C. Team/Peer Rating
Team/peer ratings are especially useful when supervisors do not have the opportunity to
observe each employee’s performance but work group members do. Peer evaluations
are also common in collegiate schools of business where professors commonly require
students to conduct peer evaluations after the completion of group-based projects. One
It is possible that any performance appraisal, including team/peer ratings, can negatively
affect teamwork and participative management efforts. Although team members have
D. Self-Rating
Self-appraisal requires employees to think about their strengths and weaknesses and set
goals for improvement. Employees working in isolation or possessing unique skills may
E. Outsider Rating
People outside the immediate work group may be asked to participate in performance
reviews. This “field review” approach can include someone from the HR department as
The customers or clients of an organization are good sources for outside appraisals. For
sales and service jobs, customers may provide useful input on the performance
F. Multisource/360-Degree Rating
Multi-source feedback recognizes that for many jobs, employee performance is
multidimensional and crosses departmental, organizational, and even national
Significant administrative time and paperwork are required to request, obtain, and
summarize feedback from multiple raters. Using electronic systems for the information
Developmental Use of Multisource Feedback
Multisource feedback focuses on the use of appraisals for the development of
individuals. Conflict resolution skills, decision-making abilities, team effectiveness,
Administrative Use of Multisource Feedback
When using 360-degree feedback for administrative purposes, managers must
anticipate the potential problems. Differences among raters can present a challenge,
especially when using 360-degree ratings for discipline or pay decisions. Bias can
just as easily be rooted in customers, subordinates, and peers as in a boss, and the
Evaluating Multisource Feedback
Research on multisource/360-degree feedback has revealed both positives and
negatives. More variability than expected may be seen in the ratings given by the
different sources. Thus, supervisor ratings may need to carry more weight than peer
Also, some wonder whether multisource appraisals really create sufficiently better
decisions to offset the additional time and investment required. These issues appear
to be less threatening when the 360-degree feedback is used only for development, so
V. Tools for Appraising Performance
Performance can be appraised by a number of methods.
A. Category Scaling Methods
The simplest methods for appraising performance are category scaling methods, which
require a manager to mark an employee’s level of performance on a specific form
divided into categories of performance. A checklist uses a list of statements or words
B. Graphic Rating Scales
The graphic rating scale allows the rater to mark an employee’s performance on a
continuum indicating low to high levels of a particular characteristic. Because of the
straightforwardness of the process, graphic rating scales are common in performance
scales:
Descriptive categories (such as quantity of work, attendance, and dependability)
Job duties (taken from the job description)
Behavioral dimensions (such as decision making, employee development, and
communication effectiveness)
Concerns with Graphic Rating Scales
Graphic rating scales in many forms are widely used because they are easy to
develop and provide a uniform set of criteria to evaluate the job performance of
different employees. However, the use of scales can cause rater error because the
form might not accurately reflect the relative importance of certain job
Regardless of the scales used, the focus should be on the job duties and
responsibilities identified in job descriptions. The closer the link between the scales
and what people actually do, as identified in current and complete job descriptions,
An additional drawback to graphic rating scales is that separate traits or factors are
often grouped, and the rater is given only one box to check. Another drawback is that
Behavioral Rating Scales
In an attempt to overcome some of the concerns with graphic rating scales,
employers may use behavioral rating scales designed to assess individual actions
instead of personal attributes and characteristics. Different approaches are used, but
When creating a BARS system, identifying important job dimensions, which are the
most important performance factors in a job description, is done first. Short
Several problems are associated with the behavioral approaches:
Creating and maintaining behaviorally anchored rating scales requires
Many appraisal forms are needed to accommodate different types of jobs in an
C. Comparative Methods
Comparative methods require that managers directly compare the performance levels of
their employees against one another, and these comparisons can provide useful
Ranking
The ranking method lists the individuals being rated from highest to lowest based on
their performance levels and relative contributions. One disadvantage of this process
is that the sizes of the performance differences between employees are often not
Forced Distribution
Forced distribution is a technique for distributing ratings that are generated with any
of the other appraisal methods and comparing the ratings of people in a work group.
Advantages and Disadvantages of Forced Distribution
One reason why firms have mandated the use of forced distributions for appraisal
ratings is to deal with “rater inflation.” The use of a forced distribution system forces
But the forced distribution method suffers from several drawbacks:
One problem is that a supervisor may resist placing any individual in the
Difficulties also arise when the rater must explain to an employee why he or
D. Narrative Methods
Managers may be required to provide written appraisal narratives. Some appraisal
methods are entirely written, rather than using predetermined rating scales or ranking
Critical Incident
In the critical incident method, the manager keeps a written record of both favorable
and unfavorable actions performed by an employee during the entire rating period.
Essay
The essay method requires a manager to write a short essay describing each
employee’s performance during the rating period. Some free-form essays are without
guidelines; others are more structured, using prepared questions that must be
E. Management by Objectives
Management by objectives (MBO) specifies the performance goals that an individual
and manager identify together. Each manager sets objectives derived from the overall
MBO Process
Implementing a guided self-appraisal system using MBO is a four-stage process. The
stages are as follows:
Job review and agreement.
Development of performance standards.
Setting of objectives.
Continuing performance discussions.
The MBO process seems to be most useful with managerial personnel and employees
who have a fairly wide range of flexibility and control over their jobs. When imposed
F. Combinations of Methods
No single appraisal method is best for all situations, so a performance measurement
system that uses a combination of methods may be sensible. Using combinations may
offset some of the advantages and disadvantages of individual methods. When managers
VI. Training Managers and Employees in Performance Appraisal
Court decisions on the legality of performance appraisals and research on appraisal
For employees, performance appraisal training focuses on the purposes of appraisal, the
appraisal process and timing, and how performance criteria and standards are linked to job
duties and responsibilities. Most systems can be improved by training supervisors in how
to do performance appraisals. The following list identifies some topics to be covered in
appraisal training for managers:
Appraisal process and timing
Performance criteria and job standards that should be considered
How to communicate positive and negative feedback
A. Rater Errors
There are many possible sources of error in the performance-appraisal process. One of
Varying Standards
When appraising employees, a manager should avoid applying different standards
and expectations to employees performing the same or similar jobs. Such problems
Recency and Primacy Effects
The recency effect occurs when a rater gives greater weight to recent events when
appraising an individual’s performance. Another time related issue is the primacy
Central Tendency, Leniency, and Strictness Errors
Appraisers who rate all employees within a narrow range in the middle of the scale
(i.e., rate everyone as “average”) commit a central tendency error, giving even
Rater Bias
When a rater’s values or prejudices distort the rating, rater bias results. Such bias
may be unconscious or quite intentional. Use of age, religion, seniority, sex,
Halo and Horns Effects
The halo effect occurs when a rater scores an employee high on all job criteria
Contrast Error
The contrast error is the tendency to rate people relative to one another. Although it
Similar-to-Me/Different-from-Me Errors
Sometimes, raters are influenced by whether people show characteristics that are the
same as or different from their own. The error comes in measuring another person
Sampling Error
If the rater has seen only a small sample of the person’s work, an appraisal may be
VII. Appraisal Feedback
After completing appraisals, managers need to communicate results to give employees a
clear understanding of how they compare to performance standards and organizations’
A. The Appraisal Interview
The appraisal interview presents both an opportunity and a challenge. It can be an
emotional experience for the manager and the employee because the manager must
Employees usually approach an appraisal interview with some concern. They may feel
that discussions about performance are both personal and important to their continued
B. Reactions of Managers and Employees
Managers who must complete evaluations of their employees sometimes resist the
appraisal process. Many feel that their role requires them to assist, encourage, coach,
Knowing that appraisals may affect employees’ future careers also may cause altered or
biased ratings. This problem is even more likely when managers know that they will
have to communicate and defend their ratings to the employees, their bosses, or HR
Employees may well see the appraisal process as a threat and feel that the only way for
them to get a higher rating is for someone else to receive a low rating. Likewise,
C. Effective Performance Management
To be effective, a performance management system, including the performance
appraisal processes, should be:
Beneficial as a development tool
Useful as an administrative tool
Legal and job related