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Individual Comparisons of Performance

Managers can evaluate the performance of their employees in a number of ways. They can compare and rank order them, rate them against preset standards, or evaluate the results, or outcomes, of their performance. These methods vary in several important ways. First, some methods focus on measuring performance outcomes (e.g., quantity, speed, sales), whereas others focus on employee traits or behaviors. Traits refer to employees’ attributes, such as their knowledge, courtesy, or some attitudinal measure. In contrast, methods that focus on behaviors strive to capture the extent to which employees display the desired behaviors related to doing their jobs. The various methods also differ in terms of their usefulness for meeting the administrative or developmental purposes of a firm’s performance management system. Perhaps the simplest form of performance evaluation is to compare employees to one another to discern their relative standing along some performance dimension. In a simple ranking approach, managers rank order employees from best to worst along some performance dimension or by virtue of their overall performance. A variation of the ranking approach is the paired comparisons method, whereby each employee in a business unit is compared to every other employee in the unit. The rater then assigns a point value to the “better” individual in the pair being compared. After all individuals are compared to one another and their points added up, they are then ranked from the most points to the least. Another form of individual comparisons is the forced distribution approach, whereby managers are forced to distribute employees into one of several predetermined categories. Forced distribution systems prevent managers from rating all employees as outstanding, average, or poor. They must use the entire range of the performance scores. This forces managers to be more critical in terms of which employees truly are exceptional, average, or poor. Although comparative approaches are often helpful for administrative purposes, they are not as useful for developmental purposes. Rankings and distributions boil down to a single overarching rating for employees that often does not capture the specifics of why they are performing at certain level.