Performance Evaluations

I. What are performance evaluations?

Performance evaluations are both tools for communication and evaluation. Performance evaluations are intended to be fair and balanced assessments of past performance on projects and are comparative in nature.

This means that they compare the performance of specific employees with colleagues, company, market, or industry outcomes.

Both employees and teammates want an objective measure of how they are doing, and performance evaluations comprise an integral aspect of employee effectiveness measurement.

Some evaluative methods rank employees and compare their performance, while others break down performance into ratings of distinct attributes, behaviours, or results.

Ideally, performance evaluations should give employees and employers the opportunity to discuss performance, set goals for professional development, create objectives, go over expectations, and recognize and document progress and accomplishments.

In some cases, the final step of a performance evaluation will involve deciding to terminate underperformers, but before you can decide on that, you must create standards with which to compare performance.

II. How to give a performance evaluation:

To begin the performance evaluation process, you must first create a performance standard. Performance standards are related to the specific performance of a single employee, but must be aligned with overall divisional or organizational objectives.

Effective performance evaluations are specific, fit within organization strategy, valid, and reliable.

Performance can be measured and evaluated by:

1. A simple ranking (that ranks employees from lowest to highest performer)
2. Forced distribution (assigning a specific percentage of employees to a category e.g. outstanding 10%, meets expectations 30%, etc.). Normally from 1-5.
3. Chart plotting performance vs culture fit on x/y axis

After deciding the specifics of a performance evaluation, ensure to utilize the principles of
constructive feedback.

Giving a good performance evaluation means setting expectations up early, thus ensuring that the content and timing of each performance evaluation is anticipated.

Many leaders in the business field have found that breaking performance evaluations into quarterly coaching and dialogue sessions as well as annual performance appraisals is far more effective in increasing productivity and organizational strength than a single year-end performance evaluation.

Setting a positive tone and utilizing concepts such as the “feedback sandwich” (compliment-critique-compliment) will guarantee that your audience is receptive to the evaluation.

Ensuring that all performance evaluations are final will also ensure that they are taken seriously.

Thus, although some individuals may attempt to negotiate their evaluation, by standing firm to the rating you have granted you assure that its impact is not watered down.

In sum, when giving a performance review, ensure that they are planned and anticipated, frequent, cordial, objective, and firm.

III. How to receive a performance evaluation:

Performance evaluations are often received negatively. This can stem from either:

1. The manner in which the performance evaluation was carried out
or
2. Your response to the results of your performance evaluation.

As such, it is important to recognize where your feelings and attitudes regarding your performance evaluation lay, particularly if they are negative.
This is because a negative response to a performance evaluation defeats its purpose, which as a tool of communication and evaluation, seeks to reinforce areas of strength and reinvigorate areas of weakness.

Negative receptions of performance evaluations will often include defensive posturing, deflection, excuses, and feelings of being wronged or singled out.

It is important to go into a performance evaluation in a relaxed state of mind, prepare yourself to encounter the unexpected, put any feedback into context, and reflect on the overall message given.

IV. Cognitive risks associated with performance evaluations:

While individuals once had their year-long performance evaluations consendensed into a single numerical score (e.g. 3/5) or phrase, (e.g. meeting expectations) managers have found that in the modern organization and team, rather than assisting employees in reaching their goals, these practices often harmed their recipients instead.

Performance evaluations such as these can be seen as being reductive and vague in nature, reducing months of work into grades that can be vague, or even inaccurate.

In order to grant an effective performance review, it is important to recognize that there are a number of cognitively based risks which may result in an inaccurate performance evaluation.

The main cognitive risks associated with performance reviews are general bias, evaluator personality, the halo effect, and positional influence.

These risks are particularly acute if you utilize a single, end-of-year performance review system.

Researchers have found that biases often influence annual performance evaluations, with one study published in the Harvard Business Review finding that biases may account for over 60% of the average evaluation.

Cognitive obstacles to the performance evaluation include:

General subjectivity (some evaluators are harsher, while others are generous).
The “halo effect” (where overall perceptions about an individual influence the rating of specific behaviours or characteristics),
Positional influence (evaluators may have an inaccurate view of performance due their position vis-a-vis their employees as is often the case with managers).

However, these rater biases risks may also be joined by recency emphasis (mistakingly relying on an individual’s most recent performance).

Likewise, the Dunning-Kruger Effect is another cognitive bias that will influence an individual’s ability to properly receive a performance evaluation. In the Dunning-Kruger Effect, people who are incompetent at a task are incapable of recognizing their relative incompetence. This failure to recognize their own incompetence leads them feel confident that they are among the most competent and is shockingly widespread. As example, one study of tech firms discovered that 32-42% of coders rated their skills as being in the top 5% of their firms.

Thus, when someone suffering from the Dunning Kruger effect is given a negative performance evaluation, they will have trouble understanding that they have room to improve or are even incompetent, leading to significant obstacles in placing them back on the path towards progress.

In order to counter rater errors such as these it is important to train evaluators utilizing frame of reference training if possible, or more commonly having third parties review performance appraisals and/or evaluate raters themselves by providing feedback on errors.

V. Executive Summary of performance evaluations

Performance evaluations can save an organization time and money, as well as improve communication and effectiveness between team members.

In order for performance appraisals to be effective tools for communication and evaluation, they must be scheduled, frequent, balanced, and objective.

Although performance evaluations can involve a number of cognitive biases, recognizing and acknowledging them is the first step towards overcoming any implicit or explicit rater biases.