Notes on Evaluating Employee Performance

Evaluating Employee Performance Notes

Learning Objectives
  • 7-1: Create a performance appraisal instrument.
  • 7-2: Administer a performance appraisal system.
  • 7-3: Describe the problems associated with performance ratings.
  • 7-4: Conduct a performance appraisal review.
  • 7-5: Explain how to legally terminate an unproductive employee.
  • 7-6: Determine the legality of a performance appraisal system.
7-1 Determine the Reason for Evaluating Employee Performance
  • Organizations usually aim to evaluate employee performance for:
    • Improving employee performance through feedback.
    • Determining salary increases based on performance.
    • Making decisions about promotions and terminations.
Providing Employee Training and Feedback
  • Continuous feedback is crucial for improving performance. Organizations are shifting from a single annual performance review to more regular feedback sessions.
Determining Salary Increases
  • Salaries should reflect performance and tenure. Numerical formats are preferable for evaluations linked to compensation. Drawing comparisons between employees can introduce competition and perceptions of unfairness.
Making Promotion Decisions
  • Performance reviews need to assess competencies relevant to the new position rather than just past performance.
Making Termination Decisions
  • Sometimes performance evaluations may lead to termination, requiring documentation of performance issues and adherence to legal standards.
Conducting Organizational Research
  • Employee evaluations can inform research initiatives and training effectiveness assessments.
7-2 Identify Environmental and Cultural Limitations
  • Evaluate potential environmental and cultural factors:
    • Overburdened supervisors may struggle to implement an elaborate appraisal system.
    • Lack of financial resources can complicate performance evaluations.
7-3 Determine Who Will Evaluate Performance
  • Multiple sources for evaluations might include:
    • Supervisors
    • Peers
    • Subordinates
    • Customers
    • Self-appraisal
7-4 Select the Best Appraisal Methods to Accomplish Your Goals
  • Decide the focus for appraisals (traits, competencies, tasks, or goals) and potential weighting of dimensions.
  • Explore methods:
    • Competency Focus: Assessing skills and abilities.
    • Task Focus: Organized by tasks performed.
    • Goal Focus: Based on measurable goals.
Contextual Performance
  • Employees' behaviors related to cooperation and organizational citizenship should also be measured.
Making Decisions on Rating Methods
  • Consider whether to use employee comparisons, objective measurements, or subjective ratings.
Common Rating Errors
  • Leniency Error: Tendency to rate employees more favorably.
  • Halo Error: Overall impression influences ratings across dimensions.
  • Strictness Error: Consistently low ratings.
  • Contrast Error: Ratings affected by comparison with previously evaluated individuals.
7-7 Evaluate Performance
  • Use objective data and critical incident logs to inform performance ratings. Avoid common distribution errors during ratings.
7-8 Communicate Appraisal Results to Employees
  • Establish a structured process for performance feedback that includes discussion of previous evaluations, upcoming goals, and areas for improvement.
7-9 Terminate Employees
  • Understand the employment-at-will doctrine, which allows freedom to terminate employment without cause in the private sector.
  • Legal considerations include documentation of company rules and consistent enforcement.
7-10 Monitor the Legality and Fairness of the Appraisal System
  • Regular reviews should be conducted to ensure the appraisal process is fair and does not discriminate against employees based on race, gender, or age.
Key Terms
  • Forced-choice rating scale: A method where raters select behaviors without knowing a key.
  • Behaviorally anchored rating scales (BARS): A method using critical incidents to anchor ratings.
  • Progressive discipline: A series of penalties of increasing severity.
  • Employment-at-will: The ability to terminate employment without just cause.