Techniques of Performance Appraisal

Assessment Centers

A relatively new method of evaluation is the assessment center. Assessment centers are unique among appraisal techniques in that they focus more on evaluating an employee's long-range potential to an organization than on her performance over the past year. They are also unique in that they are used almost exclusively among managerial personnel.

An assessment center consists of a series of standardized evaluations of behavior based on multiple inputs. Over a two- or three-day period (away from the job), trained observers make judgments on managers' behavior in response to specially developed exercises. These exercises may consist of in-basket exercises, role-playing, and case analyses, as well as personal interviews and psychological tests. An example of an assessment center program is shown in Table 8.5.

Example of Two-Day Assessment Center Schedule
Day #1   Day #2  
8:00–9:00 A.M. Orientation session 8:00–10:30 A.M. In-basket exercise
9:00 –10:30 A.M. Psychological testing 10:30–10:45 A.M. Coffee break
10:30–10:45 A.M. Coffee break 10:45–12:30 P.M. Role-playing exercise
10:45–12:30 P.M. Management simulation game 12:30–1:30 P.M. Lunch
12:30–1:30 P.M. Lunch 1:30–3:15 P.M. Group problem-solving exercise
1:30–3:15 P.M. Individual decision-making exercise 3:15–3:30 P.M. Coffee break
3:15–3:30 P.M. Coffee break 3:30–4:30 P.M. Debriefing by raters
3:30–4:30 P.M. Interview with raters    

Table 8.5

On the basis of these exercises, the trained observers make judgments on employees' potential for future managerial assignments in the organization. More specifically, information is obtained concerning employees' interpersonal skills, communication ability, creativity, problem-solving skills, tolerance for stress and ambiguity, and planning ability. This technique has been used successfully by some of the largest corporations in the United States, including AT&T, IBM, and General Electric.

Results from a series of assessment center programs appear promising, and the technique is growing in popularity as a means of identifying future managerial potential. For example, Coca-Cola USA experimented with using assessment centers to select its managerial personnel. After a detailed study, the company found that those selected in this way were only one-third as likely to leave the company or be fired than those selected in the traditional way. Although the assessment center approach added about 6 percent to the cost of hiring, the lower turnover rate led to large overall savings.

Some problems with the technique have been noted. In particular, because of the highly stressful environment created in assessment centers, many otherwise good managers may simply not perform to their potential. Moreover, the results of a poor evaluation in an assessment center may be far-reaching; individuals may receive a "loser" image that will follow them for a long time. And, finally, there is some question concerning exactly how valid and reliable assessment centers really are in predicting future managerial success. Despite these problems, assessment centers remain a popular vehicle in some companies for developing and appraising managerial potential.