Saturday, July 24, 2010

Evaluating Performance

Necessity for improvement, has led to numerous forms of evaluations which can largely be summarized in four main categories. First there are comparative evaluations where employees are ranked or measured in relation to one another. Second, there exist a number of attribute scales that measure skills or competencies that employees possess. Third, there are behavioral appraisals to evaluate employee demonstration of certain expected behaviors. Last are measurements based on employee results of which MBO (management by objectives) is a well known and widely utilized example (Milkovich & Newman, 2002).

Regardless of the form an evaluation takes, O’Malley (2003) has identified four best practices recommendations: 1) evaluations should take a multidimensional view of performance using a wide variety of appraisal criteria; 2) use of ratings and measurement by scales providing a point score and not by ranking; 3) standardization of the forms themselves and a demonstration of the measurements reliability and validity; 4) procedural enhancements by holding managers accountable for reviews, striving for consistency by training all managers conducting evaluations and clearly communicating to employees the expectations of the organization.

Numerous factors go into the design and maintenance of a performance review system, however, the underlying objective is for the organization to measure an employee’s contribution to one of its business goals while at the same time providing a fair process for the employee. Much of the difficulty arising from performance appraisal plans remains in the area of procedural justice, as is the case with any compensation related program. Ultimately, an organization’s culture (including its leadership and employee communications) and a history of positive labor relations will make or break a performance measurement system which is otherwise compliant or reasonMain Author:

Milkovich, G.T. and Newman, J. M. (2002). Compensation management (7th edition). Boston, MA: McGraw-Hill.

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