Employee Assessment

A performance review system is an approach to assessing and encouraging positive job performance. It is a tool for development, but it also provides the basis for the company to give raises and promotions or take corrective actions. There are various evaluation methods, including rating scales, essays, checklists, critical incident appraisals, work standards approach, and ranking methods. With the management by objectives (MBO) approach, performance is measured against the goals set by the manager and employee. A narrative is included with the behaviorally anchored rating scale (BARS) approach for each rating. This text addresses how to design an effective performance appraisal system.

Performance Evaluation Systems

Key Takeaways

  • A performance evaluation system is a systematic way to examine how well an employee is performing in his or her job.
  • The use of the term systematic implies the process should be planned.
  • Depending on which research you read, some believe the performance evaluation system is one of the most important to consider in HRM, but others view it as a flawed process, which makes it less valuable and therefore ineffective.
  • The first step in designing a performance appraisal process is to determine how often the appraisals will be given. Consideration of time and effort to administer the evaluation should be a deciding factor.
  • Many companies offer pay increases as part of the system, while some companies prefer to separate the process. Determine how this will be handled in the next step in the performance appraisal development process.
  • Goals of the performance evaluation should be discussed before the process is developed. In other words, what does the company hope to gain from this process? Asking managers and employees for their feedback on this is an important part of this consideration.
  • After determining how often the evaluations should be given, if pay will be tied to the evaluations and goals, you can now sit down and develop the process. First, determine what forms will be used to administer the process.
  • After you have determined what forms will be used (or developed), determine who will be the source for the information. Perhaps managers, peers, or customers would be an option. A 360 review process combines several sources for a more thorough review.
  • There are some errors that can occur in the process. These include halo effects or comparing an employee to another as opposed to rating employees only on the objectives. Other errors might include validity, reliability, acceptability, and specificity.
  • Performance evaluations should always be based on the actual job description.
  • Our last step in development of this process is to communicate the process and train employees and managers on the process. Also, training on how best to use feedback is the final and perhaps most important step of the process.