Performance appraisal is a tool that the management uses to evaluate the performance of employees against the set performance standards such as output, competence, job initiative, and accomplishments (Bogaert, n.d.). Used effectively, performance appraisal can provide the management with important information to make decisions such as salary increment, promotions, or take disciplinary actions against an employee. Properly conducted performance appraisals also provide the organization with a legal defense in case an employee sues the organization over any grievance they may have against a negative performance appraisal.
An effective performance appraisal is one that is consistent, valid, factual, and job related (Bogaert, n.d.). However, in some cases performance appraisals fail to meet these criteria leading to ethical and legal dilemmas. Rater bias can divert their focus from the professional elements of the evaluation and skew the results (Ahmad & Majid, 2016). Some of the common rater biases include:
Halo and horn effect – this bias occurs when the rater relies on one aspect of an individual performance to rate other aspects of the individual performance. For instance, in a halo effect the rater may rate an employee who is punctual to work but unproductive as both punctual and productive (Ahmad & Majid, 2016).
Centrality effect – this bias occurs when the rater rates everyone close to the average thus denying high performers a high rating, while awarding low performers better ratings (Ahmad & Majid, 2016).
Leniency or severity effect – this bias occurs when the rater is either too lenient and awards high ratings to employees or too strict and awards low ratings to the employees (Ahmad & Majid, 2016).
Hayness (1978) as cited by Ahmad and Majid (2016) proposes the following fours ways of reducing rater bias in the performance appraisal: a. introducing second level review, b. group appraisals, c. use of field review experts and, d. multiple appraisals.
Performance appraisals can open up the organization to lawsuits especially from an employee who receives negative performance appraisal. Some of the common battlefronts arising from performance appraisal include the following:
Age discrimination claims – an employee aged at least 40 years can institute a claim against age discrimination contrary to Age Discrimination in Employment Act (ADEA) by proving that a. they were performing the job satisfactorily b. they belong to a protected class c. was replaced by a much younger person of similar or lower credentials (Bogaert, n.d.). Guz v. Bechtel National Inc. and Pascoe v. mentor Graphics Corporation are some of the cases on age bias claim.
Adverse impact claims – Title VII of the Civil Rights Act of 1964 that prohibits employee discrimination based on gender, race, religion, sex, color or nationality (Bogaert, n.d.). An employee protected under Title VII can instate a claim against the company if they can prove that an organization selection rate for the protected class is less than 80% of the non-protected class (Bogaert, n.d.). Griggs v. Duke Power Co. (1971) and Albemarle Paper Co. v. Moody (1974) are some of the cases in adverse impact claim.
A formally documented performance appraisal conducted by well-trained raters will substantially reduce the potential ethical and legal dilemmas in performance appraisal. Raters must conduct the performance appraisals professionally and ensure that the appraisal is consistent, objective, job related and well documented. Proper documentations provide employers with a paper trail that they can use as a defense against employee lawsuits.
References
Ahmad, S. & Majid, J. (2016). Performance Appraisal System - An Instrument for Training for
Trainers. International Journal Of Trend In Research And Development, 3(2), 646-649.
Bogaert, D. New Legal Battlegrounds for Performance Evaluations by (PHD). Loyola Mary
Mount University.
