Six Factors That Distort Performance Appraisals
Multiple psychological factors can sway evaluators to rate employees a certain way.
Most companies use performance appraisals, also known as job evaluations, to determine whether employees are meeting expectations, and to get some clues about how the employee could improve for the benefit of the business. Even so, performance appraisals have a major flaw in that they are not completely objective. Six major factors cause distortions in performance appraisals. 1. Stereotyping * People usually can fall into at least one general category based on physical or behavioral traits, and performance evaluators sometimes let stereotypes associated with those categories sway their employee appraisals. For example, a boss might assume that because many Asians excel, an Asian worker who doesn't meet a performance objective simply isn't working hard enough, even if the worker tried his best.
Similarity
* Often, people tend to seek out and rate more positively those who are similar to themselves. This tendency to approve of similarity may cause evaluators to give better ratings to employees who exhibit the same interests, work methods, points of view or standards. A major problem with this cause of distortion is that it can stifle innovation in a company, as "different" people must struggle to rise in the ranks.
Leniency
* Leniency, sometimes referred to as inflation, is the tendency of evaluators to give employees higher marks than deserved across the board, usually because of the desire to avoid conflicts. The issue with this distortion cause is that a person's qualifications and successes are misrepresented, with sometimes undeserving individuals getting pay raises and other perks. Related to this concept is the tendency of evaluators to use "central tendency," scoring all employees at roughly the same level.
Halo and Devil Effects * The halo and devil effects refer to the first impression an evaluator has of an employee. If the first impression is good, the evaluator looks at the employee through a "halo" lens, viewing the employee's work as good overall, even if it is not. If the first impression is poor, the evaluator may score the employee lower than is deserved.
Attributional Bias * Attributional bias occurs when two or more employees have achieved the same level or goal. It assumes that even though the levels or goals are the same, the employees aren't necessarily deserving of the same rating based on various factors, or attributions. These attributions can be things like medical issues, stress, IQ or social skills.
Affective Reaction * -------------------------------------------------
Affective reaction is bias that happens in evaluations because of the relationship the evaluator has with the employee. Usually, affective reactions are based on what the evaluator has observed and done with the employee over time. An example of this would be if an employee was consistently late because she couldn't afford to fix her unreliable car, and the evaluator marked her as "satisfactory" in the "on time" on category because he felt sorry for her situation.

6 Important Factors that can Distort Performance Appraisal
Important factors that can distort performance appraisal are given below:
1. Leniency error

Each evaluator has his own value system which acts as a standard against which appraisals are made. Relative to the true performance an individual exhibits, some evaluators mark high and others low.

Performance appraisals
The former is referred to as positive leniency error and the latter as negative leniency error. When evaluators are positively lenient in their appraisal an individual’s performance is overstated while in the opposite case leniency error understates performance.

If all individuals in an organisation were appraised by the same person, there would be no problem. The difficulty arises when we have different raters with different leniency errors making judgments.

2. Halo error

Halo error or halo effect is a tendency to rate high or low on all factors due to the impression of a high or low rating on some specific factor. As an example, if an employee tends to be dependable, we might become biased towards him to the extent that we will rate him high on many desirable attributes.

3. Similarity error

When evaluators rate other people in the same way that the evaluators perceive themselves, they are making a similarity error. Due to this perception that evaluators have of themselves, they project those perceptions onto others.

For example, the evaluator who perceives himself as aggressive may evaluate others by looking for aggressiveness. Those who demonstrate this characteristic tend to benefit, while others are penalised.

4. Low appraiser motivation

If the evaluator knows that a poor appraisal could hurt the employee’s future, say, opportunities for promotion, the evaluator may be reluctant to give a realistic appraisal.

5. Central tendency

Raters who are prone to the central tendency error are those who continually rate all employees as average. For example, if a manager rates all subordinates as 2 on a scale of 1 to 4 then no differentiation among the subordinates exists. Failures to rate subordinates as 4, for those who deserve that rating, will only create problems if this information is used for pay increase.

6. Inappropriate substitutes for performance

In many jobs it is difficult to get consensus on what is a good job and it is still more difficult to get agreement on what criteria will determine performance. For a salesman the criterion may be the money value of sales in his territory but even this criterion is affected by factors beyond the salesman’s control, such as action of competitors.

As a result, the appraisal is frequently made by using substitutes for performance, such as criteria that closely approximate performance and act in its place. Many of these substitutes are well chosen and give a good approximation of actual performance.

However, the substitutes chosen are not always appropriate. Organisations use criteria such as enthusiasm, conscientiousness and a positive attitude as substitutes for performance.

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In some jobs one or more of the criteria listed above are part of performance. Enthusiasm does enhance the effectiveness of a teacher. But enthusiasm may not be relevant to effective performance for many accountants or watch repairers. So what may be an appropriate substitute for performance in one job may be totally inappropriate in another.
Figure desc * Leniency error * Each evaluator has his/her own value system. * Some evaluate high (positive leniency) and others, low (negative leniency). * Halo error: Evaluator lets an assessment of an individual on one trait influence evaluation on all traits. * Similarity error: Evaluator rates others in the same way that the evaluator perceives him or herself. * Low appraiser motivation: Evaluators may be unwilling to be accurate if important rewards for the employee depend on the results. * Central tendency: The unwillingness to use the extremes of a rating scale and to adequately distinguish among employees being rated. * Inflationary pressures: Pressures for equality and fear of retribution for low ratings leads to less differentiation among rated employees. *

distortions central tendancy similarity error halo error inappropriate substitutes leniency error inflationary pressures
Inappropriate substitutes for performance: Effort, enthusiasm, appearance, etc. are less relevant for some jobs than others. *