Companies rely on the data provided by performance evaluations for a myriad of business decisions. Succession planning, compensation decisions, recruiting and retention strategies, development initiatives, and engagement plans are just a few decisions and processes whose execution and success depends on accurate and fair performance appraisal data.

When so much rests on the validity of this data, it seems clear that eliminating bias and error in performance appraisals is a critical responsibility for supervisors, managers and human resources staff.

What type of biases should leaders be aware of? Tyler Lacoma, an author for eHow, explains:

Horns and Halos Effect

The horns and halos effect is a common phenomenon noted in many business situations. Essentially, it refers to the habit that managers have of assuming that a particular employee is naturally good or bad at his job. This perspective is usually based in personality clashes and other factors that do not actually indicate job performance. Once the manager has decided on a certain viewpoint of an employee, that manager naturally looks for information to back up that viewpoint, rather than letting data on the employee form perspectives. This influences performance appraisals and other types of reviews.

Purposeful Bias – In rarer cases, manager bias in performance reviews is not a natural “filling in” of previous expectations but is instead purposeful sabotage. This occurs when a manager feels threatened by an employee who shows talent, defiance of business orders or ambition to reach a higher level in the business. To protect their own positions or keep negative opinions from reaching higher levels of the hierarchy, these managers give employees poor appraisal scores.

Appraisal Bias– In many instances, the appraisals themselves are biased toward a particular type of position. Many companies use only one type of appraisal form, but one form rarely applies well to every type of employee. For instance, a form that emphasizes creativity and communication allows an employee in marketing to score very well but an employee in production to score poorly, based simply on the requirements of the different positions.

Self Bias – Employees can also suffer from a type of self-fulfilling prophecy. In general, if performance appraisals show that an employee is performing very well, that employee will continue to perform well and could even perform better. If the review shows poor performance, the employee will continue to perform poorly. Like the managers themselves, employees tend naturally to change to fit the perception that the performance review creates.

So how does one avoid these types of biases?

Year-round Journaling and feedback: This seems simple enough – if managers provide timely feedback, then the accuracy of that feedback is going to be much better than if they wait until an annual review. The Halo effect is very common and it is clear why. If managers sit down at the end of the year and attempt to recollect the caliber of an employee’s performance over that span of time, it is no wonder why they would inadvertently refer to past performance results. Having a performance management system that allows the attachment of files and notes is a great way for employees to ensure that their actual accomplishments are being considered when managers complete their appraisal.

360° Reviews: Sometimes the best way to get an accurate look at an employee’s performance is to ask several parties for their input and then use the results to gauge overall performance. 360° multi-rater reviews are a great way to eliminate bias as it ‘averages out’ if you will, the ratings and reviews of several parties.

Benchmarking: Many organizations are finding it useful to have managers and supervisors meet to discuss how and why they rate performance the way they do. This ensures rating consistency across departments.

Adjusted rating scales: In February, we posted a blog about  improving rating scales. Click here to view. Overall, if rating scales are vague and rely on manager judgements instead of observable milestones, then chances of a biased rating are increased. For instance, managers are more likely to be biased if they are using a traditional ‘Exceeds Expectations, Meets Expectations etc…’ rating scale as opposed to a ‘Goal Completed, Goal Started’ rating scale.

Custom forms: The appraisal bias is a serious one and is often unavoidable by managers as they might not have any control over appraisal form templates. Companies using outdated or paper-based appraisal systems simply don’t have the time to create and maintain separate forms that accurately rate different departments, roles, or levels.  Performance management technology does give companies the chance to eliminate this bias. Choosing automated, online performance management software that allows for custom appraisal templates to be built, maintained, and updated by the organization is a quick and easy way to avoid appraisal bias. CRG emPerform does just that by providing flexible software that allows for an unlimited number of forms, workflows, and approver levels.

Monitor: Even if you educate managers and supervisors on how to avoid bias, how can you be sure it isn’t happening? Again, automated performance management systems, such as emPerform, can give you up-to-the minute status reports such as ratings by manager. Any anomalies will stand out like a sore thumb and you can catch up with that manager about his or her rating styles. Ratings by Manager is just one of almost a hundred canned reports available in emPerform (not to mention the additional ad-hoc reporting functionality). Overall – if you can see it, you can address it.

So don’t let bias backfire and muddy up your organization’s performance data. Not only is it unfair to employees, but it will result in business decisions being based on inaccurate results.

If you would like to learn more about how emPerform’s award-winning software is helping companies create job-specific reviews with year-round notes and 360° feedback to eliminate bias, click here to register for an upcoming live demo.