Performance Appraisals- could you be biased?

Losyk’s (2002) ‘How to conduct a performance appraisal’ is a brief snapshot on what he considers to be key elements of delivering positive and productive performance appraisals. He argues that understanding our biases is the “biggest challenge that impedes an effective performance review”.

So what sort of biases are there?

‘Actor/observer bias’ is an attributional bias where a manager or supervisor for example consistently attributes all failures to the subordinate, discounts their successes and generally assesses their performance as insufficient (Cannon & Witherspoon. 2005).

‘Blind spot’ bias occurs when an employee mirrors the manager in terms of knowledge, skill, ability or even behavioural deficiencies. If the manager isn’t particularly aware of their own short-comings they are likely to be ‘blinded’ so to speak and not take these areas into consideration when conducting the employee’s performance appraisal. This then means that the employee does not become aware of these development areas, and is additionally blinded to areas of mediocre or even poor performance. This can be highly disadvantageous for the individual in the long term when they look for advancement and find out that they need to lift their performance significantly in order to take the next steps in their career.

It is important to note that biases can also be positively skewed which again means that employees become less aware of the areas in which they need to develop. For instance, positive biases such as the “halo effect” where an employee’s one-off high performance masks mediocre performance over the entire appraisal period. This can significantly impact upon employee’s self-perception and how they receive future feedback about their performance. This is because unless they receive accurate feedback on their performance in real-time they will keep making inferences and assumptions about how they are performing and are often met with disappointment and frustration when they discover their perception is not aligned with their managers. This is why open communication and regular feedback and is so important in the workplace.

Additionally, many managers feel almost compelled to inflate their ratings and this results in what is coined the Lake Wobegon phenomena “where everyone is good looking and all the employees are above-average”. This is most likely to occur when managers feel as if they must rate their employees on their performance and also in relation to how other managers will rate similar staff. This of course is poor practice as it does not objectively rate the employee and sends mixed messages around the feedback provided.

It’s wise to help your managers to understand these biases and how they impact on people and the organization before the performance appraisal period comes around.

Performance appraisals don’t work!

Recommended Reads:
Gray, G. (2002), ‘Performance appraisals don’t work’, Industrial Management, March/April.

Gray’s article ‘Performance appraisals don’t work’ (2002) is a paper which says that the process of conducting performance appraisals does not elicit the desired behaviours required from employees in the workplace. As a HR professional- you scream- but why not?!

Gray argues that most managers are ill-equipped to carry out the task at hand and questions how a system can be objective, consistent and dependable if the manager executing it lacks the appropriate skills or training.

This is highlighted by a study undertaken by Coutts & Schneider (2004) which looks at the effectiveness of police officer performance appraisal systems in Canada. In this article, it was discovered that in terms of the perceived extent of performance appraisal training provided to supervisors who conducted performance feedback and appraisals, 21.6% of the participants indicated that there was no training provided, 67.3% indicated very little training was provided, and only 11.1 % indicated that substantial training is provided.

They argue that performance appraisal can only be as effective as the “task-relevant skills and knowledge” of those responsible for using it. Suggested skills that managers need to be trained in include their observational skills, how to reduce judgemental biases and how to provide meaningful and constructive feedback.

However, most interestingly Gray asserts that if performance feedback is used by organisations in the performance appraisal process this automatically means that a large proportion of the company’s employees are ‘average’ if they stick to a traditional bell curve or a forced ranking methodology. In this seemingly totem-pole process, each person gets a unique ranking against other employees in the business unit or function, whilst the bell curve system distributes employees into particular bands or categories (Loren. 2001). The inadequacy of this system is highlighted by the statement “only a few people can be best performers. Similarly, some people have to be slotted into the lowest rank, even if their performance, using a competency-based assessment, is satisfactory” (Loren. 2001).

Hence, a large proportion of employees under a bell curve or ranking method will be told they are ‘average’ and their development conversations will be based around this grading in the performance appraisal. Subsequently, this is neither accurate nor effective performance feedback, adeptly illustrating Gray’s (2002) main argument that performance appraisals don’t work.

Gray’s article is frank about the downfalls of many performance management systems and rightly so. These issues identified by Gray are ones that are currently being experienced by many organizations in contemporary society and it identifies areas for improvement and why current systems fall short.

360 feedback- for appraisal or employee development?

Recommended Reads:
Garavan, T.N., Morley, M., and Flynn, M. (1997), ‘360 degree feedback: its role in employee development’, Journal of Management Development, Vol. 16, No. 2, pp. 134-147, MCB University Press.

In terms of communication management and performance feedback in the workplace, the 360 degree feedback methodology is becoming an increasingly common way of developing employees, appraising their performance or in some companies; a combination of the two. Garavan, Morley & Flynn’s (1997) article essentially describes the concept behind 360 degree feedback, including its pros and cons; stating that it can be defined as a “contrived method of providing a flow of feedback to employees from all directions”.

However a key point standpoint in this article is the discussion of conflicting views on whether 360 degree feedback should be used primarily for employee development or performance appraisal. The purpose of 360 degree feedback arguably creates a huge impact on the overall effectiveness of the feedback to initiate positive change in employee performance as it has the potential to, for example, influence what motivates the employee and what they hope to gain from the feedback process itself.

For instance, provision of feedback for development purposes will ensure the employee is seeking accurate feedback from their manager and/or other raters in order to improve their performance. This means they will be more open and receptive to the dialogue about their performance (Silverman, Pogson, & Cober. 2005). However, when the feedback is evaluative in nature, provided for a performance appraisal for example, the employee desires to appear competent and attractive in order to be scored as highly as possible, particularly if this rating is linked to a financial reward or bonus. This then significantly reduces their willingness to be receptive to the feedback provided (Silverman et al. 2005) and make the necessary changes to improve performance.

Moreover, when 360-degree feedback is used for purposes other than development such as performance appraisal, the effectiveness (or perceived accuracy) of the feedback received, arguably diminishes. For instance O’Reilly (1994) asserts that when 360 degree performance feedback is provided by raters for the purposes of development, the feedback is “remarkably similar”. However when this feedback is gathered and used for more formal evaluative purposes, the scores and feedback are different as friends pump up each others scores and mark competitors as mediocre.

Similarly, London & Beatty (1993) report that 34 per cent of respondents in their study would rate their manager differently if the feedback was used for a performance appraisal as opposed to developmental purposes and Carlson (1998) affirms that both raters and those being rated are less fearful and more likely to be honest if they know results will be used for personal development purposes. In the same way Clampitt (2005), asserts that it may encourage gamesmanship and ‘behind-the-scenes’ deals.

I found this article really interesting- but at the same time- it all makes so much sense. It will really make good business sense to consider first WHY you are doing 360 degree feedback- is it for developmental or evaluative purposes- and what is the outcome you need.

Does your organization assess its employees on the competencies they deem to be most crucial for success?

Recommended Reads:
Abraham, S.E., Karns, L.A., Shaw, K., and Mena, M.A., (2001), ‘Managerial competencies and the managerial performance appraisal process’, Journal of Management Development, Vol. 20, No. 10, pp. 842-852, MCB University Press.

Abraham et al’s (2001) study initially surveys the literature concerning the term “competency”, identifying that there is some disagreement over the definition of a personal or managerial competency. However essentially, competency is referred to be inclusive of “panoply of characteristics, behaviours and traits necessary for successful job performance” (Abraham et al. 2001). With competencies defined, the article is then quick to establish the connection between competencies and effective performance management, and this adeptly captured by Pickett’s (1998) statement:

Managerial competencies provide a sound basis for an effective performance management program. Using the information obtained during the review of competencies required by the job and those possessed by the person performing that job, an integrated process can be introduced linking competencies with the annual performance review program and the determination of objectives.

The crucial part in that statement identifies that is it vital to review competencies required for the job, and compare with the competencies a person possesses as a part of the organizations performance management and appraisal system. Consequently, the main aim of Abraham et al’s (2001) study was to determine if companies assess and appraise their management employees on the same competencies that they identify as being necessary for success in a managerial role.

On the surface, this standpoint appears to make perfect sense. Organisations ideally should appraise their people on the components they identify as crucial in achieving success as guided by the organisations strategic objectives. Moreover, Grote (2000) asserts that core competencies can be easily identified, and then highlighted, communicated and reinforced via the organizations performance appraisal system. However many organisations do not follow this basic premise.

For instance, findings in a study conducted by Pettijohn et al (2001) indicate that the criteria used are not always the ones that salespeople for instance, view as being the most appropriate. Generally, the literature indicates that behavioural criteria is preferred over more results-based output criteria, as proponents argue that these criteria are subject to a greater degree of self-control than output criteria (Churchill et al (1985); Challagalla and Shervani (1996); Oliver and Anderson (1994). Despite this Jackson, Schlacter and Wolfe’s (1995), study of 215 sales managers indicated that the criterion was most based output related to sales volume. Hence, although behavioural competencies which have a significant potential to impact on company culture and the way an organisation operates, are identified as being important they are not adeptly reflected upon in performance appraisal. This then impacts on the employee’s self efficacy in terms of what competencies employees believe are achievable, and which ones they have the power to influence successful results.

Comparably, Abraham et al’s (2001) study reflects these findings in their study, illuminating that “for every one of the 23 competencies surveyed, the percentage of organisations that identified a competency as describing the successful manager was substantially greater than the percentage of organizations that used the same competency as a criterion in the performance appraisal process”. The data indicates that organizations are not appraising their employees on the competencies they deem to be most crucial to business success, which then places huge limitations on the effectiveness of the performance appraisal system and subsequently, the way in which organizations facilitate improved performance from its employees.

Does your organization assess its employees on the competencies they deem to be most crucial for success?

Have a look at this example.

Upcoming appraisal? here’s how to ace it

I would recommend a read of this article by David Rolleston (Associate Director of Robert Walters Melbourne) by on performance appraisals. It might also be useful to send around to your clients as it sends a key message- preparation is the key!

Performance Appraisals- is it cringe time at your work too?

If the thought of performance appraisal time at your workplace as a HR professional makes you break out in hives,  get some antihistamines and try not to stress- you aren’t alone.

Why is it so stressful? Like most HR pros (I hope!) I really believe in the performance agreement/development plan process mainly because it clarifies expectations between people at work.  It’s when everyone knows what they are meant to be doing, what the goals are, and how they are expected to behave that your company will succeed. The whole process is an imperative part of talent management,  and more specifically succession planning.

The problem is that your Managers would rather swallow razor blades than have to conduct performance appraisals.  Its frequently seen as a ‘tick in the box process’ or an administrative requirement that they begrudgingly complete. So how do you overcome the resistance and turn the whole thing into something that is actually going to add value to your organisation?

Here’s a few things that I’ve found to be helpful in the past:

Explain why its important– Basic andragogy (how adults learn) tells us that “adults need to know why they need to learn something before undertaking to learn it” (Knowles, M. 1990. ‘An andragogical theory of adult learning’, The adult Learner: a neglected species, pp. 54-65).  Hence, explain why they need to go through the process and what the benefits are.

Engage employees- Place the onus on the individual to prepare early and complete a self-assessment which includes achievement against objectives, recognition, impact on the business etc. Afterall, it is them who will be reaping the reward of a promotion, pay increase or recognition. This facilitates a two way dialogue in the appraisal, and ensures a greater chance of the employee walking out feeling like they were heard and taken seriously. It also reminds them that they should be the ones who drive their career rather than waiting for Managers to do it for them.

Get Managers to prepare early– with a check list for each employee.  For example:

• Have you booked a meeting with the employee (with at least 2 weeks notice so they have time to prepare)?
• Have you got a copy of the person’s obejctives? (and last year’s assessment?)
• Are you familiar with the employees job description? If not, review this.
• Are there competencies expected for this person’s role? Review these and assess whether these are being met.
• Are they living the organisation’s values/expected behaviours/adhering to code of conduct?  
• Are there any internal/external clients that you need to gather feedback from in order to get increased visibility of the employee’s overall performance?

Prep your Managers on how to give good feedback– it might be worthwhile getting your managers together in a room before the appraisal period and discussing the finer points to giving good feedback.  This way they have the opportunity to enhance their feedback skills,  feel more prepared before the appraisal and share their experiences with other managers.