1. Human Resource Management 10th Edition Chapter 8 PERFORMANCE MANAGEMENT AND APPRAISAL
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2. HRM In Action: Identifying Those In The Middle Is Also Important
Many focus solely on top-performing and high-potential employees
More middle-friendly
They’re workhorses; they get the job done
Make incentive system objective through clearly defined goals and precise definitions
Nonfinancial rewards
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3. Performance Management
Goal-oriented process directed toward ensuring organizational processes are in place to maximize productivity of employees, teams, and organization
Training and performance appraisal play significant role in process
With PM, training, appraisal, and rewards, is integrated and linked for the purpose of continuous organizational effectiveness
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4. Performance Appraisal Defined
Formal system of review and evaluation of individual or team task performance
Often negative, disliked activity that seems to elude mastery
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5. Uses of Performance Appraisal
Human resource planning - Data must be available to identify those who have the potential to be promoted
Recruitment and selection - May be helpful in predicting the performance of job applicants
Training and development - Point out an employee’s specific needs for training and development
Career planning and development - Essential in assessing an employee’s strengths and weaknesses and in determining the person’s potential
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6. Uses of Performance Appraisal (Cont.)
Compensation programs - Provide a basis for rational decisions regarding pay adjustments
Internal employee relations - Used for decisions in several areas of internal employee relations, including promotion, demotion, termination, layoff, and transfer
Assessment of employee potential - Some organizations attempt to assess employee potential as they appraise their job performance
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7. Performance Appraisal Environmental Factors
External:
Legislation requiring nondiscriminatory appraisal systems
Labor unions
Factors within internal environment, such as type of corporate culture
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8. Legislation Affecting Performance Appraisal
Mistretta v Sandia Corporation - Federal judge ruled against company, stating, “There is sufficient circumstantial evidence to indicate that age bias and age based policies appear throughout the performance rating process to the detriment of the protected age group.”
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9. Legislation Affecting Performance Appraisal (Cont.)
Albermarle Paper v Moody – Supreme Court case supported validation requirements for performance appraisals
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10. Labor Unions and Performance Appraisal
Have traditionally stressed seniority as the basis for promotions and pay increases
May vigorously oppose the use of a management-designed performance appraisal system
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11. Performance Appraisal Process External Environment Internal Environment
Identify Specific Performance Appraisal Goals
Establish Performance Criteria (Standards) and Communicate Them To Employees
Examine Work Performed
Appraise the Results
Discuss Appraisal with Employee
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12. Establish Performance Criteria (Standards)
Traits
Behaviors
Competencies
Goal Achievement
Improvement Potential
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13. Traits
Certain employee traits such as attitude, appearance, and initiative are the basis for some evaluations
May be either unrelated to job performance or difficult to define
Certain traits may relate to job performance and, if this connection is established, using them may be appropriate
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14. Caution on Traits: Wade v. Mississippi Cooperative Extension Service
In a performance appraisal system, general characteristics such as “leadership, public acceptance, attitude toward people, appearance and grooming, personal conduct, outlook on life, ethical habits, resourcefulness, capacity for growth, mental alertness, loyalty to organization” are susceptible to partiality and to the personal taste, whim, or fancy of the evaluator” as well as “patently subjective in form and obviously susceptible to completely subjective treatment” by those conducting the appraisals.
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15. Behaviors
Organizations may evaluate person’s task-related behavior or competencies
Examples: leadership style, developing others, teamwork and cooperation, or customer service orientation
If certain behaviors result in desired outcomes, there is merit in using them in the evaluation process
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16. Competencies
Broad range of knowledge, skills, traits and behaviors that may be technical in nature, relate to interpersonal skills, or be business oriented
In leadership jobs, relevant competencies might include developing talent, delegating authority and people management skills
Competencies selected should be those that are closely associated with job success
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17. Goal Achievement
Use if organizations consider ends more important than means
Outcomes established should be within control of individual or team
Should be those results that lead to firm’s success
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18. Improvement Potential
Many of criteria used focus on the past
Cannot change past
Firms should emphasize future, including behaviors and outcomes needed to develop the employee, and, in the process, achieve firm’s goals
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19. Responsibility for Appraisal
Immediate supervisor
Subordinates
Peers and team members
Self-appraisal
Customer appraisal
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20. Immediate Supervisor Traditionally been most common choice
Supervisor is usually in excellent position to observe employee’s job performance
Supervisor has responsibility for managing a particular unit
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21. Subordinates
Our culture has viewed evaluation by subordinates negatively
Some firms conclude that evaluation of managers by subordinates is both feasible and needed
Will do a better job of managing
Might be caught up in a popularity contest
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22. Peers and Team Members
Work closely with evaluated employee and probably have an undistorted perspective on typical performance
Problems include reluctance of some people who work closely together, especially on teams, to criticize each other
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23. Self-Appraisal
If employees understand their objectives and criteria used for evaluation, they are in good position to appraise their own performance
Employee development is self-development
Employees who appraise their own performance may become more highly motivated
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24. Customer Appraisal
Customer behavior determines a firm’s degree of success
Organizations use this approach because it demonstrates a commitment to customer, holds employees accountable, and fosters change
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25. The Appraisal Period Prepared at specific intervals
Usually annually or semiannually
Period may begin with employee’s date of hire
All employees may be evaluated at same time
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26. Performance Appraisal Methods
360-Degree Evaluation
Rating Scales
Critical Incidents
Essay
Work Standards
Ranking
Paired Comparisons
Forced Distribution
Behaviorally Anchored Rating Scales (BARS)
Result-Based Systems
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27. 360-Degree Valuation Multi-rater evaluation
Input from multiple levels within firm and external sources
Focuses on skills needed across organizational boundaries
More objective measure of performance
Process more legally defensible
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28. Trends & Innovations: 720-Degree Review
More intense, personalized and greater review of upper-level managers that brings in perspective of their customers or investors, as well as subordinates
Start with a 360-degree review, but then go out and do interviews
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29. Rating Scales Rates according to defined factors
Judgments are recorded on a scale
Many employees are evaluated quickly
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30. Critical Incidents
Written records of highly favorable and unfavorable work actions
Appraisal more likely to cover entire evaluation period
Does not focus on last few weeks or months
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31. Essay Brief narrative describing performance
Tends to focus on extreme behavior
Depends heavily on evaluator's writing ability
Comparing essay evaluations might be difficult
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32. Work Standards Compares performance to predetermined standard
Standards - Normal output of average worker operating at normal pace
Time study and work sampling used
Workers need to know how standards were set
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33. Ranking
All employees from group ranked in order of overall performance
Comparison is based on single criterion, such as overall performance
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34. Paired Comparison Variation of ranking method
Compares performance of each employee with every other employee in the group
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35. Forced Distribution
Rater assigns individual in work group to limited number of categories similar to normal distribution
Assumes all groups of employees have same distribution
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36. Behaviorally Anchored Rating Scales (BARS)
Combines traditional rating scales and critical incidents methods
Job behaviors derived from critical incidents described more objectively
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37. Result-Based Systems
Manager and subordinate agree on objectives for next appraisal
Evaluation based on how well objectives accomplished
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38. Use of Computer Software
Available in recording appraisal data
Reduces required paperwork
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39. Problems in Performance Appraisal
Appraiser discomfort
Lack of objectivity
Halo/horn error
Leniency/strictness
Central tendency
Recent behavior bias
Personal bias
Manipulating the evaluation
Employee anxiety
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40. Appraiser Discomfort
Performance appraisal process cuts into manager’s time
Experience can be unpleasant when employee has not performed well
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41. Lack of Objectivity
In rating scales method, commonly used factors such as attitude, appearance, and personality are difficult to measure
Factors may have little to do with employee’s job performance
Employee appraisal based primarily on personal characteristics may place evaluator and company in untenable positions
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42. Halo/Horn Error
Halo error - Occurs when manager generalizes one positive performance feature or incident to all aspects of employee performance resulting in higher rating
Horn error - Evaluation error occurs when manager generalizes one negative performance feature or incident to all aspects of employee performance resulting in lower rating
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43. Leniency/Strictness Leniency - Giving undeserved high ratings
Strictness - Being unduly critical of employee’s work performance
Worst situation is when firm has both lenient and strict managers and does nothing to level inequities
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44. Central Tendency
Error occurs when employees are incorrectly rated near average or middle of scale
May be encouraged by some rating scale systems requiring evaluator to justify in writing extremely high or extremely low ratings
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45. Recent Behavior Bias
Employee’s behavior often improves and productivity tends to rise several days or weeks before scheduled evaluation
Only natural for rater to remember recent behavior more clearly than actions from more distant past
Maintaining records of performance
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46. Personal Bias (Stereotyping)
Managers allow individual differences such as gender, race or age to affect ratings they give
Effects of cultural bias, or stereotyping, can influence appraisals
Other factors – Example: mild-mannered employees may be appraised more harshly simply because they do not seriously object to results
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47. Manipulating the Evaluation
Sometimes, managers control virtually every aspect of appraisal process and are in position to manipulate system
Example: Want to give pay raise to certain employee. Supervisor may give employee a undeserved high performance evaluation
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48. Employee Anxiety
Evaluation process may create anxiety for appraised employee
Opportunities for promotion, better work assignments, and increased compensation may hinge on results
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49. Reasons for Intentionally Inflating Ratings
Believe accurate ratings would damage subordinate’s motivation and performance.
Improve employee’s eligibility for merit raises.
Avoid airing department’s “dirty laundry.”
Avoid creating negative permanent record that might haunt employee in future.
Protect good workers whose performance suffered because of personal problems.
Reward employees displaying great effort even when results were relatively low.
Avoid confrontation with hard-to-manage employees.
Promote a poor or disliked employee up and out of department.
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50. Reasons for Intentionally Lowering Ratings
Scare better performance out of employee.
Punish difficult or rebellious employee.
Encourage problem employee to quit.
Create strong record to justify planned firing.
Minimize amount of merit increase a subordinate receives.
Comply with organizational edict that discourages managers from giving high ratings.
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51. Characteristics of Effective Appraisal System
Job-related criteria
Performance expectations
Standardization
Trained appraisers
Continuous open communication
Conduct performance reviews
Due process
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52. Job-Related Criteria
Most basic criterion needed in employee performance appraisals
Uniform Guidelines and court decisions quite clear on this point
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53. Performance Expectations
Managers and subordinates must agree on performance expectations in advance of appraisal period
If employees clearly understand expectations, they can evaluate own performance and make timely adjustments
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54. Standardization
Firms should use same evaluation instrument for all employees in same job category who work for same supervisor
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55. Trained Appraisers
Common deficiency in appraisal systems -evaluators seldom receive training on how to conduct effective evaluations
Training should be ongoing
How to rate employees and how to conduct appraisal interviews
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56. Continuous Open Communication
Employees have strong need to know how well they are performing
Good appraisal system provides highly desired feedback on continuing basis
Should be few surprises in performance review
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57. Conduct Performance Reviews
Special time should be set for formal discussion of employee’s performance
Withholding appraisal results is absurd
Performance review allows them to detect any errors or omissions in appraisal, or employee may simply disagree with evaluation and want to challenge it
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58. Due Process Provide employees opportunity to appeal appraisal results
Must have procedure for pursuing grievances and having them addressed objectively
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59. Legal Implications
Employers must prepare for more discrimination lawsuits and jury trials related to performance appraisals
Unlikely that any appraisal system will be immune to legal challenge
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60. Courts Normally Require
Either absence of adverse impact on members of protected classes or validation of process.
System that prevents one manager from directing or controlling a subordinate’s career.
Appraisal should be reviewed and approved by someone or some group in organization.
Rater, or raters, must have personal knowledge of employee’s job performance.
Must use predetermined criteria that limits manager’s discretion.
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61. Appraisal Interview Achilles’ heel of entire evaluation process
Scheduling interview
Interview structure
Use of praise and criticism
Employees’ role
Use of software
Concluding interview
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62. Interview Structure Discuss employee’s performance
Assist employee in setting goals and personal development plans for next appraisal period
Suggesting means for achieving established goals, including support from manager and firm
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63. Conducting Separate Interviews
Merit in conducting separate interviews for discussing (1) employee performance and development and (2) pay
When topic of pay emerges in interview, it tends to dominate conversation with performance improvement taking a back seat
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64. Use of Praise and Criticism
Praise is appropriate when warranted
Criticism, even if warranted, is especially difficult to give
“Constructive” criticism is often not perceived that way
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65. Employees’ Role
Should go through diary or files and make notes of every project worked on, regardless of whether they were successful or not
Information should be on appraising manager’s desk well before review
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66. Concluding the Interview
Ideally, employees will leave interview with positive feelings about management, company, job, and themselves
Cannot change past behavior, future performance is another matter
Should end with specific and mutually agreed upon plans for employee’s development
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67. A Global Perspective: Two Cultures’ View of Performance Appraisal
Special problems when translated into different cultural environments
Chinese companies tend to focus appraisals on different criteria
Place great emphasis upon moral characteristics
May tolerate less than optimal performance because maintaining family control is so important
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