Month: February 2016

The Subjectivity of Performance Appraisals

In a perfect world employee evaluations can be an excellent tool for both managers and employees to maximize productivity to achieve personal objectives and organizational goals. But the workplace is not a perfect world, and in reality some surveys of managers indicate that they hate conducting performance appraisals, second only to firing employees. The vast majority of U.S. organizations use some kind of performance appraisal as a means to evaluate their workforce. These appraisals are important since they are often used when it comes to human resource decisions such as salary increases, promotions, career advancement, and training opportunities. While performance appraisals can have a positive influence on the above personnel decisions, other research has found that many U.S. organizations face difficulty when it comes to terminating employees that demonstrate unsatisfactory workplace performance. Why? Managers are reluctant to give truly candid performance appraisals for fear of creating conflict and possible recrimination by the employee against the manager. This subjectivity raises some ethical questions about the performance appraisal process.

Due to their widespread use and substantial influence on the status of an employee, managers have an ethical obligation to conduct employee appraisals in the most impartial and unbiased way possible. Researchers have recently distinguished two different types of performance appraisals: one based on the rational and the other based on the political perspective. The rational approach is designed to use objective criteria to assign accurate ratings. The goal of the political approach is subjective in nature and can use ambiguous standards which are designed to increase the degree of latitude provided to a manager when evaluating an employee. Prior studies have found that many managers have manipulated the performance appraisal process for political purposes. To reduce employee discord and workplace dissonance, managers have been found to give higher ratings to employees to keep them content. Higher ratings can also be given to obtain a promotion for preferential employees. Lower ratings can often be given to employees as a signal that they are no longer held in high esteem by the organization and it may be time to seek employment elsewhere. Low ratings can also be given by managers as a form of retaliation. However, lower ratings can be detrimental to employers because it can lead to decreased motivation, increased turnover, and increased risk of litigation.

Manipulating ratings either higher or lower is unethical. Performance ratings should provide an honest appraisal of an employee’s abilities. To intentionally lower a worker’s rating for political purposes is unethical because it deprives deserving employees of rewards and promotional opportunities. An inflated performance rating is unethical because it fails to provide an employee with a true assessment of their abilities and where they can improve. Furthermore, it decreases employee morale because it fails to differentiate higher-achieving employees from the average.

When a company incorporates a code of ethics into its business practices, it helps assure that business is conducted in a fair and professional manner. A company’s ethical conduct should be an integral part of its corporate landscape. Managers do not always act upon ethical issues. For example, the overall objective of a performance evaluation is to provide an honest assessment of the employee’s performance and to develop an action plan when there is a need for improvement.

Communication is an integral part of the performance evaluation process and should be ongoing throughout the entire year. Specific performance feedback should be communicated to subordinates about any unsatisfactory behavior and what alternative methodologies can be incorporated to improve their performance. Continual feedback and communication are important in fostering a harmonious working relationship. Ideally, a manager should not wait until the formal evaluation process to convey performance problems that have occurred during the course of the year.

In my work experience, I have found that performance evaluations are frequently based on the manager’s opinion and are often subjective. The evaluation reflects what the manager can remember which is usually the more recent events when evaluating a subordinate. Thus some managers tend to evaluate employees on what they have recently done rather than looking at the entire year. This, of course, does not accurately reflect an employee’s overall performance because it only reflects the employee’s most recent behavior. Other managers can place unreasonably high demands on subordinates that makes it difficult for them to achieve positive performance evaluations. Less than positive ratings can result in decreased motivation. Often managers may give inflated ratings in order to avoid conflict. In today’s tough economic environment where organizations are giving modest to no salary increases, managers may create a discord in the work environment when giving an unsatisfactory performance evaluation. This internal conflict can be devastating on workplace morale and can last for a long time. To avoid this, many managers try to prevent conflict and opt for a more harmonious workplace by giving inflated evaluations. However, by not providing honest feedback, the purpose of the performance evaluation is ultimately defeated.

Performance evaluations that are not properly conducted can have a negative effect and can be subject to legal action particularly in the areas of discrimination and EEOC compliance. Some organizations use forced rankings. Forced rankings is a process where a company ranks its employees against each other than can terminate those employees at the lowest end of the ranking. Consider the high-profile cases of Capital One, Ford Motor Company, and Goodyear who have been sued for age-related discrimination associated with forced rankings. In another instance, a class-action lawsuit was filed against 3M for alleged age discrimination in training, performance reviews, pay, promotions, and layoffs. Lawsuits can be costly to a company’s reputation and its bottom line.

No matter how objective performance appraisal rating systems appear to be, they are still substantially influenced by the subjectivity that is part of human nature.