Staff Matters Newsletter August/July 1996
Performance Appraisal Errors:
Reading the Warning Signs
By Steve O'Connor

We encounter a lot of signs as we navigate life. Most are functional, some are confusing, and a few are downright stupid.

I was in a restaurant recently and a sign over the front door, apparently placed there by the health department, read, "This door must be kept unlocked during business hours." Well, there's a savvy business strategy; let's let the customers get in!

There are also signs that insult our intelligence. As you traverse some of the most beautiful areas of northern Michigan on scenic two-lane roads, you often encounter a posted sign that says, "Do not pass when opposing traffic is present." No kidding! Do I really need a sign that tells me not to hit another car head-on, on purpose?

Some signs are redundant. An apartment complex near my house boasts of "residential apartments." What else are you going to do in an apartment?

There is yet another category of signs that just makes you do a slow burn. I got a parking ticket. You know the kind. If you pay it in the next 30 minutes, it's only $5. After three days it goes to $20. The parking enforcement division has the incredible gall to post a sign over its door that reads, "Customer Service Center." Customer service?!? I don't call a team of meter maid commandos lurking in the shadows waiting for me to patronize a downtown merchant customer service.

A good sign is one that is easily understood and tells the truth. Warning signs are especially important because they alert us to a threat. There are warning signs within our organizations as well that signal threats to the company's business-health and well-being. This is especially true when evaluating our organization's performance appraisal system. There are seven critical signs that tell us our appraisal methods may be less than objective and each one is a disservice to the employee:

The Halo/Horn Effect - This may occur when an employee is extremely competent in one area and is therefore, rated high in all categories. Conversely, the horn effect happens when an overall poor rating is given because of one performance area that is below standard.

Recency - This error happens when an appraiser gives more weight to recent occurrences and discounts earlier performance during the appraisal period.

Bias - When an appraiser's personal values, beliefs or prejudices distort ratings, the error is due to bias.

Strictness - Appraisers who believe that standards are too low may inflate the standards in an effort to make them more meaningful in their eyes. So although the employees of a strict appraiser may be performing better than those working for another appraiser who does not inflate the standards, their ratings may be lower.

Leniency - Leniency errors are the result of appraisers who don't want to give low scores. All employees in this case are given high scores. Consequently, they don't learn anything from the process.

Central Tendency - This error happens when an appraiser rates all employees with a narrow range, regardless of differences in actual performance.

Contrast - The contrast error is committed when an employee's rating is based on how his or her performance compares to that of another employee instead of objective standards.

Performance appraisals are extremely important. They serve to motivate by reinforcing desired behaviors, and they function as development plans by identifying training needs. Additionally, if there is a direct link to salary increases, the appraisal accuracy has a serious impact on the organization's business success. When conducting appraisals, look for signs that may indicate potential errors. Being accurate is being fair. Being fair in a "tough love" kind of way is admittedly difficult, but it's also good business.