Is your manager biased ?Biases in performance appraisal

While evaluating employees’ performances, managers may commit mistakes. Biases contaminate the sanctity of the performance appraisal process. Bias is defined as inclination or prejudice for or against one person or group, especially in a way considered to be unfair.Bias here refers to inaccurate distortion of a measurement. Some of the common biases are :-

1. Halo Effect

One of the most common biases affecting performance appraisals and reviews.Our overall impression of a person influences how we feel and think about their character.

Example: employees’ enthusiasm or positive attitude may coverup their lack of knowledge or skill, causing co-workers to rate them more highly than their actual performance justifies.

The halo effect can also have an impact on income. A study published in the Journal of Economic Psychology found that, on average, attractive food servers earned more in tips than their unattractive counterparts.

Physical attractiveness has a positive effect not only on a person’s self-confidence but also on their income and financial well-being.

2. Horn Effect

The individual’s performance is appraised on the basis of a negative quality or feature perceived.

Example : A person not formally dressed up in the office may be perceived casual at work too. An employee who questions processes and asks questions may be regarded as a person with negative attitude.

If the halo affects makes you think of coworkers as perfect angels, the horns effect makes you think of them as devils.

3. Central Tendency bias

Manager rates most of the employees as average performers. Managers take middle path, to rate people as neither high nor low . Managers also do it to avoid any direct confrontation with any employee.

Example : Whenever you have a five or three point performance scale, managers have a tendency to rate the majority of their employees in the middle. Managers might not want to lower their low-performing employee’s confidence. Since, it doesn’t alarm that they need to improve, this further worsens the situation

4. Recency Bias

The rating is influenced by the most recent behaviour forgetting about the entire picture . It can completely ignore the general behaviour demonstrated by the employee during the entire appraisal period.

Manager’s ability to recall employee’s performance can also have a major impact on their results. Remembering how was employee’s performance throughout the year can be a tedious task. The behaviour demonstrated the first and second quarter could be well forgotten.

Example : A low-performing employee suddenly starts performing better just before the review, then despite their previous low performance, they are going to get a good review.

5. Spillover bias

Spillover bias occurs when managers continue to rate an employee based on past performance, failing to take into account recent improvements.

Example: If an employee performs well throughout the year, but before the review, his/her performance drops, then despite his/her previous good performance, he/she is going to get a bad review. This is especially demotivating for employee.

Forgetfulness on the part of the rater can actually lead an employee to be over or under valued for their work..

6. Leniency Bias

The manager tends to be more lenient than other counterparts when rating employees or is more lenient with one employee as compared to another.This results in inflated ratings, and certainly inaccurate ones, since areas for performance improvement tend to be ignored or swept under the rug in performance appraisals.

7. Severity Bias

Manager rates employees lower than may be deserved there by being strict and giving low performance ratings. Manager goes “too hard” causing all scores to be very low.

8. The Similar-to-Me Effect

We fall for similarly-minded and even similar-looking individuals. People like people who are like them. Male rates male higher than a female and vice versa. Vintage employee will rate vintage employee higher than a new employee. The older employee will rate older employee higher than his/her contemporary young employee.

Similarity in age, gender, race, city, qualification ,experience ,work habits, attitudes, or similar personalities also affect ratings. The similar-to-me is evident when rating supervisors, rating subordinates, and rating peers.

Example: Think about it. Do you bond well with a peer over your love of cricket ? Do you have a great bonding with your manager because both of you grew up in Kolkata? Once we find common ground with someone else, we tend to hold them in a more positive light.

Studies reveal that diverse teams are better in terms of performance, innovation, and financial strengths than homogenous teams. The similar-to-me bias perpetuates the cycle of hiring and promoting the same types of people.

9. Contrast bias

Though Comparisons are inevitable while appraising , however the contrast effect overuses comparisons . A contrast biased manager evaluates a person by comparing them to a particular person or to previous person who was in the same position. The effect of this bias can be positive or negative depending on the person who previously held the position.

Example. Rohit is a sales agent with an extra-ordinary sales person .Bharat is also a very good sales person. However, Bharat is rated low because the manager could not help comparing him to Rohit.

10. Opportunity bias

When manager ignores the notion that opportunity may either decrease or increase performance. Here, opportunity means factors beyond the control of the employee.

Example : A sales person got the highest rating because of one big ticket size case, which happened to him by sheer luck.

A proper performance management system, creating better prompts, running consistency checks and boosting everyday performance, having weekly reviews and monthly meetings can help contain these biases within limits.

If you can’t measure it, you can’t manage it.

Peter Drucker
Join the discussion

Further reading