In cooperation with appointing authorities the director may establish a system of service reports. Such service reports, if any, may take into consideration, among other things, the employee’s conduct, performance, and output. In such manner and with such weight as shall be provided in the regulations, ratings assigned to such service reports may be considered in determining salary increases and decreases within the limits established by law and by the pay plan; as a factor in promotional decisions; as a factor in determining employees who should be demoted, transferred or dismissed. In such manner and at such time as the regulations may require, each appointing authority shall report to the director on the services of employees in his or her division. Any employee shall be given reasonable opportunity to inspect the records of the department which show the ratings assigned to his or her service reports.