Compensation

2014 Performance Management Survey Results—What Are Supervisors’ Most Common PA Errors?

Supervisors’ Role in Performance Appraisals

Management’s top responsibilities when it comes to performance evaluations are writing evaluations of their direct reports for 85.6% of survey participants, followed closely by setting goals for/with employees for 78.3%, conducting review meetings for 75.3%, and coaching employees for improved performance for 75.3%. Finishing out the field is reviewing evaluations prepared by their direct reports for their own employees (64.6%), deciding employee salary raises (50.8%), and providing input to other supervisors on their direct reports (40.5%).

The errors performance evaluators make include: not completing the evaluation (13.8%), halo effect (18.6%), and horn effect (12.3%). The three most common errors are:

  • Not following up with the employee to check on progress, 40.1%
  • Not wanting to hurt feelings or overrating so it places all employees in the middle of the scale, 40%
  • Focusing on the most recent performance rather than on the entire review period, 38.9%
Supervisor’s Error Percent reporting that error
Rater does not follow up with employee after evaluation to check on progress 40.1%
Central tendency (Rater doesn’t want to hurt feelings or overrates so places all employees in the middle of the scale.) 40.0%
Recent effect (Rater focuses on most recent rather than entire review period.) 38.9%
Rater is late completing evaluations 38.3%
Leniency effect (Rater overrates to avoid making enemies.) 37.6%
Rater does not include details on why employee was rated a certain way 37.4%
Rater does not include a plan for improvement 25.5%
Halo effect (Rater evaluates overall performance based on a single area in which the employee excels.) 18.6%
Perceptual bias (Raters base rating on their own perception of what is right or wrong or acceptable.) 16.4%
Rater does not complete the evaluations 13.8%
Primacy effect (Rater focuses on a good or bad incident from when the employee first came under his/her supervision.) 13.8%
Just like me tendency (Overrates employees who share his/her own interests/beliefs.) 12.6%
Horn effect (Rater underrates overall performance based on a single negative impression of the employee.) 12.3%
Other 3.5%

 

 

Implementation of Performance Appraisals

When asked how they’ve successfully implemented performance appraisal programs, survey participants provided several helpful hints, including:

  • Publish a performance calendar at the onset of the year.
    • Personal follow-up with delinquent supervisors/managers.
    • Inform department directors of delinquent reviews.
    • Send CEO an overall status report on ratings, including who has not completed their reviews.
  • Offer assistance as needed; train individually as requested.
  • Tie to supervisor/manager job performance.
  • View the process as developmental, not punitive.
  • Make evaluation forms shorter.
  • Tie all bonus disbursement for team to completion.
  • Allow enough time to complete evaluations and support where needed.
  • Automate the process.

HR’s responsibility for the performance appraisal process varies but several functions were widely practiced, including:

  • Formal training for supervisors/evaluators, 50.8%;
  • Reviewing all evaluations, 54.5%;
  • Filing the paperwork, 56.9%; and
  • Informal coaching for supervisors/evaluators, 60.3%.

Additionally, for 40.7% of survey participants, HR screens performance evaluations for anything that might be illegal before supervisors/managers meet with employees.


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Merit Increases

Evaluations are tied to most salary increases for 47%, are completely separate for 21.9%, and are partially tied together for 31.1%. Those who separate evaluations from increases do so because:

  • A union agreement governs pay increases, 7.8%.
  • Evaluations are conducted more frequently than raises are issued, 9.9%.
  • Employee pay increases are on a different schedule than evaluations, 16.5%.
  • They fear supervisors will be tempted to give good yet false appraisals so employees receive a good raise, 18.1%.
  • Budget doesn’t allow for raises every time employees receive evaluations, 18.2%.
  • Appraisals are more valuable and constructive if raises aren’t tied to them, 19.5%.
  • It helps keep employees from having an entitlement mentality (evaluation = raise), 26.1%.
  • They want to focus attention on employee performance instead of on amount of raise, 32.7%.

Appraisals Under Pay Freezes

Even if salary increases are not an option due to pay freezes or some other reason, 84.6% of survey participants still conduct performance appraisals.

Performance Pay by Employee Type

 

Type of Pay Execu-tive Middle management Profes-sional Exempt staff Non-exempt staff
Bonus 49.8% 44.2% 37% 36.1% 27.5%
Merit plan 46.4% 55% 54.2% 56.1% 55.1%
Long-term incentive 18.9% 6% 3.9% 3.2% 2.1%
Commission 4.9% 3.7% 4.3% 4.1% 4.6%
Piece rate 1.9%
Other 6.4% 4.8% 4.7% 4.6% 6%
None 26.9% 28.4% 30.7% 30.1% 31.4%

 

Group Performance Pay by Employee Type

 

Type of Pay Executive Middle management Professional Exempt staff Non-exempt staff
Bonus 25.2% 22.5% 19.2% 19.4% 15%
Merit plan 16.7% 18.3% 18% 18% 17.7%
Long-term incentive 7.8% 3.1% 2.4% 1.6% 1.3%
Commis-sion 2.4% 2.1% 2.9% 1.6% 2%
Piece rate 1.6%
Other 2.2% 2% 2.1% 2% 2.5%
None 66.8% 65.8% 67.5% 67.9% 69.1%

Survey Participants

 

Demographic breakouts of the 1481 participants in the survey are below.

Number of Employees Percent of Respondents
Up to 250 employees 57.4%
251 to 1,000 employees 22.9%
1,001 to 10,000 employees 16.9%
More than 10,000 employees 2.8%

 

Of the participants responding to our survey, 39.4% have a workforce that is one-fifth or less exempt employees. Another 32.8% have a workforce that is more than one-fifth but less than one-half exempt, and 27.8% have a workforce with more than one-half exempt employees. Unions represent employees at 22.2% of our survey participant employers.

Privately owned organizations are represented by 47.8% of survey participants and nonprofits account for 18.7%. Public corporations make up 8.6% and governments are represented by 10.1%.

Industries include manufacturing (15.4%); health care and social assistance (13.7%); finance and insurance (9.8%); and professional, technical, and scientific services (8.1%). Educational services represent 6.9% of our survey participants and retail trade accounts for 2.3%.

Our 1,481 survey participants’ positions are:

Job Title Percent of Respondents
HR Coordinator 4.1%
HR Generalist 9.5%
HR Specialist 4.9%
HR Manager 26.5%
HR Director 24.3%
HR VP or above 9.2%

 

Thanks again to everyone who participated!

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