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Corporate Culture's Influence on Employee Evaluations

New research finds a workplace's culture can play an outsized role in how comfortable supervisors and co-workers are with providing accurate feedback -- both positive and negative. Experts offer tips for HR leaders on how best to create the right type of culture to ensure accurate and insightful reviews.

Tuesday, May 26, 2015
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Being able to generate real value from employee-performance reviews can have more to do with an organization's overall culture than with just the individual personalities of the supervisors or co-workers who are doing the ratings.

That's according to Jisoo Ock and Fred Oswald, professors of psychology at Rice University, in a paper titled "Managing the Interpersonal Aspect of Performance Management," which appeared in the latest issue of Industrial and Organizational Psychology, the social environment in a workplace can either encourage or inhibit constructive feedback during employee performance evaluations.

Certainly, individual concerns among supervisors and co-workers can play a role. "Interpersonal and political factors play a significant role in how employee performance reviews are conducted," says Ock. "Both anecdotal and empirical evidence suggest that raters are seriously concerned about these factors in conducting reviews, and these concerns have meaningful influence on the ratings that they provide."

For example, according to Ock and Oswald, supervisors are legitimately concerned about demotivating or disengaging employees by providing appraisal ratings that may be accurate, but are at the low end of the rating scale. As such, having ratings clustered at the high end of the rating scale tends to be more common.

According to Kerry Chou, a senior practice leader at Scottsdale, Ariz.-based WorldatWork, many supervisors have a desire to be liked, and a poor review can strain a relationship. "In addition, since most organizations tie pay increases, promotions and even continued employment in the event of a low rating to performance evaluations, a low rating can have a impact." he says.

"For these reasons, it is usually the case that, if supervisors and managers are not provided with any rules or guidance on how to rate their employees, overall ratings will be skewed toward the high side of the rating spectrum."

And, when co-workers rate each other, the social context of the appraisals can make it difficult and discomforting to provide negative ratings or feedback, since these individuals have to work with each other on a daily basis.

Most, but not all, employees feel somewhat reluctant to provide negative feedback about another employee in a formal process, according to Chou.

"The employee may believe they will be perceived as not being a good team player," he says. "Also, the employee knows that other employees are providing feedback about them, too." Third, the employee may figure that others will provide negative feedback about the employee if that employee really is that bad."

Beyond these individual concerns, though, the workplace culture itself can play a role in how comfortable supervisors and co-workers are in providing accurate feedback, whether it is positive or negative, and HR can play a role in creating the right type of culture.

"Certainly, no organization is going to be without politics, but the more that an organization has a non-threatening social environment that facilitates ongoing communication and feedback among employees, the more productive and beneficial the performance appraisal process will be," says Ock.

Ock offers four ways organizations can improve their own social environments and thereby increase the accuracy of future performance reviews.

Offer Incentives. Generally speaking, providing some sort of incentive to the raters for conducting effective performance reviews could help "because raters are simply not motivated to take time out of their busy schedules to engage in performance reviews," says Ock.

Provide Training. One of the best things an organization can do to improve a performance-review process is to provide training to managers and supervisors on what behaviors and work results constitute below average, average and above average performance.

"Many organizations have instituted a calibration process, where managers from different parts of the organization get together and actively discuss how each of their respective employee groups have been rated, including who were the high and low performers, and why they were rated as such," he says, adding that this results in a more consistent evaluation process and minimizes the chances that certain managers will be more lenient in their allocation of ratings than others.

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"It is easier to keep interpersonal factors and politics out if managers are trained to coach and help an associate improve on their weaknesses, rather than just delivering negative feedback," says Ravin Jesuthasan, global leader of talent management for Towers Watson in New York.

Introduce continuous feedback. Continuous feedback that occurs on a day-to-day basis is much more likely to create real-time alterations in employees' job performance behaviors than are infrequent or annual formal feedbacks sessions. "Informal feedback occurs naturally, which is why there needs to be an environment in which members feel comfortable providing and receiving frequent informal feedback," says Ock.

Create an "improving" culture. "A company's culture greatly affects how performance reviews are given and received," says Doug Terry, a managing principal with Korn Ferry. If the organization has more of a "proving" environment ("I have to prove my self-worth each day"), the performance-review process will likely be viewed as a negative experience, according to Terry. "People by nature want to avoid conflict."

A "proving" culture forces reviewers to focus more on what the individual has done wrong, rather than what the individual has done to add value to the company. The end result is that supervisors devote their energy to "fixing" the people they consider "broken," while ignoring or not rewarding the good behaviors of others.

Terry instead recommends the creation of an "improving" culture, one which emphasizes encouraging open feedback and the development of others. In this environment, feedback is valued and viewed as an opportunity to leverage strengths and open doors to opportunities for growth. "The performance-review process is seen as a positive way to focus on the individual's development," he says. The purpose of the evaluation changes from "I caught you doing something wrong" to "How do we leverage what you do well and change other behaviors so that you become a more productive person, which in turn moves the organization forward?"

"By HR being the 'keeper' of the culture," says Terry, "they assure that, when the performance evaluation happens, both colleagues and supervisors feel inspired to embrace the process in a positive way."

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