Addressing Performance Appraisal Problems

2. Halo or Horns Effect

The ‘halo’ effect occurs when a manager feels that an employee is particularly good in one aspect of their role, and awards a similarly high assessment for all other areas without objective consideration. Conversely, where an employee has one serious fault or poor element of performance, this can sometimes result in unjustifiably reduced assessment of other areas – known as the ‘horns’ effect.

What to do: managers should assess performance against each appraisal factor or competency. This means that employees are considered in relation to specific standards, reducing the tendency for generalizations to affect overall performance judgements. It can also be helpful to encourage managers to take a step back and consider whether particularly irritating or admirable elements of an employee’s performance are unfairly overemphasized. Using multiple appraisers can also help to reduce the halo or horns effect.

3. Personal Bias

Everyone has their own thoughts, beliefs and assumptions, and these can often affect the performance appraisal process through unfair bias, prejudice and stereotyping. Personal bias can be made in relation to employee’s age, gender, religion, ethnicity, disability, education, etc. Examples of personal bias which can impact on appraisal ratings include beliefs or assumptions that:

• women are more emotional, whereas men are rational
• young people work more efficiently than older workers
• a university degree is needed to go places
• employee X works through lunch so therefore must be a good performer
• employee Y is sometimes late in to work so is not committed to the job

What to do: understanding and awareness of different types of personal bias and their impact on the appraisal process can be improved by providing training which encourages managers to think about and challenge their own personal assumptions and stereotypes. Tools such as 360 degree feedback, using multiple appraisers, peer appraisal or self appraisal help maintain a sense of objectivity and transparency. Managers should always assess an individual’s performance on the basis of concrete, documented evidence rather than on gut feeling or instinct. As Jeffrey Pfeffer, a well known contributor to this debate highlights:

“Making performance criteria more explicit and objective reduces managerial discretion so that one person’s perceptions and biases don’t matter so much.” [2]

4. Avoiding Problems

A recent Gallup study revealed just 29% of employees believe performance reviews are fair, and only 26% think they're accurate. [3] Many of the benefits of appraisals can be lost if managers hold back from giving employees honest feedback on their performance or if they avoid addressing difficult or sensitive issues. Managers may give low appraisal ratings for different reasons, including:

• A reluctance to face up to substandard performance and address difficult or complex issues.
• Concern that low appraisal scores will have a negative impact on perceptions of their own management abilities.
• Concern that a poor appraisal will have a negative impact on an employee’s motivation, morale and career development prospects.

What to do: ongoing conversations are essential to prevent problems building up over time. Regular, informal discussions should be held (e.g. monthly 1:1 meetings) where any problem issues can be aired at an early stage. Regular meetings also provide opportunities for open and honest feedback. To help address problem issues in a timely way, managers should:

• Document performance, collecting relevant evidence such as customer complaints or examples of procedural errors.
• Identify the issue with the employee, using objective evidence and outlining what standards of performance are expected.
• Ask the employee for their input, in terms of what support and resources they feel would help them to improve.
• Provide advice and guidance on the resources that are available to help, e.g. internet resources, training courses and 1:1 coaching.
• Agree a plan for improvement, including a future date at which to review progress.

5. Making Unfair Comparisons

In many cases, managers find it difficult to resist making performance judgements based on how individuals compare to their team peers. Known as forced ranking, this can create problems within a team as a competitive culture reduces the potential for individuals to freely share knowledge or collaborate on projects. As Pfeffer explains:

“Using comparisons between individuals can cause some people to give up (as they feel they can’t ever emulate their peers), or coast (where no improvement is needed given the level of competition).” [4]

What to do: Managers can improve the objectivity of performance appraisals by judging each individual on their own merits, rather than on how their performance compares with others. A better measure of performance can be for managers to adopt a more joined-up approach and consider whether an individual’s performance has improved or deteriorated in comparison with their own previous performance.

6. Lack of Preparation

In many organizations, appraisals are carried out annually. Managers can find themselves with numerous appraisals at the same time, which often results in inadequate preparation. This can make employees feel that their performance is not important or valued. Consequently, both the appraisal process and the managers involved can lose credibility.

What to do: careful planning and preparation is important in ensuring that appraisals are meaningful. Some organizations send out e-mail reminders to encourage managers to plan ahead for forthcoming appraisals. Ideally, managers should gather and reflect on their thoughts for each employee over a period of time, rather than forming an opinion at the last minute. To help prepare for appraisals, managers should:

• Consider all the notes, reports and evidence which relate to performance throughout the appraisal period.
• Draft a provisional assessment of employee performance.
• Review and reflect upon these initial thoughts and check justification for each (including possible sources of bias).
• Consider constructive suggestions for improvement (which should be made in consultation with the individual).
• Think about avenues for development, such as new projects, tasks and responsibilities.

The effectiveness of the appraisal process can also be improved by providing training for managers in asking appropriate appraisal questions, effective listening, coaching, giving feedback and body language.

Conclusion

Organizations that take steps to ensure that individuals with responsibility for conducting appraisals have an understanding of the main problem areas and how to address them will reap the benefits of improved performance, enhanced working relationships and increased personal fulfillment. If appraisals are well planned and managers approach them in an honest, unbiased way, they can provide an important means of linking individual performance to the achievement of organizational goals.

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