Performance evaluations help managers make human resource decisions about employees. Evaluations identify training and development needs. They also provide feedback to employees on how the organization views their performance and are often the basis for reward allocations, including merit pay increases. The criteria that management chooses to evaluate has a major influence on what employees do. The three most popular sets of criteria are individual task outcomes, behaviors, and traits.

If ends count rather than means, management should evaluate on outcomes such as quantity produced, overall sales volume, or number of new accounts. Having a good attitude, being dependable, or staying busy, can be desirable in the workplace, but it’s important to remember that these traits may not be highly correlated with positive task outcomes. By tradition, the task of evaluating employee performance has fallen to managers because they are held responsible for their outcomes. But others may do the job better, particularly with the help of HR departments.

Peers and even subordinates are being asked to take part in the process, and employees are participating in their own evaluations. In most situations, it is highly advisable to use multiple sources of ratings. By averaging across raters, we can obtain a more reliable, unbiased, and accurate performance evaluation. The performance evaluation process has potential for bias. Evaluators can unconsciously inflate evaluations, understate performance, or allow the assessment of one characteristic to unduly influence the assessment of others.

Training can produce more accurate raters. Asking for more detail encourages raters to remember more about the employee’s performance rather than just acting on their feelings about the employee at the moment. Few activities are more unpleasant for many managers than providing performance feedback to employees. In fact, unless pressured by organizational policies and controls, managers are likely to ignore this responsibility. Many managers fear confrontation when presenting negative feedback. In addition, employees tend to have an inflated assessment of their own performance.