The Importance of Performance Appraisals One-panel comic of .docx

The Importance of Performance Appraisals
One-panel comic of a woman reading to her daughter before
bed. The girl says to her mother, "I think the Little Engine was
probably worried about his performance reviews."
Throughout your life, people will make life-changing
evaluations of your performance. From elementary school
through college, on the playing field and in your community,
from your first part-time job to your adult career, others will
give you tests and evaluate and compare your performance, the
results of which will determine your advancement (or failure to
advance) to the next phase of life.
Within organizations, assessment of employees' performance
tends to be perceived as a necessary evil that neither managers
nor staff particularly like. Many employees fear that even one
low performance rating could affect their pay or damage their
career. Even more frightening is the prospect of receiving low
ratings from a manager who doesn't ever directly observe or
work with the employee but uses secondhand information or
personal biases to make his or her evaluations. Sadly, this
frequently happens.
Consider This: How Do You Feel About Being Evaluated?
•Think about one or more occasions in which you were being
evaluated. It could be at work, school, a playing field, or
elsewhere.
•Describe your feelings and thoughts before receiving these
evaluations. Were you anxious? Were you looking forward to
the evaluations?
•Describe your feelings and thoughts while receiving these
evaluations. Were you surprised? Upbeat? Interested in

receiving feedback? Actively involved? Passively receiving the
information? Feeling under attack?
•Describe your feelings and thoughts immediately after these
evaluations. Were you excited? Flattered? Humiliated? Angry?
Defensive?
•What effects did these evaluations have on your personal,
social, or professional life? Did they make you a better person
in any way? Explain.
Managers also suffer anxiety when completing performance
appraisals. Most often, they worry that criticisms, no matter
how small, might provoke negative reactions, ranging from
disappointment and frustration to anger and hostility. These
emotions can put strain on the manager-employee relationship
or cause the employee to become less motivated or even to quit.
As a result, managers tend to shy away from providing negative
performance feedback, which of course negates accuracy.
Consider This: How Do You Feel About Evaluating Others?
•Think about one or more occasions in which you had to
evaluate or give feedback to someone. Again, it can be at work,
school, or a playing field. Personal and social settings can also
be used for this exercise.
•Describe your feelings and thoughts before you gave your
evaluation or feedback. Were you anxious? Hesitant? Excited?
•What were your primary concerns? The fairness of your
evaluations? The reactions of the people you were evaluating?
The repercussions of your evaluation for yourself and/or the
person you were evaluating?
•Describe the settings in which you had to communicate your
evaluations. Was it face to face? On the phone? Through e-
mail? In a written report?
•Describe the content of your feedback. Was it positive, neutral,
or negative?
•What were the reactions of the people you were evaluating?

Was your feedback appreciated? Tolerated? Rejected?
•How did you manage or leverage the reactions of the people
you were evaluating? Did you involve them? Did you ask for
their input?
•Describe your feelings and thoughts after giving your
evaluations. Were you stressed? Drained? Relieved? More
confident about your feedback communication skills and your
ability to accurately assess others' performance?
•What effects did your evaluations have on others' personal,
social, or professional lives? Did they make them better? Did
they help them advance their careers? How did they affect your
relationships with the individuals you evaluated? Explain.
So then, if everyone dislikes performance appraisals, why keep
doing them? For one thing, unmanaged performance is chaotic
and random. Employees' work needs to be aligned with the
organization's overall goals, and clear performance feedback
helps everyone to know if this is indeed happening. In fact, a
well-designed performance appraisal system should not only
provide employees with rich feedback but should also
communicate clear performance expectations and include
information that will help them perform at the highest level
possible (Pulakos & O'Leary, 2011). Appraisals that meet each
of these concerns will enable the organization to further its
mission to succeed. The question, then, is not whether to keep
doing performance appraisals but how to make them most
effective.
Uses of Performance Appraisal
A performance appraisal is the formal process through which
employee performance is assessed, feedback is provided to the
employee, and corrective action plans are designed.
Organizations conduct performance appraisals for the following
reasons:

Photo of an evolution form. The evolution check boxes read
unsatisfactory, marginal, satisfactory, very good, and
outstanding.
Performance appraisals have several benefits, including
increased worker motivation. Employees are more productive
and satisfied when they know what is expected of them and how
they can achieve these results.
1.To evaluate performance objectively. Organizations need
some sort of system to measure the value of each employee's
performance. These measures must be objective and must allow
for consistent comparison of performance of people with the
same job function.
2.To increase worker motivation. Appraisals provide employees
with specific feedback regarding their strengths and
weaknesses. When workers know what they should be doing,
how they actually are doing, and how they can improve, they
are often motivated to perform better.
3.To make administrative decisions. Managers rely heavily on
data from performance appraisals when making decisions about
employee raises and bonuses, promotions, demotions, or even
terminations. Employees must perceive these decisions as fair
and free from bias; a good performance appraisal will facilitate
those favorable perceptions.
4.To improve organizational performance. Performance
appraisals are essential to improving organizational
performance (DeNisi & Sonesh, 2010). They pinpoint skill
deficiencies in specific parts of the organization, helping
managers to focus their training and selection efforts.
Appraisals also enhance an organization's opportunities for
success by identifying poor performers, which not only helps
weed out subpar personnel but also motivates top performers to
keep their performance levels high.
5.To establish training requirements. Appraisal data provide
insight into workers' knowledge, skill, and deficiency levels.
This information helps managers establish specific training
objectives, update or redesign training programs, and provide

appropriate retraining for specific employees.
6.To enhance selection and testing processes and outcomes. An
important use of performance- appraisal data is to establish the
criterion-related validity of selection tests. Recall from chapter
3 that criterion-related validity establishes a predictive,
empirical (number-based) link between test scores and actual
job performance by correlating applicants' employment test
scores with their subsequent performance on the job. How can
the predictive capacity of a test be determined if the
organization does not design and implement objective
performance measures and procedures? It would have no
accurate data to correlate test scores with, which would hinder
its ability to design and use accurate tests and implement
effective selection processes.
4.2 Approaches to Measuring Performance
I/O psychologists have identified a number of techniques to
measure employee performance. These measures can be either
objective or subjective. Generally, what is measured and how it
is done depends on the type of work an employee performs.
Some jobs, such as sales and assembly-line work, have
objective outcome measures (sales revenue, number of pieces
assembled), whereas others are more subjective (wait staff
performance, art design work).
Objective Performance Measures
Concepts in Motion:
How to Evaluate Business Performance
<span id="w39039" class="werd"> </span>
Objective performance measures are quantitative measures of
performance that can be found in unbiased organizational
records. They are generally easy to gather and include two types

of data: production measures (such as sales volume, number of
units made, number of error occurrences) and personnel
measures (such as absenteeism, tardiness, theft, and safety
behaviors). Both measures are also usually evaluated according
to the quality of performance.
However, objective measures can be deceivingly simple.
Consider the performance of two sales professionals in an
insurance company. Over the course of a year, Salesperson A
sold 500 policies and Salesperson B sold 1,000. According to
this data, Salesperson B appears to be the better salesperson—
twice as good, in fact. However, if we examine the quality of
each worker's performance, we might learn that Salesperson B
sold unprofitable policies, resulting in a $1 million loss for the
company. Salesperson A, on the other hand, sold very profitable
policies, resulting in a $1 million profit.
Alternatively, Salesperson B may have focused on selling more
policies while cutting corners on after-sale service and follow-
up, which could have resulted in dissatisfied customers. On the
other hand, Salesperson A may have invested more time per
sold policy on such interactions. Although after-sale service and
follow up may not be directly measured or rewarded by the
organization, these customer interactions can help build the
reputation of the organization and are known to result in more
satisfied customers returning for additional products and
referring others. Repeat business from and referrals by satisfied
customers are significantly less costly for an organization to
generate than is building new clientele. However, these
additional sales may not be easily attributable to Salesperson A
if the returning or referred customers are assigned to another
salesperson. As you can see, evaluating worker performance by
quantity alone without also adding in the quality component is
not a wise course of action.
Photo of a man pointing to his wristwatch.

Types of personal data like absenteeism and tardiness are used
to evaluate workers' performance and provide an objective
measure of an employee's success or failure on the job.
Unfortunately, even after controlling for performance quality,
objective data may not provide an accurate or complete picture
of an employee's performance. Many factors beyond workers'
control can limit their ability to perform their best. Looking
more closely at our two insurance salespeople, we might
discover that the difference in sales volume could be
attributable to the location of each employee's branch office.
Salesperson A could work in a small Midwestern town while
Salesperson B works in Manhattan. Thus, Salesperson A could
have captured a larger market share of his designated region
than Salesperson B, even though he sold fewer policies.
Alternatively, perhaps Salesperson B was assigned an easyto-
sell policy because she was a new employee, while Salesperson
A, as a veteran employee, was assigned a hard-to-sell but very
lucrative policy. As you can see, accurate performance
evaluations require more than a cursory look at sales and
production numbers, although adding manager interpretation
into the mix does make objective performance measures more
subjective.
Personnel data, another objective measure, includes such
components as theft, tardiness, absenteeism, safety behaviors,
and rate of advancement. Though not typically related to a
worker's ability to do the job, these elements do indicate job
success or failure. Many jobs, such as teachers, customer
service representatives, and bank tellers, require consistent
daily attendance. Thus, absenteeism and tardiness are often used
to evaluate these workers' performance. Other jobs, such as
machine operators, assembly-line workers, and truck drivers,
have serious safety risks. With jobs such as these, it makes
sense to keep count of employees' accidents and safety incidents
and use them as objective measures of performance.

As with any type of objective data, however, taken on its own,
personnel data can be misleading. Once again, circumstances
outside the worker's control could affect performance. Sick
children, a death in the family, or transportation troubles may
affect an otherwise superior employee's ability to come to work.
Similarly, a workplace accident could have been caused by
faulty company equipment, not worker error. Because you now
understand the limits of objective data, let's turn to subjective
performance measures, their limitations, and ways to keep this
data fair and free from bias.
Subjective Performance Measures
The allure of objective performance measures has to do with
their ability to provide biasfree information on all workers
across a specific job. Of course, we now know that objective
data can still be misleading. Further, most jobs require much
more than simply looking at sales or production numbers,
because most jobs are composed of a complex web of tasks, not
all of which can be measured objectively. A teacher's
performance must be made up of more than his or her students'
test scores, just as a police officer cannot be evaluated solely on
the number of arrests he or she makes each month. To address
these issues, I/O psychologists created subjective performance
measures, which rely on human judgment and are thus exposed
to some degree of subjectivity. To reduce bias, which is always
a factor in subjective measurements, evaluators must base their
ratings on observations of worker behaviors that are critical for
successful job performance. Further, these behaviors must be
identified through an accurate job analysis.
Interestingly, research shows only a small correlation between
objective and subjective performance measures, which suggests
that they measure different aspects of worker performance
(Bommer, Johnson, Rich, Podsakoff, & McKenzie, 1995). Thus,

the two sets of measures are complementary and should be
utilized in conjunction whenever possible.
Organizations use many types of subjective performance
measures, ranging from manager-composed performance
narratives to numerically oriented rating scales. Each method
differs in complexity as well as the amount of time required to
create and implement it. The next section provides a brief
review of some common subjective performance measures.
Written Narratives
Photo of a businessman writing with a pen.
Reference letters are one type of written narrative used by
managers to highlight an employee's performance over a certain
period of time. Written narratives can also be used for
performance evaluation, highlighting the worker's strengths and
weaknesses.
With the written narrative, one of the easiest performance
measures to develop, the manager writes a paragraph or two
summarizing an employee's performance over a certain length of
time. An example of a written narrative is a reference letter
written by a supervisor for an intern at the end of an internship.
When used for performance measurement, managers often share
specific examples about the worker's strengths and weaknesses,
which the worker can then use to help improve his or her
performance during the next appraisal cycle.
Although written narratives are quick and easy, they have a
number of drawbacks. First, every manager will set different
evaluation standards, making it impossible to compare workers
with different managers. As a result, the written narrative
should not be used to make decisions about compensation,
promotions, or layoffs. Second, managers vary in their level of
written communication skills. Some may use ambiguous,

incomplete, or misleading language, which can mean that the
employee could misinterpret or not understand the manager's
feedback. Finally, managers are often reluctant to address poor
performance in a straightforward manner and sometimes
deliberately write the narrative to cast a positive light on
negative behavior.
The drawbacks of the written narrative have prompted I/O
psychologists to develop a number of techniques both to
improve the objectivity of subjective performance measures and
to reduce managerial biases.
Rank Ordering
Cartoon of a man balancing on top of a chair which is placed
on top of a desk. There are three judges seated at another desk
holding up sings with the number "5" on each to judge his
balancing act.
Rank ordering requires no forms or instruments and is the
easiest way to evaluate workers. Managers simply rank their
employees from best to worst. Some managers have the
tendency to evaluate employees similarly. Rank ordering
provides muchneeded differentiation, even though the small
differences between median employees still make ranking
employees a challenge for managers. Rankings also do not
provide workers with performance feedback, which means they
are not useful as tools for self-improvement or training
guidance. Because of their limitations, rankings should be used
only during periods of downsizing, reorganization, or any other
situation in which understanding a worker's relative standing to
other workers would be valuable.
Paired Comparison
As with rank ordering, the paired comparison technique requires

the manager to evaluate a worker's performance in comparison
to the other workers on the team. In a systematic fashion, the
manager compares one pair of workers at a time and then judges
which of the two demonstrates superior performance. After
comparing all the workers in all possible pairings, the manager
then creates a rank ordering based on the number of times each
worker is the better performer of a pair. For example, using the
formula (N(N − 1)/2)N to determine the number of discrete
pairings in a group, a manager with 10 employees would need to
make 45 paired comparisons. A manager with a team of 20
employees would need to make 190 comparisons. As you can
see, the number of pairs goes up quite quickly as the size of the
team increases. For this reason, paired comparisons are
advantageous only for smaller groups.
Like general rank orderings, paired comparisons do not provide
performance feedback. However, they are generally simpler to
use because managers need only compare one employee pair at a
time instead of the entire work team. Organizational leaders
should keep in mind that rankings are not standard across the
entire workplace. The lowest ranked member of a high-
performing team might, for example, actually perform better
than the highest-ranked member of a poorly performing team.
Forced Distribution
When an organization needs to evaluate a large number of
employees, forced distribution is a viable option. With this
technique, managers place employees into categories based on
pre-established proportions. A typical performance distribution
uses the following performance categories and proportions:
Superior 10%
Above average 20%
Average 40%
Below average 20%

Poor 10%
Using this distribution for a team of 100 workers, a manager
would identify the top 10 employees (10%) and the bottom 10
employees (10%) and place them in the superior and poor
categories, respectively. From the remaining 80 workers, the
manager would then select the next 20 highest performers (20%)
for the above-average category and the next 20 lowest
performers (20%) for the below-average category. The final 40
workers (40% of the original 100) would fall into the average
category. The lowest performance group would then be
reprimanded, put on probation, or terminated. This approach is
most commonly associated with Jack Welch, former CEO of
General Electric. GE eliminated the lowest 10% of performers
every year using this method.
Obviously, one of the major drawbacks of forced distribution is
that it assumes that worker performance follows a normal
distribution (some high performers, some low, most somewhere
in the middle). This method makes no concessions for teams
filled with superior performers or, conversely, teams fraught
with poor performers. Further, it makes no distinctions among
workers in a category; all average workers, for example, are
simply considered average. Finally, as with rank ordering and
paired comparisons, forced distribution can add artificial luster
to "superior" members of poor-performing teams, or unfairly
tarnish "poor" members of a high-performing team.
Graphic Rating Scale
Graphic rating scales are the most commonly used method for
rating worker performance. Managers observe specific employee
behaviors or job duties along a number of predetermined
performance dimensions, such as quality of work, teamwork,
initiative, leadership ability, and judgment. Then, the manager
rates the quality of performance for each dimension on a scale

ranging from high to low performance. Looking at Figure 4.1,
you can see that this employee received a below-average rating
on teamwork.
Figure 4.1: General graphic rating scale
Each point on a graphic rating scale, called an anchor, is
defined along the continuum. Anchors can vary in number,
description, and depth of detail and can be stated in numbers,
words, longer phrases, or a combination of these forms.
Typically, the manager rates workers' performance for each
anchor using the five-point rating scale, although sevenor even
nine-point scales are not uncommon.
Graphic rating scales are versatile, inexpensive, and quickly
made. However, in order for the manager to make clear,
accurate distinctions in worker performance across different
dimensions, care must be taken to create specific and
unambiguous anchor descriptions. For example, in Figure 4.2,
scale A uses only qualitative anchors and requires the rater to
place a check mark at the point that represents the worker's
current performance level. This is a poorly designed rating scale
because the rating anchors are left undefined. Similarly, scales
B, C, and D include both verbal and numerical anchors, but
ratings rely solely on manager judgment. Of course, this can
problematic, because one manager might judge his or her
employees more or less stringently than another. Standard
measures allow for clear comparisons across workers, even if
they have different managers.
Figure 4.2: Examples of different graphic rating scales
Some organizations ask managers to provide written examples
that support their ratings of employees for each performance

dimension and/or for their overall level of performance. By
combining both their rating scores and written feedback,
employees learn both how their performance compares to the
company's expectations and what their current strengths and
weaknesses are. This allows the company to set goals or devise
training strategies and the employee to seek self-improvement
or educational resources to improve his or her performance.
Behaviorally Anchored Rating Scale
First proposed by Smith and Kendall in 1963, the behaviorally
anchored rating scale, also called BARS, attempts to evaluate
workers' performance of very specific behaviors critical for job
success. These behaviors are established using the critical-
incidents job analysis technique discussed in chapter 2.
Developing a BARS can be a long and difficult process. To
begin, a group of supervisors familiar with the job identifies
both the performance dimensions (quality of work, teamwork,
initiative, etc.) that should be measured and observe critical
incidents that exemplify both effective and ineffective job
performance. Another group of subject matter experts
transforms the list of critical incidents into behavioral
statements that describe different levels of performance. A final
group evaluates the behavioral statements and assigns a
numerical value scale to each. See Figure 4.3 for an example.
Figure 4.3: Example of a behaviorally anchored rating scale
(BARS)
One positive feature of the BARS approach is that the
behaviorally defined anchors are very explicit as to what
performance criteria are being measured. This makes it much
easier for managers to distinguish between high and low
performers. Additionally, because the rating scale is

standardized, managers can compare BARS performance ratings
across individuals and teams. Further, workers perceive BARS
to have high face validity, which reduces negative reactions to
low ratings.
Despite the advantages, the significant time investment needed
to develop BARS means that most organizations do not employ
this technique. Additionally, this method's overall rating quality
is still dependent upon each manager's observational skills (or
lack thereof). Finally, research shows that the BARS is no more
valid or reliable than any other rating method, nor is it more
successful at decreasing rater error (Landy & Farr, 1980).
Behavioral Observation Scale
The behavioral observation scale (BOS) is similar to BARS in
that both use critical incidents to identify worker behaviors
observed on the job. The biggest difference between BOS and
BARS is the rating format. Instead of quality, BOS rates the
frequency with which a worker is observed to perform a critical
job behavior (see Figure 4.4 for an example). Frequency is
typically measured on a five-point rating scale, comprising
numerical (0–10% of the time, 11–20% of the time, etc.) or
verbal assignments (sometimes, always, never, etc.) or a
combination. The ratings are aggregated across all behavioral
statements to establish a total score. Some researchers have
tried to determine which method, BARS or BOS, is superior, but
the research has been mixed and inconclusive.
Figure 4.4: Example of a behavioral observation scale (BOS)
for a bank teller
4.3 Sources of Performance Appraisal

Concepts in Motion:
How Can Business Performance Be Evaluated?
<span id="w41779" class="werd"> </span>
The goal of performance appraisal is to accurately measure
employees' performance. To do so, raters must directly observe
an employee's actions and behaviors. In many cases, managers
cannot directly observe their employees often. A police chief,
for example, cannot accompany all of his or her officers as they
perform their daily patrols, nor can a school principal sit in
classrooms all day long. Who, then, should evaluate such
workers? For many jobs, input from a variety of sources (for a
police officer, his or her partner or members of the community;
for a professor, students or fellow faculty members) helps to
create a more accurate, well-rounded performance appraisal.
The following section describes the most common sources of
input.
Supervisor Evaluation
Supervisors are the most common source of input for a
performance appraisal, and rightly so. After all, managers are in
the best position to evaluate employees' performance as it
relates to the organization's objectives. Further, because
managers are responsible for recommending rewards and
punishments, they must be able to tie their evaluations to
employees' performance. Without this link between performance
and rewards, employees can become less motivated, resulting in
poorer performance. Indeed, research shows that supervisors'
performance ratings are more strongly correlated to employees'
actual performance than any other rating source (Becker &
Klimoski, 1989).
Peer Evaluations
Peer evaluations, or evaluations made by one worker about a
coworker, are common in jobs that require employees to work

as part of a team. Peer feedback can be especially insightful.
Coworkers often understand the job in greater depth than
managers and can analyze how team members' behaviors affect
each other and contribute to the team's success. Similarly, peer
ratings on the dimension of leadership effectiveness provide a
valuable perspective into a worker's leadership skills and
abilities.
Photo of a businessman sitting in his office and analyzing a
printout.
Supervisors are in the best position to evaluate employees'
performance as it relates to the organization's objectives.
Evaluations completed by managers are typically more accurate
than any other rating source.
How do employees respond to peer evaluations? Generally,
reactions are mixed. In some situations, workers are
appreciative because their peers are the only people who ever
directly observe their performance and are therefore the only
ones who can provide accurate evaluations. Further, because
peer ratings are nearly as accurate as supervisory ratings, they
are excellent guides for self-improvement (Harris &
Schaubroeck, 1988). On the other hand, workers may question
the validity of a negative peer review, something which can
detrimentally affect their future performance. DeNisi,
Randolph, and Blencoe (1983) found that workers who received
negative peer-rating feedback went on to hold more negative
perceptions of group performance, group cohesion, and overall
satisfaction during the subsequent team task. Conversely,
positive peer feedback did not significantly affect any of these
variables on the next task. Peer ratings, therefore, should serve
as a supplemental, not the only, source of a worker's
performance evaluation.
Subordinate Evaluations

Subordinates are uniquely capable of assessing their manager's
actions and effectiveness across a broad range of dimensions,
including delegation, coaching, communication, leadership, and
goal setting. The process of subordinate evaluation, also called
upward feedback, involves performance evaluation of a superior
by his or her subordinates.
Some research supports the notion that upward feedback can
lead to improved management performance. In one study,
subordinates rated their managers on a number of different
dimensions (quality, fairness, support, and communication).
Superiors who received low to moderate ratings showed
significantly more rating improvements six months later than
those who received high ratings (Smither et al., 1995). Further
research shows that managers can improve their ratings even
more by discussing upward feedback with their subordinates
(Walker & Smither, 1999).
Confidentiality is critical to ensure accurate subordinate
evaluations. Many employees fear the potential repercussions of
providing managers with negative feedback and will artificially
inflate their evaluations if they know that the manager will be
able to identify them (Antonioni, 1994).
Self-Evaluation
Close-up of a self evolution form and a pen.
Although self-ratings show more leniency and greater bias than
ratings by supervisors or peers, employees who complete self-
evaluations feel more engaged in the appraisal process, which
can decrease defensiveness regarding the final ratings.
Employees who complete self-evaluations, or evaluations of
their own performance, feel as though they have a voice in the
appraisal process, which in turn increases their acceptance of
and decreases their potential defensiveness about the final

ratings. Although typically used as supplemental evaluative
data, self-ratings are especially useful with workers who work
alone or independently.
Generally, self-ratings show more leniency, less variability,
greater bias, and less agreement with those provided by
supervisors, peers, or subordinates (Harris & Schaubroeck,
1988). These differences could stem from the worker's use of a
different evaluative standard (Schrader & Steiner, 1996), but
research has identified several ways to make selfratings more
accurate. First, workers can be told that their self-ratings will
be compared against objective performance criteria. Second, the
organization can make it clear that the self-evaluation will be
used only for self-developmental purposes (Meyer, 1991).
Third, educating both superiors and subordinates on the rating
criteria and appraisal process leads to greater agreement
between supervisor ratings and self-ratings (Williams & Levy,
1992).
360° Appraisals
360° appraisal is a multisource evaluative process; it utilizes
performance input from many different viewpoints. In this
process, a manager might, for example, receive feedback from
his or her supervisor, peers, subordinates, and internal or
external customers as well as doing a self-evaluation. Normally,
each source uses a rating scale to evaluate the manager's current
proficiency level for a predetermined set of job duties and/or
leadership dimensions (coaching, delegating, communicating,
etc.). After all ratings are complete, they are compiled in a
report and shared with the manager.
Over the last 20 years, 360° appraisals have grown significantly
in popularity. In the mid- 1980s, fewer than 10% of companies
used this method to evaluate managers (Bernardin, 1986).

Today, even though there is no exact percentage, it is likely that
every Fortune 1000 company has had some experience with
conducting 360° appraisals. Interestingly, there is no consensus
on how exactly to use these evaluations. Some believe they are
appropriately used in making administrative decisions (Church
& Bracken, 1997), but most disagree, suggesting they be used
only for management development purposes (Antonioni, 1996;
Coates, 1996).
I/O psychologists recommend a number of practices to increase
the effectiveness of 360° appraisals. First, both raters and the
manager should receive instructions on how to interpret the
different performance dimensions and the rating scale. Second,
all participants must be explicitly told that feedback will only
be used for the purpose of manager development. Further,
maintaining rater anonymity tends to prompt subordinates to
view 360° appraisals more positively, although, interestingly,
managers tend to prefer that employees be held accountable for
their ratings (Antonioni, 1994). Finally, to ensure the highest
quality, a 360° appraisal program must include skilled coaches
to help managers interpret and use their feedback to create goals
and courses of developmental action (Coates, 1996; Crystal,
1994).
Consider This: Seeking Feedback
•Most of us often seek feedback on our performance in various
life domains, whether at work, at school, at home, in sports, or
at church. Where do you normally seek or get feedback on your
performance in each domain of your life?
•What are the advantages and disadvantages of each source of
feedback?
Find Out for Yourself: Performance Measures and Sources

•Visit the following websites of the human resources offices at
University of California, Berkeley and University of California,
Davis for templates of performance measures that utilize
feedback from different sources as well as examples of
performance evaluations using these measures:
◦http://hrweb.berkeley.edu/performance-management/forms
(http://hrweb.berkeley.edu/performance-management/forms)
◦http://www.hr.ucdavis.edu/forms/Perf_Eval/000
(http://www.hr.ucdavis.edu/forms/Perf_Eval/000)
4.4 Sources of Rating Error and Bias in Performance Evaluation
Performance appraisal relies on the assumption that human
judgment is capable of some degree of accuracy. However,
humans are not objective observers. We can never be
completely certain that our judgments are free from error or
personal biases. Often, of course, errors are unintentional. In
the workplace, rating errors can occur if managers do not
observe workers' performance or if they do not use the rating
scale correctly. More insidious, managers can also harbor
unacknowledged biases against certain types of workers. At
other times, rating errors are intentional. Managers can
deliberately inflate a poorly performing employee's ratings
because they don't want to jeopardize their relationship with the
employee or because they don't want to cause negative
reactions. I/O psychologists have worked hard to identify,
understand, and correct sources of rating error.
Types of Rating Error
In order to improve accuracy, one must first identify and
understand error. With performance appraisals, rater errors
typically fall into three major categories: observational errors,
distributional errors, and rating scale errors. In this section, we

review the specific rating errors associated with each category
and discuss how these errors reduce performance appraisal
accuracy.
Observational Errors
As stressed throughout this chapter, appraisals must be based on
thorough observation of an employee's performance in order to
be accurate. Without direct observation, managers may rate
employees based on such unreliable sources of information as
general impressions, observations from past ratings, or hearsay.
Photo of a businesswoman looking through binoculars.
To increase accuracy, appraisals must be based on thorough
observation of an employee's performance. Otherwise
supervisors may incorrectly rate employees based on general
impressions, past ratings, or hearsay.
Even if managers are able to observe workers' performance,
they are often unable to remember more than an employee's
most memorable performance accomplishments (or failures). An
average appraisal cycle lasts up to twelve months, and, as you
might expect, a manager will remember and thus more strongly
emphasize recent performance, an effect called recency error.
Of course, when a recency error occurs, a worker's ratings do
not accurately represent his or her overall performance
throughout the entire appraisal cycle.
The best way to overcome recency error is simple: Reduce the
amount of performance information the manager needs to
remember. One practical way for managers to do this is to
shorten the appraisal cycle by conducting more frequent
appraisals throughout the year, instead of once annually.
Additionally, managers can improve recall by keeping a detailed
performance log for each employee, especially at the beginning
of the rating cycle.

Distributional Errors
Within an organization, evaluation standards tend to differ from
manager to manager. Significant error occurs if managers
inaccurately distribute rating scores along the rating scale. For
example, some managers may clump everyone together with
average scores. Others may be overly positive or afraid to give
anyone negative scores. A third group of managers may be too
stringent and thus give most of their employees low scores.
These faulty judgments are called distributional errors.
First, one of the most common forms of rating error in general
is leniency error. In this situation, managers have a low
performance standard and rate their employees higher than their
performance deserves. A graphic representation of a lenient
manager's rating scores will show that they tend to cluster on
the positive end of the distribution. Even though the high scores
could be a reflection of a truly high-performing team, research
tells us that such a result is unlikely. Normal worker
performance distribution tends to follow a bellcurve pattern,
with some workers falling at the high and low ends but most
clustering somewhere in the middle. Leniency error is very
obvious when it occurs. For example, one study found that out
of 12,000 federal employees, 85% received ratings at the
superior level on their performance appraisals, whereas only 1%
received ratings below the fully successful level (Marrelli &
Tsugawa, 2009). This distribution is extremely unlikely to be
accurate.
Research shows that rater personality characteristics such as
agreeableness and conscientiousness could be linked to leniency
error. In an experimental lab study, people with low
conscientiousness and high agreeableness rated their peers more
positively, regardless of actual performance (Bernardin, Cooke,
& Villanova, 2000). As previously discussed, a manager's

reluctance to give negative feedback is another common impetus
for rating leniency. Most managers want to develop and
maintain positive relationships with their subordinates, and
offering positive feedback during a performance discussion is
certainly more enjoyable than the alternative. Unfortunately,
being lenient not only fails to challenge and improve workers'
future performance, but also makes terminating a poor
performer legally difficult.
The second form of distributional error is central tendency.
Central-tendency error occurs when a manager is reluctant to
rate employees as either superior or inferior. As a result, ratings
scores cluster around the middle of the performance scale. Third
is severity error, in which a manager holds excessively high
standards and rates employee performance as lower than it
actually is. A severe manager's ratings scores will cluster
around the low end of the performance scale. Although these
two distribution errors are less common than leniency error,
they are just as problematic. Because they fail to address the
real differences among employees' performance, scores tainted
by severity and central tendency error are worthless for making
employee decisions.
Find Out for Yourself: Distributional Errors and Biases
•The next time you participate in a group activity or team
project, rate each of the group members (excluding yourself) on
his or her performance and contribution to the project on a scale
of 1–10.
•Ask each team member to evaluate each of the other members
(excluding himself or herself).
•Are your evaluations consistently more lenient, more stringent,
or comparable to your team members' evaluations?
Rating Scale Error

Sometimes, performance appraisal errors occur because the rater
does not know how to use the rating scale correctly. In other
cases, a manager's general opinion about a specific employee
can color his or her ratings of all performance dimensions for
that employee (Lance, LaPointe, & Stewart, 1994). This
tendency, called the halo effect, is the most common form of
rating scale error and can either artificially inflate or deflate
ratings. For example, if a manager believes one of his or her
subordinates is extremely smart, he or she might transfer that
positive opinion to evaluations of other performance areas, such
as collaboration, ethics, and loyalty. Basically, then, managers
who rate workers high (or low) on one significant dimension
will go on to score them high (or low) on all other dimensions
on the appraisal, especially if the other dimensions are not well-
defined or directly observed.
One way to counteract the halo effect is for managers to rate all
employees on the same dimension before moving on to the next
one. This helps managers keep employee performance in
perspective. Another option is to use more than one source to
rate employees.
Although most researchers believe that the halo effect is present
in almost all ratings and settings, some studies suggest that it is
less prevalent—and less of a concern—than previously thought.
In a review of past research, Murphy, Jako, and Anhalt (1993)
concluded that, in the studies they examined, halo was not
nearly as common as traditionally believed and, even when it
did occur, did not negatively affect rating accuracy.
Surprisingly, when organizations consciously try to control
halo, they end up with less accurate ratings (Murphy &
Reynolds, 1988). Organizations must therefore not become
overzealous in their attempts to eliminate halo. Indeed, some
employees really are very strong (or very weak) across all
performance dimensions and their consistent ratings reflect an

accurate evaluation of their performance.
Rater Biases
Ratings can also be influenced by a worker's personal
relationship with the evaluator. Similar-to-me-error, for
example, occurs when evaluators give higher ratings to workers
whom they perceive to be like them (Wexley, Alexander,
Greenawalt, & Couch, 1980). A study of 104 Air Force officers
showed that familiarity between the officers and the aviators
they debriefed, if it existed, positively affected the aviators'
ratings of the officers (Scotter, Moustafa, Burnett, & Michael,
2007). Other research has examined personal characteristics
such as personal attractiveness and demographic characteristics,
each of which influences performance ratings.
Photo of two young businessmen in the background and one
older businessman in the foreground.
Performance ratings are often based on the evaluator's personal
biases relating to such things as gender, age, and race. For
instance older workers typically receive lower performance
ratings than their younger coworkers.
Three demographic characteristics require particular attention:
race, gender, and age. As you recall from chapter 2, any tool
organizations use to make employee decisions (hiring,
promotion, placement, compensation, termination, etc.) must
not discriminate against protected classes. In most
organizations, performance appraisals provide important data
used in those decisions. You can easily understand, then, that
any personal biases based on race, gender, and age are
especially problematic for an organization if they significantly
influence performance appraisal ratings.
Research on race, gender, and age biases has produced mixed
results. In the category of race, research shows that overall,

black employees receive slightly lower ratings than white
employees (McKay & McDaniel, 2006). However, because
closer examination shows that all managers tend to give higher
ratings for individuals of their own race, the overall results
seem to be due to a combination of similar-to-me-error and the
higher proportion of whites in managerial roles.
Likewise, gender bias occurs in some situations, but it tends to
be limited to situations of gender-role incongruence.
Specifically, male employees' performance tends to be rated
higher than female employees' performance in traditionally
masculine roles but lower in traditionally feminine roles, and
vice versa for women (Pulakos, White, Oppler, & Borman,
1989). A more recent study of 448 upper-level managers
examined the equity of promotions for men and women and
found that women needed to show significantly higher
performance appraisal ratings than men in order to be
considered for promotion (Lynes & Heilman, 2006).
Finally, research shows that managers may favor younger
workers. In general, older workers receive lower ratings than
their younger coworkers, and the bias increases when older
employees work for younger managers (Shore, Cleveland, &
Goldberg, 2003).
Improving Rater Accuracy
Clearly, performance appraisals are susceptible to numerous
types of rating errors, which affect the appraisals' usefulness in
employee decision-making and self-improvement. To thwart the
negative effects of error, I/O psychologists have identified
several ways to increase rating accuracy. Let's take a moment to
review some of these techniques.
Rating-Error Training

One way to deal with rating errors is to train raters not to make
them. Rating-error training involves teaching raters about the
different types of rating errors along with practical strategies
for avoiding them. When dealing with leniency error, for
example, raters will first learn about the type of error (in this
case, inflated ratings with little variability), then its possible
causes (e.g., raters wish to maintain a positive relationship with
the employee), and finally strategies to overcome it (e.g., rank-
order employees before rating each one). This process assumes
that educating raters about potential errors and possible
solutions can help them overcome their biases.
Unfortunately, the perceptual biases that lead to rating errors
(stereotypes, the need to please, high expectations) are
ingrained in our cognitive processes and are difficult to change.
Rating-error training thus requires significant time and effort,
with sessions typically lasting from six to eight hours (Latham,
Wexley, & Pursell, 1975). Yet even with extensive training,
improved rating accuracy is short-lived (Fay & Latham, 1982).
Rating-Accuracy Training
Like rating error training, frame-of-reference (FOR) training
aims to help raters improve their rating accuracy. With this
method, raters learn about the type of employee performance
their organization wishes to see. They are given a frame of
reference, or model, against which to compare their employees.
If raters know the organization's performance standard for a
specific job position, they will be less likely to use their own
idiosyncratic standards to judge a worker in that position.
Designing FOR training involves a number of important steps.
First, the raters receive a clear and concrete definition of
various performance dimensions and rating scale included on
the appraisal they will be using. Next, the trainer discusses
work behavior that illustrates appropriate performance at each

rating-scale level. After the raters have a basic understanding of
the different performance expectations, they practice using the
rating scale, usually by watching video scenarios of people
working at various levels of performance and then attempting to
rate them appropriately. Finally, the trainer goes over each
scenario, discussing at which performance level each sample
employee should have been rated.
Photo of business people seated at a table during a meeting.
Calibration meetings increase accountability because managers
must discuss the ratings of employees in similar jobs, thus
requiring managers to justify their rating of each employee to
their peers.
Research has found that FOR training does indeed lead to more
accurate performance appraisal ratings (Woehr & Huffcutt,
1994). As an added bonus, research by Davis and Mount (1984)
found that managers who received FOR training became more
effective at creating development plans for their direct reports,
because they more clearly understood what the company
expected of its employees.
Rater Accountability
Raters need to be motivated to make accurate ratings, but
organizations often do not provide much incentive to do so. If
your boss never underwent formal performance appraisal
training, or if he or she was never really held accountable for
the quality of his or her performance ratings, how motivated
would he or she be to take performance appraisal seriously? In
turn, how likely will you be to take it seriously when it is time
for you to evaluate your own staff? Unfortunately, the poor
behavior modeled by some executives often provokes similarly
cavalier attitudes among the company's entire management
team. If, however, managers are held accountable, they will take
the appraisal process seriously and will be more accurate in

their ratings (Harris, Ipsas, & Schmidt, 2008; Mero &
Motowidlo, 1995). One way to increase accountability is for
organizations to hold calibration meetings, at which managers
discuss the performance and ratings of workers in similar jobs.
As you might surmise, because they force managers to justify
their ratings to their peers, these meetings increase rating
consistency across employees (McIntyre, Smith, & Hassett,
1984).
4.5 Performance Management Systems
So far in this chapter, we have focused on the need for and
strategies used to improve the accuracy of performance
appraisals. However, even the most accurate appraisal can fuel
negative worker reactions if it does not include quality
feedback. This knowledge has prompted some I/O psychologists
to suggest that worker self-improvement rather than rating
accuracy should be the focus of a performance appraisal (Ilgen,
1993). In order to build a successful self-improvement plan, an
employee needs to have the following information: first, clear
performance expectations; second, an understanding of current
performance; and third, suggestions from his or her manager on
how to improve. The appraisal, then, is really part of a larger
performance management system, which includes not only the
appraisal but also the setting of performance expectations and
continuous feedback. Of course, if he or she truly wishes to
improve, the employee must be willing to listen to and address
constructive performance feedback, something that will not
happen unless the manager and employee are able to establish a
significant amount of trust.
In this next section, we will review the three major components
of the performance management system: building trust,
continuous feedback, and expectation setting.

Building Trust
Think about the last time you worked with a peer or for a
manager you did not trust. How did you feel? Chances are, at
one time or another, you experienced frustration, confusion,
apathy, or even anger toward that person. Now imagine that the
person took some time to offer you constructive performance
feedback. How would you respond? Most of us would question
this untrustworthy person's intentions, withdraw from the
situation, or even become hostile, ignoring the feedback or
interpreting it in a negative way. Further, most people will stay
quiet and not question the feedback because they fear
repercussions for disagreement. Actual negative feedback is
even more detrimental, especially when little trust exists
between the manager and employee. Employees can become
unmotivated and lose self-esteem (Kluger & DeNisi, 1996).
When trust exists, however, workers are more likely to accept
criticism openly, believing their manager has their best interests
in mind.
As you can see, a positive manager-employee relationship is
necessary for a positive performance appraisal experience, and
trust is a prerequisite for an effective performance management
system (Peterson & Hicks, 1996). Therefore, it is important for
organizations to train managers how to build trust with their
staff by doing such things as keeping their commitments,
displaying integrity, providing timely feedback, and showing an
interest in their subordinates.
Continuous Feedback
Photo of a man and a woman having a meeting.
When managers provide continuous feedback, employees feel
less threatened and can immediately adjust their performance to
solve existing problems and account for current demands.

During a typical annual post-appraisal meeting, a manager will
hold a one-sided conversation with an employee, reviewing the
employee's successes and failures from the most recent
performance review cycle. As you may have determined from
the opening exercises of this chapter, the meeting can quickly
become tense, even hostile, if the feedback includes criticism.
Employees tend to instinctively deflect criticism, blaming it on
forces outside their control. Just think for a moment, though: If
this meeting were a once-a-year occurrence, how desirable or
useful would criticism be if it referred to something that
happened ten months ago? Could the employee even do anything
now to fix the situation? Probably not. How might an employee
react differently if, instead of annually, she or he received
informal feedback on a more regular basis?
Both scientific researchers and in-the-field practitioners
advocate the habit of providing continuous informal feedback to
employees (Corporate Leadership Council, 2002; Gregory,
Levy, & Jeffers, 2008). More specifically, continuous feedback
should be given in addition to, not to the exclusion of, the
annual performance appraisal, and it must be provided
immediately after any instance of effective or ineffective
employee performance. Once-ayear feedback has never been
very effective, but is especially unhelpful for today's users of
instant-communication systems such as Facebook and Twitter.
Increasing its frequency makes feedback not only less
threatening but also more helpful, because employees can
actually use the information to solve existing problems or adjust
performance to meet current demands.
In addition to increasing frequency, I/O psychologists have
identified a number of other conditions under which employees
will be more likely to adopt managers' feedback suggestions:
1.Feedback must address specific employee behaviors or
actions, not personal characteristics. It is best to use facts, data,

statistics, or direct observations to support positive or negative
feedback.
2.Feedback should involve two-way communication between
managers and employees. If employees feel they can express
their views, they are more satisfied with the feedback process
(Diboye & Pontbriand, 1981).
3.Managers should provide constructive feedback only on
behaviors the employee can control.
4.If feedback is negative, it should be constructive. Further,
managers should provide support for the employees' self-
improvement.
Setting Expectations
Most of us truly wish to do our best at our jobs, but it is hard to
do so if we do not understand what is expected of us. Managers
can facilitate effective goal-setting sessions by following these
guidelines:
1.Managers should not simply assign performance goals.
Rather, they should collaborate with employees to create
mutually agreed-upon expectations. Participation in the goal-
setting process increases an employee's goal-aspiration
motivation (his or her desire to meet the goal) and leads to the
creation of more challenging goals (Latham, Mitchell, &
Dossett, 1978).
2.Goals that are specific and challenging yet achievable more
successfully motivate workers to perform their best (Locke &
Latham, 1990).
3.Workers perceive open-ended goals as less urgent than those
with deadlines and are therefore less likely to achieve them. All
goals should have specific achievement deadlines.
4.Employees tend to follow the adage, What gets rewarded, gets
done. Employees should always understand how achieving (or
not achieving) goals will impact them and how accomplishments
will be rewarded.
5.Not all goals hold the same importance. Managers should help

employees prioritize and order goals according to their
importance.
4.6 The R in ROI: Linking Performance Evaluations to
Financial Results—Friend or Foe?
One-panel comic showing one man sitting at a desk with all of
his employees surrounding him. The caption reads, "Pay for
how we perform? What kind of nutty idea is that?"
Performance measurement is extremely important, for the
numerous reasons discussed earlier in this chapter. However,
many times performance appraisals become a laborious exercise
that I/O psychologists or the human resources department push
on the rest of the organization to serve other, less important
goals. For example, managing the performance appraisal system
can become a goal in itself for those whose job is to see to it
that the system is functional and well-maintained. It justifies
the jobs they are holding and the salaries they are paid. When
that is the case, the managers performing the evaluations start to
view the performance-appraisal system as a formality and do
not take it very seriously. They may fill in the necessary forms,
but the accuracy of their ratings will likely be questionable.
Another common but often less effective approach to
performance appraisals is limiting their outcomes to the
determination of annual salary increases. Especially in a tight
economy when overall payroll allocations are frozen, relatively
stable, or even decreased, linking performance appraisals only
to annual raises is unlikely to be conducive to performance
outcomes. For example, when the best performers get a raise of
only 4% and the worst performers get a raise of 2%, you can see
why the difference is unlikely to translate into any constructive
performance feedback for either employee. In cases where there
is a limited pool of resources to distribute, high performers

often feel guilty about getting a raise at the expense of their
colleagues, rather than feeling appreciated or rewarded.
Conducting performance appraisals only to determine annual
raises also ignores their purpose of providing continuous
constructive performance feedback. As discussed earlier,
employees need to receive feedback on their performance more
often. This feedback should be provided to help them better
align their performance with the organization's goals. When
appraisals are always linked to pay, appraisal sessions become
mostly about money rather than about performance
improvement.
Performance appraisals are also often used in conjunction with
layoff decisions. Even though this is a legitimate use, if they
are only used to justify these decisions, they become perceived
as a way for the organization to provide a legally defensible
paper trail, which diminishes their value, and they become
resented and distrusted by managers and employees alike.
Again, although the above uses of performance appraisals are
important and legitimate, the primary use of performance
appraisals should be as a tool to objectively measure
performance and facilitate its improvement.
So how do organizations, managers, I/O psychologists, and
human resource departments design truly effective performance
appraisals systems? It is critical to choose the correct measures.
As discussed earlier, the correct measures should be readily
linked to the goals of the organization and its success. This
chapter offers numerous ways to enhance the quality of
performance measures. However, in the words of sociologist
William Bruce Cameron (1963) in his book Informal Sociology:
A Casual Introduction to Sociological Thinking: "not everything
that can be counted counts, and not everything that counts can
be counted" (p. 13). The Pareto efficiency principle, also known
as the 80-20 rule, posits that in most situations, 80% of
outcomes are caused by 20% of the inputs. In performance

appraisal, this means that it would be most effective for
managers to focus on their employees' most critical behaviors,
which constitute about 20% of everything that their employees
do on a daily basis, because these critical behaviors cause 80%
of the outcomes that truly have an impact on the organization's
success and effectiveness.
Although not the only approach, performance measures that are
directly linked to financial results tend to be perceived as
objective and fair because they reflect the true value of an
employee to an organization. They are also critical for resource
allocation decisions, because they put human resource decisions
on a par with other investments. For example, the financial
value of an employee's performance can justify the costs of
hiring or retaining that employee over outsourcing the position
or investing in a piece of equipment that would allow for the
automation of that employee's job.
Should an appraisal system then attempt to capture the financial
value of every aspect of an employee's performance? Absolutely
not! The concept of opportunity cost, introduced in earlier
chapters, implies that only performance dimensions where the
benefits of measurement exceed the costs should be captured.
For example, even though it is easy to quantify stationery
consumption, the cost of policing employees into being less
wasteful in their use of inexpensive stationery items can be
higher than the cost savings that may accrue from these
initiatives. Similarly, many organizations install expensive
equipment or have their managers waste numerous hours
managing their employees' attendance when the costs of the few
minutes that an employee may come in late or leave early far
exceed the costs of monitoring.
What, then, should an appraisal system track? The Pareto
efficiency principle implies that it should focus on performance
dimensions that would be of high enough financial value to

justify the cost. The key is not always the absolute cost or
benefit of a performance dimension but rather the variation of
that cost or benefit. For example, the difference between the
most and least conservative use of stationery is not substantial.
In measuring the performance dimensions that would have the
most substantial effects on financial outcomes, emphasis should
be on the dimensions with the highest variability and the ones
that are "pivotal" to performance (Cascio & Boudreau, 2008).
For example, at an upscale restaurant, the most pivotal
performance dimension for cooks is their cooking skills. On the
other hand, the most pivotal skills of the wait staff are their
social skills. Although it is necessary for cooks to have some
social skills in order to effectively deal with the wait staff and
restaurant management, social skills are not pivotal for cooks.
They can still be subjectively evaluated (e.g., using a narrative
or a rating scale), but attempting to place a financial value on
them is both impractical and unnecessary.
Consider This: Appraising Performance Dimensions That Really
Matter
•Choose a job that would be of interest to you. It can be your
current job, a job you held in the past, a job you hope to have in
the future, or just a job that you have come across in a
jobopening announcement or advertisement.
•Describe the job in detail. For more information, you may
search for job descriptions of similar jobs.
•How would you measure the performance of the incumbent of
this job? What are the most important dimensions to measure
according to the Pareto efficiency principle?
•What are the performance dimensions that will likely exhibit
the most variability (the most pivotal dimensions)?
•Which dimensions will be most readily linked to financial
results? Explain.
•Which dimensions should be subjectively evaluated?
•Which dimensions should be ignored and not evaluated? Note

that this is an important decision because it can significantly
affect the efficiency and effectiveness of a performance
appraisal system. It is also a decision that is often neglected or
inadequately addressed.
4.7 Crossing the Positivity Threshold: Toward More Positive
Appraisal Sessions
As humans, we have a tendency to overemphasize and amplify
the magnitude of negativity in our lives (Baumeister,
Bratslavsky, Finkenauer, & Vohs 2001). Negative stimuli tend
to receive more of our attention and energy. For example,
threatening personal relationships have been shown to receive
more of our thought time than supportive ones, and blocked
goals tend to receive more thought time than those with open
and available options (Klinger, Barta, & Maxeiner, 1980).
Performance appraisal is no exception. It is much easier to
dwell on our own or others' faults than to acknowledge talents,
strengths, and positive performance attributes. Doing the latter
requires intention.
One-panel comic showing one man speaking to his employee.
The manager says to his emplyoee, "We're giving you a 6%
increase in appriciation. So... nice haircut, Andy."
So why do humans in general tend to focus on negativity? The
tendency to overemphasize negativity has been attributed to
primitive survival mechanisms in reaction to perceived physical
danger. In civilized societies, overemphasis on negativity has
been attributed to four psychological factors that are
comparable to these survival mechanisms: intensity, urgency,
novelty, and singularity (Cameron, 2008). The first factor is the
intensity of negative stimuli. Because negative events are
perceived as threatening, they are experienced more intensely.
Second is the sense of urgency that negative stimuli place on

our perceptions and action tendencies, because something is
wrong and needs to be fixed. Positive stimuli do not pose the
same sense of urgency, because ignoring positive stimuli does
not pose as much risk as ignoring negative stimuli. Third is the
perceived novelty of negative events. Believe it or not, a lot of
what is going on in most people's lives is positive. That's why it
tends to go unnoticed. Negativity is the exception. That's why it
gets more attention.
Fourth, one of the unique characteristics of negativity is what is
referred to as singularity. Imagine a system with one defective
component, a body with one ailing organ, a team with one
counterproductive employee, or a family with one dysfunctional
member. A single negative component is capable of tainting the
performance of the collective, which causes that single negative
component to really stand out and alarm the rest for the need to
somehow remedy the problem. On the other hand, positivity
tends to be more general and global. One positive component
alone does not necessarily make a system better. One good
employee alone usually cannot make an organization successful.
One healthy organ alone cannot make the whole body healthy.
This singularity makes the effect of negativity more pronounced
and far-reaching.
Photo of an executive and an architect at a construction site.
The businessman is patting the architect on the back.
Supervisors should focus on the positives of each employee's
performance rather than dwelling on the negatives. If the
supervisor makes three positive comments for every negative
one, the worker likely will be more receptive to the constructive
criticism offered.
Paradoxically, humans also have a natural tendency, referred to
as the heliotrophic tendency, to gravitate toward what is
pleasurable (i.e., positive) and away from painful or
uncomfortable stimuli. However, this tendency tends to be

overwhelmed by the intensity, urgency, novelty, and singularity
of negativity and needs to be brought out through intentional
decisions and actions. That is why although most managers
recognize their tendency to overemphasize their employees'
weaknesses, faults, and mistakes and wish they could be more
positive, they cannot. For example, they may get overwhelmed
by the urgency of addressing the dysfunctional behaviors of
their worst employees that they have no time to interact with
and praise their better ones for their consistent positive
behaviors. Moreover, those consistent positive behaviors may
no longer stand out; they may be taken for granted and a
manager may forget to recognize them when appraising these
employees' performances.
So how can managers overcome their negative tendencies and
lead more positive performance appraisal sessions, which can
lead to positive relationships with their employees that can be
conducive to higher subsequent performance and a better-
functioning organizational culture? First, a manager needs to
recognize the important concept of the positivity ratio, which
was introduced in chapter 3. Although extreme, Pollyannaish
positivity is unnecessary and can even be dysfunctional,
research supports the existence of a tipping point or threshold
for positivity at which humans go beyond just being average or
functional and start to thrive and flourish (Keyes, 2002). This
tipping point tends to take place at a positivity-tonegativity
ratio of about 3:1.
So, managers need to intentionally create about three positive
interactions with their employees for every negative interaction.
In performance appraisal sessions, managers should really put
in the effort to find and comment on three positive aspects of
their employees' performance for every negative aspect they
want to bring to an employee's attention. This requires the art of
catching employees doing something right instead of the
common practice of focusing on problems and mistakes.

Interestingly, research shows ratios of 2:1 or 1:1 are not
significantly different. They are almost equally
counterproductive. Interactions that fall below the 3:1 threshold
will likely be perceived by the employee to be excessively
negative, regardless of how negative.
You might think that this hand-holding is more necessary for
new or inexperienced employees and that more mature
employees or more established relationships can tolerate lower
positivity ratios. However, research shows the tipping points in
those situations are actually higher. For example, the threshold
is about 5:1 in more complex settings such as top management
teams and as high as 6:1 in marital relationships (Fredrickson &
Losada, 2005; Losada & Heaphy, 2004; Gottman, 1994).
Consider This: Positive Performance Appraisal Sessions
In order to conduct more positive performance appraisal
sessions, managers need to be more positive in collecting and
sharing performance information. Below are two examples of
positively oriented practices that can be used to replace the
negative practices often used by managers.
•Negative: Reprimand workers when late. Positive: Praise and
reward workers who are consistently on time. Rationale:
Workers who are on time will know that their positive behavior
is noticed and appreciated instead of ignored. Late workers will
start coming on time to get the manager's attention and receive
rewards.
•Negative: Criticize an employee for weaknesses (e.g., poor
people skills or leadership skills). Positive: Find and
acknowledge the employee's strengths that parallel those
weaknesses (e.g., independent thinking or willingness and
ability to follow directions). Suggest changes in role to better
fit employee strengths and/or training opportunities to develop
lacking skills. Rationale: Weaknesses may be based on stable

personality traits that cannot be readily changed (e.g.,
introversion). In these cases, role changes are more likely to
lead to performance improvements. In others, training and
development are more likely to be perceived as opportunities.
Criticism is more likely to be perceived as a threat.
Find Out for Yourself: Do Your Relationships Cross the
Threshold?
•Choose an individual you interact with on a regular basis in a
close relationship. It can be a spouse or significant other, a
friend, a coworker, a parent, a sibling or a classmate. (Do not
share any information about positivity ratios or this exercise
with that individual yet.)
•Keep track of your interactions with this person for a week. Jot
down brief notes about your interactions and evaluate whether
you consider each interaction to be positive or negative.
•At the end of the week, calculate the positivity ratio of your
relationship by dividing the number of positive interactions by
the number of negative interactions.
•Did your relationship cross the positivity threshold (generally
3:1 for work relationships and 6:1 for personal relationships)?
•Now ask that individual to honestly assess whether your
relationship is positive, neutral, or negative. Compare the
individual's perceptions with the positivity ratio you calculated.
Do not be discouraged if the perception is too negative or if
your relationship did not cross the threshold. Eighty percent of
relationships and interactions do not.
•Here is the hardest part of this exercise! If your relationship
did not meet the threshold, then over the next few weeks,
intentionally try to increase the positivity ratio, keeping track of
your interactions and calculating your ratio on a weekly basis
until you reach the threshold. Describe (and enjoy) the
noticeable increase in the relationship quality.
•If (or when) your relationship has met the threshold, move on

to other relationships in your life and repeat the same exercise.
You should start to notice significant increases in your own
positivity level as well!

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