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The appraisal and management of performance is an important concern in organizations. Although interest in and the use of performance appraisals has increased during the last 30 years, the practice of formally evaluating employees has existed for centuries. Despite its widespread use, the performance appraisal process continues to be plagued by both technical and nontechnical problems that reduce its effectiveness. Rating errors and perceptual biases in performance ratings are two such problems.

Performance ratings—quantifiable yet subjective assessments of an individual's performance made by supervisors, peers, or others who are familiar with the employee's work behavior—are frequently used to assess work performance. However, performance ratings do not always accurately represent an employee's true level of performance. Differences between an employee's true, veridical, objective level of performance and the performance ratings that he or she receives, which are believed to be caused by perceptual biases, are referred to as rating errors. Although such differences are sometimes the result of intentional manipulation of the performance appraisal system because of political or interpersonal motivations, the term rating errors generally refers to the unconscious and unintentional biases that influence the rating task. Biases and rating errors can be classified into several categories; the following sections describe these types of biases and errors, their consequences, and possible remedies.

Types of Biases and Rating Errors

Distributional Errors

It is not uncommon to find that 80% to 90% of all employees rated by a single rater receive an aboveaverage rating. This often indicates a distributional error, wherein the rater misrepresents the distribution of performance across persons they are evaluating. In other words, these errors occur when the distribution of assigned ratings differs from the (assumed) distribution of actual job performance of the group of employees being rated. Such misrepresentations can occur both in terms of the mean level and the variability of ratings provided. The three most common types of distributional errors are leniency/severity, range restriction, and central tendency errors.

Leniency/severity errors occur when the mean of the ratings of all employees rated by a particular supervisor differs substantially from the midpoint of the rating scale. For example, if the mean ratings for all employees rated by a supervisor are very low, then the rater is thought to be overly severe; when the mean ratings are very high, he or she is thought to be overly lenient. This error can be caused by (a) raters having inaccurate or unreasonable frames of reference or expectations for performance; (b) the rater's desire to be liked, hence his or her unwillingness to give negative feedback; or even (c) expectations that other raters will also inflate their ratings. Recent research has shown that rating severity/leniency is a relatively stable characteristic of the rater and can be related to his or her personality. Specifically, individuals who score higher on agreeableness tend to provide more elevated ratings, whereas individuals who score higher on conscientiousness tend to provide lower ratings.

It is also possible for a rater to fail to make adequate distinctions among multiple ratees when rating their performance, an error referred to as range restriction. For example, consider a group of employees who vary widely in their levels of performance on one dimension, quality of work. If all of the supervisor's ratings on this dimension are clustered within a small range of scores, the variance of the supervisor's ratings will be lower than the variance of the actual performance levels of the ratees, and hence, range restriction is said to occur. Raters who commit this error fail to distinguish among ratees on individual performance dimensions, either because of a lack of opportunity to observe the employees or a conscious desire to avoid differentiating among ratees.

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