1. HUMAN RESOURCE
MANAGEMENT
PERFORMANCE
MANAGEMENT
CHAPTER NO. 5

2. AFTER STUDYING THIS CHAPTER YOU SHOULD BE ABLE TO:
Understand and differentiate between Performance Management and Performance Appraisal.
Identify the factors that effect Performance.
Narrate Performance Management Cycle.
Describe two major purposes of Performance Management.
Understand three job criteria and information types.
Discuss the pros and cons of using different raters to appraise a person’s performance .
Develop , evaluate, and administer at least four appraisal methods to measure performance
Explain several rater errors by giving examples of them.
Perform an effective appraisal interview.
Design Appraisal form to measure employee performance effectively.

3. Common Elements to Performance
WHAT IS PERFORMANCE
PERFORMANCE
Performance is essentially what an employee does or does not do.
Quality of output
Quantity of output
Timeliness of output
Presence at work
Cooperativeness
Common Elements to Performance

4. FACTORS THAT INFLUENCE
PERFORMANCE
P=f (M,E,A)
1. MOTIVATION
Career Ambition
Employee Conflict
Frustration
Fairness/Satisfaction
Goals/Expectations
2. ENVIRONMENT
Equipment/Materials
Job Design
Economic Conditions
Unions
Rules & Policies
Management Support
Laws & Regulations
3. ABILITY
Technical Skills
Interpersonal Skills
Problem Solving Skills
Analytical Skills
Communication Skills
Physical Skills

5. PERFORMANCE MANAGEMENT
A Process that Consolidates:
1. Defining Performance
2.Measuring Performance
3. Feedback Performance
Information
Objective of this system is to align employee work behaviors with the organization’s goals.

6. PERFORMANCE MANAGEMENT CYCLE Administrative Decisions
(1)
Set clear performance goals & make developmental plans
Administrative Decisions
Promotion
Pay raise
Transfer
(4)
Annual appraisal against goals adjust & plan for next year
(2)
Monitor goal progress
(3)
Coaching by supervisor throughout the year

7. PURPOSES FOR PERFORMANCE
MANAGEMENT
1. DEVELOPMENTAL
Provide Performance Feedback
Recognize Individual Performance
Assist in Goal Identification
Evaluate Goal Achievement
Identify Individual Training Needs
Improve Communication
2. ADMINISTRATIVE
Document Personnel Decisions
Determine Promotion Candidates
Identify Poor Performance
Decide Retention or Termination
Decide on Layoffs
Validate Selection Criteria
Make Reward/Compensation Decisions

8. PERFORMANCE APPRAISAL
DEFINITION
Performance appraisal is the process of evaluating how well employees perform their jobs when compared to a set of standards, and then communicating that information.

9. Measure Performance PERFORMANCE MANAGEMENT VS. PERFORMANCE APPRAISAL
is used to align employee’s performance with the organization’s goals .
is the part of performance management in which an employee’s contribution to the organization during a specified period of time is measured.
Defines Performance
Measure Performance
Facilitates Performance
Evaluate Performance
Encourages Performance
Feedback on Performance

10. 2. Who Measure Performance
WHAT IS IN PERFORMANCE
APPRAISAL SYSTEM
1. What is Measured
2. Who Measure Performance
3. When is it Measured
4. How is it Measured

11. 1. WHAT IS MEASURED INFORMATION TYPE
a. TRAIT BASED INFORMATION
Identifies a subjective character trait—such as pleasant personality, initiative, or creativity but traits tend to be ambiguous.
b. BEHAVIOR BASED INFORMATION
Focuses on specific behaviors that lead to job success but more difficult to identify.
c. RESULT BASED INFORMATION
Considers what the employee has done or accomplished but un measurable parts of the job may be left out.

12. 2. WHO MEASURE PERFORMANCE
Team
Supervisor
Peers
Customers
Self
Subordinates

13. 360 DEGREE PERFORMANCE APPRAISAL
Multisource feedback recognizes that the manager is no longer the sole source of performance appraisal information. Instead, Feed back from various colleagues and constituencies is obtained and given to the manager, thus allowing the manager to help shape the feedback from all sources.

14. 3. WHEN IS IT MEASURED
TASK ORIENTED
MONTHLY
QUARTERLY
ANNUALLY

15. Category Rating Methods Behavioral/Objectives Methods
4. HOW IS IT MEASURE
Category Rating Methods a
Comparative Methods b
Behavioral/Objectives Methods d
Narrative Methods c

16. a. CATEGORY RATING METHODS
The simplest methods for appraising performance are category rating methods which require a manager to mark an employee’s level of performance on a specific form divided into categories of performance.
i. Adjective/Graphic Rating Scales
ii. Checklist Appraisal

17. i. GRAPHIC/ADJECTIVE TRAIT
RATING SCALE
Allows the rater to mark an employee’s performance on a continuum. Because of its simplicity, this method is the one most frequently used. One of the oldest and most popular methods of appraisal is the adjective rating scale in which a rating scale list traits (such as quality, quantity, job knowledge & integrity etc) and range of performance values (from unsatisfactory to outstanding for each traits.

18. i. GRAPHIC/ADJECTIVE TRAIT RATING SCALE

19. ii. CHECKLIST APPRAISAL
This method is composed of a list of statements or words. Raters check statements most representative of the characteristics and performance of employees.

20. ii. FORCED DISTRIBUTION
b. COMPARATIVE METHODS
Comparative methods require that managers directly compare the performance of their employees against one another.
i. INDIVIDUAL RANKING
ii. FORCED DISTRIBUTION
iii. PAIRED COMPARISON

21. i. INDIVIDUAL RANKING
The ranking method consists of listing all employees from highest to lowest in performance.

22. ii. FORCED DISTRIBUTION High Average Performer
The group order ranking method or forced distribution method is similar to grading on a curve and it requires the evaluator to place employee into a particular classification.
High Performers 15
Example
High Average Performer 20
Average Performer 30
Low Average Performer 20
Low Performer 15

23. iii. PAIRED COMPARISON
In paired comparison method for every traits (quality of work, quantity of work, creativity etc) you pair and compare very subordinate. This method become unwieldy when large numbers are being compared.

24. i. Critical Incident Appraisal
c. NARRATIVE METHODS
NARRATIVE METHODS
i. Critical Incident Appraisal
ii. Essay Appraisal
iii. Field Review

25. i. CRITICAL INCIDENT APPRAISAL
In the critical incident method, the manager keeps a written record of both highly favorable and unfavorable actions in an employee’s performance. A list of critical incidents is kept during the entire rating period for each employee.
Critical incidents, with their focus on behaviors, judge performance rather then personalities.

26. SAMPLE CRITICAL INCIDENT APPRAISAL

27. ii. ESSAY APPRAISAL
The essay, or “Free-Form,” appraisal method requires the manager to write a short essay describing each employee’s performance during the rating period. The rater usually is given a few general headings under which to categorize comments.

28. SAMPLE ESSAY APPRAISAL
Name:
Position:
Department:
Date started on job:
Date of last rating:
Date of this rating:
Appraisal of Performance: ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Suggestions for Development:
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Prepared By: Position:
Manager’s Signature: Employee’s Signature:

29. iii. FIELD REVIEW
In the field review, the outside reviewer becomes an active partner in the rating process. The outsider interviews the manager about each employee’s performance, then compiles the notes from each interview into a rating for each employee. Then the rating is reviewed by the supervisor for needed changes. This method assumes that the outsider knows enough about the job setting to help supervisors give more accurate and thorough appraisals.

30. d. BEHAVIORAL/OBJECTIVES METHODS
Behavioral approaches hold promise for some situations in overcoming some of the problems with other methods.
i. Behaviorally Anchored Rating Scales (BARS)
ii. Management by Objective (MBO)

31. i. BEHAVIORALLY ANCHORED
RATING SCALES (BARS)
Assess an employee’s behaviors instead of other characteristics. BARS match descriptions of possible behaviors with what the employee most commonly exhibits i.e., Behavioral rating approaches describe examples of employee job behaviors.

32. BARS Dimensions (Sample) Quality of Group member input
Group Member has read all agreed upon material
Group Member participate in discussion, through not always prepare
Group members does little work & offer no valuable ideas or feedback 5 4 3 2 1
Effective
Ineffective
BARS Dimensions (Sample)
Quality of Group member input

33. BARS for Supervision (Sample) Exhibits respect towards subordinates
Can train and develop subordinates
Criticize of personnel in front of others.
Sets a poor example. 5 4 3 2 1
Effective
Ineffective
BARS for Supervision (Sample)
Exhibits respect towards subordinates
Does not lead by example.

35. ii. MANAGEMENT BY OBJECTIVE (MBO)
MBO involves setting specific measurable goals with each employee and then periodically reviewing the progress made.

36. THE MBO PROCESS a. Job review and Agreement
b. Development Of Performance Standards
c. Guided Settings of Objectives
d. Continuing Discussion of Performance

37. ?
Best Appraisal
Method
COMBINATIONS OF
METHODS

38. BENEFITS OF PERFORMANCE APPRAISAL
For the Appraisee
For the Organization
For the Management

39. BENEFITS OF PERFORMANCE
APPRAISAL Cont . . .
For the Appraisee
For the Organization
Better understanding of his
role.
Clear understanding of
strengths and weaknesses by
employees.
Increased motivation, job
satisfaction, and self-esteem.
Opportunity of open
discussion regarding work
problems & how to overcome
them.
Improved working relationships
with the superiors.
Improved performance
throughout the organization.
Creation of a culture of
continuous improvement and
success.
Conveyance of message that
people are valued.

40. BENEFITS OF PERFORMANCE
APPRAISAL Cont . . .
For the Management
Identification of performers and non-
performers and their development.
Opportunity to prepare employees for
assuming higher responsibilities.
Opportunity to improve communication
between the employees and
the management.
Identification of training an development
needs.
Generation of ideas for improvements.
Better identification of potential and
formulation of career plans.

41. 1. Problems of Varying Standards 4. Leniency and Strictness Errors
RATERS ERRORS
1. Problems of Varying Standards
4. Leniency and Strictness Errors
RATERS
ERRORS
2. Recency Effect
5. Rater Bias
3. Central Tendency
6. Halo Effect
7. Contrast Error

42. 1. Problems of Varying Standards
RATERS ERRORS Cont . . .
When appraising employees, a manager should avoid using different standards and expectations for employees performing similar jobs.
1. Problems of Varying Standards
Error in which the rater gives greater weight to recent events when appraising an individual’s performance.
2. Recency Effect
Central tendency error Rating all employees in a narrow band in the middle of the rating scale.
3. Central Tendency

43. 4. Leniency, and Strictness Errors
RATERS ERRORS Cont . . .
The leniency error occurs when ratings of all employees are at the high end of the scale.
The strictness error occurs when a manager uses only the lower part of the scale to rate employees.
4. Leniency, and Strictness Errors
Rater bias occurs when a rater’s values or prejudices distort the rating.
5. Rater Bias
The halo effect occurs when a manager rates an employee high or low on all items because of one characteristic.
6. Halo Effect

44. RATERS ERRORS Cont . . . 6.Contrast Error
The tendency to rate people relative to other people rather than to performance standards.
6.Contrast Error

45. APPRAISAL FEEDBACK INTERVIEW
After appraisals, interview is conducted in which the supervisor and subordinate review the appraisal and manager provide constructive feed back and mutually make developmental plans.

46. Performance management
Factors that Influence
Performance
1. Motivation
2. Environment
3. Ability
1. Set clear performance goals & make developmental plans
2. Monitor Goal Progress
Performance Management Cycle
Administrative Decisions
3. Caching by supervisor throughout the year
4. Annual appraisal against goals adjust & plan for next year
Purposes for Performance
Management
1. Developmental
2. Administrative
Performance Management Vs.
Performance Appraisal
Performance Management
Defines Performance
Facilitates Performance
Encourages Performance
Performance Appraisal
Measure Performance
Evaluate Performance
Feedback on Performance
What is in Performance
Appraisal System
1. What is Measured
2. Who Measure Performance
3. When is it Measured
4. How is it Measured
Performance management
a. Trait Based Information
Supervisor
Task Oriented
Customers
Monthly
b. Behavior Based Information
Subordinates
Peers
Quarterly
Management Quality Circle
c. Result Based Information
Team
Annually
Self
d. Behavioral Methods
c. Narrative Methods
b. Comparative Methods
a. Category Rating Methods
CHAPTER 7
i. Behaviorally Anchored Rating Scales
i. Critical Incident Appraisal
i. Individual Ranking
i. Adjective Rating Scales
ii. Management by Objective (MBO)
ii. Essay
Appraisal
ii. Forced Distribution
ii. Checklist Appraisal
iii. Field Review
iii. Paired Comparison
MBO Process
a. Job review and Agreement
b. Development Of Performance Standards
c. Guided Settings of Objectives
d. Continuing Discussion of Performance
BENEFITS OF PERFORMANCE
APPRAISAL
a. For the
Appraisee
b. For the Organization
c. For the Management
1. Problems of Varying Standards
2. Recency Effect
3. Central Tendency
RATERS ERRORS
7. Contrast Error
4. Leniency and Strictness Errors
5. Rater Bias
6. Halo Effect

47. THOUGHT OF THE DAY
The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.
“Michelangelo”