BSAD 310 Spring 2017 - CH 8

Chapter 8:Performance Management and Appraisal

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Performance Management vs Performance Appraisal

• Performance Management – Identifying, measuring, managing, and

developing HR performance; serves as systematic measurement of performance

• Performance Appraisal – Evaluating individual employee

performance; vital component of performance management process

Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

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Exhibit 8-1: The Performance Appraisal Process


4Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

Accurate Performance Measures Must Be…

• Valid and reliable• Acceptable and feasible• Specific and pertinent to the job itself• Based on the mission and objectives


Why Do We Conduct Performance Appraisals?

• Communication (Informing)– To communicate employee’s strengths and needs

and to motivate performance• Decision-Making (Evaluating)

– To make employment-related decisions (i.e., salaries, promotions, demotions, training, development, termination)

• Motivation (Engaging)– To motivate employees to improve the way they

work, which will in turn improve organizational productivity overall


What Do We Assess?• Trait Appraisals• Behavior Appraisals• Results Appraisals


Trait Appraisals• Traits identify the physical or psychological

characteristics of a person.• There is evidence that certain traits such as

inquisitiveness, conscientiousness, and general cognitive ability are valuable in jobs that require management and leadership.

• Should We Measure Traits?– Important to ask whether both the manager and

employee will agree with the measured rating as being accurate.


Behavioral Appraisals• Behaviors are the actions taken by an

individual.• Behavior appraisals measure what

individuals do at work.• Evaluated employees should have recourse

to question outcome of their appraisals. • Should We Measure Behaviors?

– The most useful and most acceptable feedback to employees is feedback on specific job-related behaviors.


Results Appraisals• Results are a measure of the goals

achieved through a work process.• Results are concrete measures of

performance.• Should We Measure Results?

– Results-based evaluations are typically very acceptable to both the employee and the manager.


How Do We Use Appraisal Methods and Forms?

• The formal performance appraisal usually involves the use of a standard form developed by the HR department to measure employee performance.

• Employees need to know the standards and understand what good performance looks like, and they need to be able to measure their own performance.


Exhibit 8-2: Performance Appraisal Measurement Methods and Forms



Critical Incident Method• A performance appraisal method in

which a manager keeps a record of the positive and negative performance of employees throughout the performance period.

• A list of documented critical incidents is especially important to have leading up the evaluative decision of firing employees.


Management by Objectives (MBO)

• Managers and employees jointly set employee objectives.

• Managers give feedback, evaluate performance, and reward as merited.

• It is not unusual to see misappropriation of resources used to fulfill MBOs. Misuse of MBOs can foster a “me-first” mentality.


Narrative Method or Form• Managers keep written records about

employees’ performance.• Used for ongoing feedback and

employee development planning.• Narratives capture employees’ values

and contributions.


Graphic Rating Scale Forms• Managers use appraisal checklists to

rate employee performance, often expressed as a numerical scale.

• Typically used for evaluative decisions, but should also steer development decisions.

• An effective rating is possible using a 1–5 Likert Scale, but examples provide greater clarity.


Behaviorally Anchored Rating Scales (BARS)

• Managers use behaviorally-based continuum to rate employee performance, often expressed as a numerical scale.

• It’s perhaps the best and most effective appraisal measurement.

• It is typically used for evaluative decision-making, but should also steer development decisions.


Model 8-1: Setting Objectives Model



Ranking Method• Managers rank employees by

comparing best to worst. • Forced distribution ranking of best to

worst is the most used measure when companies resort to downsizing and layoffs.

• It is typically used for evaluative decision-making and development.


Which Option Is Best?• Using a combination of the methods

and forms is usually superior to using just one.

• For developmental objectives, the critical incidents, MBO, and narrative methods work well.


Which Option Is Best?• For administrative decisions, a ranking

method based on the evaluative methods and especially graphic rating scales or BARS forms work well.

• The success of the performance appraisal process depends on the manager’s human relations skills in ongoing critical-incidents coaching.


Who Should Assess Performance?

• Supervisors• Peers • Subordinates • Customers • Employees themselves • 360-Degree Evaluations

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Exhibit 8-3: Performance Appraisal Problems and

Avoiding Them



Debriefing the Appraisal• Managers prepare for and

communicate analysis of each employee’s performance with the employee.

• There are two major reasons for assessing performance:– For evaluative decisions– For development


Model 8-2: The Evaluative Performance Appraisal Interview



Model 8-3: The Developmental Performance Appraisal Interview



Trends and Issues in HRM• Continuous Appraisals: Is it time to do

continuous appraisals?• Competency-Based Performance

Management: With the nature of work in today’s companies and the fact that competencies are becoming a significant issue, performance management systems need to be redesigned so that we can evaluate the skills and capabilities that are most important to the business.

BSAD 310 Spring 2017 - CH 8

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