2PERFORMANCE APPRAISAL is a systematic and objective way of evaluating both work related behaviour and potential of employees.
3It is not a past oriented activity It is not a past oriented activity. The intention is not to put poor performers in a spot. Instead, it shows employees where things have gone wrong, how to set things in order and deliver superior performance using their potential fullyThe focus of appraisals is on employee growth and development. It forces managers to be coaches rather than judges.
4ObjectivesThe performance appraisal process serves several important purposesCompensation decisionsPromotion decisionsTraining and development programmesFeedback to the employeePersonal growth and development
5What is to be appraised?The content to be appraised is determined on the basis of job analysis. Usually it comprises of:Behaviours, including observable physical actions, movementsObjectives which measure job related resultsTraits which are measured in terms of personal characteristics
6Who will appraise? When to appraise? Supervisors Peers Subordinates Users of servicesconsultantsSelf appraisalWhen to appraise?Conducted informallyCarried out systematically at regular intervals, sticking to a definite plan
7The Performance Appraisal Process Establish performance standards.Good performance goals should speak aboutWhat is the task to be accomplished?What will it look like when it is accomplished?When must it be completed?What are the cost considerations?What are the likely payoffs to the employee?
8Communicate the standards The Appraiser should prepare job descriptions clearlyHelp the appraisee set own goals and targetsAnalyse results objectivelyOffer coaching and guidanceThe Appraisee should be clear about what he is doing and why he is doing
9Measure actual performance Compare actual performance with standards and discuss the appraisalNot an easy jobEmotional factors to be taken into accountAffects the self esteem of the appraiseeCriteria likely to be questioned, if the appraisal turns out to be negativeTake corrective action, if necessary
10Performance Appraisal Programs A process, typically performed annually by a supervisor for a subordinate, designed to help employees understand their roles, objectives, expectations, and performance success.Performance managementThe process of creating a work environment in which people can perform to the best of their abilities.
11Training Performance Appraisers Common rater-related errorsError of central tendencyAdverse impact is a concept that refers to the rejection of a significantly higher percentage of a protected class for employment, placement, or promotion than the successful, nonprotected class.Adverse Rejection Rate (Four-Fifths Rule).In the Uniform Guidelines on Employee Selection Procedures, a selection program has adverse impact if the selection rate for any protected racial, ethnic, or sex class is less than four-fifths (or 80%) of the rate of the class with the highest selection rate.Standard Deviation Analysis.Handed down from the U.S. Supreme court in Hazelwood School District v United States (1977), this uses the statistical concept of standard deviation to measure whether the difference between the expected selection rates for protected groups and the actual selection rates could be attributed to chance. If chance is eliminated, then it is assumed that the selection technique has an adverse impact.The concept of standard deviation. It is a measure of how far and how many individual occurrences in a population will be from the mean (average case). In a bell-shaped distribution, 95% of all occurrences fall within two standard deviations. In social science, the number of standard deviations used to rule out occurrences due to chance is subjective. Most social science disciplines use 2 standard deviations (.05); some use 3 standard deviations (.01).McDonnell-Douglas Test. McDonnell-Douglas Corp. v Green (1973)This test provides four guidelines for individuals who believe they have been unjustly rejected for employment: Guidelines are:The person is a member of a protected class.The person applied for a job for which he or she was qualified.The person was rejected despite being qualified.The employer continued to seek other applicants with similar qualifications.Leniency or strictness errorsSimilar-to-me errorsRecency errorsContrast and halo errors5
12Rater Errors Error of Central Tendency Leniency or Strictness Error A 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.
13Rater Errors Contrast Error Similar-to-Me Error A 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.
14Trait Methods Graphic Rating-Scale Method A trait approach to performance appraisal whereby each employee is rated according to a scale of individual characteristics.
15Trait Methods Forced-Choice Method Essay Method Requires the rater to choose from statements designed to distinguish between successful and unsuccessful performance.1. ______ a) Works hard _____ b) Works quickly2. ______ a) Shows initiative _____ b) Is responsive to customers3. ______ a) Produces poor quality _____ b) Lacks good work habitsEssay MethodRequires the rater to compose a statement describing employee behavior.
16Behavioral Methods Critical Incident Method Critical incident An unusual event that denotes superior or inferior employee performance in some part of the job
17Behavioral Methods Behaviorally Anchored Rating Scale (BARS) Consists of a series of vertical scales, one for each dimension of job performance; typically developed by a committee that includes both subordinates and managers.
18Example of a BARS for Municipal Fire Companies FIREFIGHTING STRATEGY: Knowledge of Fire Characteristics.Source: Adapted from Landy, Jacobs, and Associates. Reprinted with permission.
19Results 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.
20Performance Appraisal under an MBO Program MANAGEMENT BY OBJECTIVES
21The Balanced Scorecard Source: Robert Kaplan and David Norton, “Strategic Learning and the Balanced Scorecard,” Strategy & Leadership 24, no. 5 (September/October 1996): 18–24.
22The Balanced Scorecard The appraisal focuses on four related categoriesFinancial, customer, processes, and learningEnsuring the method’s successTranslate strategy into a scorecard of clear objectives.Attach measures to each objective.
23Cascade scorecards to the front line. Provide performance feedback based on measures.Empower employees to make performance improvements.Reassess strategy.
24Alternative Sources of Appraisal Source: From The Wall Street Journal—permission, Cartoon Features Syndicate.
2590 degree = one person review (self or another, the boss) • 180 degree = two person review (self and boss/manager)• 270 degree = three person review (self, boss, and peers or direct reports)• 360 degree = four person review (self, boss, peers, and direct reporters)
26Then, 540 degree appraisal add more external customers and suppliers
27We have 360 feedback/appraisal and it is1st feedback=360, then 2nd feedback=720, 3rd feedback=1080 and so on.