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HRMN 400 – Week 6 Citations

(Heathfield, 2019)

(Bacal, n.d.)

(Heathfield, 4 Common Problems With Performance Appraisals, 2020)

(Williams)

(Heathfield, The Advantages and Disadvantages of Merit Pay, 2020)

(Petersen, 2019)

(HR Basics: Performance & Rewards, 2011)

(How to do Effective Performance Appraisals, 2008)

(Heathfield, Performance Management Process Checklist, 2019)

(Heathfield, Why Employee Performance Appraisal Does Not Work, 2019)

(Module 13: Designing a High-Performance Work System, 2012)

(Appraising Employee Performance)

Bibliography Appraising Employee Performance. (n.d.). Retrieved February 15, 2021, from University of

Maryland Global Campus: https://learn.umgc.edu/d2l/le/content/543604/viewContent/20431470/View

Bacal, R. (n.d.). Performance Enhancement. Retrieved February 14, 2021, from A Performance Management Bias And Error Glossary: http://performance- appraisals.org/Bacalsappraisalarticles/articles/bias.htm

Heathfield, S. M. (2019, November 25). Performance Management Process Checklist. Retrieved February 15, 2021, from Balance Careers: https://www.thebalancecareers.com/performance-management-process-checklist- 1918852

Heathfield, S. M. (2019, November 17). The 5 Goals of Employee Performance Evaluation. Retrieved February 14, 2021, from Balance Careers: https://www.thebalancecareers.com/employee-performance-evaluation-goals-1918866

Heathfield, S. M. (2019, October 19). Why Employee Performance Appraisal Does Not Work. Retrieved February 15, 2021, from Balance Careers: https://www.thebalancecareers.com/performance-appraisals-dont-work-1918846

Heathfield, S. M. (2020, May 8). 4 Common Problems With Performance Appraisals. Retrieved February 14, 2021, from Balance Careers: https://www.thebalancecareers.com/performance-appraisal-problems-1918857

Heathfield, S. M. (2020, April 30). The Advantages and Disadvantages of Merit Pay. Retrieved February 15, 2021, from Balance Careers: https://www.thebalancecareers.com/the- advantages-and-disadvantages-of-merit-pay-1919083

How to do Effective Performance Appraisals (2008). [Motion Picture]. YouTube. Retrieved February 14, 2021, from https://www.youtube.com/watch?v=E34Zt1cEpFA&feature=youtu.be

HR Basics: Performance & Rewards (2011). [Motion Picture]. YouTube. Retrieved February 14, 2021, from https://www.youtube.com/watch?v=ALZVggBDODY&feature=youtu.be

Module 13: Designing a High-Performance Work System. (2012). In Principles of Management. Lumen Learning. Retrieved February 15, 2021, from https://courses.lumenlearning.com/principlesmanagement/chapter/16-6-designing-a-high- performance-work-system/

Petersen, L. (2019, March 5). Advantages & Disadvantages of Pay-for-Performance Policies. Retrieved February 15, 2021, from Chron: https://smallbusiness.chron.com/advantages- disadvantages-payforperformance-policies-44264.html

Williams, L. (n.d.). Module 15: Performance Appraisals. In Introduction to Business. Lumen Learning. Retrieved February 15, 2021, from https://courses.lumenlearning.com/wmintrobusiness/chapter/reading-performance- appraisals/

The 5 Goals of Employee Performance Evaluation • • • BY SUSAN M. HEATHFIELD Updated November 17, 2019

Are you interested in why organizations do employee performance evaluations? It's both an evaluative process and a communication tool. Done traditionally, employee performance evaluation is universally disliked by supervisors, managers, and employees.

The managers hate employee reviews because they don't like to sit in judgment about an employee's work. They know that if the performance evaluation is less than stellar, they risk alienating the employee. At the same time, employees hate performance evaluations because they dislike being judged. They tend to take suggestions for performance improvement personally and negatively.

Performance management, on the other hand, provides the advantages organizations seek in doing performance evaluation. But, performance management, participated effectively and with the appropriate mindset, accomplishes the same goals, and more. Performance management also supplies additional advantages to both the manager and the employee.

The question on the table now is why organizations would want to ask employees to participate in either employee performance evaluation or a performance management system. Good reasons exist for advocating the basic concept of performance evaluation. There are few fans of the traditional process.

Where Employee Performance Evaluation Fits

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In some form, most organizations have an overall plan for business success. The employee performance evaluation process, including goal setting, performance measurement, regular performance feedback, self-evaluation, employee recognition, and documentation of employee progress, ensures this success.

The process, done with care and understanding, helps employees see how their jobs and expected contributions fit within the bigger picture of their organization.

The more effective evaluation processes accomplish these goals and have additional benefits. Documented performance evaluations are communication tools that ensure the supervisor and their reporting staff members are clear about the requirements of each employee’s job.

The evaluation also communicates the desired outcomes or outputs needed for each employee’s job and defines how they will be measured.

Goals of Employee Performance Evaluation

These are the five goals of an effective employee evaluation process.

1. The employee and the supervisor are clear about the employee’s goals, required outcomes or outputs, and how the success of the contributions will be assessed. Your goal in employee evaluation is to motivate a high level of quality and quantity in the work that the employee produces.

2. The goals of the best employee performance evaluations also include employee development and organizational improvement. The employee performance evaluation helps employees accomplish both personal development and organizational goals. The act of writing down the goals takes the employee one step closer to accomplishing them.

Since goals, deliverables, and measurements are negotiated in an effective employee performance evaluation, the employee and the supervisor are committed to achieving

them. The written personal development goals are a commitment from the organization to assist the employee to grow in their career.

3. Employee performance evaluation provides legal, ethical, and visible evidence that employees were actively involved in understanding the requirements of their jobs and their performance. The accompanying goal setting, performance feedback, and documentation ensure that employees understand their required outputs. The goal of employee performance evaluation is to create accurate appraisal documentation to protect both the employee and the employer.

In the event that an employee is not succeeding or improving their job performance, the performance evaluation documentation can be used to develop a Performance Improvement Plan (PIP).

This plan provides more detailed goals with more frequent feedback to an employee who is struggling to perform. The goal of a PIP is the improvement of the employee's performance, but non-performance can lead to disciplinary action up to and including employment termination.

4. In many organizations, numeric rankings are used to compare an employee’s performance with the performance of other employees. Numeric ratings are frequent components of these systems, too.

No matter how fair and non-discriminatory these ratings are made to appear through the endless establishment of criteria for rating, and they boil down to the manager’s opinion of an employee’s performance. This is why numeric components in an employee performance evaluation process are not recommended.

5. The employee performance evaluation provides evidence of non-discriminatory promotion, pay, and recognition processes. This is an important consideration in training managers to perform consistent, regular, non-discriminatory employee performance evaluations. You want to ensure equitable measurement of an employee's contribution to the accomplishment of work,

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The documentation of success and failure to achieve goals is a critical component of the employee performance evaluation process.

While employee performance evaluation systems take many forms from organization to organization, these are the components that organizations are most likely to include. Some are more effective than others.

But the goals for the employee performance evaluation system, or the appraisal process, or the performance management process are similar. The differences appear in the approach and the details. And, that can make all of the difference in how the performance evaluation system is perceived by and carried out by employees.

2/11/2021 A Performance Management Bias And Error Glossary

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A Performance Management Bias And Error Glossary by Robert Bacal

Robert Bacal is a noted author, keynote speaker, and management consultant. His most recent books include Performance Management - A Briefcase Book, and The Complete Idiot's Guide To Dealing With Difficult Employees. The Work911 Supersite contains many more free articles and tips on a number of workplace topics. Access it at work911.com .

Performance appraisals are always sticky for everyone. While managers make an effort to be as objective as possible, there are always concerns about specific performance appraisals, and their accuracy. If you are going to evaluate your staff, then it is wise to be aware of factors that may affect your assessments. In this short article we outline a few factors you should be aware of, so that you can examine your own assessment processes to ensure that they are as free from bias as possible.

Halo Effect

The halo effect is the tendency to rate someone high or low in all categories because he or she is high or low in one or two areas. Results in appraisals that do not help develop employees, because they are two general or inaccurate as to specifics. Evaluating someone lower is sometimes also called the "devil effect".

Standards of Evaluation

If you are using categories such as fair, good, excellent, etc, be aware that the meanings of these words will differ from person to person. In any event, the use of these categories is not recommended because they do not provide sufficient information to help employees develop.

Central Tendency

The habit of assessing almost everyone as average. A person applying this bias will tend not to rate anyone very high or very low.

Recency Bias

Tendency to assess people based on most recent behaviour and ignoring behaviour that is "older".

Leniency Bias

Tendency to rate higher than is warranted, usually accompanied by some rationalization as to why this is appropriate.

Opportunity Bias

Ignoring the notion that opportunity (factors beyond the control of the employee) may either restrict or facilitate performance, and assigning credit or blame to the employee when the true cause of the performance was opportunity.

False Attribution Errors

We have a tendency to attribute success or failure to individual effort and ability (at least in North America). So when someone does well, we give them credit, and when someone does less well, we suggest it's somehow their fault. While there is some truth in this, the reality is that performance is a function of both the individual and the system he or she works in. Often we misattribute success and failure and assume they are both under the complete control of the employee. If we do, we will never improve performance.

http://www.amazon.com/exec/obidos/ASIN/0070718660/bacalassoci
http://work911.com/articles/
4 Common Problems With Performance Appraisals Where Do Managers Go Wrong With Performance Appraisal? • • • Table of Contents

• Performance Appraisals Are Annual • Performance Appraisal As a Lecture • Appraisals and Employee Development • Performance Appraisals and Pay

BY SUSAN M. HEATHFIELD Updated May 08, 2020

Managers go wrong with performance appraisals in so many ways, that it’s difficult to identify all of them. Some of the problems have to do with the overall system of performance appraisal, and other problems are the result of the one-on-one meeting that is held for the appraisal interaction.

The systemic problems are rarely under the control of one manager. They are created by the people who have developed the performance appraisal system that the managers are asked to use, usually the senior leadership team and Human Resources staff.

Here are four of the big problems managers and employees experience with performance appraisals. If you are clear on the problems, you have an opportunity to fix the problems.

Performance Appraisals Are Annual

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Start with the fact that performance appraisals are usually annual. Employees need feedback and goal planning much more frequently than annually. Managers may need to participate in the annual performance appraisal plan, but they have the power to provide regular feedback in addition to the annual performance appraisal.

Employees need weekly, even daily, performance feedback. This feedback keeps them focused on their most important goals. It also provides them with developmental coaching to help them increase their ability to contribute. The feedback also recognizes them for their contributions.

Employees need and respond best to clear expectations from their manager. Feedback and goal-setting annually just doesn't cut it in the modern work environment. In this environment, goals are constantly changing. Work is under constant evaluation for relevance, importance, and contribution.

Customer needs change with such frequency that only the nimble respond in a timely manner. It is what performance feedback needs to do—respond nimbly and with serious responsiveness in a timely manner.

Performance Appraisal As a Lecture

Managers, who don't know any better, make performance appraisals into a one-way lecture about how the employee did well this year and how the employee can improve. In one example from a small manufacturing company, employees reported to HR that they thought that the performance development planning meeting was supposed to be a conversation.

Their manager was using 55 of the 60 minutes to lecture his reporting staff members about their performance—both good and bad. The employees' feedback was relegated to less than five minutes. This is not the point of a performance appraisal discussion—a two-way discussion is critical so employees feel heard out and listened to.

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Additionally, once a manager tells an employee about problems with their work or a failure in their performance, employees tend not to hear anything else the manager has to say that is positive about their performance.

So, the feedback sandwich in which managers praise an employee, then give the employee negative feedback that is followed, once again, by positive feedback is an ineffective approach to providing needed feedback.

So, it’s a combination problem. The best performance appraisals are a two-way discussion and focus on the employee assessing his or her own performance and setting his or her own goals for improvement.

Performance Appraisal and Employee Development

Performance appraisals rarely focus on developing an employee’s skills and abilities. They do not provide commitments of time and resources from the organization about how they will encourage employees to develop their skills in areas of interest to the employee.

The purpose of performance evaluation is to provide developmental feedback that will help the employee continue to grow in their skills and ability to contribute to the organization. It is the manager's opportunity to hold a clear exchange about what the organization expects and most wants and needs from the employee. What a lost opportunity if a manager uses the meeting in any other way.

Performance Appraisals and Pay

In a fourth way that performance appraisals often go astray, employers connect performance appraisals with the amount of pay raise an employee will receive. When the appraisal becomes a deciding factor in decisions about employee raises, it loses its ability to help employees learn and grow.

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You will train employees to hide and cover-up problems. They will set their manager up to be blindsided by problems or an issue in the future. They will bring only positives to the appraisal meeting if they are a normal employee.

Don’t ever expect an honest discussion about improving an employee's performance if the outcome of the discussion will affect the employee’s income. Doesn't this make perfect sense? You know it does, so why go there? It should be one component of your salary setting system.

Let your employees know that you will base raises on a wide range of factors—and tell them what the factors are in your company annually. Employees have short memories, and you need to remind them every year about how you will make your decisions about merit increases.

If your company has a company-wide approach—and many companies do these days—even better. You will have support and backup as all employees will receive the same message. Your job will be to reinforce the message during the performance appraisal meeting.

Connecting the appraisal to an employee's opportunity for a salary increase negates the most important component of the process—the goal of helping the employee grow and develop as a result of the feedback and discussion at the performance appraisal meeting.

The Bottom Line

If you can influence these four big problems in performance appraisal, you will go a long way toward having a useful, developmental system in which the employee's voice plays a prominent role. It is the right way to approach performance appraisal.

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Reading: Performance Appraisals

The Purpose of Performance Appraisals

A performance appraisal (PA) or performance evaluation is a systematic and periodic process that assesses an individual employee’s job performance and productivity, in relation to certain pre-established criteria and organizational objectives. Other aspects of individual employees are considered as well, such as organizational citizenship behavior, accomplishments, potential for future improvement, strengths, and weaknesses. A PA is typically conducted annually. However, the frequency of an evaluation, and policies concerning them, varies widely from workplace to workplace. Sometimes an evaluation will be given to a new employee when a probationary period ends, after which they may be conducted on a regular basis (such as every year). Usually, the employee’s supervisor (and frequently, a more senior manager) is responsible for evaluating the employee, and he or she does so by scheduling a private conference to discuss the evaluation. The interview functions as a way of providing feedback to employees, counseling and developing employees, and conveying and discussing compensation, job status, or disciplinary decisions.

Historically, performance appraisals have been used by companies for a range of purposes, including salary recommendations, promotion and layoff decisions, and

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training recommendations.[1] In general, “performance elements tell employees what they have to do, and standards tell them how well they have to do it.”[2] This broad definition, however, can allow for appraisals to be ineffective, even detrimental, to employee performance. “Second only to firing an employee, managers cite performance appraisal as the task they dislike the most,” and employees generally have a similar feeling.[3] One key item that is often forgotten during the appraisal process (by managers and employees alike) is that the appraisal is for improvement, not blame or harsh criticism.[4]

Developing an Appropriate Appraisal Process

One significant problem in creating an appraisal process is that no single performance appraisal method will be perfect for every organization.[5] Establishing an appropriate process involves significant planning and analysis in order to provide quality feedback to the employee. The most crucial task in the process is determining proper job dimensions that can be used to evaluate the employee against accepted standards that affect the performance of the team, business unit, or company.[6] Peter Drucker developed a method termed “Management by Objectives,” or MBO, in order to address the need for specifying such job dimensions. Drucker suggests that objectives for any employee can be validated if they pass the following SMART test:[7]

• Specific • Measurable • Achievable • Realistic • Time-related

The process of an evaluation typically includes one or more of the following:

• An assessment of how well the employee is doing. Sometimes this includes a scale rating indicating strengths and weaknesses in key areas (e.g., ability to follow instructions, complete work on time, and work with others effectively). It’s also common for the supervisor and manager to discuss and determine the key areas.

• Employee goals with a deadline. Sometimes the employee may voluntarily offer a goal, while at other times it will be set by his or her boss. A significantly underperforming employee may be given a performance improvement plan, which details specific goals that must be met to keep the job.

• Feedback from coworkers and supervisors. The employee may also have the chance to share feelings, concerns, and suggestions about the workplace.

• Details about workplace standing, promotions, and pay raises. Sometimes an employee who has performed very well since the last review period may get an increase in pay or be promoted to a more prestigious position.

Methods of Performance Appraisal

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Numerous methods exist for gauging an employee’s performance, and each has strengths and weaknesses depending on the environment. The following outlines some of the more commonly used methods, as well as some recently developed ones that can be useful for various feedback situations:

• Graphic rating scales: This method involves assigning some form of rating system to pertinent traits. Ratings can be numerical ranges (1–5), descriptive categories (below average, average, above average), or scales between desirable and undesirable traits (poor ↔ excellent). This method can be simple to set up and easy to follow but is often criticized for being too subjective, leaving the evaluator to define broad traits such “leadership ability” or “conformance with standards.”[8]

• Behavioral methods: A broad category encompassing several methods with similar attributes. These methods identify to what extent an employee displays certain behaviors, such as asking a customer to identify the usefulness of a sales representative’s recommendation. While extremely useful for jobs where behavior is critical to success, identifying behaviors and standards for employees can often be very time-consuming for an organization.[9]

• 2+2: A relative newcomer in performance appraisal methodology, the 2+2 feedback system demonstrates how appraisals can be used primarily for improvement purposes. By offering employees two compliments and two suggestions for improvement focused around high-priority areas, creators Douglas and Dwight Allen suggest that organizations can become “more pleasant, more dynamic, and more productive.”[10] If the goal is employee improvement, this system can provide significant benefits; however, if the goals are compensation changes and rankings, the system provides little benefit.

Appraisal methodologies depend greatly on the type of work being done; an assembly worker will require a very different appraisal system from a business consultant. Significant planning will be required to develop appropriate methods for each business unit in an organization in order to obtain maximum performance towards the appraisal goals.

1. Kulik, 2004 ↵ 2. United States Department of the Interior, 2004 ↵ 3. Heathfield, Performance Appraisals Don't Work ↵ 4. Bacal, 1999 ↵ 5. Kulik, 2004 ↵ 6. Fukami, Performance Appraisal, 2007 ↵ 7. Management by Objectives—SMART, 2007 ↵ 8. Kulik, 2004 ↵

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9. Kulik, 2004 ↵ 10. Formula 2+2, 2004 ↵

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The Advantages and Disadvantages of Merit Pay

• • • BY SUSAN M. HEATHFIELD Updated April 30, 2020

Merit pay is an approach to compensation that rewards higher performing employees with additional pay, sometimes called incentive pay. It is a tool that employers can use to make sure that their best-performing employees feel as if they are adequately compensated for their contributions.

Merit pay has advantages and disadvantages for both employees and employers over a traditional pay system that puts the money in base pay. Before implementing a merit pay system, it's a good idea to review the advantages and disadvantages of this approach to your employees' compensation.

Advantages of a Merit Pay System

A merit system is most applicable when tdetailed data available to measure the performance of employees. Consider how that data can push employees to achieve more, padding their own paychecks, as well as the company's bottom line.

• Communicates company objectives: Merit pay sends a powerful message about how you want to see employees perform and what you want to see them contribute. It confirms what you most value from employees. Merit pay also provides a vehicle for an employer to recognize individual performance on a one- time basis. This is useful for rewarding employees who may have participated in a one-time project.

• Let's employees know where they stand: Making the range of the available merit pay public allows employees to see where their increase falls in the merit

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pay ranges established by your company pay plan. It can be a good way to reward the employees that you most want to keep. When employees receive less than the top increase, supervisors have an opportunity to describe and discuss exactly how the employees will need to improve their performance to qualify for the top merit increase during the next cycle of raises.

• Aids in employee retention: Merit pay can help an employer differentiate between the performance of high and low performing employees and reward the performance of the higher performers. This can aid in retention because no employer wants to lose the organization's best performers.

Disadvantages and Challenges

Some businesses are not conducive to measuring employee contributions so clearly and definitively, making it difficult to establish an effective means for merit pay. Consider whether or not you might be trying to force such a system into an office where it won't work.

• Concerns about favoritism: In many offices, the value of any particular employee is subjective and ultimately determined by a supervisor. Without clear measurables, others easily could dispute the outcomes when merit pay is determined. Even in offices where there are measurables, outcomes can be challenged. For example, some might argue that the salesperson with the best sales had an advantage because he had the best sales territory.

• Uses time and resources better spent elsewhere: The amount of time and energy that organizations invest in an attempt to make performance measurable for merit pay, including developing competencies, measurements, baselines for performance, and so forth, is better spent on delivering service for customers. Organizations have generated documents with several hundred pages that lay out what merit means in various jobs. Often, the benefits just aren't worth all that time and effort.

• Communication troubles: Given the limitations of metrics, the ability of a supervisor to communicate to each employee the value of his or her contribution,

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and what superior performance entails that makes it worthy of merit pay consideration, is an ongoing challenge. Some supervisors communicate better than others, and this means the effectiveness of merit pay sometimes can vary wildly from one department to the next based on the communications skills of supervisors.

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2/11/2021 Advantages & Disadvantages of Pay-for-Performance Policies

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Advantages & Disadvantages of Pay-for- Performance Policies Small Business | Human Resources | Policies By Lainie Petersen Updated March 05, 2019

Choosing a compensation policy is one of the most crucial decisions a business owner can make. In recent years, some employers have moved toward a pay-for-performance model, which provides financial rewards for employees who meet and exceed performance standards. Over time, analysts have observed both advantages and drawbacks to this method of determining employee pay.

What are Pay-for-Performance Policies? Employees usually expect to receive regular wage increases even if their job role. hasn't changed. Many companies offer an automatic annual salary increase around the time of a performance

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2/11/2021 Advantages & Disadvantages of Pay-for-Performance Policies

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review. Some businesses, however, are no longer providing raises to employees just for showing up for work. Instead, a worker can expect an increase only if his performance meets or exceed his employer's expectations.

Pay-for-performance compensation models vary, but typically present workers with guidelines as to what kind of increase they can expect for varying levels of performance. For example, an employer may provide no increase for workers with poor performance evaluations; but those who receive a satisfactory, above average or excellent review could expect corresponding increases; and those who have excellent reviews would receive the highest raises.

Advantages of Pay-for-Performance Many companies have adopted this compensation system, because they believe in its benefits, which include:

Worker motivation: The reasons why an employee remains in his or her job are often complex. Many individuals derive significant satisfaction from work that they find meaningful. However, workers are also significantly, if not primarily, motivated by financial concerns. If a worker knows that meeting performance objectives will result in a compensation increase, they may be inclined to work harder and improve their skills.

Retaining top talent: You can expect that your top talent will be approached by other employers. If you want to keep exceptional employees, you must offer them a competitive compensation package. When your best employees know that they will be rewarded for their efforts, they are more likely to stay with your company.

Disadvantages of Pay-For-Performance Not everyone is enamored with pay-for-performance compensation increases, however. Some analysts are skeptical that it is an effective way of motivating employees and retaining good workers. The primary disadvantages cited are:

Performance measurement is often subjective: The work of some employees can be easily quantified and measured. For example, a salesperson may be asked to meet specific sales numbers for the year. However, many workers, particularly those in administrative roles, perform vital functions, but their work isn't defined by achieving specific goals. For these employees, a pay-for-performance plan could prove frustrating, in large part because their evaluations are more

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subjective. A personality conflict with a supervisor could, in some cases, result in lower compensation.

Performance reviews are falling out of favor: The pay-for-performance model often hinges on the results of an employee's annual performance review. However, many employers are finding such reviews ineffective, and are abandoning them in favor of encouraging managers to provide feedback to employees throughout the year.

More Things to Consider Before instituting a pay-for-performance system, review your human resources policies and ask your attorney for guidance. Workers who are not successful in pay-for-performance reviews may perceive the system as unfair. This could potentially lead to the employee taking legal action against your company for discrimination. An experienced attorney can help you minimize the risk of a lawsuit and other penalties.