Which of the Following Is a Concern About Performance Reviews?

1. How do organizations effectively use performance appraisals to meliorate individual chore performance, and what are the limitations inherent in the apply of various appraisal systems?

Functioning appraisals are one of the most important and oftentimes i of the most mishandled aspects of management. Typically, we recall of performance appraisals every bit involving a dominate evaluating a subordinate. Nevertheless, functioning appraisals increasingly involve subordinates appraising bosses through a feedback process known every bit 360 feedback,¹ customers appraising providers, and peers evaluating coworkers.

Whether appraisals are washed past subordinates, peers, customers, or superiors, the procedure itself is vital to the lifeblood of the organization. Performance appraisal systems provide a means of systematically evaluating employees across various performance dimensions to ensure that organizations are getting what they pay for. They provide valuable feedback to employees and managers, and they assist in identifying promotable people likewise equally issues. However, such appraisals are meaningless unless they are accompanied by an constructive feedback system that ensures that the employee gets the right messages concerning performance.

Reward systems represent a powerful motivational forcefulness in organizations, just this is true only when the system is off-white and tied to performance. Because a variety of approaches to appraising performance exists, managers should exist aware of the advantages and disadvantages of each. In plough, an agreement of advantage systems will help managers select the system best suited to the needs and goals of the organization.

Performance appraisal systems serve a diversity of functions of fundamental importance to employees. Appraisal techniques practiced today are not without problems, though. Managers should keep abreast of recent developments in bounty and reward systems then they can alter existing systems when more than appropriate alternatives get available.

A key management responsibility has always been to oversee and develop subordinates. In fact, information technology has been said that every director is a human being resource director. Nowhere is this truer than with regard to evaluating and rewarding subordinates. Managers are consistently involved with employee training and development, monitoring employee performance, providing job-related feedback, and administering rewards.

In this chapter, we examine iii interrelated aspects of the performance appraisal and reward process. As Exhibit eight.2 shows, this process moves from evaluating employee functioning to providing adequate and constructive feedback to determining discretionary rewards. Where attempt and functioning are properly evaluated and rewarded, nosotros would look to see more stable and consistent job performance. On the other hand, where such performance is merely evaluated intermittently or where the appraisal and review procedure is poorly done, we would by and large meet less consequent performance. We begin our discussion with a expect at the nature of appraisals.

We begin past examining three aspects of operation appraisal systems: (i) the uses of performance appraisals, (2) problems found in performance appraisals, and (three) methods for reducing errors in the appraisement system. This overview will provide a foundation for studying specific techniques of performance appraisal. Those interested in more detailed information on performance appraisal systems may wish to consult books on personnel assistants or compensation.

Showroom 8.2 The Performance Appraisal and Advantage Process (Attribution: Copyright Rice Academy, OpenStax, under CC By-NC-SA 4.0 license)

Uses of Performance Appraisals

In most piece of work organizations, performance appraisals are used for a multifariousness of reasons. These reasons range from improving employee productivity to developing the employees themselves. This diversity of uses is well documented in a study of why companies use performance appraisals.² Traditionally, compensation and functioning feedback have been the most prominent reasons organizations utilize operation appraisals.

Feedback to employees. Operation appraisals provide feedback to employees virtually quantity and quality of job functioning. Without this information, employees have piddling knowledge of how well they are doing their jobs and how they might improve their work.

Self-development. Performance appraisals can also serve as an aid to employee self-development. Individuals larn about their strengths and weaknesses as seen by others and tin can initiate self-improvement programs (see discussion on behavioral self-management programs).

Reward systems. In addition, appraisals may form the bases of organizational advantage systems—particularly merit-based compensation plans.

Personnel decisions. Performance appraisals serve personnel-related functions too. In making personnel decisions, such every bit those relating to promotions, transfers, and terminations, they can exist quite useful. Employers tin brand choices on the ground of information most individual talents and shortcomings. In addition, appraisal systems help management evaluate the effectiveness of its selection and placement functions. If newly hired employees mostly perform poorly, managers should consider whether the right kind of people are being hired in the offset identify.

Training and development. Finally, appraisals can help managers place areas in which employees lack critical skills for either immediate or future performance. In these situations, new or revised grooming programs can exist established to further develop the company's human resource.

Information technology is credible that functioning appraisal systems serve a variety of functions in organizations. In light of the importance of these functions, it is imperative that the accuracy and fairness of the appraisal be paramount considerations in the evaluation of a system. Many performance appraisement systems be. It is the managing director's job to select the technique or combination of techniques that best serves the particular needs (and constraints) of the organization. Earlier considering these diverse techniques, let us await at some of the more prominent problems and sources of error that are common to several of them.

Problems with Performance Appraisals

A number of problems can be identified that pose a threat to the value of appraisement techniques. Most of these problems deal with the related issues of the validity and reliability of the instruments or techniques themselves. Validity is the extent to which an instrument really measures what it intends to measure, whereas reliability is the extent to which the instrument consistently yields the same results each time information technology is used. Ideally, a expert performance appraisal system will showroom high levels of both validity and reliability. If not, serious questions must exist raised apropos the utility (and perhaps the legality) of the system.

It is possible to identify several common sources of error in performance appraisement systems. These include: (1) key tendency error, (2) strictness or leniency error, (3) halo effect, (4) recency error, and (five) personal biases.

Central Tendency Error. It has often been plant that supervisors charge per unit most of their employees within a narrow range. Regardless of how people actually perform, the rater fails to distinguish significant differences amongst grouping members and lumps everyone together in an "average" category. This is called key tendency error and is shown in Showroom 8.iii. In short, the central tendency error is the failure to recognize either very good or very poor performers.

Exhibit viii.3 Examples of Strictness, Central Tendency, and Leniency Errors (Attribution: Copyright Rice Academy, OpenStax, under CC By-NC-SA four.0 license)

Strictness or Leniency Error. A related rating problem exists when a supervisor is overly strict or overly lenient in evaluations (come across Exhibit viii.3). In college classrooms, we hear of professors who are "tough graders" or, conversely, "like shooting fish in a barrel A'due south." Like situations be in the workplace, where some supervisors see nigh subordinates as not measuring up to their high standards, whereas other supervisors see well-nigh subordinates as deserving of a loftier rating. As with central tendency fault, strictness mistake and leniency error fail to distinguish fairly between good and bad performers and instead relegate almost everyone to the aforementioned or related categories.

Halo Effect. The halo effect exists where a supervisor assigns the same rating to each factor being evaluated for an individual. For example, an employee rated to a higher place average on quantity of functioning may besides be rated above boilerplate on quality of functioning, interpersonal competence, attendance, and promotion readiness. In other words, the supervisor cannot finer differentiate between relatively discrete categories and instead gives a global rating.

These types of bias are based on our perceptions of others. The halo upshot occurs when managers have an overly positive view of a particular employee. This can touch the objectivity of reviews, with managers consistently giving an employee loftier ratings and failing to recognize areas for improvement.

Whether positive or negative, nosotros as well accept a natural trend to ostend our preconceived beliefs most people in the way nosotros interpret or retrieve performance, which is known equally confirmatory bias.

For case, a manager may accept a preconception that her male person report is more believing. This could cause her to call up instances more easily in which her report asserted his position during a meeting. On the other hand, she may perceive her female report to be less assertive, predisposing her to forget when the study suggested an effective strategy or was successful in a tough negotiation.

The halo consequence is often a upshot of people having a similarity bias for sure types of people. We naturally tend to favor and trust people who are similar to us. Whether it'southward people who also have a penchant for golf or people who remind us of a younger version of ourselves, favoritism that results from a similarity bias tin can give certain employees an unfair advantage over others. This tin impact a team to the point that those employees may receive more coaching, better reviews and, as a result, more than opportunities for advancement.³

Recency Error. Oftentimes evaluators focus on an employee'south almost recent behavior in the evaluation process. This is known as the recency error. That is, in an annual evaluation, a supervisor may requite undue accent to functioning during the past months—or fifty-fifty weeks—and ignore performance levels prior to this. This practice, if known to employees, leads to a situation where employees may "float" for the initial months of the evaluation period and and so overexert themselves in the terminal few months or weeks prior to evaluation. This practice leads to uneven performance and contributes to the attitude of "playing the game."

Personal Biases. Finally, it is not uncommon to detect situations in which supervisors allow their own personal biases to influence their appraisals. Such biases include like or dislike for someone, too equally racial and sexual biases. Personal biases tin can interfere with the fairness and accuracy of an evaluation and are illegal in many situations.

Reducing Errors in Performance Appraisals

A number of suggestions have been advanced recently to minimize the effects of various biases and errors on the performance appraisal process.⁴ When errors are reduced, more accurate information is available for personnel decisions and personal development. These methods for reducing error include

• ensuring that each dimension or factor on a operation appraisal form represents a single job activity instead of a group of job activities.
• avoiding terms such as boilerplate, because different evaluators define the term differently.
• ensuring that raters discover subordinates on a regular basis throughout the evaluation menstruum. It is even helpful if the rater takes notes for futurity reference.
• keeping the number of persons evaluated by one rater to a reasonable number. When i person must evaluate many subordinates, information technology becomes difficult to discriminate. Rating fatigue increases with the number of ratees.
• ensuring that the dimensions used are conspicuously stated, meaningful, and relevant to good task functioning.
• grooming raters and then they can recognize various sources of error and understand the rationale underlying the evaluation process.

Using mechanisms like these, better employee ratings that can accept greater meaning both for the individual employee and the organization will result.

Concept Check

1. What are functioning appraisals, and how are they used in organizations?
2. How are performance appraisals used as a reward system, and what issues tin can they cause?

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Source: https://openstax.org/books/organizational-behavior/pages/8-1-performance-appraisal-systems

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