sealPurdue News

February 2001

Employee performance evaluations:
How to do them right

WEST LAFAYETTE, Ind. -- With the beginning of the new year, 'tis the season for companies and organizations to consider employee evaluation.

Employee evaluation should start early -- when management, using a focused selection process, chooses the right person for the job, according to a Purdue University professor who studies employer-employee relations.

"In a more perfect world, all employees would begin their orientation by being shown around -- not just where the break room is but also where the real culture and history of the business or organization lives," says Daniel O. Lybrook, associate professor of organizational leadership and supervision. "The new hire needs to know not just what the company espouses but also the truth about what it really values. This requires organizational self-awareness and reflection.

"A good evaluation process is knitted into everything -- job expectations, career path, compensation, advancement -- in a healthy organization. It is important to the employee to understand what he or she is to give and to get."

Talk to most managers, and they will say that evaluations divert them from the real work of the company -- producing and making money, according to Lybrook. Talk to most employees, and they will say management doesn't evaluate or does a poor job of it.

So why don't more businesses use the employee evaluation process more effectively? Lybrook says that on a basic human level people don't like to be evaluated themselves, so they tend not to like evaluating others.

"Many managers view the process itself as threatening and leading to conflict on interpersonal and organizational levels," Lybrook says. "One way to reduce potential conflict is to avoid it. This leads to the once-a-year 'You did a good job. See you next year,' syndrome."

Lybrook also says short-term demands on managers to produce keep employee performance reviews from being a more meaningful long-term evaluative and developmental tool. "Evaluations tend to be an unexamined part of the corporate culture," Lybrook says. "They aren't seen as contributing to the company's bottom line."

Lybrook points to some pitfalls leading to ineffective evaluations:

-- Routine evaluations are often not tied to promotion or advancement. Because of this, neither management nor employees tend to take them seriously.

-- If employee evaluations are tied to upward mobility in the organization, they can create competition among employees. This also can lead to a centralizing tendency in which everyone gets a three or four on a five-point scale.

-- The recency effect, in which employees are judged on what they did last week instead of last year or last quarter.

-- The Lake Woebegone effect, in which all the employees are rated above average.

How can organizations evaluate employees effectively?

-- "Employers and employees need to be clear going into the evaluation process what they want the outcomes to be," Lybrook says. From the management point of view, what a good evaluation process accomplishes is that the employee clearly understands the organization's goals and how to orient his or her work toward accomplishing the goals.

-- From the employee's point of view, evaluations should encourage organizational involvement and present opportunities for career and personal growth through contributing to the achievement of organizational goals.

-- Lybrook counsels management to take a measured, three-fold, quantitative approach to evaluation -- what the employee is doing, how the organization can do it better and what the rewards will be for achieving these goals.

-- Management needs to understand that there is a direct line from mutually agreed upon, long-term organizational goals to success and profits, according to Lybrook. Employees will come to understand that organizational success translates into professional advancement.

Are there model businesses and organizations doing evaluation well? Recently, a Wall Street financial analyst worked undercover at and reiterated his buy rating on the company based on "the high energy and morale among warehouse management and workers alike." Lybrook says employee morale is a good measure of how healthy a relationship exists between employer and employee.

Lybrook cites Cisco Systems as having demonstrated the ability to assimilate smoothly into its corporate culture the employees who have joined the company in the many mergers and acquisitions Cisco has completed.

If a Cisco can integrate employees from a different organizational culture into its own, it should, in theory, be easier to orient a new employee to the company's goals, Lybrook says. That is, if there is an effective continual evaluation process operating.

Source: Daniel O. Lybrook, office (765) 494-7676,

Writer: J. Michael Lillich, (765) 494-2077,

Purdue News Service: (765) 494-2096;

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