Lecture 3 Readings: Evaluating Employee
Performance (Chapter 7)
Step 1: Determine the Reason for Evaluating Employee Performance: this is
important because the various performance appraisal techniques are appropriate
for some purposes but not for others. Example: forced-choice rating scale:
supervisor is given several behaviours and is forced to choose which of them is most
typical of the employee (excellent for determining compensation but terrible for
training purposes. Most organizations do not have specific goals for their
performance appraisal systems; as a result most of these systems are not successful.
Providing Employee Training and Feedback: most important use of
performance evaluation is to improve employee performance and provide feedback.
The semiannual performance appraisal review: meeting between a supervisor
and a subordinate for the purpose of discussing performance appraisal results, is an
excellent time to meet with employees to discuss their strengths and weaknesses.
Determining Salary Increases: one important reason for evaluating
employee performance is to provide a fair basis to determine an employee’s salary
Making Promotion Decisions: sometimes best performing employee does
not receive promotion (may go to seniority). Peter Principle: the promotion of
good employees until they reach a level in which they are not competent.
Making Termination Decisions: the results of the performance review
might suggest the best course of action is to fire the employee
Conducting Personnel Research: not the most important reason, but
important to determine performance.
Step 2: Identify Environmental and Cultural Limitations: important to know
how the surroundings and culture affects the system. Examples: employees being
over worked (time-consuming performance test not effective), insufficient funds
available for merit pay or testing (makes the system frustrating), etc.
Step 3: Determine Who Will Evaluate Performance: traditionally evaluated by
supervisors, however, organizations realized that supervisors see only certain
aspects of an employees behaviour (70% of behaviour or more is seen by custmers,
peers, and support staff).
360-Degree Feedback: performance appraisal system in which feedback is
obtained from multiple sources such as supervisors, subordinates, and peers. Used as source of training and development rather than salary increase, promotion, and
Multi-Source Feedback: performance appraisal system in which an
employee receives feedback from sources (clients, subordinates, peers) other than
just his/her supervisor
Supervisors: most common type of performance appraisal is the supervisor
rating (90% are conducted this way). They do not see every minute of employee’s
behaviour, but they see the end result.
Peers: while employees see the results, peers often see the actual behaviour.
Ratings come from peers that work directly with employee and those who come in
contact with employee. Only reliable when the peers who make the ratings are
similar to and well acquainted with the employees being rating. They are successful
in predicting the future success of promoted employees.
Subordinates: (upwards feedback) is an important component of 360-
degree feedback, as subordinates provide a different view about their supervisor’s
behaviour. It is difficult to obtain because employees can fear a backlash from their
Customers: they provide feedback on employee performance by filing
complaints or complimenting a manager about one of their employees. Formally,
customers provide feedback by completing evaluation cards. Organizations
sometimes hire “secret customers” to “shop” in the store (really evaluate
Self-Appraisal: used by only a small percentage of organization, and is when
employees rate themselves.
Step 4: Select the Best Appraisal Methods to Accomplish Your Goals
Decision 1: Focus on the Appraisal Dimensions
Trait-Focused: concentrates on employee attributes such as dependability,
honesty, and courtesy. Not a good idea because they provide poor feedback and will
not result in employee development. Traits are personal and employees will get
Competency-Focused: concentrate on the employee’s knowledge, skills, and
abilities. The advantage is that it is easy to provide feedback and suggest the steps to
correct deficiencies. Example: employee has poor writing skills, the effective
measure would be to enroll the employee in a writing course Task-Focused: concentrates on the everyday tasks of the employee (often
includes several competencies). The advantage is that because supervisors are
concentrating on tasks that occur together, it is often easier to evaluate
performance. The disadvantage is that it is more difficult to offer suggestions for
how to correct the deficiency if an employee scores low. Example: for a police
officer, is a low score of court testimony due to lack of knowledge of poor public
Goal-Focused: based on goals to be accomplished by the employee. The
advantage of a goal-focused approach is that it makes it easier for an employee to
understand why certain behaviours are expected
Contextual Performance: the effort the employee makes to get along with
peers, improve the organization, and perform tasks that are needed but not
necessary to the employee’s job. Example: in academia it is not uncommon to deny
tenure to a faculty member who is technically competent but does not “play well
Decision 2: Should Dimensions Be W