Performance evaluation is the process by which the employee's overall performance is estimated. Most employees seek feedback on how they carry out their activities, and individuals charged with directing other employees should evaluate individual performance to decide what actions to take.
Informal evaluations, based on daily work, are necessary but insufficient. With a formal and systematic feedback system, the personnel department can identify employees who meet or exceed expectations and those who do not. It also helps to evaluate recruitment, selection and orientation procedures. Even decisions about internal promotions, compensation and more from the personnel department area depend on the systematic and well-documented information available about the employee
In addition to improving performance, many companies use this information to determine the compensation they provide. A good evaluation system can also identify problems in the human resources information system. People who perform poorly may expose the wrong selection, orientation and training processes, or it may indicate that job design or external challenges have not been considered in all its facets.
An organization cannot adopt any performance evaluation system. The system must be valid and reliable, effective and accepted. The approach should identify the elements related to performance, measure them and provide feedback to employees and the personnel department.
As a general rule, the human resources department develops performance evaluations for employees in all departments. This centralization is due to the need to make the procedure uniform. Although the personnel department may develop different approaches for senior executives, professionals, managers, supervisors, employees, and workers, they need consistency within each category for usable results. Although it is the personnel department that designs the evaluation system, it rarely carries out the evaluation itself, which in most cases is the job of the employee's supervisor.
Advantages of performance evaluation
- Enhances performance through feedback. Compensation policies: can help determine who deserves to receive raises. Location decisions: promotions, transfers and separations are based on past or anticipated performance. Training and development needs: performance. Insufficient performance may indicate the need for retraining, or untapped potential. Career Planning and Development: Guides decisions about specific career opportunities. Inaccuracy of Information: Insufficient performance may indicate errors in information on analysis of position, human resource plans, or any other aspect of the personnel department's information system. Job design errors:insufficient performance may indicate errors in the conception of the position.External challenges: sometimes, performance is influenced by external factors such as family, health, finances, etc., which can be identified in the evaluations.
Preparation of performance evaluations
The purpose of the evaluation is to provide an accurate and reliable description of how the employee performs the position. The evaluation systems must be directly related to the position and be practical and reliable. They need to have fully verifiable measurement levels or standards. By directly related to the position it is understood that the system only qualifies elements of vital importance to obtain success in the position. If the evaluation is not related to the position, it is invalid. Evaluation is understood to be practical when it is understood by evaluators and evaluated. A complicated system can lead to confusion or generate suspicion and conflict.
A standardized system for the entire organization is very useful, because it allows equal and comparable practices.
In certain countries with a high level of industrialization, performance evaluations have even been standardized among different industries in the same field.
There are elements common to all approaches to performance evaluation:
Performance standards:
The evaluation requires performance standards, which are the parameters that allow more objective measurements. They emerge directly from job analysis, which highlights specific performance standards through job analysis. Based on the responsibilities and tasks in the job description, the analyst can decide which elements are essential and should be evaluated in all cases. When this information is lacking, standards can be developed from direct observations about the position or direct conversations with the immediate supervisor.
Performance measurements:
They are the qualification systems of each work. They must be user friendly, reliable, and qualify the essential elements that determine performance. Performance observations can be carried out directly or indirectly. In general, indirect observations (written exams, simulations) are less reliable because they evaluate hypothetical situations. Objective performance measurements are those that are verifiable by other people. As a general rule, objective measurements tend to be quantitative in nature. They are based on aspects such as the number of units produced, the number of defective units, material savings rate, quantity sold in financial terms or any other aspect that can be expressed in a mathematically precise way. Subjective measurements are unverifiable ratings,which can be considered evaluator opinions. When subjective measurements are also indirect, the degree of precision drops even further.
Subjective elements of the qualifier:
Subjective performance measurements can lead to grade distortions. These distortions can occur more frequently when the qualifier fails to retain its impartiality in several respects:
- Personal biases: When the evaluator a priori holds a pre-evaluation personal opinion, based on stereotypes, the result can be severely distorted. Effect of recent events: Ratings can be greatly affected by the employee's most recent actions. These actions (good or bad) are more likely to be present in the evaluator's mind. Careful recording of employee activities can serve to lessen this effect. Tendency to core measurement: Some evaluators tend to avoid very high or very low ratings, thereby distorting their measurements to approach the average. Halo effect or halo:occurs when the evaluator qualifies the employee predisposed to assign a rating even before observing their performance, based on the sympathy or antipathy that the employee produces. Interference of subconscious reasons: driven by the unconscious desire to please and conquer popularity, many evaluators may adopt systematically benevolent or systematically strict attitudes.
Methods to reduce distortions:
When the use of subjective methods of performance measurement is necessary, personnel specialists can reduce the potential for distortion through training, feedback, and an appropriate selection of evaluation techniques.
Assessment techniques can be divided into performance-based techniques from the past and performance-based ones from the future.
Intercultural elements:
The member of a certain group tends to think that the practices, beliefs, traditions, etc., of his own group are the best, and that the practices and beliefs of other groups are "backward", "excessively noisy" or "dangerous". This phenomenon is called ETNOCENTRISMO, and can be defined as the tendency to consider that the values themselves are always the best.
Every performance evaluator has certain expectations about the conduct of the personnel that they must evaluate. Much of those expectations are based on cultural elements.
Performance-based assessment methods in the past
Evaluation methods based on past performance have the advantage of dealing with something that has already happened and can, to some extent, be measured. Its disadvantage lies in the impossibility of changing what happened. The most common evaluation techniques are:
- Scoring scales: the evaluator must grant a subjective evaluation of employee performance on a scale ranging from low to high. The evaluation is based solely on the opinions of the person who confers the rating. It is customary to grant numerical values to each point, in order to allow obtaining several computations. Some companies tend to link the score obtained to salary increases. Its advantages are ease of development and simplicity of delivery, evaluators require little training and can be applied to large groups of employees. The disadvantages are numerous: involuntary distortions are very likely to arise in such a subjective instrument; Specific aspects of job performance are eliminated in order to be able to evaluate different jobs. Feedback is also undermined,Because the employee has little opportunity to improve deficiencies or reinforce the adequate ones when administering such a general evaluation.Check list:requires the person giving the rating to select sentences that describe the employee's performance and characteristics. The evaluator is usually the immediate supervisor. Regardless of the supervisor's opinion, the personnel department assigns scores to the different points of the checklist, according to the importance of each one. The result is called a checklist with values. These values allow quantification. If enough items are included in the list, you may be able to provide an accurate description of the employee's performance. Although this method is practical and standardized, the use of general statements reduces the degree of relationship that it has with the specific position. The advantages are the economy, the ease of administration,the scarce training required by evaluators and their standardization. The disadvantages are the possibility of distortions, misinterpretation of some points and the inappropriate allocation of values by the personnel department, in addition to the impossibility of granting relative scores.Forced selection method:forces the evaluator to select the most descriptive phrase of the employee's performance in each pair of statements they find. Both expressions are often positive or negative. Sometimes, the evaluator must select the most descriptive statement from groups of 3 or 4 sentences. Regardless of the variants, specialists group the points into pre-determined categories, such as learning ability, performance, interpersonal relationships. The degree of effectiveness of the worker in each of these aspects can be computed by adding the number of times that each aspect is selected by the evaluator. The results can show the areas that need improvement. It has the advantage of reducing distortions introduced by the evaluator,it is easy to apply and fits a wide variety of positions. Although practical and easily standardized, the general statements on which it is based may not be specifically related to the position. This may limit its usefulness in helping employees improve their performance. An employee may perceive selecting one sentence over another as very unfair.Critical event recording method:requires the evaluator to keep a daily log (or a computer file), the evaluator records the most outstanding actions (positive or negative) carried out by the evaluated. These actions or events have two characteristics: it refers exclusively to the period relevant to the evaluation, and only the actions directly attributable to the employee are recorded; the actions that are beyond their control are only recorded to explain the actions carried out by the evaluated party. It is useful to provide feedback to the employee. Reduces the distortion effect of recent events. Much of its effectiveness depends on the records kept by the evaluator. Some supervisors start by recording some incidents in great detail, but later the level of recording declines,until when the evaluation date approaches, new observations are added. When this occurs, the distortion effect of recent events is presented. Even when the supervisor records all the events, the employee can consider that the negative effect of a wrong action is prolonged too much.Behavioral rating scales: they use the employee performance comparison system with certain specific behavioral parameters. The objective is the reduction of the elements of distortion and subjectivity. Objective parameters are determined from descriptions of acceptable performance and unacceptable performance obtained from job designers, other employees, and the supervisor. A serious limitation of the method is that the method can only contemplate a limited number of behavioral elements to be effective and of practical administration. Most supervisors do not keep records up-to-date, thereby reducing the effectiveness of this approach. Field verification method:A qualified staff representative participates in the scoring that supervisors assign to each employee. The personnel department representative requests information about the employee's performance from the immediate supervisor. The expert then prepares an assessment based on that information. The evaluation is sent to the supervisor for verification, channeling and discussion with the personnel expert first and then with the employee. The final result is delivered to the personnel specialist, who records the scores and conclusions. Involving qualified personnel allows for increased reliability and comparability, but the increase in cost is likely to make this method expensive and impractical.A variant is used in positions where performance evaluation may be based on a test of knowledge and skills. The experts come from the technical area as well as from the personnel department. Exams can be of many types and to be useful they must be reliable as well as validated.
Group assessment methods
Group evaluation approaches can be divided into several methods that have in common the characteristic that they are based on the comparison between the performance of the employee and that of his coworkers. These evaluations are generally conducted by the supervisor. They are very helpful in making decisions about merit-based pay increases, promotions, and awards, because they allow employees to be placed from best to worst. Often these comparative results are not disclosed to the employee. There are two important points that support the use of these methods: comparisons are always made in the organization, and these methods are more reliable for the employee. Reliability is guaranteed by the scoring process itself and not by external rules and policies.
- Categorization method: It leads the evaluator to rank their employees on a scale from best to worst. In general, it is known that some employees outperform others, but it is not easy to stipulate for how much. This method may be distorted by personal inclinations and recent events, although two or more evaluators may be involved. Its advantage is the ease of administration and explanation. Forced distribution method:Each evaluator is asked to place their employees in different classifications. As a general rule, a certain proportion should be placed in each category. The relative differences between employees are not specified, but in this method distortions of tendency to the central measurement are eliminated, as well as those of excessive rigor or tolerance. Since the method requires that some employees receive low scores, some may feel unfairly evaluated. A variant is the point distribution method (when the appraiser has to award points to his subordinates). Pairwise comparison method:The evaluator must compare each employee against all those evaluated in the same group. The basis of comparison is generally overall performance. The number of times that the employee is considered superior to another can be added, to constitute an index. Although subject to sources of distortion by personal factors and recent events, this method overcomes the difficulties of central measurement tendency and excessive benignity or severity.
Evaluation methods based on future performance
They focus on future performance by evaluating employee potential or setting performance goals.
- Self- evaluations : Taking employees to carry out a self-evaluation can be a very useful technique, when the objective is to encourage individual development. Defensive attitudes are much less likely to occur. When self-assessments are used to determine areas for improvement, they can be very helpful in determining future personal goals. The most important aspect of self-evaluations lies in employee participation and dedication to the improvement process. Management by Objectives:it is that both the supervisor and the employee jointly set the desirable performance objectives. Ideally, these goals should be established by mutual agreement and be objectively measurable. Employees are in a position to be more motivated to achieve the objectives by participating in their formulation, as they can measure their progress and make periodic adjustments to ensure that they are achieved. In order to make these adjustments, however, it is necessary for the employee to receive periodic feedback. Employees get the motivational benefit of having a specific goal. The goals also help the employee and supervisor to comment on specific employee development needs.The difficulties center on the fact that sometimes the objectives are too ambitious and sometimes they fall short. Furthermore, the objectives are likely to focus exclusively on quantity, because quality is more difficult to measure. When employees and supervisors consider objectives that are measured by subjective values, special care is needed to ensure that there are no distorting factors that may affect the evaluation.Psychological evaluations: When psychologists are used for evaluations, their essential function is the evaluation of the potential of the individual and not his previous performance. The evaluation consists of in-depth interviews, psychological tests, conversations with supervisors, and a verification of other evaluations. The psychologist then prepares an evaluation of the intellectual, emotional, motivational, and other characteristics that may allow prediction of future performance. The work of a psychologist can be used on a specific aspect or it can be a global assessment of future potential. Based on these evaluations, location and development decisions can be made. Because this procedure is slow and expensive, it is generally reserved for bright young managers.Assessment center methods:they are a standardized form for employee evaluation, based on multiple types of evaluation and multiple evaluators. This technique is usually used for intermediate level management groups that show great potential for future development. Often potential employees are brought to a specialized center and undergo an individual evaluation. Next, an especially suitable group is selected to undergo an in-depth interview, psychological exams, personal background study, involve them in round tables and simulation exercises of real working conditions, activities in which they are qualified by a group of evaluators. The verdicts of the different evaluators are averaged to obtain objective results.This method is expensive in terms of time and money. It also requires separating the personnel who are under evaluation from their duties. The results can be very helpful in assisting the management development process and location decisions.
Implications of the evaluation process
Both the design of the evaluation system and its procedures are usually the responsibility of the personnel department. If the objective is to evaluate performance in the past and to award awards, comparative approaches are likely to be preferred. Other methods can be used for evaluating past performance, in case the essential function of the system is to provide feedback.
Future-oriented assessment methods can focus on specific goals. Self-evaluation or evaluation centers can propose the identification of specific aspects that can be improved or serve as instruments of internal promotion. The approach taken needs to be used by line managers.
Evaluation systems that involve managers and supervisors are more widely accepted. Participation increases interest and understanding.
Evaluator training:
Regardless of which method is chosen, evaluators need knowledge of the system and the objective it sets.
Two essential problems are the evaluator's understanding of the process being carried out and its consistency with the adopted system. Some personnel departments provide evaluators with a manual that describes in detail the current methods and policies.
Many companies review their compensation levels twice a year, before granting semi-annual increases. Others perform a single annual evaluation, which may coincide with the anniversary date of the employee's entry into the organization.
Evaluation interviews:
They are performance review sessions that provide employees with feedback on their past performance and future potential. The evaluator can provide this feedback through several techniques: conviction (used with young employees, reviews recent performance and tries to convince the employee to act in a certain way), dialogue (the employee is encouraged In order to express its defensive reactions, excuses, complaints, it is proposed to overcome these reactions by advising on ways to achieve better performance) and problem solving (identify difficulties that may be interfering in employee performance, from there those problems are solved through training, advice or relocation).
By emphasizing desirable aspects of employee performance, the evaluator is in a position to provide new and renewed confidence in their ability to achieve their goals. This positive approach also empowers the employee to get a global picture of the strengths and weaknesses of their performance.
The performance evaluation session concludes by focusing on the actions that the employee can take in order to improve areas where their performance is not satisfactory. The evaluation interview provides employees with feedback directly related to their performance.
Feedback on Human Resources Management and Personnel Role
The performance evaluation process provides vital information regarding how an organization's human resources are managed.
Performance evaluation serves as an indicator of the quality of the work of the personnel department. If the evaluation process indicates that low-level performance is frequent in the organization, many employees will be excluded from the promotion and transfer plans, the percentage of personnel problems will be high and, in general, the level of dynamism of the entire organization will be low. business.
High levels of employees who are not performing well may indicate the presence of errors in various facets of personnel management.
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As a complement we suggest the following video-conference by Professor Almudena García, from the School of Business and Management, which addresses the issue of performance evaluation as a substantial part of the organization of human resources and addresses the following aspects: concept, steps to do it, advantages of doing it, common problems when doing it, evaluation methods, the evaluation interview and what to do when the evaluations are not positive, among others.
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