be rated based on the frequency with which they occur. ▪ As part of our performance appraisal system, supervisors are asked to decide whether their employees “always,” “almost always,” “often,” “seldom,” or “never” follow the rules. ▪ It is often difficult for a supervisor to distinguish between levels such as “almost always” and “often.”  o Extent to Which Organization Expectations Are Met: perhaps the best approach is to rate employees on the extent to which their behavior meets the expectations of the organization. ▪ Such an approach allows for high levels of feedback and can be applied to most types of employee behavior. Some behaviors, however, are not suitable for such a scale. - A variety of methods to rate performance are available, including behaviorally anchored rating scales (BARS), mixed-standard scales, and forced-choice scales. D. EVALUATION OF PERFORMANCE APPRAISAL METHODS - Research has shown that such complicated techniques as BARS, forced-choice scales, and mixed- standard scales are only occasionally superior to the inexpensive and uncomplicated graphic rating scale. - Although techniques such as behavioral checklists are only slightly more psychometrically sound, they still have some advantages over graphic rating scales. Because employees are directly involved in creating them, they tend to see performance-evaluation results as being more fair. - Finally, feedback from behavior-based methods is easier to give and to use to provide suggestions for improvement. - Although the various performance appraisal methods may yield results that are technically similar, the way in which the performance appraisal system is administered can affect employee trust. - From a legal perspective, courts are more interested in the due process afforded by a performance appraisal system than in its technical aspects. - Decisions based on performance appraisal ratings are most likely to survive a legal challenge if they are: o based on a job analysis, o raters received training and written instructions, o raters had the opportunity to actually observe the performance of the employee, o performance standards had been communicated to the employee, o employees were allowed to review and comment on the appraisal results, o employees were warned of performance problems, and o given a chance to improve their performance, and ratings from multiple raters are consistent. STEP 5: TRAIN RATERS - Research has indicated that training supervisors to become aware of the various rating errors and how to avoid them often increases accuracy and reduces rating errors, increases the validity of tests validated against the ratings, and increases employee satisfaction with the ratings. o This is especially true when the training technique uses discussion, practice in rating, and feedback about rating accuracy rather than lecture. o These training effects, however, are short-lived unless additional training and feedback are provided, and they can even reduce the accuracy of ratings by substituting new errors. - The effectiveness of rater training also is a function of training format. - Frame-of-reference training: provides raters with job-related information, practice in rating, and examples of ratings made by experts as well as the rationale behind those expert ratings. - The goal of frame-of-reference training is to communicate the organization’s definition of effective performance and to then get raters to consider only relevant employee behaviors when making performance evaluations. - Research on frame-of-reference training indicates that it increases rater accuracy and reduced rater errors.  - Though training raters is certainly important, it is also important to explain the performance appraisal system to employees. 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. Such documentation is usually written in a critical incident log—formal accounts of excellent and poor employee performance that were observed by the supervisor. - Critical incidents should be communicated to the employee at the time they occur. - Documentation is important for four reasons: o First, documentation forces a supervisor to focus on employee behaviors rather than traits and provides behavioral examples to use when reviewing performance ratings with employees. o Second, documentation helps supervisors recall behaviors when they are evaluating performance. Without documentation, supervisors tend to recall only a small percentage of an employee’s actual behavior. Supervisors tend to remember the following: ▪ First impressions ▪ Recent behaviors ▪ Unusual or extreme behaviors ▪ Behavior consistent with the supervisor’s opinion o Third, documentation provides examples to use when reviewing performance ratings with employees. o Fourth, documentation helps an organization defend against legal actions taken against it by an employee who was terminated or denied a raise or promotion. - To use critical incidents to document performance, a supervisor maintains a log of all the critical behaviors she observes her employees performing. These behaviors are then used during the performance appraisal review process to assign a rating for each employee. - The use of logbooks to record behaviors not only provides an excellent source of documentation but also results in more accurate performance appraisals. This is especially true if the logs are organized by employee. - A more formal method for using critical incidents in evaluating performance was developed by Flanagan and Burns for use by General Motors called Employee Performance Record. - Employee Performance Record: this method consists of a two-color form. Half of the sheet is used to record examples of good behaviors, and the other half to record examples of poor behaviors. On each side, there are columns for each of the relevant performance dimensions. o Supervisors have a separate record for each employee and at the end of the day can record the observed behaviors. - The advantage of this format is that supervisors are allowed to record only job-relevant behaviors. At the end of the performance appraisal period (every six months), the supervisor has a record of job-relevant behaviors recorded in an organized fashion. - The Employee Performance Record had several positive effects for General Motors. The number of disciplinary warnings declined, suggestions in the company suggestion box increased, and productivity increased. STEP 7: EVALUATE PERFORMANCE A. OBTAINING AND REVIEWING OBJECTIVE DATA - When it is time to appraise an employee’s performance, a supervisor should first obtain and review the objective data relevant to the employee’s behavior.  o For example, a police sergeant might review the numbers of tickets an officer wrote, arrests made, and citizen complaints received. - These data, when combined with critical-incident logs, provide a solid basis on which to rate an employee. - When reviewing objective data, it is essential that potential sources of contamination (e.g., shift, equipment, training, coworkers, geographic area) be considered. B. READING CRITICAL-INCIDENT LOGS - After obtaining objective data, the supervisor should go back and read all of the critical incidents written for an employee. - Reading these incidents should reduce errors of primacy, recency, and attention to unusual information. C. COMPLETING THE RATING FORM - Once critical-incident logs have been read and objective data reviewed, the supervisor is ready to assign performance appraisal ratings. - While making these ratings, the supervisor must be careful not to make common rating errors involving distribution, halo, proximity, and contrast. 1. Distribution Errors - Distribution errors: rating errors in which a rater will use only a certain part of a rating scale when evaluating employee performance. - Leniency error: a type of distribution error in which raters tend to rate every employee at the upper end of the scale regardless of the actual performance of the employee. - Leniency error can in part be explained by the discomfort felt by supervisors about giving low ratings. o Supervisors who are uncomfortable about how employees react to a low rating are more likely to be lenient than supervisors who are comfortable with negative employee reactions. - Another partial explanation for leniency is that supervisors don’t really know the difference between good and bad performance, so they err on the positive side. - Conducting frame of reference training should help reduce leniency in supervisors that don’t know the difference between good and bad performance. - Central tendency error: rater consistently rates all employees in the middle of the scale, regardless of their actual levels of performance. - Strictness error: rates every employee at the low end of the scale. 2. Halo Errors - 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. - For example, a teacher might think that a student is highly creative. Because of that, the teacher might rate the student as being intelligent and industrious when, in fact, the student’s grades are below average. - Halo effects occur especially when the rater has little knowledge of the job and is less familiar with the person being rated.  - Usually, halo error is statistically determined by correlating the ratings for each dimension with those for the other dimensions. If they are highly correlated, halo error is often said to have occurred. 3. 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. - For example, a supervisor gives an employee a rating of 5 on the first dimension. Because the second dimension is physically located on the rating form next to the first, there is a tendency to provide the same rating on both the first and second dimensions. - With halo error, all dimensions are affected by an overall impression of the employee. With proximity error, only the dimensions physically located nearest a particular dimension on the rating scale are affected. 4. Contrast Errors - The performance rating one person receives can be influenced by the performance of a previously evaluated person. - Such contrast errors can also occur between separate performance evaluations of the same person. That is, the ratings received on one performance appraisal will affect the ratings made on an appraisal six months later. - Contrast effects occur only when the person making the evaluation actually sees the employee perform and rates the employee during both rating periods. - Assimilation: occurs when raters base their rating of an employee during one rating period on the ratings the rater gave during a previous period. 5. Low Reliability Across Raters - There are three major reasons for the lack of reliability: o First, raters often commit the rating errors previously discussed (e.g., halo, leniency). Thus, if one rater engages in halo error and another in contrast error, it is not surprising that their ratings of the same employee are different. o Second, raters often have very different standards and ideas about the ideal employee. o Third, two different raters may actually see very different behaviors by the same employee. - One way to reduce the number of rating errors and increase reliability is to train the people who will be making the performance evaluations. 6. Sampling Problems - Recency Effect: recent behaviors are given more weight in the performance evaluation than behaviors that occurred during the first few months of the evaluation period. o Such an effect penalizes workers who performed well during most of the period but tailed off toward the end, and it rewards workers who saved their best work until just before the evaluation. - Infrequent Observation: the idea that supervisors do not see most of an employee’s behavior. - Infrequent observation occurs for two reasons:  o First, managers are often so busy with their own work that they have no time to “walk the floor” and observe their employees’ behavior. Instead, they make inferences based on completed work or employee personality traits o Second, employees often act differently around a supervisor than around other workers. - This problem can be alleviated somewhat by having several raters evaluate the employee. Other raters can be other supervisors, fellow workers (peer ratings), and even customers. o Unfortunately, ratings from these sources are often subject to more errors than the uninformed ratings made by a supervisor. 7. Cognitive Processing of Observed Behavior - Observation of Behavior: Research indicates that raters recall those behaviors that are consistent with their general impression of an employee and the greater the time interval between the actual behavior and the performance rating, the greater the probability that rating errors will occur. o Raters who are familiar with the job being evaluated recall more judgments about performance but fewer behaviors than do raters who are unfamiliar with the job. o The decrease in memory accuracy over time can be reduced if several raters, rather than one, are used to evaluate performance - Emotional State: The amount of stress under which a supervisor operates also affects her performance ratings. o Raters who were placed in a stressful situation produced ratings with more errors than did raters who were not under stress. - Bias: Raters who like the employees being rated may be more lenient and less accurate in their ratings than would raters who neither like nor dislike their employees. o The rater may overcompensate in an effort to be “fair.” The rater’s feelings, or affect, toward an employee may interfere with the cognitive processing of actual performance information. o Research on the presence of racial bias in performance evaluations is both controversial and mixed. Gender bias and age does not seem to be an issue in performance ratings. STEP 8: COMMUNICATE APPRAISAL RESULTS TO EMPLOYEES - Research suggests that certain techniques can be used to make the performance appraisal interview more effective: time, scheduling, and preparation. A. PRIOR TO THE INTERVIEW 1. Allocating Time - Both the supervisor and the employee must have time to prepare for the review interview. - Both should be allowed at least an hour to prepare before an interview and at least an hour for the interview itself. 2. Scheduling the Interview - The interview location should be in a neutral place that ensures privacy and allows the supervisor and the employee to face one another without a desk between them as a communication barrier. - Performance appraisal review interviews should be scheduled at least once every six months for most employees and more often for new employees.  - Review interviews are commonly scheduled six months after an employee begins working for the organization. 3. Preparing for the Interview - While preparing for the interview, the supervisor should review the ratings she has assigned to the employee and the reasons for those ratings. o This is important because the quality of feedback given to employees will affect their satisfaction with the entire performance appraisal process. - Meanwhile, the employee should rate her own performance using the same format as the supervisor. - The employee also should write down specific reasons and examples that support the ratings she gives herself, as well as ideas for personal development. B. DURING THE INTERVIEW - Begin the interview with some small talk until the jitters go away. - Once the employee and supervisor are feeling as comfortable as they are going to get, the supervisor should communicate the following: o (1) the role of performance appraisal—that making decisions about salary increases and terminations is not its only purpose; o (2) how the performance appraisal was conducted; o (3) how the evaluation process was accomplished; o (4) the expectation that the appraisal interview will be interactive; and o (5) the goal of understanding and improving performance. - The review process is probably best begun with the employee communicating her own ratings and her justification for them. o Research indicates that employees who are actively involved in the interview from the start will be more satisfied with the results. - The supervisor then communicates her ratings and the reasons for them. The supervisor should limit this communication to statements about behavior and performance rather than traits that are or are not possessed by the employee. - Positive feedback generally should be given first, followed by the negative feedback, and finishing with more positive feedback. This process is often referred to as the “feedback sandwich,” in which the negative feedback is sandwiched between positive feedback. o helps employees accept the negative feedback, as well as help supervisors who tend to avoid providing negative feedback in an effort to reduce the chance of interpersonal conflict - The next step is perhaps the most important. Because few employees receive perfect evaluations, it is essential to discuss the reasons an employee’s performance is not considered to be perfect. - The supervisor’s acknowledgment that there may be external reasons for an employee’s poor performance can increase the employee’s satisfaction with the review and enable her to perceive the feedback and evaluation as accurate and helpful. - Feedback should be candid, specific, and behavioral rather than personal. Awareness and acknowledgment of external factors for performance is especially important because we have a tendency, called the fundamental attribution error, to attribute others’ failure or poor performance to personal rather than situational factors. - Once the problems have been identified, the next and most difficult task is to find solutions. The idea here is that solutions to the problems result from joint effort.  - By communicating the appraisal results first, and then discussing strategies to improve performance at a later date, the employee can think about her performance ratings and be better able to discuss future options. - At the conclusion of the interview, goals should be mutually set for future performance and behavior, and both supervisor and employee should understand how these goals will be met. STEP 9: TERMINATE EMPLOYEES A. EMPLOYMENT-AT-WILL DOCTRINE - In the private sector, the employment-at-will doctrine in most states allows employers freedom to fire an employee without a reason—at will. In the public sector, an employee can be fired only for cause. - The idea behind employment at will is that because employees are free to quit their jobs at will, so too are organizations free to terminate an employee at will. - There are some limitations to the employment-at-will doctrine: o State law. States such as California, Montana, and New York have laws that an employee can be fired only for cause—for example, breaking a rule, demonstrating an inability to perform. o Provisions of federal or state law. Employees cannot be fired for reasons protected by federal or state law. For example, an employer cannot fire an employee because she is female, pregnant, nonwhite, or over the age of 40. o Public policy/interest. Employers cannot terminate an employee for exercising a legal duty such as jury duty or refusing to violate the law or professional ethics. o Contracts. Obviously, if an individual employee has a signed employment contract stipulating a particular period of employment, an organization cannot fire the employee without cause. Likewise, unions enter into collective bargaining agreements (contracts) with employers that also limit or negate employment-at-will. o Implied contracts. Employment-at-will is nullified if an employer implies that an employee “has a job for life” or can be fired only for certain reasons. o Covenants of good faith and fair dealing. Though employers are generally free to hire and fire at will, the courts have ruled that employers must still act in good faith and deal fairly with an employee. - To protect their right to use a policy of employment-at-will, most organizations include employment-at- will statements in their job applications and employee handbooks. B. LEGAL REASONS FOR TERMINATING EMPLOYEES - In situations not covered by employment-at-will, there are only four reasons that an employee can be legally terminated: probationary period, violation of company rules, inability to perform, and an economically caused reduction in force (layoffs). 1. Probationary Period - In many jobs, employees are given a probationary period in which to prove that they can perform well. - Though most probationary periods last three to six months, those for police officers are usually a year, and the probationary period for professors is six years. - Employees can be terminated more easily during the probationary period than at any other time. 2. Violation of Company Rules - Courts consider five factors in determining the legality of a decision to terminate an employee for violating company rules: o A rule against a particular behavior must actually exist. ▪ Unwritten rules will not hold up in court o If a rule exists, a company must prove that the employee knew the rule. ▪ Rules communicated in handbooks are the most legally defensible. ▪ To prove that an employee knew a rule, organizations require employees to sign statements that they received information about the rule, read the rule, and understand the rule o The ability of the employer to prove that an employee actually violated the rule. ▪ Proof is accomplished through such means as witnesses, video recordings, and job samples. o The extent to which the rule has been equally enforced. ▪ If other employees violated the rule but were not terminated, terminating an employee for a particular rule violation may not be legal. o The extent to which the punishment fits the crime. ▪ Employees in their probationary period (usually their first six months) can be immediately fired for a rule infraction. ▪ For more tenured employees, however, the organization must make a reasonable attempt to change the person’s behavior through progressive discipline. The longer an employee has been with an organization, the greater the number of steps that must be taken to correct her behavior. 3. 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. - For an employer to survive a court challenge to terminating a poor-performing employee, it must first demonstrate that a reasonable standard of performance was communicated to the employee. - 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. - A properly designed performance appraisal system is the key to legally terminating an employee. Legal performance appraisal systems: o are based on a job analysis; o have concrete, relevant standards that have been communicated to employees; o involve multiple behavioral measures of performance; o include several raters, each of whom has received training; o are standardized and formal; and o provide the opportunity for an employee to appeal. 4. Reduction in Force (Layoff) - Employees can be terminated if it is in the best economic interests of an organization to do so. - In cases of large layoffs or plant closings, the Worker Adjustment and Retraining Notification Act (WARN) requires that organizations provide workers with at least 60 days’ notice.  - Though layoffs are designed to save money, research indicates not only that force reductions have a devastating effect on employees, but that they often do not result in the desired financial savings. C. THE TERMINATION MEETING 1. Prior to the Meeting - Once a decision has been made to terminate an employee, certain steps should be taken to prepare for the meeting in which the decision will be communicated to the employee. - The first step is to ensure that the legal process has been followed. An important responsibility for human resources professionals is to ensure that a termination decision is legally defensible. - The next step is to determine how much help, if any, the organization wants to offer the employee. Forms of help can include references, severance pay, and outplacement assistance. o Usually, greater levels of help are given to employees who sign agreements not to sue the organization. - The final step is to schedule an appropriate place and time for the meeting to occur. The meeting should be held in a neutral, private location. To avoid potential damage caused by a hostile reaction to the termination decision, the meeting should not be held in a supervisor’s office. 2. During the Meeting - During the meeting, the supervisor should get to the point about terminating the employee. - The supervisor should rationally state the reasons for the decision, express gratitude for the employee’s efforts (if sincere), and offer whatever assistance the organization intends to provide. - Administrative duties such as obtaining copies of keys and completing paperwork are then performed. Finally, the employee is asked to gather personal belongings and is escorted out the door. 3. After the Meeting - Once the meeting is over, the natural reaction of the supervisor is to feel guilty. To relieve some of this guilt, a supervisor should review the facts. - When an employee is fired, other employees will be tense. Consequently, it is important to be honest with the other employees about what happened; at the same time, negative statements about the terminated employee’s character must be avoided. STEP 10: MONITOR THE LEGALITY AND FAIRNESS OF THE APPRAISAL SYSTEM - Performance appraisal systems are subject to the same legal standards as are employment tests and other employment decisions. As such, performance ratings should be analyzed each rating period to determine if there are gender, race/ethnicity, or age differences. - If there are such differences, the organization should determine whether the differences are justified by factors such as experience or if the differences are due to discrimination. - the personnel decisions that are based on the performance appraisal ratings should be analyzed to ensure discrimination does not occur in the raises, bonuses, promotions, and terminations that result from the performance ratings. - Questions that should be asked by the organization during this monitoring process include the following: o Has the organization provided training to supervisors regarding how to evaluate performance, communicate appraisal results, mentor underperforming employees, and make decisions on the basis of the appraisal results? o Are there gender, race, ethnicity, disability, or age differences in performance ratings? If so, are the differences supported by actual differences in performance? Do employees with similar performance ratings receive similar outcomes such as raises, promotions, discipline, training, or promotion? o Are there gender, race, ethnicity, disability, or age differences in the opportunities given to improve performance? That is, if a low-rated Asian employee is provided opportunities for improvement, is a similarly situated Hispanic employee given the same opportunities? o Are there employees who historically have received high ratings suddenly being given a low rating? If so, is the drop in ratings due to an actual performance decrease or to potential discrimination? Reference: Aamodt, M. G. Industrial / Organizational Psychology. 8 th Edition.