Performance evaluation, or performance appraisal (PA), is the process of assessing an employee's job performance and productivity. The assessment is conducted based on previously established criteria that align with the goals of the organization.
Various employee attributes can be assessed during this process, including organizational-citizenship behavior, accomplishments, strengths and weaknesses, and potential for future improvement. The management of performance plays a vital role in the success or failure of the organization, as human resources are a significant investment that must provide meaningful returns. An ineffective performance-evaluation system can create high turnover and reduce employee productivity.
Pros and Cons of Performance Appraisals
Benefits of the PA system include increased employee effectiveness, higher likelihood of improved employee performance, the prompting of feedback, enhanced communication between employers and employees, fostering of trust, promotion of goal setting, and assessment of educational and other training needs. Detriments of the PA system include the possible hindrance of quality control, stress for both employees and management, errors in judgment, legal issues arising from improper evaluations, and the implementation of inappropriate performance goals.
Performance appraisal is situated at both the individual employee level and the organizational level because human resources (HR) conducts evaluations of individuals in light of organizational goals with the object of improving achievement of these goals. HR relies on a strong performance-management policy; a proper PA should be able to educate employees on the organization, its goals, and its expectations in legal ways. This means that antidiscrimination laws and other employment laws need to shape the PA policy.
Methods of Performance Evaluation
There are various ways human resource professionals can approach assessing performance, though integrating various perspectives (i.e., collecting the most differentiated data) will paint the clearest picture. Some examples include:
Objective production: Under this method, direct data is used to evaluate the performance of an employee. This often relates to simple and quantifiable data points, such as sales figures, production numbers, etc. However, one drawback of this process is that the variability in performance can be due to factors outside employees' control. Also, the quantity of production does not necessarily indicate the quality of the products. Still, this data reflects performance to some extent.
Personnel: This is the method of recording the withdrawal behavior of employees, such as absences. This personnel data usually is not a comprehensive reflection of an employee's performance and is best complemented with other metrics.
Judgmental evaluation:One of the primary drawbacks of employee performance evaluation is the tendency for positive feedback despite negative behavior. That is, often people are nice enough to provide good evaluations for work that isn't up to par. Judgmental evaluations focus on benchmarks to more accurately promote constructive criticism (through relative scales). A few examples include:
- Graphic rating scale: Graphic rating scales are the most commonly used performance-evaluation system. Typically, the raters use a 5 to 7 point scale to rate employees' productivity.
- Employee-comparison methods: Rather than subordinates being judged against pre-established criteria, they are compared with one another. This method eliminates central-tendency and leniency errors but still allows for halo-effect errors to occur.
- Behavioral checklists and scales: Behaviors are more definite than traits. Supervisors record behaviors that they judge to be job-performance relevant, and they keep a running tally of good and bad behaviors and evaluate the performance of employees based on their judgement.
Peer and Self Assessments
Often, peer assessments and self-assessments are used to paint a clearer image of performance. Managers are often less aware of employee efficacy than team members or other peers. In self-assessments employees have the right to underline what they think their performance is, and why certain metrics may be misleading. Peer assessments and self-assessments are useful in capturing this data:
- Peer assessments: members of a group evaluate and appraise the performance of their fellow group members.
- Self-assessments: in self-assessments, individuals assess and evaluate their own behavior and job performance.
- 360-degree feedback: 360-degree feedback includes multiple evaluations of employees; it often integrates assessments from superiors and peers, as well as self-assessments. This is the ideal situation.
A manager rating an employee.
Rating an Employee