Read Case 7.1 and answer the following three questions:

1. State and support your three principal reasons for an annual performance review of a staff member.
2. Sketch a rating scale (indicate the range and direction, low to high) and indicate at least five areas for review pertinent to your work.
3. How likely is it that your proposal can be implemented and when?

188 Part Two Understanding and Managing Individual Behavior Case Case 7.1: The Politics of Performance Appraisal Jim: The scales are a problem. So is memory Remember our course in human re- Every Friday, Max Steadman, Jim Coburn, Lynne sources in college? Dr. Philips said that, Sims, and Tom Hamilton meet at Charley's after work for drinks. The four friends work as managers at Eckel according to research, when we sit down Industries, a manufacturer of arc-welding equipment to evaluate someone's performance in the in Minneapolis. The one-plant company employs past year, we will only be able to actively about 2,000 people. The four managers work in the recall and use 15 percent of the perfor- manufacturing division. Max, 35, manages the com- mance we actually observed . pany's 25 quality-control inspectors. Lynne, 33, works Lynne: I think political considerations are always as a supervisor in inventory management. Jim, 34, is a a part of the process. I know I consider first-line supervisor in the metal coating department. many other factors besides a person's ac- Tom, 28, supervises a team of assemblers. The four tual performance when I appraise him. managers' tenure at Eckel Industries ranges from 1 year (Tom) to 12 years (Max). Tom: Like what? The group is close-knit; Lynne, Jim, and Max's Lynne: Like the appraisal will become part of his friendship stems from their years as undergraduate permanent written record that affects his business students at the University of Minnesota. Tom, career. Like the person I evaluate today, I the newcomer, joined the group after meeting the three have to work with tomorrow. Given that, at an Eckel management seminar last year. Weekly get- the difference between a five and a six on togethers at Charley's have become a comfortable habit cooperation isn't that relevant, because for the group and provide an opportunity to relax, ex- frankly, if a five makes him mad and he's change the latest gossip heard around the plant, and happy with a six . . . the job. give and receive advice about problems encountered on Max: Then you give him the six. Accuracy is This week's topic of discussion: performance ap- important, but I'll admit it-accuracy praisal, specifically the company's annual review pro- isn't my primary objective when I evalu- cess, which the plant's management conducted in the ate my workers. My objective is to moti- last week. Each of the four managers completed evalu- vate and reward them so they'll perform ation forms (graphic rating scales) on all of his or her better. I use the review process to do subordinates and met with each subordinate to discuss what's best for my people and my depart- the appraisal. ment. If that means fine-tuning the evalu- ations to do that, I will. Tom: This was the first time I've appraised my Tom: What's an example of fine-tuning? people, and I dreaded it. For me, it's Max: been the worst week of the year. Evalu- Jim, do you remember three years ago ating is difficult; it's highly subjective when the company lowered the ceiling on and inexact. Your emotions creep into merit raises? The top merit increase that the process. I got angry at one of my as- any employee could get was 4 percent. sembly workers last week, and I still felt I boosted the ratings of my folks to get the the anger when I was filling out the eval- best merit increases for them. The year uation forms. Don't tell me that my frus- before that, the ceiling was 8 percent. The tration with the guy didn't bias my best they could get was less than what most appraisal. I think it did. And I think the of them received the year before. I felt they technique is flawed. Tell me-what's the deserved the 4 percent, so I gave the marks difference between a five and a six on "cooperation"? Lynne: that got them what I felt they deserved. I've inflated ratings to encourage some- one who is having personal problems butis normally a good employee. A couple of Chapter 7 Evaluation and Rewards Influence Behavior 189 years ago, one of my better people was going through a painful divorce, and it Max: But it does happen. You can lower a was showing in her work. I don't think guy's ratings to shock him, to jolt him it's fair to kick someone when they're into performing better. Sometimes, you down, even if their work is poor. I felt a can work with someone, coach him, try good rating would speed her recovery. to help him improve, and it just doesn't Tom : Or make her complacent. work. A basement-level rating can tell Lynne: No, I don't think so. I felt she realized her him you mean business. You can say that isn't fair, and for the time being, it work was suffering. I wanted to give her isn't. But what if you feel that if the guy encouragement; it was my way of telling doesn't shape up, he faces being fired in her she had some support and that she a year or two, and putting him in the wasn't in danger of losing her job. cellar, ratings-wise, will solve his prob- Jim: There's another situation where I think lem? It's fair in the long run if the effect fine-tuning is merited-when someone's is that he improves his work and keeps work has been mediocre or even poor for his job. most of the year, but it improves substan- Jim: Sometimes, you get someone who's a real tially in the last two, three months or so. If rebel, who always questions you, some- I think the guy is really trying and is doing times even oversteps his bounds. I think much better, I'd give him a rating that's deflating his evaluation is merited just to higher than his work over the whole year remind him who's the boss. deserves. It encourages him to keep Lynne: I'd consider lowering someone's true rat- improving. If I give him a mediocre rating, ing if they've had a long record of rather what does that tell him? questionable performance, and I think the Tom: What if he's really working hard, but not best alternative for the person is to con- doing so great? sider another job with another company. A low appraisal sends him a message to Jim: If I think he has what it takes, I'd boost consider quitting and start looking for an- the rating to motivate him to keep trying other job. until he gets there. Max: What if you believe the situation is hope- Max: I know of one or two managers who've in- less, and you've made up your mind that flated ratings to get rid of a pain in the you're going to fire the guy as soon as neck, some young guy who's transferred in you've found a suitable replacement? The and thinks he'll be there a short time. He's courts have chipped away at manage- not good, but thinks he is and creates all ment's right to fire. Today, when you fire sorts of problems. Or his performance is someone, you'd better have a strong case. OK, but he just doesn't fit in with the rest I think once a manager decides to fire, of the department. A year or two of good appraisals become very negative. Any- ratings is a sure trick for getting rid of him. thing good that you say about the subor- dinate can be used later against you. Tom: Yes, but you're passing the problem on to Deflating the ratings protects you from someone else. being sued and sometimes speeds up the Max: True, but it's no longer my problem. termination process. Tom: All the examples you've talked about Tom: I understand your points, but I still involve inflating evaluations. What believe that accuracy is the top priority about deflating them, giving someone in performance appraisal. Let me play dev- less than you really think he deserves? il's advocate for a minute. First, Jim, you Is that justified? complained about our memory limitations introducing a bias into appraisal. Doesn't Lynne: I'd hesitate to do that, because it can introducing politics into the process further create problems. It can backfire.190 Part Two Understanding and Managing Individual Behavior Max: Because most of good managing is psy distort the truth by introducing yet another chology . Understanding people , their bias? Even more n more important, most would strengths and shortcomings. Knowing agree that one key to motivating people is how to motivate , reward , and act to do providing true feedback -the facts about what's in their and your department's bey how they're doing so they know where they stand . Then you talk with them about interest. And sometimes, total accuracy is not the best path. Sometimes, it's not in how to improve their performance . When anybody's best interest . stort an evaluation-however slightly-are you providing this kind of Jim: All this discussion raises a question. feedback? What's the difference between fine-tuning Max: I think you're overstating the degree of and significant distortion? Where do you draw the line? fine-tuning. Tom: Distortion, you mean. Lynne: That's about as easy a question as what's Max: No, fine-tuning. I'm not talking about the difference between a five and a six, On the form, I mean. giving a guy a seven when he deserves a two, or vice versa. It's not that extreme. I'm talking about making slight changes Questions in the ratings when you think that the 1. Based on your view of the objectives of perfor change can make a big difference mance evaluation, evaluate the perspectiv in terms of achieving what you think performance appraisal presented by the managers is best for the person and for your department. 2. In your opinion, at what point does "fine-tuning" evaluations become unacceptable distortion? Tom: But when you fine-tune, you're manipu- lating your people. Why not give them 3. Assume you are the vice president of human resources the most accurate evaluation and let the at Eckel Industries and that you are aware that fine chips fall where they may? Give them the tuning evaluations is a prevalent practice among Eckel facts and let them decide. managers. If you disagree with this perspective, what steps would you take to reduce the practice