Management 14th Edition by Leslie Rue,Lloyd Byars ,Nabil Ibrahim

Exercise 7

Developing a Performance Appraisal System
A large public utility has been having difficulty with its performance evaluation program. The organization has an evaluation program in which all operating employees and clerical employees are evaluated semiannually by their supervisors. The form they have been using is given in Exhibit 1. It has been in use for 10 years. The form is scored as follows: excellent = 5; above average = 4; average = 3; below average = 2; and poor = 1. The scores for each facet are entered in the right-hand column and are totaled for an overall evaluation score.
In the procedure used, each supervisor rates each employee on July 30 and January 30. The supervisor discusses the rating with the employee and then sends the rating to the personnel department. Each rating is placed in the employee's personnel file. If promotions come up, the cumulative ratings are considered at that time. The ratings are also supposed to be used as a check when raises are given.
EXHIBIT 1 Performance Evaluation Form
Performance Evaluation
Supervisors: When you are asked to do so by the personnel department, please complete this form on each of your employees. The supervisor who is responsible for 75 percent or more of an employee's work should complete this form on him or her. Please evaluate each facet of the employee separately. Circle the rating for each facet.
Supervisor's signature __________________________
Employee name _______________________________
Employee number _____________________________
The system was designed by Joanna Kyle, the personnel manager, who retired two years ago. Her replacement was Eugene Meyer. Meyer graduated 15 years ago with a degree in commerce from the University of Texas. Since then he's had a variety of experiences, mostly in utilities. For about five of these years, he did personnel work.
Eugene has been reviewing the evaluation system. Employees have a mixture of indifferent and negative feelings about it. An informal survey has shown that about 60 percent of the supervisors fill out the forms, give about three minutes to each form, and send them to personnel without discussing them with the employees. Another 30 percent do a little better. They spend more time completing the forms but communicate about them only briefly and superficially with their employees. Only about 10 percent of the supervisors seriously try to do what was intended.
Eugene also found that the forms were rarely used for promotion or pay-raise decisions. Because of this, most supervisors may have thought the evaluation program was a useless ritual. In his previous employment, Eugene had seen performance evaluation as a much more useful experience. It included giving positive feedback to employees, improving future employee performance, developing employee capabilities, and providing data for promotion and compensation.
Eugene has had little experience with design of performance evaluation systems. He believes he should seek advice on the topic.
Write a report summarizing your evaluation of the strengths and weaknesses of the present appraisal system. Recommend some specific improvements or data-gathering exercises to develop a better system for Eugene Meyer.