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Tech Talk Fundamentals of the Software Design

Fixing the Fatal Flaws of Appraisals

How many managers would consider running a business without a way to accurately measure up to 70% of their budget. Yet, this is exactly what is happening with most business and organizations around the world. Nearly all government organizations and most businesses do not have an objective way to accurately measure staff performance.

Comp and benefits accounts for up to 70% of the budget..Appraisals are frequently used to evaluate employee performance, determine pay increases, bonuses and support promotion decision. Unfortunately appraisal criteria are usually vague This leads many employees to view them as biased and unfair. It is critical for managers to recognize the importance of performance management and find more accurate and fair ways to measure staff performance.

The key contributors to appraisal failures include: ill defined rating scales and subjective performance criteria.

’ Poorly Defined Rating Scales.

‘Prejudice is the child of ignorance. Wooly rating scales are those that rely on the rater’s perceptual to determine staff performance. The underlying problem here is that most managers do not know the difference between an observable behavior and an opinion. Which statements below are observable statements. Behavioral Vs Opinion Execcise

  • Sandy liaises with other departments ensuring all customer files are up-to-date.
  • Kim followed-up with customer complaints
  • Tracy maintains the fork lift.
  • Francis keeps the file cabinets organized.

The correct answer can be found at the end of this blog.

Some managers are hard raters while others are soft. I once had a general manager for a local utility tells me, “No one deserves a five This essentially turned the appraisal’s five point rating scale into a four point rating scale. Not only is this a very biased statement but increases “regression to the mean”. That is to say, the smaller the rating scale the more likely you are to get rating in the middle of the scale.. On a three point rating scale (1 2 3) most people will be rated 2. When the majority of staff are rated “meets objectives” or “average” the more pay increases resemble across-the-board raises. This drives up the cost of pay overall. See my previous blog, Across-The-Board Raises Increase Cost and Reduce Performance for more details. In other words, the larger your rating scale the more differentiated your work force becomes and the flatter your compensation bell curve becomes.

Many appraisals rely on the manager’s perception.. Here s an example. 1. Unacceptable, 2. Developmental,3. Meets Objectives, 4. Exceeds Objectives, 5. Walks – On - Water and 6. Talks With God. Bias results when rating criteria are not applied consistenly, And biased ratings will lead to erroneous decisions. Think about the many ways raters bias can distort well meaning managers.

Common Rating Errors

Similar-To-Me - This is a tendency on the part of supervisors to rate more favorably employees whom they perceive to be similar to themselves.

Stereotyping - Making judgments based on a person’s nationality, race, or religious affiliation. Individual characteristics are ignored. Behaviors supporting the stereotype are used to exaggerate strengths, weaknesses moral character, etc.

Contrast Effect - Comparing one employee with another rather than job specific performance standards. Most adults prefer to be evaluated on their own merits. Comparing one employee to another may cause conflicts between staff.

Good, bad and the Ugly - Some managers play it safe when rating employee performance always rating employees close to the mid point. While other supervisors tend to rate consistently too hard or too soft in their rating.



Building Effective Appraisal Rating Systems

So how can you reduce the bias inherent in rating scales? First behavior anchored rating scales (BARS) can define ratings by identifying job specific behaviors to define the rating scale. What actions indicate when an employee meets, exceeds or does not meet expectations. Human Factors Rating Scales

The Human Factors rating scale (HFRS)is a new technology developed by Performance Path® LLC. HFRS measures the developmental factors associated with employee performance. These factors may include observable measures of both skill and motivational levels. This allows managers and HR professional to quickly identify effective coaching strategies by pinpointing the underlying factors affecting performance. When combined with job specific performance standards HFRS provide objective measures of management and staff skill sets, motivation level in key result areas, innovation or conduct. Developmental trend analysis provide feedback on management coaching and training effectiveness,

A common dilemma for many managers is how to fairly evaluate the level of work difficulty for different people assigned to the same job category. I once had a hedge fund manager tell me he had 80 accounts with the same job description. But he said, they were not all doing the same job. Some of them were doing basic accounting. Others were working with very complex accounts containing CDOs, mortgage backs and derivatives. How can we fairly use the same measuring stick with them? We solved this by creating a second rating scale that evaluated the staff on the factors ranging from the size of the account, technical complexity, Client profile, etc , This rating scale was used boost the overall rating of the final score. This provides extra compensation for individuals working in more difficult jobs. Suddenly difficult jobs become more appealing to staff. who would otherwise play it safe.

Performance Appraisal Criteria


Most appraisals use traits such as: leadership, team work and communication to describe job standards for all jobs. One size fits all appraisal format. Every employee shares the same appraisal form. So, the actual appraisal form doesn’t measures actual job performance. It measures the manager’s opinion of the employee’s performance. Traits are open to interpretation. Different managers may have different opinions over the same employee’s performance. Usually there is little if any relationship between the appraisal items and strategy. This commonly referred to as “finger in the wind appraisals”. Examples include,

Poor Example of Phrases for Performance Appraisals
Examples Taken From Working Appraisals

Customer Service - The ability to anticipate the customer’s needs and seeks to find solutions and solve problems related to customer satisfaction.

Decision skills - Refers to the ability to make appropriate well-informed decisions in a timely manner, balancing competing needs, dealing with complexity and confusion, and being decisive but not impulsive

Team Building - Finds out and suggests meaningful ways of improving the operation of the department and constantly looks for ways to improve efficiency when carrying out key responsibilities. Builds and exhibits effective team spirit to foster organizational goals and objectives, by utilizing the skills of all team members to achieve both business and individual results

Set Direction - Fosters the development of common direction, provides clear direction and priorities, and clarifies roles and responsibilities, sets goals..:



These factors taken together create stress and frustration for everyone.

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