Why on Earth do we need performance appraisal? (Part Five)
"Managers don't like it"... "Employees don't like it"... "It takes a lot of time to do it"... "Too much administration"... "Performance cannot be assessed objectively"... the complaints about the process are endless. Probably it is the most debated managerial responsibility nowadays. - Still, I am convinced that there is a better way of doing it but first, we have to understand its role and purpose.
In the first part of this series, I was writing about the reasons why we need to evaluate performance, then in the second part, I summarized the common characteristics of performance appraisal systems, while in the third part I was dealing with how the appraisal helps us to build a growth mindset. The fourth part focused on the responsibility of leaders and managers doing the appraisal and this last part will deal with the techniques and methods that can help to make the appraisal more honest and fair.
Some biases that may distort the appraisal
1. Recency bias
It is a well-known bias, this is the reason why many organization tend to have shorter evaluation periods: it is hard to remember what was 6 months ago or a year ago and newer events may make older ones fade away. Most recent performance is many cases overrepresented in the evaluations (employees also know it and they tend to be more interactive or suggest more ideas in the period preceding their evaluation).
How to overcome it
Shorter evaluation periods will definitely solve this issue, however, if that wasn't possible for some reason, taking notes about employee performance also helps. (It is important though that we take notes about BOTH good and bad things, remarkable achievements as well as poor achievements and failures. It is also very important that besides taking notes, we give constant feedback - if we want to improve performance it is not enough to talk about it once or twice a year).
2. Central tendency bias
When we have a certain scale to rate performance many of us prefer to use central values more often and we are especially avoiding low scores. It seems as if giving a low score would evoke a fear that we'll damage the employee’s confidence. Too high or too low values are rarely seen in ratings, however, if something needs to be improved, it is the manager's responsibility to make it clear for the employee and a middle value would suggest that there isn't a big problem. Same way many leaders don't know how to praise their employees, they don't give high rates because they afraid that a high rate would make them overweening. Feedback should be honest: it means that we have to express clearly what we are the things we are satisfied with and what are the ones we aren't.
How to overcome it
Using specific competencies where there is a detailed explanation of the expected behavior for each rating range may reduce this bias. But what is most useful in my opinion is training managers to be able to give honest feedback and phrase their criticism and praises properly. The most valuable information an employee can get from the review process is insights into their strengths and weaknesses, this is something that they need to know: they need to get information about how others see them.
3. Halo Effect and similarity bias
These types of bias are based on how we see others, what perceptions do we have about them. The halo effect may occur when we have an overly positive (or negative) view of a particular employee and this affects the rating: we cannot have an objective assessment, our perceptions cloud our judgement. Also, another frequent bias is that we usually have a more positive picture of people having similar characteristics to us. We naturally tend to favour and trust people who are similar to us.
How to overcome it
Consulting with others before the assessment may help to resolve these kinds of biases. If not only one person does the rating, it may be more balanced.
Three methods that would help to have more appropriate appraisals
Calibration
With this method not only one manager is making the assessment but groups of managers sit on a meeting and discuss the evaluation of their employees. If they have to argue WHY they gave a certain evaluation, the result will be more balanced and considered fairer by the employees, too. It is also a good opportunity for managers to align their evaluation criteria and priorities. Calibration may start by evaluating those colleagues first that more of the managers know and the others may be compared to them.
Peer evaluations
Colleagues usually know better what effort is exercised by a given employee to achieve a certain result. So evaluations will be more valid if we involve peers, too. This can be done anonymously or openly in a workshop lead by a good facilitator. A variation of this is when colleagues receive 360-degree evaluations (from subordinates, from peers and from bosses plus they make a self-evaluation).
Transparency
This is a very important value if we want to have a fair system. It may be achieved on multiple levels, eg.
- making the goals transparent (both team goals and individual goals) so that everyone knows what the others are trying to achieve, what is their focus;
- making the evaluation system and the criteria transparent so that employees can also make their own assessment. Being transparent about what really matters for the managers and what are the cornerstones of his/her evaluation is essential for the employees.