Performance appraisal and management

Performance appraisal and

management

ObjectivesAfter studying this section, you should be able to:

1. Understand the meaning and importance of Performance Appraisals .

2. Describe the different sources of appraisal information.

3. Identify the six steps in performance appraisal

4. Explain the various methods used for performance evaluation.

5. Explain why appraisals might be distorted

6. How to improve performance appraisals

Copyright © 2004 South-Western. All rights reserved.

What Do Employees Want?

• Clear expectations• Positive/constructive

feedback on regular basis

• Understand evaluation criteria

• Involvement in goal setting

• Accurate job descriptions

• Be treated fairly and consistently

• Sharing of info and resources

• Job/career enrichment opportunities


An Introduction to AppraisingPerformance

• Why appraise performance?Appraisals play an integral role in the employer’s

performance management process.Appraisals help in planning for correcting

deficiencies and reinforce things done correctly.Appraisals, in identifying employee strengths

and weaknesses, are useful for career planningAppraisals affect the employer’s salary raise

decisions.


Comparing Performance Appraisal and Performance Management

• Performance appraisalEvaluating an employee’s current and/or past

performance relative to his or her performance standards.

• Performance managementThe process employers use to make sure

employees are working toward organizational goals.


Purposes for Performance Appraisal


Reasons Appraisal Programs Fail

• Lack of top-management information and support

• Unclear performance standards

• Rater bias• Too many forms to

complete• Use of the appraisal

program for conflicting purposes.


Managerial Issues Concerning Appraisals• Managers feel that little or no benefit will be

derived from the time and energy spent in the process.

• Managers dislike the face-to-face confrontation of appraisal interviews.

• Managers are not sufficiently adept in providing appraisal feedback.

• The judgmental role of appraisal conflicts with the helping role of developing employees.


Let me count the ways…

Insufficient Insufficient reward for reward for

performanceperformance

Insufficient Insufficient reward for reward for

performanceperformance

Manager Manager lacks lacks

informationinformation

Manager Manager lacks lacks

informationinformationLack of Lack of

appraisal appraisal skillsskills

Lack of Lack of appraisal appraisal

skillsskills

Manager not Manager not taking taking

appraisal appraisal seriouslyseriously

Manager not Manager not taking taking

appraisal appraisal seriouslyseriously

Manager not Manager not preparedprepared

Manager not Manager not preparedprepared

Manager not Manager not being honest being honest

or sincereor sincere

Manager not Manager not being honest being honest

or sincereor sincere

Employee not Employee not receiving receiving ongoing ongoing feedbackfeedback

Employee not Employee not receiving receiving ongoing ongoing feedbackfeedback

Ineffective Ineffective discussion of discussion of

employee employee developmentdevelopment

Ineffective Ineffective discussion of discussion of

employee employee developmentdevelopment

Unclear Unclear languagelanguage

Unclear Unclear languagelanguage

Performance Performance appraisals fail appraisals fail

because…because…

Performance Performance appraisals fail appraisals fail

because…because…


Sources of Performance Appraisal

• Manager and/or SupervisorAppraisal done by an employee’s manager and

reviewed by a manager one level higher.

• Self-Appraisal Performance By the employee being evaluated, generally on an

appraisal form completed by the employee prior to the performance interview (developmental).

• Subordinate AppraisalAppraisal of a superior by an employee, which is

more appropriate for developmental than for administrative purposes(leadership, oral communication, coordination of team efforts, delegation of authority).


Sources of Performance Appraisal

• Peer AppraisalAppraisal by fellow employees, compiled into a

single profile for use in an interview conducted by the employee’s manager (leadership, inter personal skills).

• Team AppraisalAppraisal, based on TQM concepts, recognizing

team accomplishment rather than individual performance.

• Customer AppraisalAppraisal that seeks evaluation from both

external and internal customers.


Alternative Sources of Performance Appraisal

Alternative Sources of Performance Appraisal

Supervisor

Subordinates

Peers

Team

CustomersSelf


Pros and Cons of 360-Degree Appraisal• PROS

The system is more comprehensive in that responses are gathered from multiple perspectives.

Quality of information is better. (Quality of respondents is more important than quantity.)

It complements TQM initiatives by emphasizing internal/external customers and teams.

It may lessen bias/prejudice since feedback comes from more people, not one individual.

Feedback from peers and others may increase employee self-development.

Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, “Has 360-Degree Feedback Gone Amok?” Academy of Management Executive 12, no. 2 (May 1998): 86–94; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, “Does 360-Degree Feedback Negatively Affect Company Performance?” HRMagazine 47, no. 6 (June 2002): 54–59; Maury Peiperl, “Getting 360-Degree Feedback Right,” Harvard Business Review 79, no. 1 (January 2001): 142–47; Jack Kondrasuk, Mary Riley, and Wang Hua, “If We Want to Pay for Performance, How Do We Judge Performance?” Journal of Compensation and Benefits 15, no. 2 (September/October 1999): 35–40; Mary Graybill, “From Paper to Computer,” The Human Resource Professional 13, no. 6 (November/ December 2000): 18–19; David W. Bracken, Lynn Summers, and John Fleenor, “High-Tech 360,” Training and Development 52, no. 8 (August 1988): 42–45; Gary Meyer, “Performance Reviews Made Easy, Paperless,” HRMagazine 45, no. 10 (October 2000): 181–84.


Pros and Cons of 360-Degree Appraisal• CONS

The system is complex in combining all the responses.

Feedback can be intimidating and cause resentment if employee feels the respondents have “ganged up.”

There may be conflicting opinions, though they may all be accurate from the respective standpoints.

The system requires training to work effectively.

Employees may collude or “game” the system by giving invalid evaluations to one another.

Appraisers may not be accountable if their evaluations are anonymous.

Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, “Has 360-Degree Feedback Gone Amok?” Academy of Management Executive 12, no. 2 (May 1998): 86–94; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, “Does 360-Degree Feedback Negatively Affect Company Performance?” HRMagazine 47, no. 6 (June 2002): 54–59; Maury Peiperl, “Getting 360-Degree Feedback Right,” Harvard Business Review 79, no. 1 (January 2001): 142–47; Jack Kondrasuk, Mary Riley, and Wang Hua, “If We Want to Pay for Performance, How Do We Judge Performance?” Journal of Compensation and Benefits 15, no. 2 (September/October 1999): 35–40; Mary Graybill, “From Paper to Computer,” The Human Resource Professional 13, no. 6 (November/ December 2000): 18–19; David W. Bracken, Lynn Summers, and John Fleenor, “High-Tech 360,” Training and Development 52, no. 8 (August 1988): 42–45; Gary Meyer, “Performance Reviews Made Easy, Paperless,” HRMagazine 45, no. 10 (October 2000): 181–84.


360-Degree Performance Appraisal System Integrity Safeguards

• Assure anonymity. • Make respondents accountable.• Prevent “gaming” of the system. • Use statistical procedures. • Identify and quantify biases.


Training Performance Appraisers

Recency errorsRecency errorsRecency errorsRecency errors

Leniency or strictness errorsLeniency or strictness errorsLeniency or strictness errorsLeniency or strictness errors

Common rater-related errorsCommon rater-related errorsCommon rater-related errorsCommon rater-related errors

Error of central tendencyError of central tendencyError of central tendencyError of central tendency

Similar-to-me errorsSimilar-to-me errorsSimilar-to-me errorsSimilar-to-me errors

Contrast and halo errorsContrast and halo errorsContrast and halo errorsContrast and halo errors


Rater Errors

• Error of Central TendencyA rating error in which all employees are rated

about average.

• Leniency or Strictness ErrorA rating error in which the appraiser tends to give

all employees either unusually high or unusually low ratings.

• Recency ErrorA rating error in which appraisal is based largely

on an employee’s most recent behavior rather than on behavior throughout the appraisal period.


Rater Errors

• Contrast ErrorA rating error in which an employee’s evaluation

is biased either upward or downward because of comparison with another employee just previously evaluated.

• Similar-to-Me ErrorAn error in which an appraiser inflates the

evaluation of an employee because of a mutual personal connection.


Defining Goals and Work Efforts

• Guidelines for effective goalsAssign specific goalsAssign measurable goalsAssign challenging but doable goalsEncourage participation

• SMART goals are:Specific, and clearly state the desired results.Measurable in answering “how much.”Attainable, and not too tough or too easy.Relevant to what’s to be achieved.Timely in reflecting deadlines and milestones.


Performance Appraisal Roles

• SupervisorsUsually do the actual appraising.Must be familiar with basic appraisal techniques.Must understand and avoid problems that can

cripple appraisals.Must know how to conduct appraisals fairly.


Performance Appraisal Roles (cont’d)

• HR departmentServes a policy-making and advisory role.Provides advice and assistance regarding the

appraisal tool to use.Prepares forms and procedures and insists that

all departments use them.Responsible for training supervisors to improve

their appraisal skills.Responsible for monitoring the system to ensure

that appraisal formats and criteria comply with EEO laws and are up to date.


Steps in Appraising Performance

• 1. Establish performance standards• 2. Communication performance expectations to • employees• 3. Measure actual performance• 4. Compare actual performance with standards• 5. Discuss appraisal with employees• 6. If necessary, initiate corrective action.


Designing the Appraisal Tool

• What to measure?Work output (quality and quantity)

Personal competencies

Goal (objective) achievement

• How to measure?Graphic rating scales

Alternation ranking method

MBO


Trait Methods

Trait Trait MethodsMethods

Trait Trait MethodsMethods

Graphic Rating Graphic Rating ScaleScale

Graphic Rating Graphic Rating ScaleScale

Mixed Standard Mixed Standard ScaleScale

Mixed Standard Mixed Standard ScaleScale

Forced-ChoiceForced-ChoiceForced-ChoiceForced-Choice

EssayEssayEssayEssay


Trait Methods

• Graphic Rating-Scale MethodA trait approach to performance appraisal

whereby each employee is rated according to a scale of individual characteristics.

• Mixed-Standard Scale MethodAn approach to performance appraisal similar to

other scale methods but based on comparison with (better than, equal to, or worse than) a standard.


Graphic Rating Scale With Provision For Comments

HRM 2


Trait Methods

• Forced-Choice MethodRequires the rater to choose from statements

designed to distinguish between successful and unsuccessful performance.

• Essay MethodRequires the rater to compose a statement

describing employee behavior.


Example Of A Mixed-standard Scale

HRM 3


Behavioral Methods

Behavioral Behavioral MethodsMethods

Behavioral Behavioral MethodsMethods

Critical IncidentCritical IncidentCritical IncidentCritical Incident

Behavioral ChecklistBehavioral ChecklistBehavioral ChecklistBehavioral Checklist

Behaviorally Anchored Behaviorally Anchored Rating Scale (BARS)Rating Scale (BARS)

Behaviorally Anchored Behaviorally Anchored Rating Scale (BARS)Rating Scale (BARS)

Behavior Observation Behavior Observation Scale (BOS)Scale (BOS)

Behavior Observation Behavior Observation Scale (BOS)Scale (BOS)


Behavioral Methods

• Critical IncidentAn unusual event denoting superior or inferior

employee performance in some part of the job.

• Behaviorally Anchored Rating Scale (BARS)A performance appraisal that consists of a series

of vertical scales, one for each dimension of job performance.

• Behavior Observation Scale (BOS)A performance appraisal that measures the

frequency of observed behavior.


Examples Of A Bars For Municipal Fire Companies

Source: Adapted from Landy, Jacobs, and Associates. Reprinted with permission.

FIREFIGHTING STRATEGY: Knowledge of Fire Characteristics.


Sample Items From Behavior Observation Scales


Results Methods

• Management by Objectives (MBO)A philosophy of management that rates

performance on the basis of employee achievement of goals set by mutual agreement of employee and manager.


Performance Appraisal under an MBO Program

Management by Objectives


Management by Objectives (MBO)

• Involves setting specific measurable goals with each employee and then periodically reviewing the progress made.1. Set the organization’s goals.

2. Set departmental goals.

3. Discuss departmental goals.

4. Define expected results (set individual goals).

5. Performance reviews.

6. Provide feedback.


Computerized and Web-Based Performance Appraisal

• Performance appraisal software programsKeep notes on subordinates during the year.Electronically rate employees on a series of

performance traits.Generate written text to support each part of the

appraisal.

• Electronic performance monitoring (EPM)Having supervisors electronically monitor the

amount of computerized data an employee is processing per day, and thereby his or her performance.


Summary of Appraisal Methods ADVANTAGES DISADVANTAGES

TRAITSInexpensiveMeaningfulEasy to use

Potential for errorPoor for counselingPoor for allocating rewardsPoor for promotional decisions

BEHAVIORSpecific dimensionsAccepted by employeesUseful for feedbackOK for reward/promotion

Time consumingCostlySome rating error

RESULTS

Less subjectivity biasAccepted by employeesPerformance-reward linkEncourages goal settingGood for promotiondecisions

Time consumingFocus on short termCriterion contaminationCriterion deficiency


The Balanced Scorecard

HRM 6

Source: Robert Kaplan and David Norton, “Strategic Learning and the Balanced Scorecard,” Strategy & Leadership 24, no. 5 September/ October 1996): 18–24.


Personal ScorecardPersonal

Scorecard

HRM 7Source: Robert Kaplan and David Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (January–February 1996): 75–85.


Summary of Appraisal Methods

• Trait MethodsAdvantages

Are inexpensive to develop Use meaningful dimensions Are easy to use

Disadvantages Have high potential for rating errors Are not useful for employee counseling Are not useful for allocating rewards Are not useful for promotion decisions


Summary of Appraisal Methods (cont’d)• Behavioral Methods

Advantages Use specific performance dimensions Are acceptable to employees and superiors Are useful for providing feedback Are fair for reward and promotion decisions

Disadvantages Can be time-consuming to develop/use Can be costly to develop Have some potential for rating error


Summary of Appraisal Methods (cont’d)• Results Methods

Advantages Have less subjectivity bias Are acceptable to employees and superiors Link individual to organizational performance Encourage mutual goal setting Are good for reward and promotion decisions

Disadvantages Are time-consuming to develop/use May encourage short-term perspective May use contaminated criteria May use deficient criteria

Copyright © 2004 South-Western. All rights reserved. 8–43

How to Avoid Appraisal Problems

• Learn and understand the potential problems, and the solutions for each.

• Use the right appraisal tool. Each tool has its own pros and cons.

• Train supervisors to reduce rating errors such as halo, leniency, and central tendency.

• Have raters compile positive and negative critical incidents as they occur.

References

• Human Resource Management – Snell/ Bohlander

• Human Resource Management – Gary Dessler• Personnel/ Human Resource Management –

DeCenzo/Robbins

Copyright © 2004 South-Western. All rights reserved. 8–44

Performance appraisal and management

Documents

team appraisal appraisal

customer appraisal appraisal

selfappraisal performance

appraisal feedback

performance manager

performance evaluation

appraisal form

individual performance