How fair are performance appraisals?

How fair are performance appraisals? Not very, you say. You may well be right. Personnel Decisions International (PDI), a Minneapolis-based consultancy firm, examined the records of almost 6,000 employees reporting to two bosses who were rated as being outstanding performers by one of their managers. What emerged was that this high opinion wasn’t shared by the second boss. In fact these star employees were rated lower by their second boss 62 percent of the time and much lower – ’somewhat above average’ or less – 29 percent of the time.

The figures, said Brian Davis, PDI executive vice president, highlighted the almost universal problem of bias in ratings and appraisals. “This basically means that bosses are rating employee performance through their own biases. Some bosses tend to rate employees on how well they like them, rather than how well the employee performs,” he said.

“Other bosses tend to have their own rating systems where, for example, they rate everyone well. The problem with rater bias is that it takes away the organisation’s ability to objectively use data from performance evaluations with any validity.”

To support this claim, the research found that of the 5,970 evaluated employees, 80 percent received an “above-average” rating from at least one boss.

Yet of those who received this “above-average” rating from one boss, 30 percent of the other bosses rated the same person in the bottom third of the distribution.

Davis said that the only way to compensate for this inherent human bias is to use assessments that measure against specific standards on competencies and behaviours.

“By knowing which skills and competencies are important for the work and what types of behaviours constitute an average rating compared to an above-average rating, for example, the entire validity and value of performance evaluations greatly improves,” he said.

“When standards are not used, you can’t count on the objectivity or accuracy of a performance assessment, and you have no differentiating data that allows you to make confident decisions about promotions, training or leadership development.

Most companies spend hours conducting performance assessments on each employee, Davis continued, but many are essentially leaving their talent management decisions to chance by relying on gut feeling and personal perception rather than quantifiable data.

“Implementing performance management processes that accurately and objectively measure performance and get rid of rater bias provide a more solid foundation for better talent management decisions,” Davis concluded.

“This allows you to get the right people in the right positions.”

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