Six Common Performance Appraisal Pitfalls and How to Avoid Them

Avoid the six most common performance appraisal pitfalls | Pivot HR Services

Error-proof Your Performance Appraisal Process and Avoid These Common Pitfalls

Performance appraisals can be invaluable professional development tools when used to inspire and coach employees to their greatest ability. Ideally, performance appraisals objectively communicate information that can enhance performance; however, because they are based on human judgement, they can be subject to error.

To ensure that your performance appraisals are truly reflective of employee performance and not tainted by errors, we present the most common pitfalls and solutions to avoid them:

1. Recency Effect: This occurs when judgement is influenced by recent events rather than reflecting the full performance period.

Example: A Managing Director oversaw significant sales growth in the month prior to her performance appraisal. She was praised in her annual review and was not given constructive feedback on the rest of the year’s less-than-stellar sales records.

Solution: Maintain a file of performance-related documents throughout the year that you can refer to when preparing the appraisal. These documents can include emails, notes, and work product that provide examples of accomplishments and areas that demonstrate the need for improvement.

2. Spillover: The opposite of the Recency Effect, Spillover happens when an employee is rated based on previous performance in another time period.

Example: A customer service representative who is well-known for her years at the top of the leader board has recently started to flag. However, her manager neglects to take this in to account when preparing her review and gives her top marks.

Solution: Refer to documents collected throughout the review period, as mentioned above. You should also factor in the employee’s recent KPI’s and targets, if applicable.

3. Halo Effect/Horn Effect: These two pitfalls can happen when the overall perception of an employee is formed by one dominant quality, either positively in the Halo Effect, or negatively in the Horn Effect.

The Halo Effect describes when an employee is deemed to excel in all areas because they are particularly strong in one. For example, an Executive Assistant is highly valued for having exceptional organizational skills. Her manager believes so strongly in these abilities that he subconsciously attributes her with having strong interpersonal skills and initiative as well.

Conversely, the Horn Effect occurs when an employee who performs poorly in one area is then appraised negatively in other areas. For example, the reviewer perceives that an employee dresses too informally and assumes that the employee’s work attitude must also be casual.

Solution: Refer to the document file mentioned to obtain a more holistic view of the employee’s performance. Also, evaluate each performance area separately using a numbered rating scale. It is unlikely that one person will achieve the same score for all areas when they are evaluated individually. Ensure there are concrete examples given for each performance dimension on the appraisal, rather than providing overall or generalized feedback.

4. Central Tendency: This happens when a reviewer does not want to appear to be overly complimentary or unfairly harsh. They select average ratings and provide neutral comments.

Example: A manager rates her associate 3 out 5 for all performance areas and comments that he does a satisfactory job. The associate is keen to move up to a more senior position and is hoping to gain some insight from his appraisal to sharpen his performance. He leaves his appraisal meeting feeling deflated by the lack of helpful feedback.

Solution: Use an even-numbered rating scale (such as a 4-point scale rather than a 5-point scale) to eliminate a median option. As well, structure the comments section to highlight strengths and areas for improvement.

5. Similar-to-me and Personal Biases: It has been proven that people tend to show bias towards those who they view as similar to themselves or like personally.

Example: A senior accountant sees his assistant as a younger version of himself – just like he was he was when he was starting out. He knows that the younger man cuts corners, but he’ll learn through his mistakes, just like he did. He gives the accounting assistant flying colours at his quarterly review.

Solution: This problem can be addressed by having more than one reviewer complete the appraisal. You can also use objective and well-defined performance dimensions such as KPI’s or targets rather than more subjective markers.

6. Leniency effect: This pitfall occurs when a reviewer is nervous to give low ratings or negative feedback – they want their employees to like them and don’t want to ruffle any feathers. To avoid potential conflict, they may give inflated ratings or even undeserved praise.

Example: A new supervisor is having trouble connecting with his staff – they seem to be unhappy with every decision he makes. It’s annual performance appraisal time and he really doesn’t want this to be another source of conflict with his team. He knows several of them need to be coached on their performance, but he ends up giving them all good reviews so he doesn’t have to deal with their reactions.

Solution: Have multiple reviewers complete the performance appraisal to provide a more balanced view. Assign one person to collate all scores and review appraisals before they are given to ensure objectivity. Be sure to explain the process to employees during the appraisal meeting.

Remember – you don’t want to wait for the formal performance review process to give your employees feedback. Good management means providing on-the-spot and real-time feedback to the members of your team.

Performance Appraisal Administration Training available: for additional support and to help minimize the occurrence of any of these pitfalls, Pivot HR Services offers performance appraisal administration training. Please contact info@pivothrservices.ca for more information.

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