Performance Appraisal and Career Management Chapter 10.

Performance Appraisal and Career Management

Chapter 10

Chapter 10 Objectives

1. Describe the purposes of performance appraisal in organizations

2. Summarize the performance-appraisal process in organizations

3. Identify and describe the most common methods that managers use for performance appraisal

4. Discuss other general issues involving performance appraisal in organizations

5. Describe the nature of careers in organizations

1. Describe the purposes of performance appraisal in organizations

2. Summarize the performance-appraisal process in organizations

3. Identify and describe the most common methods that managers use for performance appraisal

4. Discuss other general issues involving performance appraisal in organizations

5. Describe the nature of careers in organizations

What is Performance Appraisal?

Performance Appraisal: • The specific and formal evaluation of an

employee conducted to determine the degree to which the employee is performing his or her job effectively

Performance Management:• General set of activities carried out by the

organization to change (improve) employee performance.

Why Organizations Conduct Performance Appraisals

Performance Appraisals Can Help Assess the Quality of Employee Performance

Standards for Effective Performance Appraisal Systems


• The quality of the rating form:– Relevance:

• The degree to which the rating form includes necessary information:

– Criterion deficiency: Omission of pertinent performance criteria.

– Criterion contamination: Inclusion of irrelevant criteria on the rating form.


• The quality of the rating form (cont.):– Clear performance

standards:• Indicate the level of

performance an employee is expected to achieve.

• Help direct employee behavior.

• Help supervisors provide more accurate ratings.


• Accuracy of the ratings:– Accurate ratings reflect the

employees’ actual job performance levels.

– Inaccuracy is most often attributable to the presence of rater errors.


• Some of the common rater errors:• Leniency error: Raters provide ratings that are

unduly high.• Severity error: Ratings are unduly low.• Causes of leniency and severity errors:

• Political reasons• Raters’ lack of conscientiousness• Personal bias


• Some of the common rater errors (cont.):• Central tendency error: Appraisers purposely avoid

giving extreme ratings even when such ratings are warranted.

• Causes of central tendency error:• Administrative procedures.• End points of the rating scale are unrealistically defined.


• Some of the common rater errors (cont.):• Halo effect:

– Appraiser’s overall impression of an employee is based on a particular characteristic.

– Acts as a barrier to accurate appraisals.– Caused due to vague rating standards and failure to

conscientiously complete the rating form.


• Some of the common rater errors (cont.):• The rater’s use of implicit personality theory

– Implicit personality theory: Rater’s estimation based on a personal “theory” of how different types of people behave in certain situations.

– Using this theory, organizations are unable to identify employees’ specific strengths and weaknesses.


• Some of the common rater errors (cont.):• Recency error

– Is a consequence of memory decay. – Ratings are heavily influenced by recent events that are more

easily remembered.– Ratings that unduly reflect recent events can present a false

picture of the individual’s job performance during the entire rating period.


• Legal standards– Appraisal systems must meet all the criteria

imposed by EEO laws.– When performance appraisals are used as the basis

for HR decisions, they are considered the same as any other test under the law.

– Specifically, a court would examine the:• Nature of the appraisal instrument.• Fairness and accuracy of the ratings.

Types of Rating Instruments


• Employee comparison systems:– Employee performance is evaluated relative to other employees’

performances.– Uses rankings rather than ratings.– Ranking formats:

• Simple rankings: Require raters to rank-order their employees from best to worst, according to their job performance.

• Paired comparison: A rater compares each possible pair of employees.

• Forced distribution: Requires a rater to assign a certain percentage of employees to each category of excellence such as “best,” “average,” or “worst.”


• Employee comparison systems:

• Strengths• Low cost and practical.• Take very little time and

effort.• Eliminates some rating

errors.• Employment decisions

become much easier to make.

• Weaknesses• Disrupts teamwork.• Accuracy and fairness

questioned.• Fails to adequately direct

employee behavior.• Performance of people

from different departments cannot be compared.


• Graphic rating scales:– Presents appraisers with a list of traits assumed to

be necessary to successful job performance.– A five- or seven-point rating scale accompanies

each trait.– Points on the scale are defined by numbers and/or

descriptive words or phrases that indicate level of performance.


• Strengths• Practical.• Low cost.• Can be developed quickly.• A single form is applicable to

all or most jobs within an organization.

• Weaknesses• Vaguely defined traits to

evaluate (e.g. demeanor or attitude)

• Does not effectively direct behavior.

• Fails to provide specific, nonthreatening feedback.

• Accurate ratings are not likely to be achieved.

• Can lead to a multitude of rating errors.

• Occurrence of bias.

Graphic rating scales:


• Similar to graphic rating scales

• Requires appraisers to rate employees on their traits

• Includes seven or eight traits, referred to as “dimensions,” each anchored by a seven or nine point scale

• Anchors each trait with examples of specific job behaviors that reflect varying levels of performance

Behaviorally Anchored Rating Scales (BARS)


• Behaviorally anchored rating scales (BARS):

• Strengths• Ability to direct and

monitor behavior.

• Weaknesses• Difficult to select one

behavior that is most indicative of the employee’s performance.

• Time consuming to develop.

• Requires a lot of effort to develop.


• Behavior observation scales (BOS):• Contains a list of desired behaviors required for the successful performance of specific jobs.• Developed like BARS, where critical incidents are collected and categorized into dimensions.• An appraiser rates job performance by indicating the frequency with which the employee engages in each behavior.• A five-point scale is used ranging from “almost never” (1) to “almost always” (5).


• Behavior observation scales (BOS):

• Strengths• Is more legally defensible

than BARS or graphic rating scales.

• Effective in directing employees’ behavior.

• Used to monitor behavior and give specific feedback.

• Weaknesses• Time consuming to

develop.• Not always cost-effective.


• Management by objectives (MBO):– A management system designed to achieve

organizational effectiveness by steering each employee’s behavior towards the organization’s mission.

– MBO process includes:• Goal setting: Establishment of the organization’s mission

statement and strategic goals. • Planning: Identify potential obstacles to reaching goals

and devise strategies to overcome these obstacles. • Evaluation: Success at meeting goals is evaluated

against agreed-on performance standards.


• Management-by-objectives (MBO)• Strengths

• Outcome-focused.• Widely practiced.• Improves job performance.• States performance

standards in relatively objective terms.

• Practical and cost effective. • Provides employees a

greater stake in achieving their goals and more perceived control over their work environment.

• Weaknesses• Behaviors required to

reach goals not specified.• Success may be attributed

to factors outside employee’s control.

• Performance standards vary, providing no common basis for comparison.

• Creates performance pressures and stress.

• Gain the support of upper-level managers:• Make the performance appraisal process meaningful.• Get managers’ input in developing the system.• Train managers and help them find a way to keep track

of things employees have done during the review period.• Hold managers accountable for providing accurate

ratings on a timely basis.

• Gain the support of employees:• Encourage both managers and workers to participate in

the planning and development of the system to enhance support for it.

Designing an Appraisal SystemStep 1: Gaining Support for the System

• Three important factors to be considered are:– Practicality: The performance appraisal instrument must be

practical.

– Cost: Includes development costs, implementation costs, and utilization costs.

– Nature of job: The choice of rating instrument depends, in part, on the type of data that can be realistically collected about a particular job.

• Executive, managerial, and professional employees are usually rated based on results.

• Lower-level jobs are most often rated on behavioral or trait-oriented criteria.

Designing an Appraisal SystemStep 2: Choosing the Appropriate Rating Instrument

• Supervisory ratings: Serve as management tools for supervisors, giving them a means to direct and monitor employee behavior.

• Peer ratings: Supplement supervisory ratings, helping develop a consensus about an individual’s performance; helps eliminate biases and leads to greater employee acceptance of appraisal systems.

• Competitive nature of the organization’s reward system and friendship are potential problems limiting the usefulness of peer ratings.

Designing an Appraisal SystemStep 3: Choosing the Rater

• Self-ratings– May be used for employee development.– May not be effective as an evaluative tool.

• 360-degree feedback system– Appraisal system for managers , who are

evaluated by a “circle” of people who frequently interact with the manager.

– Evaluations are limited to job behaviors directly observed.

– Primarily used as feedback devices. – Lacks accountability.

Designing an Appraisal SystemStep 3: Choosing the Rater

• Mostly conducted annually; frequent appraisals are considered too time-consuming.

• Annual appraisals pose a problem as appraisers may have a difficult time remembering events of the past year; this can be minimized by:

• Maintaining records of employee performance; record keeping also serves as documentation for EEO suits.

Designing an Appraisal SystemStep 4: Determining the Appropriate Timing of Appraisal

• Upper-level management review: Helps to ensure fairness, and may serve to keep appraisers “honest.”

• Appeals system• Provides a means for employees to obtain a fair

hearing if they are dissatisfied with their appraisals.

• Allows employees to voice their concerns.• Fosters more accurate ratings.• Prevents the involvement of outside third parties.• Tends to undermine the authority of the

supervisor and may encourage leniency error.

Designing an Appraisal SystemStep 5: Ensuring Appraisal Fairness

The Nature of Careers

• CareerCareer– The set of experiences and activities that people The set of experiences and activities that people

engage in related to their job and livelihood over the engage in related to their job and livelihood over the course of their working life.course of their working life.

• Traditional Stages of CareersTraditional Stages of Careers– ExplorationExploration– EstablishmentEstablishment– MaintenanceMaintenance– DisengagementDisengagement

© 2012 South-Western, Cengage Learning, Inc. All rights reserved.

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The Traditional Model of Career Stages


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New Views of Career Stages and the Decision to Retire

• Older Workers May:Older Workers May:

– Find themselves ready to disengage from the Find themselves ready to disengage from the organization at a relatively young age.organization at a relatively young age.

– Begin working again by seeking opportunities with a Begin working again by seeking opportunities with a better work and family balance.better work and family balance.

– Retire if they have the financial resources to maintain Retire if they have the financial resources to maintain their pre-retirement lifestyles.their pre-retirement lifestyles.

– Retire if their health makes work burdensome.Retire if their health makes work burdensome.

Copyright ©2012 by Cengage Learning. All rights reserved.


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HRM and Career Management

• Limitations and Pitfalls in Career PlanningLimitations and Pitfalls in Career Planning– Predicting future levels of talent, expertise, Predicting future levels of talent, expertise,

motivation, or interest of an individual is difficult.motivation, or interest of an individual is difficult.

– Unexpected business changes may result in Unexpected business changes may result in changes in career opportunities.changes in career opportunities.

– Careers do not simply happen–they must be planned Careers do not simply happen–they must be planned and managed.and managed.

– Responsibility for career planning resides with both Responsibility for career planning resides with both the organization and the individual.the organization and the individual.


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Individual and Organizational Perspectives on Career Planning


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Steps in Career Planning

© 2012 South-Western, Cengage Learning, Inc. All rights reserved. 10–39

Career Planning and Development Challenges

• Career CounselingInvolves interaction between an individual employee

or manager in the organization and either a line manager or an HR manager

• Dual-Career and Work-Family Issues

Performance Appraisal and Career Management Chapter 10.

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