Performance Appraisals

Overview Performance appraisal is a formal program in which employees are told the employer's expectations for their performance and rated on how well they have met those expectations. Performance appraisals are used to support HR decisions, including promotions, terminations, training, and merit pay increases. This chapter discusses the traditional appraisal methodwhere a supervisor reviews an employee's performance during a set periodand several other methods, including self-appraisals, multisource assessments, upward appraisals, peer reviews, and computer-based appraisals. Rating techniques, implementation, and legal considerations also are discussed. For a model annual performance review policy, see Model Performance Appraisal Policy. For a model performance evaluation form, see Model Performance Appraisal Form . Performance Appraisal Uses and Steps What Are Performance Appraisals? Performance appraisals are an employer's way of telling employees what is expected of them in their jobs and how well they are meeting those expectations. A typical performance appraisal entails the supervisor: monitoring the employee's performance, completing a performance appraisal form about the employee, and conducting a performance appraisal interview with the employee to discuss his or her performance. Performance appraisals are conducted over a specific rating period typically three months, six months, or a year. Performance Appraisal Steps The performance appraisal process should begin before the employee's performance is appraised. In an effective performance appraisal system, employees know what is expected of them and against what standards they will be judged. The following is an outline of performance appraisal steps, including those leading up to the actual appraisal: Define the job and performance standards. The job should be well defined so that the employee knows what tasks are critical. Standards of acceptable performance also should be determined for each taskfor example, quantity produced, quality of work, and timeliness of task completion. Standards should be the same for all employees in that particular job. Plan for performance. In this stage, the supervisor and employee develop a plan for the rating period that guides the subordinate's work. During planning, the employee must understand the key tasks of the job, the results and conduct required in the job, and the standards of performance. Monitor performance. Both the employee and the employer should be actively involved in monitoring the employee's performance during the rating period. Throughout the rating, the supervisor should provide feedback to the employee, reinforcing good performance and correcting poor performance. The employee should be encouraged to discuss both performance successes and problems throughout the rating period. Appraise performance and conduct performance interview. The supervisor completes a performance appraisal form and conducts a performance appraisal interview with each employee. Employees should be told how well they are doing, why they are doing well or poorly, and what they can do to improve or maintain their performance. Reward performance. During this final stage, good performance often is reinforced with a reward. The reward system should be capable of differentiating among various levels of employee performance for

example, the highest performers would get the greatest reward and the lowest performers would get the smallest reward or no reward. Why Appraise Performance? Employers appraise performance for a number of reasons. Performance appraisals frequently are used to support HR decisions involving merit increases, promotions, termination, and layoffs. Employers that plan to use a merit pay plan must have a performance appraisal system that effectively and accurately assesses employee performance that the employer wants to reward and is capable of differentiating among different levels of performance. Merit pay decisions not based on an accurate and fair performance appraisal system can lead to charges of discrimination, as well as employee dissatisfaction with the pay system. Performance appraisals also can be used to: motivate employee performance and improve productivity, facilitate employee growth and development, and identify current and future training needs. Appraisal Methods Choosing the Right Method Employers use a number of methods to appraise and record employee performance, but not all performance appraisal methods work equally well for every employer. To choose the right performance appraisal method, employer should consider the following factors: Management or nonmanagement application. Does the performance appraisal method provide a way to measure supervisors' and managers' ability to direct and motivate employees? Does it measure individual work behaviors and output of nonmanagers? Types of jobs employees perform. What types of jobs are involved? Will one method work equally well in all or most cases? Nature of work relationships. What is the nature of the relationship between employees and supervisors, employees and peers or subordinates, and employees and customers? Reliability of method. Does the method provide an employee with reliable scores, regardless of who does the appraisal? Or does the same individual receive such widely varying scores from different raters that providing meaningful feedback is impossible? Validity or relevance of method. Does the method measure the aspects of performance that the employer wants to reward? Minimization of biases and errors. Does the method reduce the chances of raters making errors or acting on biases? Usefulness in productivity improvement. Is the method useful as a tool to improve productivity and manage performance? Ease of use. Is the method understood and accepted by both raters and employees? Is it easy to use? Appraisals traditionally have been top-down, with a supervisor monitoring an employee's performance, completing a performance appraisal form, and discussing the appraisal with the employee. However, many employers find that relying an immediate supervisor as the sole evaluator is insufficient, especially in less hierarchical workplaces that encourage employee involvement and teamwork. As a result, the traditional, top-down appraisal method often is supplemented by other appraisal methods, including:

 self-appraisals, multisource assessments, upward appraisals or subordinate appraisal of managers, peer reviews, and computer-based appraisals. Each of these performance appraisal methods has advantages and disadvantages that employers must carefully weigh before selecting a plan. In many cases, disadvantages of one system can be minimized by combining it with elements of another system. Top-Down Appraisals In a traditional, top-down performance appraisal, the supervisor monitors employee performance and progress throughout the appraisal period. At the end of the designated period, the supervisor uses some rating technique to make a performance assessment and meets with the employee to discuss the assessment. By itself, the performance appraisal interview has little to no motivational effect. For the appraisal to have value, it must be part of an ongoing process rather than a one-time event. A suggested outline for the performance appraisal process follows: Schedule interview. Employees should be given sufficient notice of the performance appraisal interview and encouraged to conduct a self-appraisal so that they come to the interview prepared to discuss their performance. At the beginning of the interview, the purpose of the appraisal should be reiterated. Describe good performance. The supervisor should describe specific examples of the employee's good performance and explain why it deserves recognition. By being specific, the supervisor tells the employee the types of behaviors that contribute to overall effectiveness. During this discussion, the supervisor should ask the employee to provide other examples of good performance that the supervisor might have missed. Ask about problems. Asking employees to describe their weaknesses can defuse some of the defensiveness that accompanies a performance appraisal. Supervisors should follow up by asking how they can assist the employee in addressing these weaknesses. If the employee fails to mention important weaknesses, the supervisor should raise them. However, the discussion should focus on just two or three critical weaknesses since most individuals have difficulty improving more than a few shortcomings at a time. Suggestions for improvement should focus on specific employee behaviors rather than personality aspects. Plan for future performance. The supervisor and employee should set performance objectives for the next appraisal period and identify steps to improve any performance deficiencies. If appropriate, the plan should include specific types of training that could improve performance deficiencies, prepare the employee to meet the performance objectives in the next period, or ready the employee for new duties or advancement. Set follow-up meetings. Follow-up meetings should be conducted throughout the rating period to monitor employee performance, ensure that the employee is on track, and address any problems that might have arisen. During these meetings, the employee's progress toward specific goals and impediments to performance can be discussed. Self-Appraisal

Self-appraisal gives employees an opportunity to evaluate their own performance. Self-appraisal works especially well with highly motivated, self-directed, and career-focused workers. Employees usually like self-appraisal because they can articulate their interests and goals and explain how they think they have performed, without being encumbered by their supervisor's judgments or conclusions. Supervisors like self-appraisal because it: requires employees' participation, making evaluation a two-way process; fosters more direct interaction between supervisors and employees, which can aid agreement on workable goals; provides common grounds for discussion; and can produce additional information that helps all parties view individual jobs more objectively in the context of the entire organization. A self-appraisal can be conducted formally or informally, orally or in writing. To prepare for formal discussions, some employers ask employees and supervisors to complete identical work sheets so that they can compare responses. Self-appraisal forms often include space in which employees can: note any difficulties they might have had or are having performing their jobs, describe their career goals or skills and abilities they believe are not being used fully, list projects they would like to work on, and suggest training they think they need. Most employers treat self-appraisals as a supplement to, and not a substitute for, top-down appraisals. Employees should understand that supervisors still have the responsibility to write thoughtful, balanced reviews. Self-assessment simply offers a means to obtain additional information that can result in a better evaluation and more responsible supervision and direction. Implementation Guidelines Self-appraisal is a simple method, but achieving its intended outcome requires some preparation. To facilitate the process, supervisors should: provide the employee with a copy of the evaluation form at least two weeks in advance of the review interview; ask the employee to review his or her job description for performance criteria and then complete the appraisal form; look over the employee's job description and complete the same form using the same rating factors, supplemented by memos or notes about the employee based on personally observed behaviors or information from other sources, such as peers and other supervisors; prepare a list of additional questions for the employee's consideration, such as the employee's contributions to the department or division, career aspirations, or training needs; listen carefully and note what the employee considers performance strengths or weaknesses; provide constructive comments about any shortcomings while focusing on potential for improvement; compare the completed review forms and try to reach agreement, especially where profound disparities in ratings exist; and

 devise solutions to any problems and commit to a developmental action plan and follow -up. Multisource Assessment Multisource assessment is known by a variety of names, including 360-degree feedback, multirater assessment, and three-dimensional or full-circle appraisal. MSA elicits specific, objective, constructive feedback from a variety of knowledgeable sources, with the goal of more accurately assessing how an employee is doing. MSA primarily relies on information gleaned from written forms that contain a series of statements or questions to which raters respond. Raters can include the appraised employee's subordinates, peers, supervisors, direct reports, and internal and/or external customers. Self-appraisal also is a common part of MSAs. MSA can be used with self-directed, team-based work groups or with traditionally hierarchical relationships. For some employers, MSA is an integral part of management and leadership development programs. For other employers, MSA supports, rather than replaces, the existing performance appraisal system, serving to open up a dialogue between raters and ratees that enhances career growth. Implementation Guidelines Successful implementation of MSA involves developing a questionnaire, creating a response scale, selecting and training raters, distributing MSA forms, and providing feedback to the individual appraised once all MSA ratings are analyzed. Developing a questionnaire. The first step in designing an MSA rating form is to identify the behaviors and outcomes the employer values and wants to measure. Next, the employer should develop questions related to the behaviors and outcomes to include in the rating questionnaire. Questions should focus on behaviors that are observable and can be changed, not on personality traits or characteristics. Employers also need to consider how many questions to include, particularly if raters will have a large number of employees to evaluate using the questionnaire. Raters should be able to complete a questionnaire in no more than 15 or 20 minutes. Establishing a rating scale. Employers need to create a response scale that provides quantifiable, standardized responses to questions. Most questionnaires use either a satisfaction scale with responses ranging from very satisfied to very dissatisfied, or an agreement scale with responses ranging from strongly agree to strongly disagree. Frequency scales, which elicit responses ranging from always to never, are not considered as helpful. Whatever scale is used, raters should have the option of indicating not applicable or don't know when appropriate. Six choices generally are considered sufficient to eliminate ambiguity, accurately capture raters' opinions, and measure subtle behavioral changes over time. Some questionnaires include an open-ended section so raters can provide written comments to support, clarify, or qualify their ratings. Selecting raters. The employer should identify the individuals will complete rating forms and one or more reviewers who will analyze and compile ratings into a feedback report. To provide a complete and accurate assessment, individuals selected as raters should have worked directly with the ratee. Raters, especially those participating in the process for the first time, should undergo training that covers these key points: Assurance of anonymity. The MSA process must protect raters' identities to guard against inflated rankings and ensure truthful, candid feedback. Without confidentiality assurances, raters might fear that honest responses will damage relationships with co-workers or result in repercussions by managers. While raters remain anonymous to the person undergoing appraisal, they do not have total anonymity the person(s) responsible for reviewing and compiling MSA forms must be able to contact raters about illegible responses, possible bias in scoring, and other issues that might require clarification.

 Rater accountability. To ensure the validity of feedback, evaluators should know that the MSA process includes a review of all response forms to detect anomalous ratings. Raters should understand that they likely will be asked by HR or the person in charge of compiling MSA forms to explain ratings that are consistently at the top or bottom of the scale or significantly different from other respondents' scores. Fairness safeguards. The MSA process should incorporate scoring and review procedures that eliminate clearly invalid responses, guard against collusion among respondents, and detect systemic biases against a particular employee or all employees in a protected-status group. Raters should understand that the anonymity safeguard does not give them license to act on personal grudges or biases that have little to do with work. Instructions on the MSA process. Raters should receive an overview of the MSA process and its purposes, along with information on how ratings will be collected and used. The training should instruct raters on how to complete the questionnaire, code their responses, avoid common errors, and submit completed forms. Distributing MSA forms. Questionnaires should be coded with each ratee's name or employee number and the rating source, for example, peer or direct report. All questionnaires should be accompanied by a labeled, return envelope and instructions that clearly specify the deadline for completion. NOTE: Some experts warn against using MSA on too many employees at one time. Staggering the distribution of forms helps to ensure more reliable and complete feedback and makes the tasks of compiling, analyzing, and reporting the information less daunting. Providing feedback. Once all forms have been collected, the data must be analyzed and compiled into reports for the person evaluated. Reports ideally should reflect the views of three to five raters and present information in a format corresponding to the appraisal categories and questions. When summarizing written responses to open-ended questions, employers should take care not to delete or misinterpret crucial information or create the impression that information has been censored. The reports should be presented to the ratee in a timely fashion. Follow-up, in the form of coaching and counseling, is essential to ensure that the MSA process continues to produce meaningful information for personnel decisions. Subordinate Appraisal of Managers In subordinate appraisal of managers, commonly referred to as SAM or upward appraisal, supervisors are reviewed by the employees they supervise. Employers that use SAM generally conduct a traditional topdown appraisal as well. Upward appraisal involves gathering information on specific, observable, job-related qualities and skills to uncover behaviors that need to be changed. For example, subordinate feedback might indicate that a supervisor is not keeping employees apprised of progress toward performance goals or delegating assignments in a way that fosters teamwork. Although upward appraisal is not a particularly popular with supervisors, it can be an efficient approach to evaluate certain aspects of the supervisor's performance. For example, upward appraisals are particularly valuable for assessing how well a supervisor provides direction, delegates responsibility, makes timely decisions, supplies resources, fosters teamwork, communicates policies or work procedures, or coaches employees. Implementation Guidelines To ensure that upward appraisal works as intended, employers can: publicize the potential advantages and benefitsbetter employee involvement, communication, coaching, leadership skills, and teamwork;

 explain how such evaluations can reveal opportunities for further development of managerial strengths; describe how confidentiality will be maintained so employees feel free to offer honest, candid assessments without fear of reprisal; ensure that subordinates' evaluations are not used to make decisions about compensation, promotions, or demotions; ask questions that target specific, observable skillsfor example, whether the supervisor invites employees' input on how to improve qualityinstead of personality traits; and follow up assessments with meetings to discuss results and devise a plan for further action. Upward appraisal is an employee-empowering strategy that invites employee participation and gives them a say in how they are managed. However, this process can backfire if it raises employees' expectations, only to dash them. When supervisors' behaviors do not change as a result of employees' feedback, employee confidence in the method can be eroded, and morale and productivity can decline. Peer Review The peer review method rests on the concept that individuals who perform similar work are in the best position to judge an employee's performance. Peers understand the nature of the job; are familiar with the worker's activities; share common concerns; and are relatively unencumbered by issues of power, dominance, and control. Peer review often is used by employers that support self-directed work teams, but it can be adapted to almost any work setting. One advantage of peer appraisal is that it can generate regular, reliable, and valid feedback from a consistent number of sources. Some experts also have found that peer ratings tend to focus on results achieved rather than effort invested, thereby serving as strong predictors of future job performance. Employers often are reluctant to adopt peer review, fearing that employees will be too lenient in their evaluations or overrate their friends while downgrading co-workers they dislike. However, experts discount this concern, pointing out that all ratings, whatever the source, are influenced to some extent by the evaluator's feelings about the person assessed. Other issues to address when implementing peer review include: managing the administrative aspectsfor example, distributing large numbers of forms, collecting and interpreting data, and taking time to share results with ratees; overcoming employee resistance to being judged by co-workers who might have less experience or time on the job; and easing supervisors' fears that employees' direct participation will undermine their authority. Implementation Guidelines To minimize potential problems with peer appraisals, employers should: specify a minimum and maximum number of evaluation forms to distribute for each rate e; consider having supervisors designate raters and distribute forms to ensure anonymity; encourage each employeewhen employees, not supervisors, pick ratersto select peers who have the most knowledge about the employee's job, skills, and aptitudes; require another party, such as a higher-level supervisor or an HR representative, to review each ratee's distribution list;

 allow raters to opt out of the rating process once they have received a certain number of forms to complete; insist on confidentiality and discipline employees who share and compare ratings; make it clear to employees that peer ratings are only one source of feedback used to assess performance; periodically review evaluation forms to make sure performance criteria are o bjective and current; and train supervisors and employees about objective observation techniques, the purpose and uses of peer review, how peer review relates to individual performance goals and company objectives, and how to complete evaluation forms without making common rating errors. Computer-Based Appraisal Computer-based appraisal involves using a computer to monitor and evaluate employee performance. This method is used mostly for judging performance in jobs involving repetitive, quantifiable tasksfor example, data entry. Computer-based appraisal can improve employee accountability because outputs are measured directly, making it difficult for employees to cover up errors or blame others for work not done. It also can provide ongoing feedback on performance problems and improvements, such as amount of time spent on various tasks. Computer appraisals tend to be objective because they are not subject to human biases. The principal disadvantage of computer-based appraisal is that relatively few positions involve only quantifiable tasks that are readily monitored and evaluated by computer. Computer-based appraisal also has extremely limited or no use in rating the qualitative aspects of any position such as communication skills, teamwork, leadership, and other characteristics. Rating Techniques Types of Techniques Besides selecting an appraisal method, employers must decide on an appropriate rating technique. A rating technique is the instrument the appraiser uses to assess the employee's performance. Common rating techniques include: graphic rating scales, behaviorally anchored rating scales, comparison rankings, forced choices, narrative essays, management by objectives, and critical incidents. Each of these techniques is discussed below. Graphic Rating Scales Graphic rating scalesalso known as continuous score scalesare the most widely used technique to evaluate performance. Rating scales provide a list of traits or characteristics for example, quality of work, quantity of work, appearance, dependability, cooperation, initiative, judgment, leadership, responsibility, decision-making ability, and creativityand the rather is required to evaluate the employee on each trait. The scoring system typically offers a continuum of three to five possible ratings, with descriptors ranging from unsatisfactory to outstanding. Some companies use only two levels satisfactory and unsatisfactory. However, two levels are inadequate for merit pay purposes because average performance and truly meritorious performance cannot be differentiated.

The main advantages of rating scales are that they are easy to construct and use in a wide range of jobs. In addition, rating scales are easy to quantify for merit pay purposes if enough descriptive levels are in the scoring system. Rating scales can present several drawbacks. First, they assume that every rater has the same perception of a given trait and particular rating. This problem can be mitigated somewhat if the traits are well-defined and examples are given to illustrate different ratings. For example, quality of work can be clarified by adding thoroughness, neatness, and accuracy. Even so, if an evaluation covers certain subjective personality traitssuch as leadership abilityrather than objective job performance data, this type of system is vulnerable to rater errors. Behaviorally Anchored Rating Scales Behaviorally anchored rating scales are rating scales with examples of behaviors used to define points on the scale. The rater reads each statement and then places an x beside the appropriate numeric rating, which describes the level of effectiveness. Qualifiers, such as excellent or unsatisfactory are not used; instead, the numbers correspond to more detailed statements about performance. The advantage of the BARS technique is that it correlates performance to key elements of a job. Feedback is more meaningful to employees because of the use of job-related critical statements. Using the same performance benchmarks also helps ensure consistency among raters. The chief drawback of BARS is that it is complex, time-consuming, and costly to develop. Exhaustive job analysis is necessary to create rating scales appropriate to different aspects of different job functions. For example, a typical job might have eight to 10 such aspects, with each one requiring a separate rating scale. Comparison Rankings Comparison rankings evaluate a given employee's performance against the performance of other employees. This can be done in several ways: Individual ranking. The rater is given a list of employees' names and asked to rank them from best to worst. Rankings can be based on overall performance or on specific traits. Forced distribution ranking. The rater must distribute employees along a set scale, categorizing 10 percent as top performers, 20 percent as above-average performers, 40 percent as average performers, 20 percent as below-average performers, and 10 percent as unsatisfactory performers. Paired comparison ranking. The rater compares each employee against every other employee, selecting the better or more valuable of the pair. A positive score is assigned to the better performer; no score is assigned to the poorer performer. Scores are totaled, and each employee is ranked according to his or her score in relation to the other employees. The main advantage of this technique is also its key disadvantage: Comparison ranking forces distinctions between employees and ensures that no employee can receive the same rating as a coworker. As a result, comparison rankings can be helpful when training supervisors to recognize differences among employees or when deciding how to allot bonuses or merit pay among staff. However, comparison rankings provide little useful information on individual strengths and weaknesses, so these evaluations are not helpful in setting objective performance goals. Comparison rankings work best for small groups of employees who perform the same or similar jobs, but not as well for large groups or employees who perform different jobs. This technique also is ill-suited to jobs that emphasize teamwork and cross-training to ensure all employees are equally skilled and capable of filling in for each other. Forced Choices The forced-choice technique generally presents severaltypically two or fourstatements for each job characteristic or activity and requires the appraiser to select the one statement most or least applicable to the employee. The choices should describe clear differing levels of performance; for example, if four statements are used, two usually describe different degrees of favorable performance while the other two

capture unfavorable aspects of performance. Each statement has a weight or number that later is used to score responses; however, the rater usually is not privy to the actual numbers assigned each statement. An advantage of this technique is that it describes specific types of performance instead of assuming that all raters define a performance characteristic in the same way. It also attempts to eliminate bias by forcing raters to select a descriptive statement without knowing the exact weight or score given that statement. On the downside, supervisors might resist using forced choice because they do not know the scoring system, and they can have difficulty interpreting and explaining rankings to workers. Essays The essay technique requires appraisers to write a report or answer a series of questions designed to elicit information about an employee's past performance, strengths and weaknesses, promotion potential, and training or development needs. Like rating scales, essays generally are based on certain traits or characteristics. However, the essay has an advantage over rating scales because its format is open-ended, and the appraiser can expand on areas that cannot be completely explained by a simple rating. In addition, employees generally find written appraisals easy to understand and helpful. The main disadvantage of the essay method is that an employee's evaluation can be helped or harmed by the appraiser's writing ability and style. In addition, comparisons of employee performance are difficult because the contents of one essay are not likely to correspond to points emphasized in another appraiser's review. Essays also are time-consuming for raters to prepare. Management by Objectives Management by objectives is a rating technique mainly used for managerial and professional employees. At the beginning of the rating period, the employee and supervisor set objectives usually ones tied to the company's or department's strategic planto achieve during the rating period and develop an action plan outlining specific steps with target dates for accomplishing the objectives. At the end of the rating period, the employee writes a report explaining his or her progress toward meeting the objectives. The supervisor then appraises the employee's performance based on his or her progress. On the plus side, MBO encourages a good relationship between supervisor and employee, and the employee knows what performance is expected. In addition, this technique enjoys widespread acceptance because it allows employees to participate actively in setting goals. Expectations are defined in advance, as are the evaluative measures. In-depth job analysis is not required to tailor objectives to individual positions. A disadvantage is that MBO requires more time and communicationfrom employees and supervisors alikethan other evaluation techniques. Setting appropriate goals and deadlines in advance can be difficult; unknown factors and unanticipated events can make the objectives too easy or even impossible to achieve. In addition, MBO evaluations focus only on goal achievement, not on how goals are accomplished, so work behaviorssuch as teamwork, cooperation, or interpersonal skills are not evaluated. This focus on outcomes makes it difficult to use MBO as the only evaluation method for jobs requiring a significant degree of experimentation, creativity, or innovation. Critical Incidents The critical incident technique is a behaviorally based system that requires job incumbents and supervisors to identify performance incidentsthat is, behaviorsthat distinguish successful and unsuccessful performance. The supervisor then observes employees and records their performance of these critical job behaviors. Employees are rated on how often they display successful performance behaviors. CIT is almost always used in conjunction with another rating technique to support documented actions or inactions. Because CIT requires extensive documentation and identification of successful and unsuccessful job performance behaviors, it generally is valid and reliable. However, negative actions tend to garner more attention than do positive behaviors, which can result in a lopsided view of performance. Workers should have an opportunity to offer their explanations of recorded incidents, and their views need to be incorporated in the record. Another drawback is that CIT demands continuous and close observation of the employee and extensive recordkeeping. As a result, supervisors who have not been trained to make factual, objective, job-relevant observations might record biased information that could create legal problems for employers.

Implementation Considerations Scheduling Appraisals Most employers conduct performance appraisals on an annual basis. However, such a schedule requires employees and supervisors to focus on performance only once a year. The effectiveness of performance appraisals can be improved if informal, abbreviated appraisals are scheduled throughout the year. Such an approach encourages communication between the employee and supervisor and allows the supervisor to provide regular feedback. Employers also must determine if appraisals for all employees will be conducted at the same time of the year or if they will be conducted on the employee's anniversary date. This decision depends to a great extent on the number of employees. Larger employers might find it an administrative burden for both the supervisors conducting the appraisal and the HR department processing the appraisals if all reviews take place at the same time. Rater Training For a performance appraisal program to be effective, raters must be trained in the skills necessary to evaluate employee performance effectively. Training should include sessions on: setting goals, coaching employees, providing feedback, completing the rating form, avoiding rater errors, and conducting the appraisal interview. Training that includes only lectures generally is not effective. Training sessions should use other techniques, such as videos and discussions, to illustrate and reinforce the subject matter. For example, a training session on how to conduct the appraisal interview could begin with a lecture on the topic, followed by a video of a performance appraisal interview. At the end of the video, trainees could discuss mistakes the supervisor made during the appraisal and ways the appraisal could have been improved. Role-playing is another effective tool for training purposes. Role-playing allows trainees to practice what they have learned. For new supervisors or those who feel uncomfortable in making judgments, roleplaying allows them to practice and improve their appraisal skills. Monitoring Raters Performance appraisals should be monitored by the rater's supervisor to ensure that all appraisals have been completed when required and conducted in a fair and consistent manner. The HR department also has an important role in the appraisal process. The department should maintain documentation of all performance appraisals and corrective action taken. Appraisals should be reviewed to determine whether rater biases or errors are taking place. In addition, statistics should be kept on average performance appraisal results by race, sex, and other factors to determine whether illegal discrimination is occurring (for more information, see. Legal Considerations Nondiscrimination Requirements U.S. civil rights laws protect an employee from discrimination based on race, color, religion, sex, national origin, age, and disability. Because a negative performance appraisal can affect an employee's employment statusfor example, pay levels and increases, promotions, and discharges appraisals must be based on job-related factors and not on discriminatory factors. In particular, employers must show that a selection device is valid for the particular job. The Equal Employment Opportunity Commission's Uniform Guidelines on Employee Selection Procedures provide guidance to employers subject to Title VII of the Civil Rights Act of 1964 on the proper use of tests and other policies or practices (29 C.F.R. 1607). Under the guidelines, all selection procedures including performance appraisals when they are used in making promotion decisions must be valid for the job for which they are used. Those procedures that have an adverse impact on the employment opportunities of any race, sex, or ethnic group are considered discriminatoryand therefore illegalunless the

employer can show that the procedure measures a trait related to successful performance on the job or if the employer eliminates the features that cause the adverse impact. A procedure has an adverse impact if the final selection rate for any race, color, religion, sex, or national origin is less than four-fifths or 80 percent of the rate for the group that has the highest selection rate. Determining Validity Validity refers to the extent to which the performance appraisal measures actual job performance. Different methods for determining validity include: Content validity. Content validity refers to the relevance of the appraisal factors to the job. For example, typing speed and error rates would be content-valid factors on which to appraise a typist's performance. Both are representative of the job and relevant to the job. Employers should review their performance appraisal methods to ensure that they adequately reflect the key behaviors necessary for effective job performance. Predictive validity. When employee promotions are based on past performance appraisals, the performance appraisal should have predictive validitythat is, those with poor appraisals in the past currently are poor performers and those with high appraisals are top performers. Predictive validity is difficult to prove because large numbers of people are required at one time to conduct such an analysis. Showing a definitive relationship between past appraisal scores and current performance scores is difficult if only a small sample of people is used. Construct validity. Data are used to show that the performance appraisal measures the degree to which employees have identifiable characteristics that are important for successful job performance, such as leadership qualities for a manager. The important aspect is the reasonableness of the behavior or trait for the particular job. For example, evaluating an entry-level employee on leadership ability would not be valid for compensation purposes if the employee never is required to display leadership qualities in his or her position. However, for promotional purposes, the leadership dimension might be valid if such a trait is required in the new position. Reliability and Rater Errors A performance appraisal system is reliable if it provides consistent data regardless of who conducts it. Such a system has a high degree of inter-rater reliabilitythat is, a strong likelihood that two separate raters appraising the same employee will give identical or nearly identical scores. One way to judge inter-rater reliability is to evaluate how susceptible an appraisal plan is to rater errors that is, errors in judgment made by those performing the appraisal. Errors are inherent in performance appraisal because subjective judgments always are made. However, errors can be minimized by carefully choosing a rating technique and training raters to recognize and avoid certain common errors. The major types of rater errors are: bias errors, contrast errors, central tendency errors, and leniency or strictness errors. Each of these errors is discussed below. Bias Errors Bias errors occur when the rater evaluates an employee based on a negative or positive opinion of the employee rather than on the employee's actual performance. The most common types of bias errors include: First-impression bias. The rater makes an initial favorable or unfavorable judgment about an employee and then ignores or distorts the employee's actual performance based on this impression. Positive or negative halo bias. The rater generalizes the good or bad behavior shown in one aspect of the job to all aspects of the job. Similar-to-me bias. The rater favorably judges an employee perceived as similar in terms of attitude, values, background, or interests.

 Illegal discriminatory bias. The rater discriminates against an employee because of race, color, religion, sex, national origin, age, or disability. Contrast Errors Contrast errors occur when the rater compares the employee to other employees rather than to the job's performance standards. As long as employees perform at minimum acceptable levels, they should receive satisfactory ratings, even if every other employee in the job category is performing at outstanding or above-average levels. Central Tendency Errors Central tendency errors occur when the rater rates all employees average or close to the midpoint of the scale. This is often the case when raters are forced to justify only high or low ratings with a written explanation. One way of eliminating this type of error is to require justification at every level of the scale and not just the extremes. Leniency or Strictness Errors Leniency or strictness errors occur when the rater rates everyone at the high or low end of the scale, respectively, regardless of actual performance. (BNA; 12/08)