PERSONNEL POLICY: 25

POLICY TITLE: Performance Appraisal

LAST REVISION DATE: May 9, 2002

PURPOSE

To implement a formal performance appraisal system to review job performance in an

objective manner. The performance appraisal will be used in the training and
development of employees. The appraisal will also be used as a management tool in
determining increases, promotions, bonuses, and other work related issues.

PROCEDURE

Performance evaluations will be conducted twice per year. Evaluations will be

conducted by the employee’s immediate supervisor, employee’s peers, and a self-rating.
The supervisor rating will count 75% of the rating, peer rating will count 20% of rating
and self-rating will count 5%. The purpose of having the employee and his/her peer’s
rate each employee is to get the most accurate performance assessment of the employee’s
performance. This will help reduce any bias and make the evaluation a more valid
measurement of performance.

The supervisor will score each employee on five dimensions of performance. A

numerical value (1-5) will be placed on each of the five dimensions. Then attendance and
punctuality will be scored separately, but will be considered in the final supervisor rating.
The supervisor will place several work related comments under each dimension being
rated.

Each employee in the department will be required to fill out an evaluation on the other
employees in their department. The employee will rate his/her co-workers with an
overall rating. The supervisor will total the overall peer rating and divide by the number
of peer evaluations and multiply by 20%. This will give the supervisor the total peer
rating which will be used to calculate the employees final overall peer rating.
The self-rating is included to give each employee the opportunity to rate his/her
performance on how they view their performance. The self-rating is an opportunity for
the employee to review strengths and weaknesses and ask for any additional training that
might be needed.

The supervisor must complete their portion of the performance appraisal before the self-
rating and peer rating is conducted. Each employee should be asked to perform self-
rating before conducting their respective peer evaluations.

If an employee disagrees with the rating issued to them by their supervisor, the employee
may request a meeting with his supervisor’s immediate supervisor to discuss the
performance appraisal. If a resolution is not reached at that point, the employee may
request a meeting with Human Resources and the head of the manufacturing or
distribution. If a resolution is still not reached, the employee may request a meeting with
the President of Kelley Foods.

When revised, a copy of this policy should be distributed to all employees.

The Company reserves the right to amend this policy at any time without prior notice.