32.52.4Industrial and Organizational Psychology: Evaluating Employee Performance Study Guide
Step 1: Determine the Reason for Evaluating Employee Performance
Importance of Determination: Identifying the reason for evaluations is crucial because specific performance appraisal techniques are effective for certain purposes but inappropriate for others.
Most Common Uses and Goals for Performance Appraisal: 1. Providing Employee Training and Feedback: This is considered the most important use of performance evaluation. * The semiannual performance appraisal review serves as an excellent time for supervisors to meet with employees to discuss specific strengths and weaknesses. * The session should focus on how weaknesses will be corrected moving forward. 2. Determining Salary Increases: Appraisals provide a fair, objective basis for deciding the specific amount of an employee’s salary increase. 3. Making Promotion Decisions: Appraisals help identify candidates for advancement. However, promoting the best performer or the most senior employee often leads to the Peter Principle, where individuals are promoted to their level of incompetence. 4. Making Termination Decisions: Documented performance data is necessary to justify the firing of an employee. 5. Conducting Personnel Research: To conduct valid research, organizations must have access to accurate and reliable measures of job performance.
Step 2: Identify Environmental and Cultural Limitations
Environmental Factors: Evaluators must consider external pressures such as overwork, high stress levels, or financial limitations within the organization.
Consequences of Neglect: If these environmental and cultural limitations are not identified and accounted for, the results of the evaluation may not be taken seriously by employees or management.
Step 3: Determine Who Will Evaluate the Performance
Traditional Approach: Performance is typically evaluated by supervisors; however, supervisors may only see specific aspects of an employee’s behavior.
360-Degree Feedback and Multiple-Source Feedback: This method involves using several different sources to provide a comprehensive appraisal of performance.
Specific Sources of Appraisal: 1. Supervisors: This is the most common type of performance appraisal (often called a supervisor rating). 2. Peers: Peers often witness actual daily behavior because they work directly with the employee. * Peer ratings are only reliable when the peers are similar in rank and well-acquainted with the employee being rated. * Employees typically react more negatively to unfavorable feedback from peers than from designated experts. 3. Subordinates: This is referred to as upward feedback. * This process is difficult because subordinates often fear a backlash if they provide an unfavorable rating for their supervisor. * Despite this fear, subordinate ratings tend to correlate highly with the ratings given to supervisors by upper management. 4. Customers: Feedback is provided via complaints or compliments filed with the manager. * Secret Shoppers: These are current customers enlisted by a company to periodically evaluate the service they receive. 5. Self-Appraisal: This allows an employee to evaluate their own behavior and performance. * Self-appraisals often suffer from leniency and only correlate moderately with actual performance. * Accuracy increases when the appraisal is not being used for administrative purposes (like raises or promotions). * Accuracy also increases when employees understand the appraisal system and believe an objective record of their performance exists for the supervisor to use as a comparison.
Step 4: Select the Best Appraisal Methods to Accomplish Goals
Criteria: These are specific ways of describing employee success.
Decision 1: Focus of the Appraisal Dimensions
I. Trait-Focused Performance Dimensions: These concentrate on attributes like dependability, honesty, and courtesy. They are generally considered a poor idea because they offer low-quality feedback and do not facilitate employee development.
II. Competency-Focused Performance Dimensions: These focus on the employee's knowledge, skills, and abilities (KSAs).
III. Task-Focused Performance Dimensions: These are organized by the similarity of tasks performed. * This allows supervisors to visualize performance easily by concentrating on tasks that occur together. * A drawback is that it is more difficult to offer suggestions for correcting deficiencies if an employee scores low.
IV. Goal-Focused Performance Dimensions: These organize appraisals based on specific goals the employee needs to accomplish, making it easier to understand why certain behaviors are required.
V. Contextual Performance: This focuses on the effort an employee makes to get along with peers, improve the organization, and perform necessary tasks that are not part of their official job description. These dimensions are usually similar across different job types.
Decision 2: Should Dimensions be Weighted?
Weighting makes philosophical sense because certain dimensions are more important to the organization than others.
It can help reduce racial and other types of biases.
Weighting makes the process administratively easier to compute and explain to staff.
Decision 3: Use of Employee Comparisons, Objective Measures, or Ratings
A. Employee Comparisons: * Rank Order: Employees are ranked from best to worst on relevant dimensions. This is easy when there are few employees. * Paired Comparisons: Every possible pair of employees is compared. This becomes time-prohibitive as the number of employees increases. * Forced Distribution: A predetermined percentage of employees is placed into one of categories. This assumes performance is normally distributed (some poor, some excellent, most average). * Note: Comparison methods do not provide information on how well an employee is actually performing in absolute terms.
B. Objective Measures (Hard Criteria): * Quantity of Work: A count of relevant job behaviors. This can often be misleading. * Quality of Work: Measured by errors (deviations from a standard). Work quality can sometimes be higher than the established standard. * Attendance: Categorized into three criteria: absenteeism, tardiness, and tenure. * Safety: Employees who follow rules and avoid accidents save the company money compared to those who break rules or damage equipmCommunicateent.
C. Ratings of Performance: * Graphic Rating Scale: The most common scale. It is easy to construct and use but susceptible to errors like halo and leniency. * Behavioral Checklist: A list of behaviors/expectations for each dimension. Supervisors concentrate on relevant behaviors converted from task statements in job descriptions. * Behavior-focused system: Increases specific feedback for employees. * Result-focused statements: Concentrate on accomplishments. * Contamination: A situation where an employee does everything correctly but fails to get results due to factors outside their control. * Comparison with Other Employees: Comparing one's performance level to others to reduce leniency, though it may force high-performers to be rated lower than they deserve. * Frequency of Desired Behaviors. * Extent to which Organizational Expectations are Met: Provides high feedback levels and applies to most behaviors.
Step 5: Train Raters
Frame-of-Reference Training: Raters receiving this training make fewer errors and recall more information. It involves providing job-related info, practice in rating, and reviewing expert ratings with their rationales.
Goal: To communicate the organization's definition of effective performance and ensure raters focus only on relevant behaviors.
System Satisfaction: The better employees understand the appraisal system, the higher the satisfaction with the process.
Step 6: Observe and Document Performance
Critical Incidents: Supervisors must observe and document examples of excellent and poor performance.
Critical Incident Log: A written record that forces supervisors to focus on actual behavior. It helps supervisors recall first impressions, recent behaviors, and unusual or extreme behaviors.
Benefits: Provides examples for performance reviews and helps defend against legal actions regarding termination or denied promotions.
Employee Performance Record: A formal method for using critical incidents developed by Flanagan and Burns (1955), where only job-relevant behaviors are recorded.
Step 7: Evaluate Performance
Obtaining and Reviewing Objective Data: Combined with logs, this provides a solid basis for rating.
Reading Critical-Incident Logs: This helps reduce errors related to primacy, recency, and unusual information.
Completing the Rating Form: Raters must be wary of common errors: * A. Distribution Errors: Using only one part of the scale. * Leniency Error: Rating everyone at the upper end. * Central Tendency Error: Rating everyone in the middle. * Strictness Error: Rating everyone at the low end. * B. Halo Errors: Allowing a single attribute or overall impression to affect all dimension ratings. This is determined statistically by correlating dimension ratings. High correlation indicates halo error. It can be reduced by rating traits at separate times. * C. Proximity Errors: A rating on one dimension affects the rating of the dimension immediately following it on the scale (physically nearest items). * D. Contrast Errors: A person's rating is influenced by the performance of the person evaluated previously. * Error Assimilation: A supervisor gives an excellent rating to a poor performer because the previous evaluation reviewed was excellent. * E. Low Reliability Across Raters: Different raters seldom agree because of individual errors, different standards for an "ideal" employee, or seeing different behaviors from the same person. * F. Sampling Problems: * Recency Effect: Recent behaviors are weighted more heavily than behaviors from the first few months. * Infrequent Observation: Supervisors are often too busy to see a representative sample, or employees act differently when the supervisor is present. * G. Cognitive Processing of Observed Behavior: * Observation of Behavior: Observation doesn't guarantee proper recall. Accuracy is highest immediately after behavior occurs. Time intervals increase errors. * Emotional State: Stress levels affect performance ratings. * Bias: Liking an employee can lead to leniency and lower accuracy because affect interferes with cognitive processing.
Step 8: Communicate Appraisal Results to Employees
I. Prior to the Interview
Preparation: Allocate at least hour for preparation and the interview itself.
Scheduling: Use a neutral place. Schedule at least once every months for most employees (more often for new hires).
Review: The supervisor reviews their ratings and reasons; the employee performs a self-appraisal.
II. During the Interview
Atmosphere: Start with small talk to reduce jitters.
Content: Communicate the role of the appraisal, the process, the expectation for a two-way interview, and the goal of improvement.
Engagement: Active employee involvement leads to higher satisfaction.
Structure: Use a feedback sandwich: positive feedback, then negative, then positive again.
Discussion: Explain why performance wasn't perfect. Avoid the Fundamental Attribution Error (attributing failure to personal factors instead of situational ones).
Goals: Mutually set goals for future performance and behavior, ensuring both parties understand how to meet them.
Step 9: Terminate Employees
Employment-at-Will Doctrine: Allows employers to fire employees without a reason.
Limitations to Employment-at-Will: State and Federal laws, Public Policy/Interest, Contracts, Implied Contracts, and the Covenant of Good Faith and Fair Dealing.
Legal Reasons for Termination: 1. Probationary Period: A timeframe to prove performance capability. 2. Violation of Company Rules: * The rule must exist. * The company must prove the employee knew the rule. * The employer must prove the rule was actually violated. * The rule must be equally enforced. * The punishment must fit the crime. 3. Inability to Perform. 4. Reduction in Force (Layoff).
Process: * Ensure legal processes are followed. * Determine offerings like references, severance pay, and outplacement assistance. * Schedule the meeting at an appropriate time and place. * During the meeting: Be direct, state reasons, express gratitude, and offer assistance. * After the meeting: Review facts and be honest with remaining employees about the event.