Stage 3 - Evaluating Performance (Part 8 of 10 of HRSG’s Guide to Performance Management through Competencies)

The final stage in the performance management cycle involves determining how the employee performed, whether there were things that could have been done differently or better, and whether the employee achieved his/her learning goals for the cycle.

This is the first in a 10 part series that looks at:

1. What is Performance Management?
2. Linking Performance Management to Corporate Strategy
3. How to Design a Performance Management System - Step 1
4. How to Design a Performance Management System - Step 2
5. The Performance Cycle – How Competencies are Incorporated
6. Stage 1 – Planning for Success
7. Stage 2 – Managing & Feedback for Success
8. Stage 3 – Evaluating Performance
9. Multi-source Feedback
10. Performance Management in Summary

While the supervisor is clearly responsible for conducting the final review, the process should be collaborative, with employees coming prepared to review their accomplishments, where they may have exceeded or performed to the standards required, as well as where there were challenges or shortfalls in their performance. If progress review meetings have been conducted on a regular basis, there should be few surprises for the employee and supervisor.

Common Errors in Evaluation
One of the main challenges in Performance Management, especially in situations where high stakes decisions are being made based on Performance Reviews (e.g., salary increase, bonuses, promotions, etc.), is ensuring that to the extent possible ratings of performance are as fair and as accurate as possible.

The following table highlights some of the common errors when rating employee performance as well as ways in which each of these types of errors can be addressed.

Error Type		Description	Ways to Address
Recency:		Giving more weight to events closer to the evaluation time	•  Record performance information throughout the cycle. •  Conduct evaluation based on full performance information available.
Leniency:		Lenient evaluations because: •       like employee •       don’t want to deliver negative information •       Don’t want to penalize employee if other managers are known to be lenient	•  Keep a good record of performance information •  Substantiate evaluation, based on specific performance examples collected throughout the cycle. •  Second level review by manager’s manager. •  Committee reviews to rationalize ratings among employees.
Central Tendency:	The tendency to give an average rating to all or most employees. Could be due to: •       Lack of time •       Laziness •       Uncertainty about employee performance •       Unwilling to differentiate among employees		•   Keep a good record of performance information. •   Substantiate evaluation, based on specific performance examples collected throughout the cycle. •   Second level review by manager’s manager. •   Committee reviews to rationalize ratings among employees.
Severity:	Relatively rare. May be due to wish to: •       Keep employees on their feet, or •       Appear tough.		•   Ensuring that manager substantiates ratings based on specific performance examples. •   Second level review by manager’s manager. •   Committee review to rationalize ratings among employees.
First Impression:	Reliance on first impression of employee. Could be related to infrequent contact with employee.		•   Observing employee’s performance at work. •   Regular meetings to review progress and provided feedback.
Similar-to-me:	Giving more favorable evaluations to employees that seem similar to manager.		•   Keep good records of performance •   Substantiate evaluation, based on specific performance examples collected throughout cycle. •   Second level review by manager’s manager. •   Committee review to rationalize ratings among employees.

Key Decisions
When designing an integrated goals and competency-based performance management system, there are a number of decisions that have to be made with regard to how the ratings will be completed.

Rating Goals:

• Will each goal be rated, or will the manager assign and overall rating for all goals?
• Will there be an arithmetic average of all the goals, or will some goals be seen as more important and given more weighting in the overall rating?

Rating Competencies:

• Will an overall rating be given to each competency?
• Will each indicator be rated and then averaged to achieve a rating for the competency?
• Will some competencies be seen as more important and therefore be given a heavier emphasis or weighting?

 Rating Goals plus Competencies:

• How will the ratings for the goals be considered in combination with the ratings for competencies?
• What weighting will each receive?

All of these questions needed to be considered, especially if significant decisions are being made based on the ratings – e.g., pay-for-performance, bonus or other rewards, promotion, succession, etc.

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In the next in our series of 10 blogs, we will discuss multi-source (360 degree) feedback and the important role competencies play in this form of performance management. Sign up to our blog’s mailing list through the form on the right-hand side to receive the rest of the series in your inbox.

HRSG is a leader in competency-based performance management solutions and training. Contact us today to find out how we can help you.