Evaluating an employee's performance by comparing the employee with other employees
Group Order Ranking
1. Evaluator places employees into a particular classification, such as the "top 20 percent"
2. Often used in recommending students to graduate schools, where evaluators are asked to rank the student in the top 5 percent, the next 5 percent, the next 15 percent, and so forth
Advantages of Group Order Ranking
Prevents raters from inflating their evaluations so everyone looks good or from forcing the evaluations, so everyone is rated near the average
Disadvantages of Group Order Ranking
Surfaces when the number of employees compared is small
Individual Ranking
Evaluator lists employees in order from highest to lowest, where only one employee can be rated "best"
Individual Ranking assumes the difference between the first and second employee is the same as that between the twenty-first and the twenty-second, even though some of these employees may be closely grouped</b>
Management by Objectives (MBO)
Employees are evaluated on how well they accomplished a specific set of objectives determined as critical in the successful completion of their job
Common Elements in MBO Programs
Specific Goals
Participative Decision Making
Specific Time Period
Performance Feedback
Specific Goals in MBO
Concise statements of expected accomplishments, not just general desires
Participative Decision Making in MBO
MBO objectives are jointly chosen by the manager and employee, not unilaterally set by the boss
Specific Time Period in MBO
Each objective has a concise time in which it is to be completed, typically, three months, six months, or a year
Performance Feedback in MBO
Allows individuals to monitor and correct their own actions, supplemented by periodic formal appraisal meetings
Leniency Error
Performance appraisal distortion caused by evaluating employees against one's own value system
Halo Error
The tendency to let our assessment of an individual on one trait influence our evaluation of that person on other specific traits
Similarity Error
Evaluating employees based on the way an evaluator perceives himself or herself
Central Tendency
The tendency of a rater to give average ratings
Peer Evaluation
A performance assessment in which co-workers provide input into the employee's performance
Upward Appraisal
Employees provide frank and constructive feedback to their supervisors
360-Degree Appraisals
Performance evaluations in which supervisors, peers, employees, customers, and the like evaluate the individual
360-degree appraisals are being used in approximately 90 percent of the Fortune 1,000 firms
Research studies into the effectiveness of 360-degree performance appraisals are generally reporting positive results from more accurate feedback, empowering employees, reducing subjective factors in the evaluation process, and developing leadership in an organization