Employee Performance Evaluations

There are four primary types of Employee Performance

Evaluations
There are four primary types of employee performance evaluations used in organizations
today. They are: 1) Top Down, 2) Peer-to-Peer, 3) 360-Degree and 4) Self-Assessment. Please
note that it is not necessary to choose only one type of employee performance evaluation method
and some organizations successfully use all four. An explanation of each type follows.

1. Top-Down Employee Performance Evaluations

Top-down employee performance evaluations tend to be the most common and most effective,
because they involve the assessment of an employee by a direct manager. Top-down employee
performance evaluations are most useful when given by an employee's immediate supervisor -
someone who works with that employee everyday and knows his or her strengths and
weaknesses. The top-down employee performance evaluation becomes less effective when given
by a Human Resources manager who has only second-hand knowledge of an employee's
performance.

One offshoot of top-down employee performance evaluations are "matrix" employee

performance evaluations, where multiple managers rate the same employee. This is a good
choice when the employee works for multiple managers, or engages in various fixed-time length
projects

2. Peer-to-Peer Employee Performance Evaluations

Peer-to-peer employee performance evaluations require employees at the same level to review
each other. The thinking behind peer-to-peer employee performance evaluations is that nobody
knows a worker's ability better than his or her co-workers. While this can be an effective review
format for some groups of workers (for example, a team of doctors working on a research project
together, where specific content knowledge is required), it can also cause controversy because of
the way it affects future group dynamics. When evaluating the use of these types of employee
performance evaluations, consider the maturity level of the employees involved and the long-
term effects that could result from the source of negative reviews getting back to the team
members.
3. 360-Degree Performance Reviews
In 360-degree performance reviews, many different types of people are consulted about an
employee's performance. This includes customers, suppliers, peers and direct reports. In the case
of a manager, employees are often asked to give "upward feedback" on how well they are being
managed. While the benefits of multiple points of view are obvious, there are also some
challenges to these types of performance reviews. Employees almost never give "true" feedback
about their managers (out of fear that the manager finds out) and outside contacts may be simply
too busy, or unqualified to effectively rate a specific employee (customer satisfaction surveys
may be a better way to gauge this type of feedback).

If 360-degree performance reviews are performed, a Human Resources manager should

coordinate the process, so that subordinate reviewers (i.e., employees) are assured that their
performance reviews are kept anonymous.

4. Self-Assessment Performance Reviews

Self-Assessment performance reviews are effective when combined with any of the other three
types of performance reviews. With this type of review, employees are asked to rate themselves,
often using the same form that a manager will use to review them. Self-assessment performance
reviewss help make the employees an active part of the process and provide a vehicle for them to
reflect on their own performance prior to the formal review.

Studies have shown that employees are usually harder on themselves in self-assessment
performance reviews, than their managers and generally give themselves lower ratings. Having
employees do self assessment performance reviews prior to a manager's review can set a positive
tone for the meeting, as the manager will often have better things to say than the employee has
said about him or herself.

Performance appraisal
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improve this article if you can. The talk page may contain suggestions. (November 2009)

A performance appraisal, employee appraisal, performance review, or (career)

development discussion[1] is a method by which the job performance of an employee is
evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding
manager or supervisor[2]. A performance appraisal is a part of guiding and managing career
development. It is the process of obtaining, analyzing, and recording information about the
relative worth of an employee to the organization. Performance appraisal is an analysis of an
employee's recent successes and failures, personal strengths and weaknesses, and suitability for
promotion or further training. It is also the judgement of an employee's performance in a job
based on considerations other than productivity alone.

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[edit] Aims
Generally, the aims of a performance appraisal are to:

 Give employees feedback on performance

 Identify employee training needs
 Document criteria used to allocate organizational rewards
 Form a basis for personnel decisions: salary increases, promotions, disciplinary actions,
bonuses, etc.
 Provide the opportunity for organizational diagnosis and development
 Facilitate communication between employee and administration
 Validate selection techniques and human resource policies to meet federal Equal
Employment Opportunity requirements.
 To improve performance through counseling, coaching and development.

[edit] Methods
A common approach to assessing performance is to use a numerical or scalar rating system
whereby managers are asked to score an individual against a number of objectives/attributes. In
some companies, employees receive assessments from their manager, peers, subordinates, and
customers, while also performing a self assessment. This is known as a 360-degree appraisal and
forms good communication patterns.

The most popular methods used in the performance appraisal process include the following:

 Management by objectives
 360-degree appraisal
 Behavioral observation scale
 Behaviorally anchored rating scales

Trait-based systems, which rely on factors such as integrity and conscientiousness, are also
commonly used by businesses. The scientific literature on the subject provides evidence that
assessing employees on factors such as these should be avoided. The reasons for this are twofold:
1) Because trait-based systems are by definition based on personality traits, they make it difficult
for a manager to provide feedback that can cause positive change in employee performance. This
is caused by the fact that personality dimensions are for the most part static, and while an
employee can change a specific behavior they cannot change their personality. For example, a
person who lacks integrity may stop lying to a manager because they have been caught, but they
still have low integrity and are likely to lie again when the threat of being caught is gone.

2) Trait-based systems, because they are vague, are more easily influenced by office politics,
causing them to be less reliable as a source of information on an employee's true performance.
The vagueness of these instruments allows managers to fill them out based on who they want
to/feel should get a raise, rather than basing scores on specific behaviors employees
should/should not be engaging in. These systems are also more likely to leave a company open to
discrimination claims because a manager can make biased decisions without having to back them
up with specific behavioral information.

Management by objectives
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Management by Objectives (MBO) is a process of defining objectives within an organization

so that management and employees agree to the objectives and understand what they are in the
organization.

The term "management by objectives" was first popularized by Peter Drucker in his 1954 book
'The Practice of Management'.[1]

The essence of MBO is participative goal setting, choosing course of actions and decision
making. An important part of the MBO is the measurement and the comparison of the
employee’s actual performance with the standards set. Ideally, when employees themselves have
been involved with the goal setting and choosing the course of action to be followed by them,
they are more likely to fulfill their responsibilities.

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[edit] Features and Advantages

[edit] Unique features and advantage of the MBO process

The basic principle behind Management by Objectives (MBO) is for employees to have a clear
understanding of the roles and responsibilities expected of them. They can then understand how
their activities relate to the achievement of the organization. MBO also places importance on
fulfilling the personal goals of each employee.

Some of the important features and advantages of MBO are:

1. Motivation – Involving employees in the whole process of goal setting and increasing employee
empowerment. This increases employee job satisfaction and commitment.
2. Better communication and Coordination – Frequent reviews and interactions between superiors
and subordinates helps to maintain harmonious relationships within the organization and also
to solve many problems.
3. Clarity of goals
4. Subordinates have a higher commitment to objectives they set themselves than those imposed
on them by another person.
5. Managers can ensure that objectives of the subordinates are linked to the organization's
objectives.

[edit] Domains and levels

Objectives can be set in all domains of activities (production, marketing, services, sales, R&D,
human resources, finance, information systems etc.).

Some objectives are collective, for a whole department or the whole company, others can be
individualized.

[edit] Practice
Objectives need quantifying and monitoring. Reliable management information systems are
needed to establish relevant objectives and monitor their "reach ratio" in an objective way. Pay
incentives (bonuses) are often linked to results in reaching the objectives

[edit] Limitations
There are several limitations to the assumptive base underlying the impact of managing by
objectives, including:

1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.

2. It underemphasizes the importance of the environment or context in which the goals are set.
That context includes everything from the availability and quality of resources, to relative buy-in
by leadership and stake-holders. As an example of the influence of management buy-in as a
contextual influencer, in a 1991 comprehensive review of thirty years of research on the impact
of Management by Objectives, Robert Rodgers and John Hunter concluded that companies
whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in
productivity. Companies with CEOs who showed low commitment only saw a 6% gain in
productivity.
3. Companies evaluated their employees by comparing them with the "ideal" employee. Trait
appraisal only looks at what employees should be, not at what they should do.

When this approach is not properly set, agreed and managed by organizations, self-centered
employees might be prone to distort results, falsely representing achievement of targets that were
set in a short-term, narrow fashion. In this case, managing by objectives would be
counterproductive.

The use of MBO must be carefully aligned with the culture of the organization. While MBO is
not as fashionable as it was before the 'empowerment' fad, it still has its place in management
today. The key difference is that rather than 'set' objectives from a cascade process, objectives
are discussed and agreed upon. Employees are often involved in this process, which can be
advantageous.

A saying around MBO -- "What gets measured gets done", ‘Why measure performance?
Different purposes require different measures’ -- is perhaps the most famous aphorism of
performance measurement; therefore, to avoid potential problems SMART and SMARTER
objectives need to be agreed upon in the true sense rather than set.

360-degree feedback
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In human resources or industrial/organizational psychology, 360-degree feedback, also known

as multi-rater feedback, multisource feedback, or multisource assessment, is feedback that
comes from all around an employee. "360" refers to the 360 degrees in a circle, with an
individual figuratively in the center of the circle. Feedback is provided by subordinates, peers,
and supervisors. It also includes a self-assessment and, in some cases, feedback from external
sources such as customers and suppliers or other interested stakeholders. It may be contrasted
with "upward feedback," where managers are given feedback by their direct reports, or a
"traditional performance appraisal," where the employees are most often reviewed only by their
managers.

The results from 360-degree feedback are often used by the person receiving the feedback to
plan training and development. Results are also used by some organizations in making
administrative decisions, such as pay or promotion. When this is the case, the 360 assessment is
for evaluation purposes, and is sometimes called a "360-degree review." However, there is a
great deal of controversy as to whether 360-degree feedback should be used exclusively for
development purposes, or should be used for appraisal purposes as well (Waldman et al., 1998).
There is also controversy regarding whether 360-degree feedback improves employee
performance, and it has even been suggested that it may decrease shareholder value

Behaviorally anchored rating scales

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Please help improve this article by adding citations to reliable sources. Unsourced material may be
challenged and removed. (December 2006)

Behaviorally Anchored Rating Scales (BARS) are scales used to rate performance. BARS are
normally presented vertically with scale points ranging from five to nine.It is an appraisal
method that aims to combine the benefits of narratives, critical incident incidents, and quantified
ratings by anchoring a quantified scale with specific narrative examples of good, moderate, and
poor performance. [1]

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[edit] Background
BARS were developed in response to dissatisfaction with the subjectivity involved in using
traditional ratings scales such as the graphic rating scale[2] A reviews of BARS concluded that the
strength of this rating format may lie primarily in the performance dimensions which are
gathered rather than the distinction between behavioral and numerical scale anchors. [3]

[edit] Benefits of BARS

BARS are rating scales that add behavioral scale anchors to traditional rating scales (e.g. graphic
rating scales). In comparison to other rating scales, BARS are intended to facilitate more
accurate ratings of the target person's behavior or performance. However, whereas the BARS is
often regarded as a superior performance appraisal method, BARS may still suffer from
unreliability, leniency bias and lack of discriminant validity between performance dimensions[4][5]

[edit] Developing BARS

BARS can be developed using data collected through the critical incident technique[6], or through
the use of comprehensive data about the tasks performed by a job incumbent, such as might be
collected through a task analysis. In order to construct BARS several basic steps, outlined below,
are followed.

1. Examples of effective and ineffective behavior related to job are collected from people
with knowledge of job using the critical incident technique. Alternatively, data may be
collected through the careful examination of data from a recent task analysis.
2. These data are then converted in to performance dimensions. To convert these data into
performance dimensions, examples of behavior (such as critical incidents) are sorted into
homogeneous groups using the Q-sort technique. Definitions for each group of behaviors
are then written to define each grouping of behaviors as a performance dimension
3. A group of subject matter experts (SMEs) are asked to retranslate the behavioral
examples back into their respective performance dimensions. At this stage the behaviors
for which there is not a high level of agreement (often 50%- 75%) are discarded while the
behaviors which were retranslated back into their resepctive performance dimensions
with a high level of SME agreement are retained. The retranslation process helps to
ensure that behaviors are readily identifiable with their respective performance
dimensions.
4. The retained behaviors are then scaled by having SMEs rate the effectiveness of each
behavior. These ratings are usually done on a 5 to 9 point Likert-type scale.
5. Behaviors with a low standard deviation (for examples, less than 1.50) are retained while
behaviors with a higher standard deviation are discarded. This step helps to ensure SME
agreement about the rating of each behavior.
6. Finally, behaviors for each performance dimensions- all meeting retranslation and criteria
will be used as scale anchors.