What will you evaluate in the performance appraisal?

Rating scales

Ranking is probably the simplest method available. All employees in a section are rated in order according to their job performance and/or value to the organization. As this process frequently takes place on an informal basis, even unconsciously, it is easily carried out.

Ranking can be used to compare employees working in different areas and for different supervisors, for example, as a basis for salary or promotion decisions. Often, the ratings of various people will be pooled and an overall result achieved. The two most common ranking methods are alternation and paired-comparison ranking.

In alternation ranking, employees' names are listed, with the rater to choose the most effective,most efficient or most valuable employee first, then the least effective or least valuable, then second best,second worst and so on until the list is completed.

Paired-comparision rankings. In paired-comparison ranking, employees' names are listed, and each rater compares each employee against each of the other employees. The preferred employee receives a check against his or her name, with ranking being determined by number of checks at the completion of the exercise. Although only two individuals are considered at any one time, the number of comparisons increases geometrically as the size of the whole group increases.

Advantages. The main advantage of ranking is its ease of administration in terms of time and cost.

Disadvantages. Ranking systems have the following disadvantages:

• The simplicity of ranking means it only produces overall results and does not allow evaluation of specific aspects or components of job performance.

• Although indicating how each person stands relative to each other, ranking does not show the distance of merit between each person, or the overall quality. For example, the person ranked last may still be quite an effective and productive employee if the overall standard of the group was high.

• Both of these problems imply that the rater must have knowledge of each job in order to make such a general assessment.

Visual or graphic forms

Graphic rating is probably the most widely used of all formal appraisal methods, mainly because of its adaptability to a wide range of jobs.

A form is used which requires the rater to assess a range of aspects of job performance and personal attributes on a scale that reflects the quality of performance in each aspect. The form used should be tailored to the requirements of each individual organization.

Generally, the item to be assessed is named, and each degree on the scale is prefaced by a short statement or adjective describing each level of quality and quantity. The rater is to choose the statement nearest to his or her judgment of the employee. Often an overall score can be tabulated, but this is not usually a valid means of comparing people in different jobs since factors on the scale will vary in importance from job to job, and may therefore require some form of weighting.

The simplest type of graphic scale is the graphic rating scale in which the appraiser typically notes an employee's performance by circling a number or making a mark in a box.

Advantages. The popularity of graphic rating methods is due largely to their ease of administration. A visual system is easily understood by different appraisers and can be adapted to a large range of jobs, provided these jobs have a range of common elements. It is also capable of ensuring that a large range of job components is covered by the appraisal. It does not occupy a great deal of time, is easy to learn to use and, finally, documentation is relatively easy.

Disadvantages. There are several major issues with this form of evaluation:

• One of the main problems in any visual method is that it can become too standardized. That is, it will fail to allow for special features of a particular job, due to the rigidity caused by trying to represent a wide range of jobs. This may result in the alternative ratings becoming irrelevant or overly subjective. A possible means of overcoming that difficulty is to combine the graphic rating method with another, more flexible approach, such as essay or narrative.

• From the appraiser's viewpoint, one of the problems is the difficulty of justifying a bad rating to the employee in subsequent discussions. If the rater is afraid of this situation, he may avoid allocating poor ratings, even though they are justified. A related problem is a tendency for ratings to cluster around the average mark. This is often caused by the rater's lack of knowledge of the employee or the issue at hand, and the frequent tendency to start at average and work outwards.

• Overall, a visual rating system does not encourage a flexible approach, and often does not produce sufficiently discriminating information. These systems may be so simple that they do not relate to the complexities of the job and hence, have no validity.

Essay or narrative

The essay or narrative method is a simple, open-ended, unstructured approach. The appraiser is asked to write a report on the employee's performance and is free to include any items he or she wishes. Generally the employee's strengths, weaknesses and potential will be mentioned, along with overall assessment of performance. Sometimes the appraisal report will take the form of general questions requiring detailed, written answers, such as What are the employee's strengths?

An essay section often is combined with another, more structured technique, such as graphic rating or forced choice, as a means of giving those techniques greater flexibility while including some structure.

Advantages. Because the appraiser has few constraints to observe, he or she is free to explore and comment on a wider range of aspects of work, where other methods tend to be restricted to what is on the form. This enables the narrative approach to pick up unique or unusual features of particular jobs.

Disadvantages. The essay method is the most subjective method of all and is therefore vulnerable to bias. Lack of guidance for raters may result in widely differing bases for judgment of employees, making comparisons between employees difficult. Some raters may experience difficulty in self-expression, resulting in problems of interpretation. The essay approach is also time-consuming.

Behavioral checklist

Checklist is a term that applies to types of performance evaluations that contain lists of statements that indicate various levels of favorable and unfavorable performance.

Basic checklist. In a basic checklist system, the appraiser reviews the statement list and checks those descriptive statements that are reflective of the employee's performance

How to develop a behavioral checklist. The steps in developing a checklist include:

• Conduct a job analysis and identify the most important performance categories (5 to 8 is preferable).

• Prepare statements of positive and negative events that describe the range of behavior possible from unacceptable to outstanding.

• Review the material with a group of employees that is very familiar with the job. Ensure that all of the statements provide an accurate summary of possible job performance.

• Create a random list of statements illustrating the levels of performance.

• Check and make sure that for every statement, there is or can be workplace behavior illustrating the statement. This ensures that the statements describe valid behavior.

Advantages. Checklists can compensate for typical rater errors by random statement and using actual behavior. This forces the rater into comparing employee performance to an objective standard. Checklists are relatively easy to design, inexpensive and easy to administer.

Disadvantages. Designing the checklist is time-intensive. Too often, statements are too broad and do not specifically describe behavior on various jobs. Each statement has the same weight; therefore, the system may not reflect the reality in the job. Typically, the employee has no input into the review process and there is no structured feedback unless a checklist system is combined with another method that incorporates these features.

Behaviorally anchored rating scales (BARS)

This is a relatively complex method using rating scales that describe typical instances of behavior, ranging from unsatisfactory to excellent. Unlike the graphic rating method, which uses statements of a general nature that then may be applied to a wide range of jobs, the BARS method is very specific and usually requires separate scales for each position. It also concentrates upon descriptions of actual job activities, avoiding quantitative assessments and where possible the use of numerical values.

A basic aspect of the job is described first, followed by a scale of concrete examples of desirable and undesirable behavior. Sometimes a point rating is attached to the scale. The term behaviorally anchored refers to the use of actual instances of job behavior as a basis or anchor. The appraiser must have a thorough knowledge of the job content, and a large number of scales may be needed within the organization to maintain relevance to each job.

Advantages. The main advantage of BARS is its potential for objectivity. By relying on job behavior-what people actually do-it takes into account only those aspects under the employee's control. Its specialized nature means it is related closely to the job in question and can be adapted to unusual or highly specialized positions. The specific descriptions make it easier for the appraiser to decide which ratings apply, which lessens the chance that some types of rating error will occur.

Disadvantages. As the above discussion suggests, BARS is a very costly and time-consuming method. It may require the design and use of many different scales, which may in turn lead to a great deal of time spent on job analysis. BARS may also require use of a large number of expert appraisers. Unless there is a large number of closely related jobs, BARS may be too expensive to consider. Frequent updating may also be necessary if the scales are to remain valid. Consequently, only large organizations may be able to employ the level of expertise needed to develop and maintain this system.

As mentioned above, careful wording of statements on the scale is necessary. It will also be difficult to compare employees, since different rating scales may be used for each. But, on the other hand, BARS tend to be a good indicator of current performance as opposed to an indicator of potential.

Critical incidents

The critical incident method involves recording on-the-job behavior over a period of time. The employee's supervisor keeps a diary of examples of effective and ineffective job performance. At the end of the appraisal period, the information is used to produce the appraisal (which may be one of the other types).

A variation of the critical incident method is to draw up a scale of behavior based on critical incidents, and to position employees on the scale according to the statements or examples which apply to them.

Advantages. The advantage of the critical incident method is that the appraisal tends to be based on actual instances of job performance. It also ensures that it covers the full part of a time period and is not concentrated upon the last few weeks prior to appraisal date. Also, statements made during the appraisal interview can be given a factual background. On the whole, however,the critical incident method appears to work best when it is combined with and provides background information for one of the other appraisal methods.

Disadvantages. Used by itself, the critical incident methods has a number of possible disadvantages:

• It concentrates on recording extremes of job behavior, rather than typical or representative performance.

• It can encourage micromanagement and over-supervision of employees.

• It has an air of secrecy, which may cause ill-will.

• It is easily subject to bias; for example, a disproportionate number of negative examples may be recorded.

• It can be very time-consuming.

• To be effective, rewards and punishment normally need to be administered shortly after the behavior occurs. With this method, feedback would not occur until months after the incident took place, meaning discussion at that stage may have little impact. Also, such a time lag is inconsistent with one of the aims of appraisal, which is to concentrate on improving performance rather than merely compiling a record.

Management by objectives (MBO)

MBO differs from other appraisal methods in that it emphasizes goals and outcomes, rather than methods. The goals are set by the supervisor and the employee, and the results, rather than personality traits, are evaluated. The stages of MBO are usually as follows:

• Supervisor and employee agree on the duties of the job or the objectives and list them.

• The subordinate sets his own goals while the supervisor ensures that they mesh with those of the organization.

• Progress is evaluated periodically (more often than once a year), and as progress is checked, the goals can be modified.

Advantages. By concentrating upon results achieved, MBO may offer a relatively high level of objectivity. MBO increases motivation by relating organizational goals to individual goals. It is best suited to comparatively flexible situations, that is, jobs that are not tightly constrained by factors such as technology. There must be some freedom to set goals and vary work methods.

Disadvantages. The potential drawbacks of MBO, its proponents would say are really misuses or corruptions of the MBO system. One difficulty in setting goals is that they may be goals of short-term benefit only and, in order to achieve them, more important long-term factors may be ignored. For example, in order to achieve high short-term output, unsatisfactory compromises might be made in areas such as maintenance, safety, stock levels, etc. Goals may deliberately be set too low in order to ensure success each time. The goals can also be affected by external factors beyond the employee's control, such as economic changes, which are difficult to take into account. But, if MBO is used properly, the stated goals or objectives will take these possibilities into account.

More legitimate problems include the difficulty of coordinating the individual's goals with the overall goals of the organization, and the difficulty in making comparisons between different employees-for instance, in promoting or setting relative salary levels. If the goals are set by management, not by the employee, the MBO system has not been applied properly, and it may be hard to gain commitment by the employee.