Unit 4 Intentionally and Unintentionally Rating Inflation Discussion

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Respond to the questions posted and write a minimum of 250 words for this question with a minimum of one source for the response. You are required to respond to one classmate’s postings with a minimum of 100 words per post. You are required to use a reference source for each response.

1. Discuss the factors that may intentionally and unintentionally cause rating inflation.

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Before I discuss the factors that may intentionally and unintentionally in some cases cause rating inflation, I will first expand on the idea of rating inflation and describe it in more detail. Rating inflation normally occurs in a rating system where the average rating the person or party being evaluated increases over time with no real changes occurring just a natural progression so to speak in the scoring scale (Heyman & Sailors, 2011). Essentially, this means that if a person rates at a 90 for example, a person that may rake as a 90 in the future may not necessarily be as strong as the person who is presently receiving this score for their performance, but that the inflation of the scoring critique has occurred. When considering performance management this brings an interesting aspect to consider. Performance management is general is done differently throughout many different industries and organizations and can be affected by many different things including biases based upon many different such as relationships between the people involved, past experiences, and many other things(Slaughter & Greguras, 2008).There is many factors and potential causes of inflated ratings that can occur within a organization rating system which could be either intentional or unintentional. Some factors could include factors such as motivation to improve performance of the employee, could be a reason to reduce work for the manager such as inflating performance to reduce perceived work needed with employee, to improve the overall rating with an organization such as a regional ranking or something to that effect, budget control, and many others. The problem with rating inflation is that it occurs frequently throughout many years, it cause many issues for the organizations, including a staff of underperformers, or lack of production and an unhealthy culture within an workplace that includes employees attempting to do just enough to get by instead of being motivated to further increase their production or performance(Lee, 2019). I have personally seen this in action a few different times and in my case, it was a form of budget control that influenced the performance management structure. Essentially the majority of the employees fell into the average group normally around 90% of the employees, and the outlines the top 5% and low 5% required in depth review to process the review so essentially that process was avoided by the management staff in most cases to prevent the extra work and help control the raises the employees would receive based upon the review they were given.

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Chapter 6 Gathering Performance Information G A T E Unless a reviewer has the courage to give you unqualified S praise, I say ignore the bastard. , —JOHN STEINBECK D E A N LEARNING OBJECTIVES D By the end of this chapter, you will be able to do the following: R  Understand why each of several basic components is included in the appraisal form. A  Design effective appraisal forms.        Compute an overall employee performance score based on information found on the appraisal form. 1 Select an appropriate time period to document performance as part of a 1 performance review. 2 Determine how many formal meetings are needed between the subordinate and the supervisor to discuss performance 3 issues. Understand advantages and disadvantages T of using supervisors, peers, subordinates, self, and customers as sources of performance information. S Know how to deal with potential disagreements involved with different sources evaluating the performance of the same employee. Understand the psychological mechanisms leading to the inflation and deflation of performance ratings. Understand that the implementation of training programs can address intentional and unintentional rating distortion. 130 Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information As discussed in Chapter 2, the performance management process includes several stages: prerequisites, performance planning, performance execution, performance assessment, performance review, and performance renewal and recontracting. An important component of the performance assessment stage is the use of appraisal forms. These forms are instruments used to document and evaluate performance. Chapters 4 and 5 provided a description of the various approaches and techniques that can be used to measure performance, but this chapter provides a more exhaustive description of the use of appraisal forms and their content. In addition, this chapter describes other issues related to the administration of appraisal forms, such as how often the supervisor and subordinate should meet to discuss performance issues and how to choose the source(s) of performance G data (e.g., supervisors, self, subordinates, peers, or customers). The chapter concludes with A a discussion of reasons why raters are likely, either intentionally or unintentionally, to distort performance ratings and what T can be done to improve the accuracy of ratings. E S 6.1 APPRAISAL FORMS At the core of any performance management,system is the assessment of performance. Information on performance is collected by using forms, which can be filled out on paper or electronically. One advantage of filling out forms electronically is that the D information is stored and can easily be shared, for example, between the manager filling out the form and the human resourcesE(HR) department. Also, having the data available in electronic form can help in subsequent analyses, for example, in making A comparisons of the relative average performance levels of various units within the Nbeneficial because, as change take place organization. Finally, using electronic forms is 1 in the organization or job in question, forms D need to be revised and updated, and electronic forms are usually easier to modify than paper forms. R or paper, appraisal forms usually Regardless of whether they are electronic 2 include a combination of the following components : A • Basic employee information. This section of the form includes basic employee information such as job title, division, department and other work group information, 1 classification. In addition, forms usually employee number, and pay grade or salary include the dates of the evaluation period, 1the number of months and years the rater has supervised or worked with the employee, an employee’s starting date with the 2 job, the reason for the appraisal, current company and starting date in the current salary and position in range, and the date 3of the next scheduled evaluation. • Accountabilities, objectives, and standards. If the organization adopts a results T approach, this section of the form would include the name and description of each S manager and employee, and the extent accountability, objectives agreed upon by to which the objectives have been achieved. In many instances, the objectives are weighted in terms of importance, which facilitates the calculation of an overall performance score. Finally, this section can also include a subsection describing conditions under which performance was achieved, which may help explain why the employee achieved the (high or low) performance level described. For example, a supervisor may have the opportunity to describe specific circumstances Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 131 132 Part II • System Implementation surrounding performance during the review period, including a tough economy, the introduction of a new line of products, and so forth. • Competencies and indicators. If the organization adopts a behavior approach, this section of the form includes a definition of the various competencies to be assessed, together with their behavioral indicators. • Major achievements and contributions. Some forms include a section in which a rater is asked to list the two or three major accomplishments of the individual being rated during the review period. These could refer to results, behaviors, or both. • Developmental achievements. This section of the form includes information about the extent to which the developmental goals set for the review period G have been achieved. This can include a summary of activities, such as workshops attended and courses taken asAwell as results, such as new skills learned. Evidence of having learned new skills can be documented, for example, by T obtaining a professional certification. Although some organizations include developmental achievements in theEappraisal form, others choose to include them in a separate form. Sun Microsystems is an example of an organization S that separates these forms. Some organizations do not include development , because it is often difficult for employees content as part of the appraisal form to focus constructively on development if they have received a less-than-ideal performance review. • Developmental needs, plans, and goals. DThis section of the form is future oriented and includes information about specific E goals and timetables in terms of employee development. As noted before, some organizations choose to create a separate A this information as part of the performdevelopment form and do not include ance appraisal form. N • Stakeholder input. Some forms include sections to be filled out by other stakeholdD ers, such as customers with whom the employee interacts. Overall, stakeholders R knowledge of and are affected by the are defined as people who have firsthand employee’s performance. In most cases, A input from other stakeholders is collected from them by using forms separate from the main appraisal because not all sources of performance information are in the position to rate the same performance dimensions. For example, an employee may be rated on the competency 1 “teamwork” by peers and on the competency “reliability” by a customer. A more 1 sources of performance information is detailed discussion of the use of various offered later in this chapter. 2 • Employee comments. This section includes reactions and comments provided by 3 to allowing formal employee input, which the employee being rated. In addition improves the perceived fairness of the T system, the inclusion of this section helps with legal issues because it documents that the employee has had an opportunity S to participate in the evaluation process. • Signatures. The final section of most forms includes a section in which the employee being rated, the rater, and the rater’s supervisor provide their signatures to show they have seen and discussed the content of the form. The HR department may also provide approval of the content of the form. Table 6.1 summarizes the major components of appraisal forms. Let’s consider some examples to see which of these components are present in each. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information TABLE 6.1 Major Components of Appraisal Forms Basic employee information Accountabilities, objectives, and standards Competencies and indicators Major achievements and contributions Developmental achievements (could be included in a separate form) Developmental needs, plans, and goals (could be included in a separate form) Stakeholder input G A Signatures T First, consider the form included in Figure E 6.1. This is a generic form that can be used for almost any position in a company. Let’s evaluate this form in relation to the S asks for the employee’s basic informacomponents listed in Table 6.1. First, the form tion. Second, while the form asks the manager , to list the expected versus the actual Employee comments accountabilities, it does not include objectives or standards. Third, the form includes five competencies, but it does not include a definition of those competencies nor does it list the indicators to look for to determineD whether the employee has mastered the E A Form Performance Review N Employee Name: _________________________________ Title: ____________________________________________ D Manager: ________________________________________ Date of Appraisal Meeting: ________________________ R Employee Performance Reviews improve employeeA performance and development by encouraging communication, establishing performance expectations, identifying developmental needs, and setting goals to improve performance. Performance reviews also provide an ongoing record of employee performance, which is helpful for both the supervisor and employee. 1 1 2 1. Job description/key responsibilities/required tasks: 3 _______________________________________________________________________________________ _______________________________________________________________________________________ T _______________________________________________________________________________________ _______________________________________________________________________________________ S Use the form below to list examples of outstanding performance or achievements as well as areas of performance that need improvement. Please provide open comments on your employee’s performance. Complete each section and list examples of performance where applicable. 2. Note expected accomplishments vs. actual accomplishments: _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ FIGURE 6.1 Basic Performance Review Form Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 133 134 Part II • System Implementation 3. List the areas where the employee developed in ways enabling him or her to take on additional responsibilities or be eligible for high-profile assignments: _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ 4. Areas of development for upcoming quarter (i.e., communication skills, teamwork, project management skills, budgeting experience, etc.): _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ G A T 5. Goals for upcoming quarter (Please list S.M.A.R.T. goals): _______________________________________________________________________________________ E _______________________________________________________________________________________ _______________________________________________________________________________________ S _______________________________________________________________________________________ , Please circle the number below that best describes the employee’s performance in the following areas: Areas of concentration Teamwork Leadership Business acumen Customer service Project management Did not meet expectations Achieved most expectations 1 1 2 2 1 2 1 2 1 2 D E Achieved Aexpectations 3 N 3 D 3 R 3 A 3 Achieved expectations and exceeded on a few Significantly exceeded expectations 4 4 5 5 4 5 4 5 4 5 Average Performance Score 1 Employee Use Only: 1 Please provide comments and examples of behaviors to describe your performance in the past quarter. 2 ____________________________________________________________________________ 3 ____________________________________________________________________________ ____________________________________________________________________________ T ________________________________ _____________________________________ Manager Signature Date Employee Date S Signature FIGURE 6.1 (Continued) relevant competencies. The form does include space to list major achievements, developmental needs, and employee comments. The form does not solicit information from all relevant stakeholders. In short, the following table summarizes the components that are present: Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information Major Components of Appraisal Forms: Evaluation of Form in Figure 6.1 X Basic employee information Accountabilities, objectives, and standards Competencies and indicators X Major achievements and contributions X Developmental achievements X Developmental needs, plans, and goals Stakeholder input G X Employee comments A X Signatures T E As a second example, consider the formS included in Figure 6.2. Similar to the form in Figure 6.1, this form has a section for basic , employee information, developmental areas, goals, and employee comments. This form does not include a list of the employee’s accountabilities, objectives, and standards. The competencies needed for the position are listed, but the behavioral indicators to look forD to evaluate the presence of the competency E A Employee Performance Appraisal N Employee Name: ________________________ D Department: _____________________ Date of Hire: ____________________________ R Date of Performance Review: _____________________ A Ratings: Please rate the employee on the following factors: Flexibility Teamwork Oral communication Written communication Initiative Decision making Job knowledge Quality work Productivity FIGURE 6.2 Did not meet expectations 1 1 Achieved most expectations 2 2 1 2 1 1 1 1 1 1 2 2 2 2 2 2 1 Achieved 1 expectations 2 33 3 3 T 3 S 3 3 3 3 3 Achieved expectations and exceeded on a few 4 4 Significantly exceeded expectations 5 5 4 5 4 4 4 4 4 4 Total Points: 5 5 5 5 5 5 Employee Performance Appraisal Form Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 135 136 Part II • System Implementation Level of Performance Unsatisfactory (0–15 pts) Needs improvement (16–31 pts) Fulfills responsibilities (32–37 pts) Description of Performance Did not meet the responsibilities associated with position. Place on personal improvement performance plan. Met main responsibilities, but did not fulfill all responsibilities. Inconsistent level of performance across tasks. Fulfilled all key responsibilities. Consistently performed to established work standards. Fulfilled key responsibilities, and took on more and completed additional responsibilities. Consistently a high performer. Far exceeded the job responsibilities in all areas and took charge of major projects. Consistent high performer and expert at position. G A Exceeds responsibilities (38–48 pts) T E S Far exceeds responsibilities (49–55 pts) Note: Percentage increases listed are to be used as a, guideline. Increase NA 1–2% 3–4% 4–5% 5–6% Employee strengths/areas of expertise: _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ D E A Developmental areas: N _______________________________________________________________________________________ _______________________________________________________________________________________ D _______________________________________________________________________________________ R _______________________________________________________________________________________ A and developmental areas: Goals for upcoming year in relation to job responsibilities _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ 1 1 Employee comments (optional): _______________________________________________________________________________________ 2 _______________________________________________________________________________________ 3 _______________________________________________________________________________________ _______________________________________________________________________________________ T Employee:__________________________________ S Date:______________________ Reviewer:___________________________________ FIGURE 6.2 Date:______________________ (Continued) Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information Major Components of Appraisal Forms: Evaluation of Form in Figure 6.2 X Basic employee information Accountabilities, objectives, and standards Competencies and indicators Major achievements and contributions Developmental achievements X Developmental needs, plans, and goals G X Employee comments A X Signatures T E are not. Furthermore, unlike the form in Figure S 6.1, the employee’s developmental and major achievements are not acknowledged. Again, stakeholders are not asked for their , input. In short, the following components are present: Stakeholder input This analysis shows that although the forms included in Figures 6.1 and 6.2 seem to be quite complete and thorough, they are not. Thus, before implementing appraisal D forms, make sure that all their necessary components are present. E A 6.2 CHARACTERISTICS OF APPRAISAL FORMS N We should be aware that there is no such thing as a universally correct appraisal form. D In some cases, a form may emphasize competencies and ignore results. This would be the case if the system adopted a behavior approach as opposed to a results approach to R measuring performance. In others, the form may emphasize developmental issues and A minimize or even completely ignore both behaviors and results. In such cases, the form would be used for developmental purposes only and not for administrative purposes. One size does not fit all, and different components are appropriate based on the pur1 poses of the appraisal. In spite of the large variability in terms 1 of format and components, there are certain desirable features that make appraisal forms particularly effective: 2 • Simplicity. Forms must be easy to understand, easy to administer, quick to com3 plete, clear, and concise. If forms are too long, convoluted, and complicated, it is T likely that the performance assessment process will not be effective. • Relevancy. Good forms include information related directly to the tasks and S responsibilities of the job; otherwise, they will be regarded as an administrative burden and not as a tool for performance improvement. • Descriptiveness. Good forms require that the raters provide evidence of performance regardless of the performance level. The form should be sufficiently descriptive that an outside party (e.g., supervisor’s supervisor or HR department) has a clear understanding of the performance information conveyed. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 137 138 Part II • System Implementation TABLE 6.2 Desirable Features of All Appraisal Forms Simplicity Relevancy Descriptiveness Adaptability Comprehensiveness Definitional clarity Communication G A T • Adaptability. Good forms allow managers in different functions and departments E and situations. This feature encourages to adapt them to their particular needs widespread use of the form. S • Comprehensiveness. Good forms include all the major areas of performance for a , period. particular position for the entire review Time orientation • Definitional clarity. Desirable competencies and results are clearly defined for all raters so that everyone evaluates the same attributes. This feature enhances D consistency of ratings across raters and levels of the organization. E of the components of the form must be • Communication. The meaning of each successfully communicated to all people participating in the evaluation process. A This enhances acceptance of the system and motivation to participate in it both as N raters and as ratees. • Time orientation. Good forms help clarify D expectations about performance. They address not only the past but also the future.3 R Table 6.2 includes a summary of the A features that are desirable in all forms regardless of specific content and format. Let’s consider the two illustrative forms discussed earlier to see how they fare in relation to these desirable features. First, consider the form shown in Figure 6.1. It1is simple because it is easy to understand and clear. The fact that it includes an essay format implies that it would take a little 1 essays is kept to a minimum. The form is more time to complete, but the number of also relevant, but only if the supervisor enters 2 the correct job description and actual accountabilities. This form can be extremely descriptive owing to its narrative 3 nature. The form encourages the manager to give examples of relevant behavior. Next, the form is also adaptable, perhaps T too adaptable; it would be hard to compare performance across employees because the manager can adapt the form to S each employee. This form is comprehensive, but again only if the manager lists all of the expected accountabilities. This form does not have definitional clarity. Because the competencies listed are not clearly defined, ratings are likely to be inconsistent across raters. Next, this form can be communicated across the organization. Manager acceptance may be hard to gain, however, because of the amount of detail required by the essay answers. Finally, the form is time oriented. It asks for past and future performance expectations and goals. In short, the following table summarizes which of the desirable characteristics are present in this form: Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information Desirable Features of All Appraisal Forms: Evaluation of Form in Figure 6.1 X Simplicity X Relevancy X Descriptiveness X Adaptability X Comprehensiveness Definitional clarity X Communication G X Time orientation A T Next, let’s evaluate the form shown in Figure 6.2 in relation to the desirable features listed in Table 6.2. First, it is simple because it isE easy to administer, quick to complete, clear, and concise. This form is easier to administer S than the form shown in Figure 6.1 because this form does not include an essay format. On the other hand, it scores low on the , relevance dimension because it does not enumerate and specify the employee’s tasks and responsibilities of the job. Third, this form is not descriptive. Although the different levels of performance are described, the actual expectations of the individual employees are not D The beginning ratings regarding the clear. Fourth, the form is only somewhat adaptable. competencies are exact, but the second half of E the form can be adapted to each employee. This form is not comprehensive because it does not include all the major components that A the entire review period. This form does indicate performance for a particular position for not provide definitional clarity because the competencies that are listed are not defined N and there is no mention of the employee’s key responsibilities. All of the levels of performD ance are explained well, but they are not tailored to each individual employee. Next, the form could not be communicated throughout the R organization. Since the competencies are not defined, it would be hard to explain the process to all stakeholders. Finally, the form A makes no mention of time, so it does not focus on past or future expectations. The table below summarizes this analysis: 1 Desirable Features of All Appraisal Forms: Evaluation of Form 1 in Figure 6.2 X 2 3 Descriptiveness T Adaptability S Comprehensiveness Simplicity Relevancy X Definitional clarity Communication Time orientation Many organizations use forms very similar to those presented in Figures 6.1 and 6.2. A careful analysis of these forms against the desired features indicates that the forms, particularly the one shown in Figure 6.2, could be improved substantially. An important Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 139 140 Part II • System Implementation point to consider regarding these and other forms is that they should include the critical components discussed here because such forms help organizations implement a performance-focused culture. An exclusive emphasis on the appraisal form should be avoided; it is just one component of the performance management system. 6.3 DETERMINING OVERALL RATING After the form has been completed, there is usually a need to compute an overall performance score. This is particularly necessary for making administrative decisions such as the allocation of rewards. Computing overall performance scores is also useful in determining G whether employees, and groups of employees, are improving their performance over time. Two main strategies are used to obtain A an overall performance score for each employee: judgmental and mechanical. The judgmental procedure consists of considT ering every aspect of performance and then arriving at a defensible summary. This E of the rater to arrive at a fair and accubasically holistic procedure relies on the ability rate overall score. The mechanical procedure S consists of first considering the scores assigned to each section of the appraisal form and then adding them up to obtain an , section, weights are typically used based overall score. When adding scores from each on the relative importance of each performance dimension measured. Consider the performance evaluation form shown in Figure 6.3, which is used to Dat a supermarket chain.4 This form includes evaluate the performance of sales associates the hypothetical ratings obtained by a salesEassociate on just two competencies and just two key results (the complete form probably includes more than just four performance A dimensions). You can see that, in the Competencies section, each competency is weighted according to its value to the organization. Specifically, Follow-Through/Dependability is N given a weight of .7 whereas Decision Making/Creative Problem Solving is given a D weight of .3. For the competency Follow-Through/Dependability, Anthony Carmello obtained a score of 4 for the first half of theR review period and a score of 3 for the second half of the review period; consequently, the scores for this competency are 4 ⫻ .7 ⫽ 2.8 for A the first half and 3 ⫻ .7 ⫽ 2.1 for the second half of the review period. Adding up the 1 Decision Making/Creative Problem Solving Points: 12 4 3 Anticipates, Defines and Acknowledges 2 recognizes, and addresses and attempts to confronts problems problems well. solve most 3 with extraordinary Typically reaches problems when skill. Perseveres useful solutions presented. T until solution is and decisions are Usually comes to reached. Extremely sound. Innovative, conclusions S on innovative and takes risks. with aboveaverage risk taking. solving basic issues. Little innovation and sometimes takes risks. 1st 2nd Wgt Pts Pts 2 1 Has difficulty recognizing problems and making decisions. Always needs guidance. No innovation and never takes risks. 0.3 .9 .6 3.7 2.7 3 Comments: Total Score for Competencies Section FIGURE 6.3 Performance Appraisal Form Used by Grocery Retailer Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information Key Results: Rate each area to the performance demonstrated in the achievement of budgeted numbers. KR #1: Achieved Budgeted Sales (U.S. dollars) 1st half objective 2nd half objective Budgeted $78,000 Actual $77,000 $80,000 $83,000 4 = 108%+ 3 = 107–103% KR #2: Margin Balance (gain/loss in U.S. dollars) Budgeted Actual 1st half objective $30,000 $29,000 2nd half objective $31,000 $34,000 3 = 107–103% TOTAL SCORE FOR KEY RESULTS: Circle Rating: Excellent 3.6–4.0 Associate G A T E S , Comp. Score 1st half Comp. Score 2nd half 3.7 Above average 2.6–3.5 2.7 Average 1.6–2.5 Pts 1 = Below 97% 1.2 % of achievement (1, 2, 3, 4) 1 D E A N D R A KR Score 1st half 1.8 Wgt 0.4 4 2 = 102–98% Comments: Wgt 0.6 3 2 = 102–98% Comments: 4 = 108%+ % of achievement (1, 2, 3, 4) 2 Pts 1 = Below 97% KR Score 2nd half .4 1.6 1.6 3.4 Subtotal 1.6 3.4 Unsatisfactory 1–1.5 11.4/4 = 2.85 Date 1 Store Director Date 1 FIGURE 6.3 (Continued) 2 3 in each competency leads to a total of scores obtained for the first and second half 3.7 points for the first half and 2.7 for the second T half of the review period. The form also indicates that the key results have different weights. Specifically, KR #1 has a weight of .6 whereas KR #2 has a weightS of .4. Consider KR #1. The objective for the first half was to achieve a sales figure of $78,000. The actual sales figure achieved by Carmello was $77,000, representing a 98.71% achievement, which is a score of 2. Multiplying this score times the weight of .6 yields 1.2 points for the first half of the review period. Similarly, for the second half, the goal was $80,000 and Carmello surpassed it by achieving a figure of $83,000, which represents a score of 3 (i.e., 103.75% achievement); therefore, the score for the second half is 3 ⫻ .6 ⫽ 1.8. Finally, the form shows that the total score for the first half for all key results combined is 1.6, whereas the score for the second half is 3.4. These scores were computed by simply adding the scores obtained in each half. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 141 142 Part II • System Implementation Finally, the form shows the scores obtained for the competencies and the key results in each of the two halves of the review period. To obtain the overall performance score, we simply take an average of these four numbers: (3.7 ⫹ 2.7 ⫹ 1.6 ⫹ 3.4)/4 ⫽ 2.85. This puts Carmello in the 2.6–3.5 range, which represents a qualification of “above average.” Now, suppose that we do not follow a mechanical procedure to compute overall performance score, and instead we use a judgmental method. That is, suppose raters have no information on weights. How would James LeBrown, Carmello’s supervisor, compute the overall performance score? One possibility is that he might give equal weights to all competencies and would therefore consider that Follow-Through/Dependability is as important as Decision Making/Creative Problem Solving. This would lead to different G .3. As an alternative, the supervisor may scores compared to using weights of .7 and have his own ideas about what performance A dimensions should be given more weight and decide to ignore how the work is done (i.e., behaviors) and instead assign an overall T score based primarily on the key results (i.e., sales and margin balance). The use of weights allows the supervisor E to come to an objective and clear overall performance score for each employee. As this example illustrates, the use of clearly S specified weights allows the supervisor to come to a verifiable score for each employee. , be sure that the overall performance rating Thus, the supervisor and the employees can is reflective of the employee’s performance in each category. Which strategy is the best: judgmental or mechanical? In most cases, the mechanical D 5 A supervisor is more likely to introduce method is superior to the judgmental method. his or her own biases in computing the overall E performance score when no clear rules exist regarding the relative importance of the various performance dimensions and A various performance dimensions in calcuthere is no direction on how to combine the 6 lating the overall score. As far as the computation of overall scores goes, the mechaniN cal method is superior to the judgmental method. D Finally, you will notice that the form included in Figure 6.3 includes sections labeled “comments.” These open-ended sections are in most appraisal forms. However, Rcommon this information is typically not used effectively.7 Likely, there are two chief reasons that A this is the case. First, it is not easy to systematically categorize and analyze such comments. Second, the quality, length, and content of these comments may be more a function of the culture of the organization and the writing skills of the person filling out the form 1 than actual KSAs of the employee being rated. Regarding the first challenge, the increasing sophistication of computer-aided text 1 analysis (CATA) software that allows for an analysis of text (as opposed to numbers) may allow for more and better use of such infor2 mation. For example, the software package DICTION 5.0 allows for the analysis of text by first creating categories of terms or phrases3and then counting the relative frequency of each.8 So, an organization may wish to classify T the comments in terms of, for example, task and contextual performance. Then, a “dictionary” of terms and phrases related to S and the software automatically counts each of these performance dimensions is created the number of times that such types of behaviors are mentioned in the comments. The second challenge is more difficult to overcome because if raters are not given any training or general instructions on what two write, comments may range from none at all to very detailed descriptions of what employees have done (i.e., past orientation) and very detailed descriptions of what employees should do (i.e., future orientation). Thus, to overcome this second challenge, it is important to first establish the goals of the information that raters are asked to include in these open-ended sections and then offer raters training Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information on how to do that in a systematic and standardized fashion across ratees. If these two challenges are overcome, then the information included in the open-ended sections can be used to supplement the quantitative information offered on the forms. 6.4 APPRAISAL PERIOD AND NUMBER OF MEETINGS How long should the appraisal period be? In other words, what period of time should be included in the appraisal form? Organizations with a performance management system typically conduct an annual review; however, others choose to conduct semiannual or even quarterly formal reviews. Conducting only an annual review might not provide G sufficient opportunity for the supervisor and subordinate to discuss performance issues in a formal setting. The recommendation then is to Aconduct semiannual or quarterly reviews. For example, Colorado-based Hamilton Standard Commercial Aircraft uses a semiannual T review system.9 Twice a year, the company performs a modified 360-degree appraisal, E meaning that performance information is collected from several sources. This type of system allows individuals to receive feedback and adjust goals or objectives if necessary in S preparation for the more in-depth annual review. An example of a company implementing , quarterly reviews is Synygy, Inc., a Philadelphia-based compensation software and services company.10 Each quarter, employees receive a summary of comments and specific examples from coworkers about how they are performing. Synygy states that the goal of D Employees are trained to write effective the system is to encourage open communication. comments to their coworkers to facilitate growth E by pointing out positive and negative areas of performance. In areas that need improvement, coworkers are encouraged to sugAhis or her performance. gest ways in which an employee could improve When is the best time to complete the reviews? N Most organizations adopt one of two possibilities. First, the appraisal form could be completed on or around the annual anniverD first review would be six months before sary date. In the case of semiannual reviews, the the annual anniversary date and the second review R would be on or around the anniversary date. The biggest advantage of this choice is that the supervisor does not have to fill out A everyone’s forms at one time. The disadvantage of this choice is that, because results are not tied to a common cycle for all employees, resulting rewards cannot be tied to the fiscal year. The second choice is to complete the appraisal forms toward the end of the fiscal 1 year. In the case of a system including semiannual reviews, one review would be completed halfway through the fiscal year and1the other one toward the end of the fiscal year. Adopting this approach leads to the 2 completion of the appraisal form for all employees at about the same time, thereby facilitating cross-employee comparisons as 3 advantage of following the fiscal year well as the distribution of rewards. An additional cycle is that individual goal setting can be more T easily tied to corporate goal setting because most companies align their goal cycle with their fiscal year. This helps employees S of their unit and organization. But what synchronize their work and objectives with those about the additional work imposed on the supervisors who need to evaluate all employees at once during a short period of time? This can be a major problem if the performance management system is not implemented using the best practices described in this book and performance appraisal is a once-a-year event. If there is ongoing communication between the supervisor and the employee about performance issues throughout the year, completing appraisal forms should not uncover any major surprises and filling out the appraisal form should not create a major time burden for the supervisors. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 143 144 Part II • System Implementation Performance management systems can include six formal meetings between the subordinate and the supervisor11: • System inauguration • Self-appraisal • Classical performance review • Merit/salary review • Development plan • Objective setting Recall that informal performance discussions take place throughout the year. In G addition, however, there should be regularly scheduled formal meetings for the specific A of performance and the performance purpose of discussing the various aspects management system. The fact that the supervisor allocates time to this activity sends a T message that performance management is important. E includes a discussion of how the system The first meeting, system inauguration, works and the identification of the requirements and responsibilities resting primarily S on the employee and on the supervisor. This discussion includes the role of selfappraisal and the dates when the employee, and supervisor will meet formally to discuss performance issues. This meeting is particularly important for new employees, who should be introduced to the performance management system as soon as they become D members of the organization. E involves the employee’s assessment of The second meeting, the self-appraisal, herself. This meeting is informational in nature and, at this point, the supervisor does A not pass judgment on how the employee regards her own performance. This meeting provides an opportunity for the employeeN to describe how she sees her own performance during the review period. It is helpfulD if the employee is given the same form to be filled out later by the supervisor so that she can provide self-ratings using the same R dimensions that will be used by the supervisor. The third meeting, the classical performance A review meeting, during which employee performance is discussed, includes both the perspective of the supervisor and that of the employee. Most performance management systems include this type of meeting only. No other formal meetings to discuss performance 1are usually scheduled. This meeting is mainly past oriented and typically does not focus on what performance should look like in the future. The fourth meeting, the merit/salary1 review, discusses what, if any, compensation changes will result from the period’s performance. It is useful to separate the discussion 2 of rewards from the discussion of performance so that the employee can focus on per3 formance first and then on rewards. If these meetings are not separated, employees may not be very attentive during the discussion T of performance and are likely to feel it is merely the price they must pay to move on to the part of the meeting that really matters: S the discussion about rewards. Although these meetings are separate, supervisors should explain clearly the link between the employee’s performance, discussed in detail in a previous meeting, and the rewards given. Rewards are not likely to carry their true weight if they are not linked directly to performance. The fifth meeting, the development plan, discusses the employee’s developmental needs and what steps will be taken so that performance will be improved during the following period. This meeting also includes information about what types of resources will be provided to the employee to facilitate the development of any required new skills. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information The sixth and final meeting, objective setting, includes setting goals, both behavioral and result oriented, regarding the following review period. At this point, the employee has received very clear feedback about her performance during the past review period, knows what rewards will be allocated (if any), understands developmental needs and goals, and knows about resources available to help in the process of acquiring any required skills. Although these six meetings are possible, not all six take place separately. For example, the self-appraisal, classical performance review, merit/salary review, developmental plan, and objective setting meetings may all take place during one umbrella meeting. Nonetheless, it is best to separate the various types of information discussed so that the employee and the supervisor will focus on each of the components separately. G Take the case of Johnsonville Foods (www.johnsonville.com), a sausage-making plant in Wisconsin. Johnsonville Foods has a performance A management system that includes the following meetings: self-appraisal, classical performance review, merit/salary review, T development plan, and objective setting.12 Team members (i.e., employees) and coaches (i.e., supervisors) write six-month contracts stating E their goals for the following six months and how they plan to meet those goals (objective setting). This contract also asks the S employee to state developmental goals for the upcoming six months (developmental plan). , These goals may include reading a book on leadership or learning a new computer software program. In addition, each month the employee writes up a contract with his goals for the month. That contract is posted on the company electronic bulletin board and sent to three D performance over the month. The next internal customers who evaluate that employee’s month, employees and their coaches discuss how E the goals were met (classical performance review) and how much bonus the employee should receive (merit/salary review), and they Asetting). If the employee does not expect to set new goals for the upcoming month (objective meet his goals, a meeting is scheduled halfwayN through the month to discuss options. In short, Johnsonville Foods includes all the formal meetings that can take place in a performance management system; however,Dit does not involve six separate meetings. Instead, the company holds only two formally R scheduled meetings, but the system allows for the addition of more meetings if the need arises. A BOX 6.1 1 Performance Review Meetings at Central Florida 1 Credit Union Healthcare Federal 2 Central Florida Healthcare Federal Credit Union (http://www.cfhcfcu.org) is a nonprofit organization that provides financial services to those who join on a membership basis. The organization, which 3 employs about 40 people, is based in Orlando, Florida. The credit union utilizes a Web-based system that allows tailoring each position’s performanceTevaluation to specific duties performed. The performance management system also involves quarterly meetings and goal setting which allow Sfrequent performance reviews, including selfboth supervisor and employee to track progress. The appraisals, were instituted in order to ensure that all employees receive regular performance feedback from supervisors who might otherwise spend more time focusing on those whose performance is considered substandard. This allows employees and supervisors to focus regularly on progress toward goals. The information systems facilitate the process by allowing both supervisor and employee to keep track of progress electronically. In summary, the Central Florida Healthcare Federal Credit Union utilizes a performance management system that includes frequent performance review meetings, combined with an emphasis on setting goals and tracking progress to ensure all employees and supervisors are focused on performance management.13 Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 145 146 Part II • System Implementation 6.5 WHO SHOULD PROVIDE PERFORMANCE INFORMATION? So far, we have assumed that the supervisor is the primary source for performance information. This is the case in most organizations because the supervisor observes employees directly and has good knowledge about performance standards. However, there are also alternative sources of performance information. Let’s consider the use of the direct supervisor as a source of performance information, followed by the use of other sources including peers, subordinates, self, and customers.14 6.5.1 Supervisors G An advantage of using supervisors as a source of performance information is that A they are usually in the best position to evaluate performance in relation to strategic organizational goals. Also, supervisorsTare often those making decisions about rewards associated with performance evaluation. In addition, supervisors are able to E dimensions (e.g., adaptability, coaching, differentiate among various performance and development) regardless of the level of S experience of the employee being rated.15 In short, supervisors are often the most important source of performance information , because they are knowledgeable about strategic issues, understand performance, and are usually in charge of managing employee performance. Moreover, in some cultural contexts, supervisors are seen as the exclusive source due to the pervasiveness of D example, a survey of 74 HR directors in hierarchical organizational structures. For Jordan revealed that, in every one of these E organizations, the supervisor had almost an exclusive input in terms of providing performance information, 95% of responA dents reported that peers had no input, 82% reported that employees had no input, N either.16 and 90% reported that customers had no input Although supervisors are usually D the most important, and sometimes only, source of performance information, other sources should be considered as well. For R example, we have already seen that self-appraisals are an important component in the performance review process. In addition to self-appraisals and supervisor appraisals, A performance information can be collected from peers, customers, and subordinates (assuming there are any). Alternative sources are usually considered because, for some jobs, such as teaching, law enforcement, or 1 sales, the supervisor may not observe her subordinates’ performance on a regular basis. Also, performance evaluations given by the supervisor may be biased because the 1 supervisor may evaluate performance based on whether the ratee is contributing to goals 2 17valued by the supervisor as opposed to goals valued by the organization as a whole. For example, a supervisor may provide 3 help the supervisor advance his or her high performance ratings to employees who career aspirations within the company, asTopposed to those who engage in behaviors conducive to helping achieve organizational strategic goals. S 6.5.2 Peers Many organizations use performance evaluations provided by peers. Take, for example, the system implemented at a large international financial services bank.18 Through acquisitions, the bank has been growing rapidly and has as its strategic goal the consolidation of its offices. Change management is extremely important to the successful implementation of this consolidation. The company is therefore revising how it assesses Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information the competency “teamwork” at the senior and middle management levels, with the belief that successful teamwork is crucial to change management initiatives. Specifically, one-third of the score for this competency is determined by ratings provided by peers. As an additional example, the Australian National University Medical School recently introduced a system in which students rate their peers in terms of personal and professional performance. Students begin to provide anonymous ratings online at the end of their first year in medical school. The system allows students to share their assessment of their peers and provides faculty with early-warning signs to assist students who may not be performing up to personal or professional standards.19 Peer evaluations suffer from three problems, however. First, such evaluations Gbelieve there is friendship bias at work. may not be readily accepted when employees In other words, if an employee believes that A ratings provided by his peers will be lower than those provided for another employee because the other employee has T more friends than he does, then performance evaluations will not be taken seriously. It is not likely that the employee will useEthe feedback received to improve his performance. A second problem with peer evaluations is that peers are less discrimiS nating among performance dimensions than are supervisors. In other words, if one is , to be rated high on all the other dimenrated high on one dimension, one is also likely sions, even though the performance dimensions rated may not be related to one another and may require very different knowledge, skills, and abilities. Finally, peer D is called context effects.20 For example, evaluations are likely to be affected by what consider the situation in which peers evaluate Ecommunication behaviors. The salience of such behaviors will be affected by context: these behaviors are much more salient A daily work. The resulting peer evaluawhen there is a conflict as compared to routine tions can thus be quite different based on whether the peer providing the rating is N thinking about one specific situation versus another one, or communication behaviors D across situations in general. Given these weaknesses of peer evaluations, it would not be wise to use them R as the sole source of performance information. Peer evaluations can be part of the A from other sources, including the system, but information should also be obtained supervisor. 1 1 Subordinates are a good source of information regarding the performance of their 2 managers.21 For example, subordinates are in a good position to evaluate leadership 3 competencies, including delegation, organization, and communication. In addition, subordinates may be asked to rate their manager’s ability to (1) remove barriers that T employees face, (2) shield employees from politics, and (3) raise employees’ competence. S to provide upward feedback if put on With this type of system, subordinates may hesitate 6.5.3 Subordinates the spot; however, if managers take the time to involve employees in the process by soliciting their input, employees are more likely to give honest feedback.22 Many organizations take upward feedback very seriously. Take the case of computer giant Dell, which employs over 78,700 individuals worldwide. In 1984 Michael Dell founded Dell based on the simple concept of selling computer systems directly to customers. In 2004 Fortune magazine ranked Dell the number one most admired company in the United States.23 At Dell, all employees rate their supervisors, including Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 147 148 Part II • System Implementation Michael Dell himself, every six months, using “Tell Dell” surveys. Michael Dell said, “If you are a manager and you’re not addressing [employee] issues, you’re not going to get compensation. And if you consistently score in the bottom rungs of the surveys, we’re going to look at you and say ‘Maybe this isn’t the right job for you.’ ”24 The intended purpose of the evaluation provided by subordinates has an impact on the accuracy of the information provided. Overall, performance information provided by subordinates is more accurate when the resulting ratings are to be used for developmental purposes rather than administrative purposes. When evaluation data are intended for administrative purposes (i.e., whether the manager should be promoted), subordinates are likely to inflate their ratings.25 Most likely, G this is because subordinates may fear retaliation if they provide low performance scores. Confidentiality is key if subordinates A are to be used as a source of performance information. T E 6.5.4 Self S As discussed earlier, self-appraisals are an important component of any performance management system. When employees are, given the opportunity to participate in the performance management process, their acceptance of the resulting decision is likely to increase, and their defensiveness during the appraisal interview is likely to decrease. An D additional advantage associated with self-appraisals is that the employee is in a good E review period, whereas a supervisor may position to keep track of activities during the have to keep track of the performance of several employees. On the other hand, selfA appraisals should not be used as the sole source of information in making administrative N biased than are ratings provided by other decisions because they are more lenient and sources such as a direct supervisor.26,27 This D may explain why the vast majority of Fortune 500 companies do not include self-appraisals as part of their performance R management systems.28 Fortunately, self-ratings tend to be less lenient when they are used for developmental as opposed to administrative purposes. In addition, the followA ing suggestions may improve the quality of self-appraisals: • Use comparative as opposed to absolute measurement systems. For example, instead 1 of asking individuals to rate themselves using a scale ranging from “poor” to 1 that allows them to compare their “excellent,” provide a relative scale performance with that of others (e.g., “below average,” “average,” “above 2 average”). Other options in terms of comparative systems were discussed in 3 Chapter 5. • Allow employees to practice their self-rating T skills. Provide multiple opportunities for self-appraisal because the skill of self-evaluation may well be one that imS proves with practice. • Assure confidentiality. Provide reassurance that performance information collected from oneself will not be disseminated and shared with any one other than the direct supervisor and other relevant parties (e.g., members of the same work group). • Emphasize the future. The developmental plan section of the form should receive substantial attention. The employee should indicate his plans for future development and accomplishments. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information 6.5.5 Customers Customers, and other key stakeholders in general, provide yet another source of performance information.29 Collecting information from customers can be a costly and time-consuming process; however, performance information provided by customers is particularly useful for jobs that require a high degree of interaction with the public or with particular job-related individuals (e.g., purchasing managers, suppliers, sales representatives). Also, performance information can be collected from internal customers. For example, line managers may provide information regarding the performance of their HR representative. Although the clients served may not have full knowledge of the organization’s strategic direction, they can provideG useful information. For example, consider how this is done at Federal Express (http://www.fedex.com/us//). Federal Express revised its performance management system A to include measures of customer service.30 Currently, the company uses a six-item customer-satisfaction survey, which is evaluated T by a representative sample of the employee’s customers at the end of the year. As a result E of adding customer input and customer-developed goals to the performance review S customer expectations. process, employees are more focused on meeting Although Federal Express is now using external customer input in evaluating , performance, organizations in other industries have some catching up to do. For example, a recent study examining appraisal forms used to evaluate the performance of account executives in the largest advertisingD agencies in the United States found that much more emphasis is placed on internal than on external customers.31 Specifically, E12% of the agencies studied. About 27% external client feedback was measured in only of agencies do not evaluate the contributions A that account executives make to client relationships and to growing the client’s business. In short, advertising agencies Nof account executives from the perspecmight benefit from assessing the performance tive not only of internal but also external customers. D 6.5.6 Disagreement Across Sources: Is R This a Problem? A more than one source, it is likely that If performance information is collected from there will be some overlap in the dimensions measured.32 For example, a manager’s peers and direct supervisor may rate him on the competency “communication.” In 1 addition to the overlapping dimensions across sources, each source is likely to evaluate performance dimensions that are unique 1 to each source. For example, subordinates may evaluate “delegation,” but this competency may not be included on the form used 2 by the direct supervisor. Once the competencies and results that need to be measured 3 needs to be made regarding which are identified for a particular position, a decision source of information will be used to assess each T dimension. Of course, it is likely that there will be some overlap, and some dimensions will be rated by more than one source. Regardless of the final decision, it isS important that employees take an active role in deciding which sources will rate which dimensions. Active participation in the process is likely to enhance acceptance of results and perceptions that the system is fair. Moreover, studies including master of business administration (MBA) students, executive MBA students, and managers in a large Canadian insurance company found that, when given a choice, individuals tend to select raters whom they think are most acquainted with their work as opposed to how much they like them and how much they think the raters like them.33 Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 149 150 Part II • System Implementation When the same dimension is evaluated across sources, we should not necessarily expect ratings to be similar.34 Different sources disagreeing about an employee’s performance is not necessarily a problem. For example, self-ratings of salespeople do not necessarily agree with the ratings given by their direct supervisor, which may indicate misunderstandings regarding the nature of performance.35 Also, those rating the same employee may be drawn from different organizational levels, and they probably observe different facets of the employee’s performance, even if they are evaluating the same general competency (e.g., “communication” or “sales behavior”). In fact, the behavioral indicators for the same competency may vary across sources. For example, an employee may be able to communicate very well with his superior but not very Gissue to take into account is that, for each well with his subordinates. The important source, the behaviors and results to be rated A must be defined clearly so that biases are minimized. In terms of feedback, however, there is no need to come up with one T overall conclusion regarding the employee’s performance. On the contrary, it is important that the employee receive informationEon how her performance was rated by each of the sources used. This is the crux of what are called 360-degree feedback systems, S which are discussed in more detail in Chapter 8. When feedback is broken down by , attention and effort on the interactions source, the employee can place particular involving the source that has detected performance deficiencies. If disagreements are found, a decision must be made regarding the relative importance of the rating provided by each source.D For example, is it equally important to please external and internal customers? Is communication an equally important competency E regarding subordinates and peers? Answering these questions can lead to assigning Athe different sources in computing the overdifferential weights to the scores provided by all performance score used for administrative N purposes. D R Regardless of who rates performance, the rater is likely to be affected by biases that A may be intentionally or unintentionally distort the resulting ratings. Performance ratings 6.6 A MODEL OF RATER MOTIVATION distorted or inaccurate. When this happens, incorrect decisions may be made, employees are likely to feel they are treated unfairly, and the organization is more prone to 1 litigation. In other words, when performance ratings are distorted, the performance 1 in desired outcomes but also may lead to management system not only fails to result very negative consequences for the organization. To prevent these negative outcomes, 2 we need to understand why raters are likely to provide distorted ratings. 3 the motivation to provide accurate ratings Rating behaviors are influenced by (1) and (2) the motivation to distort ratings.36 T The motivation to provide accurate ratings is determined by whether the rater expects positive and negative consequences of accurate S ratings and by whether the probability of receiving these rewards and punishments will be high if accurate ratings are provided. Similarly, the motivation to distort ratings is determined by whether the rater expects any positive and negative consequences of rating distortion and by the probability of experiencing such consequences if ratings are indeed distorted. Consider a supervisor and his motivation to provide accurate ratings. What will the supervisor gain if ratings are accurate? What will he lose? Will his own performance be rated higher and will he receive any rewards if this happens? Or will the relationship with his or her subordinates suffer? The answers to these questions provide Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information information about whether this supervisor is likely to be motivated to provide accurate ratings. Similarly, are there any positive and negative consequences associated with rating distortion? What is the probability that this will indeed happen? The answers to these questions will determine the supervisor’s motivation to distort ratings. There are motivational barriers that prevent raters from providing accurate performance information. Raters may be motivated to distort performance information and provide inflated or deflated ratings.37 In fact, supervisors may not even be trying to measure performance accurately and may attempt to use performance ratings for other goals.38 For example, a supervisor may be motivated to provide inflated ratings to • Maximize the merit raise/rewards. A supervisor may want to produce the highest G possible reward for his employees, and he knows this will happen if he provides A the highest possible performance ratings. Tbelieve that employees’ motivation will • Encourage employees. A supervisor may be increased if they receive high performance E ratings. • Avoid creating a written record. A supervisor may not want to leave a “paper trail” S because such documentation may regarding an employee’s poor performance eventually lead to negative consequences , for the employee in question. This situation is possible if the supervisor and employee have developed a friendship. • Avoid confrontation with employees. A supervisor may feel uncomfortable providing negative feedback and, in order toDavoid a possible confrontation with the employee, may decide to take the path of least resistance and give inflated E performance ratings. • Promote undesired employees out of unit. A A supervisor may believe that if an employee receives very high ratings she may be promoted out of the unit. The Nway to get rid of undesirable employees. supervisor may regard this as an effective • Make the manager look good to his/her supervisor. A supervisor may believe that if D everyone receives very high performance ratings, the supervisor will be considR ered an effective unit leader. Moreover, when the performance ratings for the A manager himself depend on the performance of his subordinates, managers are likely to inflate their subordinates’ ratings.39 We can understand each of the reasons 1 for a supervisor’s choosing to inflate ratings using a model or rater motivation. For example, looking good in the eyes of 1 one’s own supervisor can be regarded as a positive consequence of providing inflated ratings. Avoiding a possible confrontation with 2 an employee can also be regarded as a positive consequence of providing inflated ratings. Thus, given these anticipated posi3 tive consequences of rating inflation, the supervisor may choose to provide distorted ratings. T Supervisors may also be motivated to provide ratings that are artificially deflated. S Some reasons for this are to • Shock an employee. A supervisor may believe that giving an employee a “shock treatment” and providing deflated performance ratings will jolt the employee, demonstrating that there is a problem. • Teach a rebellious employee a lesson. A supervisor may wish to punish an employee or force an employee to cooperate with the supervisor and believes that the best way to do this is to give deflated performance ratings. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 151 152 Part II • System Implementation • Send a message to the employee that he should consider leaving. A supervisor lacking communication skills may wish to convey the idea that an employee should leave the unit or organization. Providing deflated performance ratings may be seen as a way to communicate this message. • Build a strongly documented, written record of poor performance. A supervisor may wish to get rid of a particular employee and decides that the best way to do this is to create a paper trail of substandard performance. We can also understand the psychological mechanisms underlying the decision to provide deflated ratings. For example, if shocking employees and building strongly documented records about employees areGconsidered to be positive consequences of rating deflation, it is likely that the supervisor will choose to provide distorted ratings. A Fundamentally, this discussion should allow us to see that the process of evaluating T performance can be filled with emotional overtones and hidden agendas that are driven by the goals and motivation of the person providing the rating.40 If raters are not E motivated to provide accurate ratings, they are likely to use the performance manageS such as rewarding allies and punishing ment system to achieve political and other goals, enemies or competitors, instead of using it as , a tool to improve employee and, ultimately, organizational performance.41 Thus, it is important to understand the influence of context on the accuracy of performance ratings and be aware that performance measurement does not take place in a vacuum, but in D an organizational context with written and unwritten norms.42 What can be done to prevent consciousEdistortion of ratings? Considering a model of rater motivation, we need to provide incentives A so that raters will be convinced that they have more to gain by providing accurate ratings than they do by providing inaccurate N ratings. For example, if a supervisor is able to see the advantages of a well-implemented performance management system, as opposed D to one dominated by office politics, he or she will be motivated to help the system succeed. Also, if a supervisor believes there is R accountability in the system and ratings that are overly lenient are likely to be easily disA for the supervisor, leniency is also likely to covered, resulting in an embarrassing situation be minimized. Lenient ratings may be minimized when supervisors understand they will have to justify their ratings to their own supervisors.43 In terms of increasing accountability, specific recommendations include the1following44: 1 are more accurate when raters are told 1. Have raters justify their ratings. Ratings they will have to justify their ratings 2 to someone with authority, such as their own supervisors. However, rating accuracy does not necessarily improve if 3 raters need to justify their ratings to others with less authority such as their own subordinate. T 2. Have the raters justify their ratings in a face-to-face meeting. Ratings are also more S accurate when the rating justifications are offered in a face-to-face meeting compared to justifications offered in writing only. In a nutshell, a supervisor asks herself, “What’s in it for me if I provide accurate ratings versus inflated or deflated ratings?” The performance management system needs to be designed in such a way that the benefits of providing accurate ratings outweigh the benefits of providing inaccurate ratings. This may include assessing the performance of the supervisor in how she is implementing performance management Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information within her unit, and communicating that performance management is a key part of a supervisor’s job. Also, supervisors need to have tools available to make their job of providing accurate ratings and feedback easier. This includes training on, for example, how to conduct the appraisal interview so that supervisors are able to provide both positive and negative feedback and are skilled at conveying both positive and, negative news regarding performance. In addition to conscious and intentional errors in the rating process, raters are likely to make unintended errors. Observing information about performance, storing this information in memory, and then recalling it when it is time to fill out the appraisal form is a complex task. This task becomes more complex with more complex G dimensions. Because of the cognitive jobs that include several unrelated performance complexity of the performance evaluation process, raters are likely to make not only A intentional but also unintentional errors in evaluating performance. These errors are T discussed in detail in Chapter 7. To a large extent, these errors can be minimized by improving the skills of those responsible for E providing performance evaluations. These training programs, which target mostly supervisors, are discussed next. S , 6.7 PREVENTING RATING DISTORTION THROUGH RATER TRAINING PROGRAMS D of providing raters with tools that will Rater training programs have the overall objective allow them to implement the performance management system effectively and efficiently. E These training programs also help prevent rating distortion. Table 6.3 summarizes the A to inflate or deflate ratings. reasons discussed earlier for why raters are likely How can training programs help mitigate N the reasons causing intentional rating distortion listed in Table 6.3? Remedial programs include content related to informaD tion, motivation, and skills. Recall that, in addition to intentional errors, raters are likely R to make unintentional errors in rating performance. Training programs, therefore, must address both types of errors and essentially, the goal is to align the goals of the rater A with the goals of the performance management system so that raters are partners and 45 active contributors to the process. Specifically, training programs may cover the following topics: 1 • Reasons for implementing the performance 1 management system. This includes an overview of the entire system, its purpose, and benefits for all employees. 2 3 TABLE 6.3 Reasons for Rating Distortion T Rating Inflation S Rating Deflation Maximize the merit raise/rewards Shock employees Encourage employees Teach a rebellious employee a lesson Avoid creating a written record Send a message that employee should Avoid a confrontation with employees consider leaving Promote undesired employees out of unit Build a record of poor performance Make manager look good to his or her supervisor Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 153 154 Part II • System Implementation • How to identify and rank job activities. This includes information about how to conduct a job analysis and understand the most important accountabilities and competencies. • How to observe, record, and measure performance. This may include observational skills such as how to observe the behaviors that really matter and not be distracted by behaviors not related to the performance dimensions to be measured. It also includes skills needed to fill out the appraisal form. • Information on the appraisal form and system mechanics. This includes a detailed description of the content of the appraisal form and what each section is intended to measure. It also includes information about the number of recommended meetG participant. ings and the expectations regarding each • How to minimize rating errors. This includes steps that can be taken to minimize A unintentional errors caused by the cognitive demands associated with the observation T and evaluation of performance. • How to conduct an appraisal interview. This includes listening skills and E communication skills and how to provide feedback during the appraisal S interview. It also includes skills on how to help the employee create a develop, ment plan. • How to train, counsel, and coach. This includes skills that the supervisor needs to help employees improve their performance on an ongoing basis. D For example, consider the training program used by the city of Aurora, Colorado. E This program includes many of the issues listed here. First, it addresses general A considerations about the performance management system, including the reasons performance management is important.NSecond, it covers the difference between results and job-oriented (i.e., behavior-based) performance dimensions. Third, the D various performance dimensions. Fourth, trainer discusses how to weigh properly the training includes a definition of the different R levels of performance along several sample job-oriented dimensions. For example, it includes an explanation of the dimension “problem solving” and examples ofA unacceptable, acceptable, and exceptional performance. Next, it teaches managers how to develop individual performance objectives and gives examples of good objectives. Finally, it teaches managers different 1 ways to monitor performance and the benefits of doing so. Overall, Aurora’s rater 1 many of the subjects discussed here. It training program is fairly thorough and covers does not, however, seem to include steps that can be taken to minimize unintentional 2 errors or the way to conduct the appraisal interview or the way to train, counsel, and 3 coach employees. These important components of rater training programs are discussed in subsequent chapters. T In sum, raters are likely to make both intentional and unintentional errors in rating performance. Training programs S that address motivational issues, demonstrate how the system works, and provide a clear answer to the “What’s in it for me?” question can help minimize intentional errors. In addition, training programs that include information on and skills regarding how to observe and rate performance can help minimize the presence of unintentional errors. We discuss the content of various types of training programs in more detail as we continue to describe the operational details of implementing a performance management system in Chapters 7, 8, and 9. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information 155 Summary Points • Appraisal forms are the key instruments used to measure performance. Care and attention are required to ensure that the forms include all the necessary components. Most forms include a combination of the following: (1) basic employee information; (2) accountabilities, objectives, and standards; (3) competencies and indi-G cators; (4) major achievements and contributions; (5) developmental achievements;A (6) developmental needs, plans, andT goals; (7) stakeholder input; (8) employee comments; and (9) signatures. Note, how-E ever, that one size does not fit all, andS different components are appropriate , based on the purposes of the appraisal. • Regardless of the specific components included in the appraisal form, there D are several characteristics that make appraisal forms particularly effective.E These are (1) simplicity, (2) relevancy,A (3) descriptiveness, (4) adaptability, (5) comprehensiveness, (6) definitionalN clarity, (7) communication, and (8) timeD orientation. Before it is used, each form needs to be evaluated based on theR extent to which it complies with each ofA these characteristics. • For administrative purposes, it is usually desirable to compute an employee’s1 overall performance score. Two ap1 proaches are available: judgmental and mechanical. The judgmental procedure2 consists of considering every aspect of 3 performance and then arriving at a fair and defensible summary. The mechani-T cal procedure consists of combining theS scores assigned to each performance dimension, usually taking into account the relative weight given to each dimension. The mechanical procedure is recommended over the judgmental procedure, which is more prone to biases. Rounding of overall scores can be implemented (upward or downward) based on the information included in the “comments” section of the appraisal forms. However, for this to happen, there must be a systematic analysis of this text-based information and raters must be provided clear guidelines regarding what to include in these “comments” sections. • It is recommended that the period for review be six months (i.e., semiannual) or three months (i.e., quarterly). This provides fairly frequent opportunities for a formal discussion about performance issues between the subordinate and the supervisor. It is more convenient if the completion of the appraisal form coincides with the fiscal year so that rewards can be allocated shortly after the employee has received his or her performance review. • Performance management systems can include up to six separate formal meetings between the supervisor and the subordinate: (1) system inauguration, (2) self-appraisal, (3) classical performance review, (4) merit/salary review, (5) development plan, and (6) objective setting. In practice, these meetings are usually condensed into two or so meetings during each review cycle. One point that should be emphasized is that these are formal meetings. Informal meetings involving a discussion of performance issues should take place on an ongoing basis. • Several sources can be used to obtain performance information: supervisors, peers, subordinates, self, and customers. Before selecting a source, one needs to be sure that the source has firsthand knowledge of the employee’s performance. Using each of these sources has advantages and disadvantages, none of which are foolproof, and not all may be available in all situations. However, it is Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 156 Part II • System Implementation important that employees take part in the process of selecting which sources will evaluate which performance dimensions. Active participation in the process is likely to enhance acceptance of results and perceptions that the system is fair. • When multiple sources of performance information are used, there may be disagreements about an employee’s performance level, even if these multiple sources are rating the same performance dimension. The people rating the same employee may be drawn from different organizational levels, and they may observe different facets of the employee’s performance, even if they are evaluating the same general competency (e.g., “communication”). If an overall score is needed that considers all sources, then a weighting mechanism is needed. For example, a decision needs to be made regarding whether performance information provided by the supervisor has more or less relative importance than that provided by customers. There is no need to summarize the information across the sources for feedback purposes; in fact, it is beneficial for the employee to receive feedback broken down by source so that the employee can place particular attention and effort on the interactions involving any source that has detected performance deficiencies. • In providing performance information, raters may make intentional errors. These errors may involve inflating or deflating performance scores. For example, a supervisor may want to avoid a confrontation with his or her employees and inflate ratings. A peer may believe that providing accurate ratings may jeopardize the relationship with a colleague and may, consequently, provide inflated ratings. When raters provide performance ratings, they are faced with providing either accurate or inaccurate ratings. They weigh costs and benefits of G A T E S , D E A N D R A 1 1 2 3 T S choosing one or the other path. If the cost/benefit equation does not favor providing accurate ratings, it is likely that ratings will be distorted. When this happens, incorrect decisions may be made, employees are likely to feel they have been treated unfairly, and the organization is more prone to litigation. In other words, when performance ratings are distorted because raters are not motivated to provide accurate scores, the performance management system not only will fail to achieve desired outcomes but also may lead to very negative consequences for the organization. • In addition to intentional errors, raters may make unintentional errors in providing performance ratings. This happens because observing information about performance, storing this information in memory, and then recalling it when it is time to fill out the appraisal form is a complex cognitive task. • Intentional and unintentional distortion in performance ratings can be minimized by providing raters with extensive training. Such training programs include content related to information, motivation, and skills. For example, regarding information, training programs address an overview of the entire performance management system. Regarding motivation, raters are given information about how rating employees accurately will provide them with direct and tangible benefits. Training programs can demonstrate how to conduct an appraisal interview. No performance management system is foolproof, and performance ratings are inherently subjective; however, the implementation of such training programs, together with accountability (i.e., having to justify ratings to superiors in a face-to-face meeting) and rewards associated with accurate ratings, provides raters with the needed motivation and skills to minimize rating errors. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information 157 C A S E S T U D Y 6-1 Evaluating an Appraisal Form Used in Higher Education Consider the appraisal form shown below, which is a form used by a university in the United States for non-faculty staff members. First, use the table to place check marks next to each component that is present. Second, in the Comments section, please write, (1) for those components that are present, whether any changes or revisions are needed in the form and why and, (2) for those components that are absent, why they should be added and what are the possible negative consequences of not doing so.  G Major Components of Appraisal A Forms Basic employee information T Accountabilities, objectives, andEstandards Competencies and indicators S Major achievements and contributions Developmental achievements , Comments Developmental needs, plans, and goals Stakeholder input D E Approvals A N UC Berkeley D Performance evaluation and planning form Professional Employee:_______________________ Job Title: ____________________ Department: ___________________ R Control Unit: _____________________ A Evaluation Period: From _________ to _________ Annual _______ Other________ Employee comments Appointment: Limited/Contract, end date: ____________ Career ______ Probationary period ends: ______________ 1 1 Instructions: Effective evaluation of job performance is an on-going2 process. Annually, each manager or supervisor provides a summary of progress toward meeting job expectations 3and last year’s goals. This form is to be used for annual evaluations, and at other times during the year when formal feedback is needed. T These forms have been approved for employees covered by the Personnel Policies for Staff Members (PPSM). S use forms that have been approved by the respective For represented employees, departments will want to bargaining units. Part I—Job Success Factors These include key responsibilities and basic competencies. Rate each factor based on performance during the period identified above. The factors include key responsibilities specific to this position (Part 1-A), and competencies common to the campus professional job standards (Part 1-B). (Continued ) Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 158 Part II • System Implementation (Continued ) Part II—Goals from Last Year or Last Evaluation Period Rate the progress made on each of the goals established at the beginning of the period. Also include any new goals established during the evaluation period and note any modifications to the original goals. Part III—Goals for This Coming Year or Evaluation Period Enter the performance goals for the next period to be evaluated. Individual goals and objectives should align with those of the department and the campus. Part IV—Professional Development Plan Enter any actions that will be taken by the employee or manager/supervisor to support the goals indicated in Part G III above, or specific job success factors in Part I. The plan may include career growth, job mastery, or actions to A correct performance. T E S Rating Scale*: , Level 5 (E) Exceptional Performance far exceeded expectations due to exceptionally high quality of work performed in all essential areas of responsibility, resulting in an overall quality of work that was superior; and either 1) included the completion of a major goal or project or 2) made an exceptional or D unique contribution in support of unit, department, or University objectives. This rating is achievable by any employee though given E infrequently. A Exceeds expectations Performance consistently exceeded expectations in all essential areas of responsibility, and N the quality of work overall was excellent. Annual goals were met. Level 4 (EE) D Level 3 (ME) Meets expectations R Performance consistently met expectations in all essential areas of responsibility, at times possibly exceeding expectations, andA the quality of work overall was very good. The most critical annual goals were met. Level 2 (I) 1 Improvement needed Performance did not consistently meet expectations—performance failed to meet expectations 1 in one or more essential areas of responsibility, and/or one or more of the most critical goals were not met. A professional development 2 plan to improve performance must be outlined in Section 4, including timelines, and monitored to measure progress. Level 1 (U) Unsatisfactory T Performance was consistently below expectations in most essential areas of responsibility, S goals was not made. Significant improvement is and/or reasonable progress toward critical needed in one or more important areas. In Section 4, a plan to correct performance, including timelines, must be outlined and monitored to measure progress. 3 *The inclusion of goals is typically a consideration in assessing the overall rating. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information 159 Part I. Job Success Factors Factors Rating (bold or underline to select) Comments A. KEY RESPONSIBILITIES SPECIFIC TO THIS JOB Performs key responsibilities as articulated in the job description. • (may give a global rating OR insert here essential functions as listed in the job description, include them by reference in an attached copy of the job description, or paraphrase from the job description) G B. CORE COMPETENCIES A 1. Inclusiveness Shows respect for people and their differences; promotes T fairness and equity; engages the talents, experiences, and E to capabilities of others; fosters a sense of belonging; works understand the perspectives of others; and creates opportuniS ties for access and success. • , 2. Stewardship Implements a process or takes some action that significantly reduces risk on campus (e.g., making information for decision D making more accessible, reliable, consistent, and secure; supporting continuity planning or emergency preparedness; Eetc.). • A 3. Problem solving/Decision making Problem solving—Identifies problems, involves others in Nseeking solutions, conducts appropriate analyses, searches for D the best solutions, responds quickly to new challenges. Decision making—Makes clear, consistent, transparent decisions; acts R with integrity in all decision making; distinguishes relevant from irrelevant information and makes timely decisions. A • 4. Strategic planning and organizing Understands big picture and aligns priorities with broader 1 goals, measures outcomes, uses feedback to change as needed, evaluates alternatives, solutions oriented, seeks alternatives 1 and broad input; can see connections within complex issues. 2 • 3 5. Communication Connects with peers, subordinates, and customers; actively T listens; clearly and effectively shares information; demonstrates effective oral and written communication skills.S • 6. Quality improvement Strives for efficient, effective, high-quality performance in self and the unit; delivers timely and accurate results; resilient when responding to situations that are not going well; takes initiative to make improvements. • U I ME EE E U I ME EE E U I ME EE E U I ME EE E U I ME EE E U I ME EE E U I ME EE E (Continued ) Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 160 Part II • System Implementation CORE COMPETENCIES (Continued) 7. Leadership Accepts responsibility for own work; develops trust and credibility; demonstrates honest and ethical behavior. • U I ME EE E U I ME EE E I ME EE E I ME EE E 8. Teamwork Cooperates and collaborates with colleagues as appropriate; works in partnership with others. • 9. Service focus Values the importance of delivering high-quality, innovative service to internal and external clients; understands the needs of the client; customer service focus. • 10. Unit- or department-specific competency (optional) G U A T EU S , Part II. Last Period’s Goals Rate the progress made on each of the goals established at the beginning of the period and any D new goals. Note any modifications to the original goals. E AU N U D RU AU Goal 1. 2. 3. 4. 5. OVERALL RATING (based on Parts I and II) Relative weights of job success factors and performance goals are determined by the manager or supervisor. Higher priority items may be highlighted. 1U 1 2 3 T SU Rating Comments I ME EE E I ME EE E I ME EE E I ME EE E I ME EE E I ME EE E Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. Chapter 6 • Gathering Performance Information 161 Part III. Next Period’s Goals Enter the performance goals for the next period to be evaluated. Individual goals and objectives should align with those of the department and the campus. 1. Measure of success: 2. Measure of success: 3. Measure of success: 4. Measure of success: 5. Measure of success: G A T E S , Progress toward meeting these goals will be reviewed at the time of the next evaluation. D E A N D R A Part IV. Professional Development Plan Signatures: 1 Employee:__________________________________ Date: _______________________ My signature indicates that I have received a copy of this evaluation. 1 ___ I would like to include comments from my self-assessment. 2 Manager/supervisor: Name:_____________________________ 3 Signature: _______________________ Date: _____________________ T Department manager: Name: ____________________________ Signature: _______________________ Date: _____________________ S The employee being evaluated is to receive a copy of the completed evaluation form and one copy shall be placed in the personnel file. Source: Appraisal form has been adapted from those available on UC Berkeley’s Human Resource Department website. Human Resources at UC Berkeley. (2011). Performance appraisal forms. Available online at http://hrweb.berkeley.edu/files/attachments/Perf_Eval_Form_Professional. doc. Retrieval date: July 22, 2011. Copyright UC Regents. All rights reserved. Reproduced with permission from the University of California, Berkeley. Performance Management, Third Edition, by Herman Aguinis. Published by Prentice Hall. Copyright © 2013 by Pearson Education, Inc. 162 Part II • System Implementation C A S E S T U D Y 6-2 Judgmental and Mechanical Methods of Assigning Overall Performance Score at The Daily Planet The form here shows performance ratings obtained by David Kuhn, a hypothetical reporter at a major newspaper in the United States. First, use the judgmental method to come up with his overall performance score. What is Kuhn’s overall* performance score? The form on page 148 actually omitted weight information for the various competencies. The weights are the following: Now compute Kuhn’s overall performance score using the weights in the table. Is there a difference between the score computed using a subjective rather than the mechanical method...
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