1. Performance Appraisal
Session 15

2. Prelude: Performance Management
The process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals.
Three purposes
Strategic
Administrative
Developmental

3. Agenda Methods for measuring performance
Providing feedback to employees and improving their performance

4. Methods for Measuring Performance

5. Scale formats: Nominal Scale
Name or category
Country (e.g. China, U.S.A., Japan)
Department (MGTO, ECON, ACC, etc.)
Categorical
Not so popular in Performance Management

6. Scale formats: Ordinal Scale
Ordinal scales
Order
Distances between levels may not be equal
Rank (e.g., 1st , 2nd, 5th)

7. Scale formats: Interval Scale
Interval scales
Equal distances
But does not have an absolute zero
Degree Celsius (20ºC  double of 10 ºC)

8. Scale formats: Ratio Scale
Ratio scales
Equal distances
Has an absolute zero
Length (1000m = double of 500m)

9. Methods for Measuring Performance
Comparisons
Attributes
Behaviors
Results

10. Comparisons Three types: What is the comparison based on? Ranking
Forced Distribution
Paired Comparison
What is the comparison based on?

11. Ranking

12. The Forced-Distribution Method
For Core & Required Courses:
Grades Senate Guidelines
A-, A, A %
B-, B and B %
C-, C and C %
D %
F %

13. The Paired Comparison Method
Note: + means “better than.” – means “worse than.” For each chart, add up the number of +’s in each
column to get the highest-ranked employee.

14. Methods for Measuring Performance
Comparisons
Attributes
Behaviors
Results

15. Trait Appraisal
Supervisor makes judgments about worker characteristics that tend to be consistent and enduring (i.e., the trait or attribute)
Decisiveness, reliability, energy, loyalty
Quite common in appraisal systems, as well as in other related systems, e.g., reference letters

16. Rating Individuals: Attributes
Graphic Rating Scale (GRS)
Rate each worker using the scales below.
Decisiveness:
Very low Moderate Very high
Reliability:
Very low Moderate Very high
Energy:
Very low Moderate Very high

17. Rating Individuals: Attributes
Mixed Standards Scale (MSS)
Similar to graphic rating scale but here several statements are used for each trait.
Good, average and poor performance is assessed with respect to specific job related trait.
The advantages of the MSS is they refer to concrete, observable behavior, and they require relatively simple judgments on the part of the supervisor.
See example in Figure 8.5

18. Disadvantages Trait Approach
The definition of traits may be ambiguous
One’s definition of loyalty may be different from others’
It is person oriented, but not performance oriented

19. Methods for Measuring Performance
Comparisons
Attributes
Behaviors
Results

20. Rating Individuals: Behavior
Behavior Anchored Rating Scale (BARS)
Figure 8.6

21. Advantages
Behaviors are much more concrete and can be objectively observed
Provide specific examples for assessment so that it is clear to employees what they are expected to perform
Performance feedback can be given in a clear way

22. Disadvantages The development of such a system is quite time consuming
Some important behaviors may be missed
Organization may change dynamically, old behaviors may have different implications in the current context
Or, it may limit the organization’s changes or adaptation.

23. Methods for Measuring Performance
Comparisons
Attributes
Behaviors
Results

24. Management by Objectives (MBO)
A system in which people at each level of the organization set goals in a process that flows from top to bottom
Goals are set by both worker and supervisor
Goals are specific and measurable.

25. Methods for Measuring Performance
Rating individuals: Results
Table 8.3

26. Test Your Knowledge
The performance management system at XYZ company currently is perceived as unfair and is time consuming for managers. Which of the following systems is the most likely and least likely used, respectively.
Paired comparisons; Results
Results; Forced distribution
Behavioral; Attributes
Attributes; Comparative

27. Errors in Performance Management
Similarity-attraction (‘Similar-to-me’)
Halo & Horn
Errors in distribution
Leniency
Strictness
Central Tendency

28. The Hawthorne Effect
Series of studies in Hawthorne plant near Chicago.
Goal was to study the effect of illumination on production
The mere presence
of researchers
increased
productivity

29. Test Your Knowledge
Bill rates all of his employees very low except for Jane. Jane gets above average ratings because she consistently comes to work on time. The rating errors Bill makes are _______ and _______, respectively.
Leniency; Horn
Strictness; Halo
Similarity-Attraction; Central Tendency
Horn; Strictness

30. Giving Performance Feedback

31. From Session 9: Performance Management Cycle at HSBC
On-going review
Set Goals
January/February
Appraise Performance
December
Mid year
Review
July

32. Giving Performance Feedback
For a feedback session managers should:
Provide structure
Create the right context for the meeting
Select a neutral location
Enable the employee to be well prepared
Ask employees to complete a self-assessment ahead of time

33. Giving Performance Feedback
During the feedback session, managers can take any of three approaches:
Tell and sell
Problem-solving
Tell and listen
In what are the pros and cons of each of these approaches?

34. Appraisal Interview Two components
Discussion of performance (act as a coach) followed by discussion of salary (act as a judge)
Highlight the association between performance and salary to increase employee job motivation
Keep in mind three purposes of performance management: administrative, developmental, strategic.

35. Performance Improvement
Knowing the causes of problems
Ability or motivation (or situation)
Directing attention to the causes
Action plan
Providing suggestions and possible ways to improve performance
Directing communication at performance

36. Improving Performance
Figure 8.9

37. For Wednesday Hot Seat Case 13: Listening Skills
Context: Performance Feedback Session
As usual, it would be helpful to go through the references (but these will also be explained in the first part of the next session).