An Inside Look at a
PEER EVALUATION SYSTEM

Christian Management Report July/August 1998 edition, p. 13

by Laurent J. LaBrie and Mark McDermott

Other articles of interest:

Leaders are challenged to develop professionally, motivate their staff¹, deal effectively with personnel problems², and build coalescence in the workforce³. While faced with this challenge at the University of Michigan Medical Center, we discovered an instrument that goes a long way in accomplishing these goals. It replaces the more generalized approach to employee development with an individualized coaching strategy, one that can improve organizational effectiveness and provide positive career development for employees⁴. And best of all, it takes only a few minutes a week to support this highly accurate and professional development program.

Since most of us do not have the time to personally coach each person on our staff, we have found that a peer evaluation system can draw everyone into the process of professional development. And it can greatly benefit the organization by improving customer satisfaction and reducing personnel costs.

An Unmotivated Workforce Is Costly
When leadership is effective, subordinates achieve their goals and their job-related psychological needs are more likely to be met. Ineffective leadership, on the other hand, results in unachieved performance goals and superfluous personnel costs.

It's expensive to hire and train a new employee--perhaps equal to six months' salary. There are the tangibles such as administrative and hiring costs, the salary and benefits package, and the skills-training expenses, but there are also the intangibles such as loss of production during on-the-job training.⁵

Finding a way to reduce employee turnover can cut personnel costs significantly, and protecting ourselves from charges of wrongful discharge can be an even more significant savings--the average jury award paid to employees for wrongful discharge now exceeds $500,000.⁶

When value their people, show proper concern for their well-being and treat them as an important resource, they build a more loyal and productive workforce. People actually enjoy the hours they invest in their work. It also reduces interpersonal conflict and organizational frustration--which is often directly related to interpersonal conflict.⁷ We found that one effective way to demonstrate the value of each person and reduce interpersonal conflict is by requesting their input though peer evaluation.

Many Viewpoints Ensure a More Accurate Picture
If leaders want to accurately assess the causes of organizational frustration, whom should they listen to? How can he or she tell who's having a positive or negative effect on the spirit of the workplace? If a group is fractured, some workers will refuse to give input on a conflict. And if the wrong decision is made, the innocent person is frustrated while the aggressors are able to continue their negative influence. Peer evaluations can help managers avoid spending exorbitant amounts of time and energy investigating minor interpersonal altercations while maintaining group unity.

The Value of Peer Evaluations
1. It facilitates teamwork instead of the divisive pursuit of looking good for the supervisor.⁸
2. It empowers workers to have a positive impact on their environment.
3. It assures employees that their opinion is valued.
4. It gives confidence to the staff that personnel actions are characterized by justice and consensus.

Peer evaluations motivate employees through their God-given need for interpersonal relationships and sense of belonging (Genesis 2:18). Terminating an employee because you were unable to bring about the desired change is costly, but it may also damage your esteem with customers and donors. By allowing individuals to see themselves through the eyes of their peers, you provide a tool for motivating change and salvaging employees with potential.

We find that a worker's performance may be less typical when they know they are under the supervisor's observation. Peer evaluations provide a valuable tool in evaluating interpersonal relationship skills.

Annual evaluations are an asset to an organization when they are objective, thorough, specific, and data-driven.⁹ Fair and accurate evaluations require a disciplined approach with careful planning.

Establish a Paradigm
Our first step, we determined, was to establish worker-to-worker and worker-to-customer interaction paradigms for our workplace. Subordinates and managers, meeting together, determined these paradigms should include being an encourager and listening to new ideas (James 1:19), having an attitude of servanthood toward customers (Matthew 18:20), providing ready help to co-workers (John 13:14), treating people with respect (Romans 12:10), and promoting honest communication (I John 3:18, Ephesians 4:15, 4:25). We familiarized ourselves with these characteristics in designing the peer evaluation system.

Right Answers Require Right Questions

After some discussion, our team decided it was more appropriate to acquire performance data from a questionnaire than an interview process because it's easier to quantify and summarize data through computer-based statistical analysis. It also allowed for a greater amount of data to be collected and analyzed, and it is relatively inexpensive, less time-consuming and provides for greater objectivity.

At the same time, we recognized the need to appreciate and overcome the general disadvantages of a questionnaire. They are relatively impersonal. Important issues may be side-stepped because the questions are predetermined. Employees may misread items and thereby give inaccurate responses. The data may be over-interpreted. The number of completed and returned questionnaires may be too low.¹⁰

A team of subordinates and managers met together to hash out the survey questions and address the short-comings of a questionnaire. It was decided that close-ended questions would enable easier data tabulation and interpretation. Staff gave the questionnaire a final review to ensure that all the important factors were being considered and that the questionnaire was simple, direct, unbiased and sensitive to diversity issues. By evaluating several people on the same sheet, it enabled the interviewee to more accurately benchmark one person against another. Space was also provided for comments.

Get Feedback All Year
We found that performance evaluations need to be given at least once a year to establish continuity. In fact, even more frequent evaluations can improve an employee's performance throughout the year. We decided to take weekly samples with randomly selected employees from our workforce so we could ensure more equal weighting of data throughout the year and identify trends more quickly.

Communicating our expectations for the peer review program to our staff in advance of program implementation--and during new-worker orientation--was important. Not only is it fair and just to our employees, but it also brought about an immediate improvement to the work environment.¹¹

Recruit Manager Involvement
It's important to demonstrate to employees, by having management integrally involved, that we value their opinions. This evaluation system made it easy to get managers involved because it took very little management time--just enough time to write their staff's names on top of the questionnaire--to collect the data. By having participants complete their questionnaire in the manager's office, it allowed for an immediate clarification of any questions and ensured accuracy. To ensure anonymity,^8,12 employees placed their completed questionnaire in a sealed envelope and submitted it to an impartial outsider who compiled the data.

Reassure Employees Regularly
As more organizations divide workers into self-managed teams, management often tries to link pay to team performance, which isn't easy. We told our staff that although their annual salary review would include peer evaluations, no personnel actions would be based on evaluation data alone or on the basis of just one person's opinion.

We have witnessed conflicts of interest and negative actions taken against people who rated their supervisors poorly (as Proverbs 9:7-10 warns), so our evaluation system for annual reviews included peers, customers, and supervisors.

Evaluate Your System's Benefits
With any survey system, the completion rate determines the statistical significance of the results. Our evaluation process allows individuals who are uncomfortable assessing team members to opt out by giving everyone and equal score. Nevertheless, only six percent of the completed evaluations were disqualified, which gave the reports statistical significance and provided confidence in the system.

The evaluation system increased the objectivity and accuracy of personnel evaluations and made people increasingly accountable for their actions. It reduced absenteeism by 50 percent, saving us $3,000 monthly. It also improved the work environment, which in turn raised customer satisfaction ratings from "unacceptable" to "solid overall performance."

The evaluation program gave employees a voice and ownership in their work environment. For example, "Judy" didn't realize that her sarcastic remarks were being interpreted as a negative work attitude by her peers. With data available to support and measure improvement, we were able to set positive performance objectives. With supporting data, leaders can also encourage workers with words of praise from peers (e.g., peers view you in the top 10 percent in fostering a pleasant work environment). Such information can supplement and validate a manager's observation or identify areas where one's opinion may be incorrect. Peer evaluations can also quantify the group's unity as well as identify those who are trying to sabotage the careers of others by giving everybody a low rating.

At the end of the rating period, all the workers critiqued the entire evaluation system. Several suggestions were made to improve the customer evaluation program, while everyone gave the peer review program high marks.

Choosing the Right Instrument for the Right Operation
Peer evaluations, of course are just one of several valuable tools for improving professionalism, work environments, and service.

Some believe peer opinions are too subjective and outdated in this day of performance-based evaluations. But this minimizes the synergistic effect of an employee with the gift of encouragement. Peer reviews identify positive and negative influencers of peer performance and it provides a more objective window into group dynamics.

When workers receive their peers' evaluations, they often progress from shock to denial, then to awareness and acknowledgment, and finally to improvement. When used in conjunction with supervisor, customer, and competency evaluations, we find peer reviews essential to obtaining a better picture of the workplace even if this picture reveals some things about our organization that aren't pretty. Yet, "faithful are the wounds of a friend" (Proverbs 27:6).