2. Performance Appraisal Tehzeeb Sakina Amir HRM-session 8 Spring 2011-MBA

3. Main contents  Performance Appraisal & Performance Management  Methods of Appraising Performance  Management by Objectives  Appraising Performances – Problems & Solutions  The Appraisal Interview  Total Performance Management Process

4. Performance Appraisal  Evaluate an employee’s current and/or past performance relative to his performance standards.  A procedure which involves: Setting work standards Setting work standards Assessing employee’s actual performance against those standards Assessing employee’s actual performance against those standards Providing feedback with aim to motivate him to eliminate deficiencies or keep on performing at par Providing feedback with aim to motivate him to eliminate deficiencies or keep on performing at par  Traditional vs new face of performance appraisal

5. Performance Management  More integrated approach of: Setting goals Setting goals Training employees Training employees Appraising and rewarding Appraising and rewarding  Performance Management aims at improving employee to ensure that his performance is supporting company’s strategic goals

6. Performance Management  It reflects: Total Quality Management (TQM) Total Quality Management (TQM) Negates issues of ‘appraisal’ Negates issues of ‘appraisal’ Supports strategic focus Supports strategic focus

7. Performance Management building blocks… Direction Sharing Direction Sharing Role Clarity Role Clarity Goal Setting & Planning Goal Setting & Planning Goal alignment Goal alignment Developmental goal setting Developmental goal setting Ongoing performance monitoring Ongoing performance monitoring Ongoing feedback Ongoing feedback Coaching and support Coaching and support Performance assessment Performance assessment Rewards, recognition & compensation Rewards, recognition & compensation Workflow, process control, and return on investment management Workflow, process control, and return on investment management

8. Goal Setting – the focus  Employees must be appraised based on the specific performance standards which should be aligned with company’s strategic aims/goals.  Goals must be: Specific Specific Measurable Measurable Challenging but doable Challenging but doable Relevant Relevant Time-bound Time-bound Participatory Participatory

9. Why Appraise?  Four Reasons: Pay increase/promotions’ decisions base Pay increase/promotions’ decisions base Important part of performance management Important part of performance management Generate a plan to overcome deficiencies and reinforce areas of strength Generate a plan to overcome deficiencies and reinforce areas of strength Career planning purpose Career planning purpose  Appraisals must be ‘realistic’ and not unnecessarily ‘soft’. Common fears are: Unpleasant reactions from appraisee, fear of hiring & training somebody new, etc Unpleasant reactions from appraisee, fear of hiring & training somebody new, etc

10. Role of HR in appraisals  HR serves a policy-making & advisory role in the process  To train the supervisors on appraising skills  To monitor that the system is being followed as per plan  Ensure that it complies with relevant laws and guidelines

11. Steps in Appraising Performance  Three steps: Defining the job – agree on duties and job standards Defining the job – agree on duties and job standards Appraising performance – comparing actual performance to the standard Appraising performance – comparing actual performance to the standard Feedback sessions Feedback sessions

12. The Appraisal Method  What to measure Measure employee's performance in terms of Measure employee's performance in terms of Generic dimensions: quantity, quality and timeliness of the workGeneric dimensions: quantity, quality and timeliness of the work Of developing one’s competencies or achieving one’s goalsOf developing one’s competencies or achieving one’s goals  How to measure Various methods of measurements: Various methods of measurements: Graphic rating scaleGraphic rating scale Alternation ranking methodAlternation ranking method MBOMBO

13. Graphic or Linear Rating Scales Attitude No interest In work: consistent complainer No interest In work: consistent complainer Careless: In-different Instructions Careless: In-different Instructions Interested in work: Accepts opinions & advice of others Enthusiasti c about job & fellow - workers Enthusiastic opinions & advice sought by others Decisiveness Take decisions in consultation with others whose views he values Slow to take decisions Take decisions after careful consideration Takes decisions promptly Takes decisions promptly Take decisions without consultation 1 2 3 4 5 Below ExpectationsMeets ExpectationsRole Model 1 2 3 4 5

14. Alternation Ranking Method Trait 1.6.2.7. 3.8. 4.9. 5.10. Highest Ranking Employee Lowest Ranking Employee

15. Paired Comparison Method As compared to ABCDA++- B--- C-+- D++- For the trait of QUALITY Employee rated

16. No. of employees 10% 20% 40%20% 10% poorBelow average goodExcellent Force distribution curve Forced distribution method

17. Narrative Form / Descriptive Form  Open end narrative questions, like: What areas of the employee’s work performance are meeting job performance standards? What areas of the employee’s work performance are meeting job performance standards? In what area is improvement needed during the next 6-12 months? In what area is improvement needed during the next 6-12 months? What factors or events that are beyond the employee’s control affect (positively or negatively) his ability to accomplish planned results during the next 6-12 months? What factors or events that are beyond the employee’s control affect (positively or negatively) his ability to accomplish planned results during the next 6-12 months? What specific strengths has the employee demonstrated on the job that should be more fully used during the next 6-12 months? What specific strengths has the employee demonstrated on the job that should be more fully used during the next 6-12 months?

18. Ex: A fire, sudden breakdown, accident Workers Reaction scale A Informed the supervisor immediately 5 B Become anxious on loss of output 4 C Tried to repair the machine 3 D Complained for poor maintenance 2 E Was happy to forced test 1 Critical Incident method Supervisor keeps a log of positive & negative examples (critical incidents) of a subordinate’s work related behavior

19. Management By Objective  MBO: Convert organizational objectives into specific objectives Convert organizational objectives into specific objectives Objectives cascade down from Organizational – divisional – departmental – individual goals Objectives cascade down from Organizational – divisional – departmental – individual goals Four features: Four features: Goal specificGoal specific Participative decision makingParticipative decision making Explicit time periodExplicit time period Performance feedbackPerformance feedback

20. PerformancePointsBehavior Extremely good 7 Can expect trainee to make valuable suggestions for increased sales and to have positive relationships with customers all over the country. Good6 Can expect to initiate creative ideas for improved sales. Above average5 Can expect to keep in touch with the customers throughout the year. Average4 Can manage, with difficulty, to deliver the goods in time. Below average3 Can expect to unload the trucks when asked by the supervisor. Poor2 Can expect to inform only a part of the customers. Extremely poor1Can expect to take extended coffee breaks & roam around purposelessly. Behavioral Anchored Rating Scales

21. Important Comparison ToolAdvantagesDisadvantages GRS Simple to use, provides quantitative rating Unclear standards, halo effect, central tendency, leniency, bias BARS Provides behavioral anchors, very accurate Difficult to develop AR Simple to use, avoids central tendency Can cause disagreements, unfair when all are excellent FDM End up with predetermined % or number of people in each group Results depend on your choice of cutoff points CIM Determines right & wrong, on- going evaluation Difficult to rank or rate employees relative to each other MBO Tied to jointly agreed upon performance objectives Time consuming

22. Appraising Performance Problems and Solutions

23. Rating Scale Problems  Unclear standards – too open to interpretations  Halo Effect – rating on one trait effects the rating on other traits too  Central Tendency – average rating of all employees  Leniency or Strictness – rate all subordinates either high or low  Bias – allow individual differences to effect the ratings (age, race, gender)

24. How to avoid appraisal problems  Know the problems  Use Right Tool  Train supervisors  Control Outside Influences  Keep a diary

25. Potential Rating Errors  Focusing on one or two critical incidents  Lower rating for less challenging jobs  Strictness error: nobody can be that good  Similarity (background, habits or experience)  Being influenced by prior performance  Rating for retention  Style differences  Emotional rating  Recency Effect: recent performance only  Friendship

26. Who Should be Appraising?  The Immediate Supervisor (heart of appraisal)  Peer Appraisal (logrolling)  Rating Committees (multiple raters)  Self Rating (more high)  Appraisal by Subordinates (upward feedback  360 degree Feedback

27. 360 degree Feedback  The Good Improved feedback from multiple sources Improved feedback from multiple sources Team Development Team Development Personal & Organizational performance development Personal & Organizational performance development Responsibility for career development Responsibility for career development Reduce discrimination risk Reduce discrimination risk Improved customer service Improved customer service Training Need Assessments Training Need Assessments

28. 360 degree Feedback  The Bad and The Ugly Exceptional expectations from the process Exceptional expectations from the process Design process downfall (change management guidelines) Design process downfall (change management guidelines) Failure to connect the process/strategic aims Failure to connect the process/strategic aims Insufficient information Insufficient information Focus on negatives/weaknesses Focus on negatives/weaknesses Rater’s inexperience and ineffectiveness Rater’s inexperience and ineffectiveness Paperwork/computer data entry work overload Paperwork/computer data entry work overload

29. The Appraisal Interviews  End of appraisal process  Uncomfortable event – thorough preparation and effective handling of the interview help  Types: Satisfactory – Promotable Satisfactory – Promotable Satisfactory – Not Promotable Satisfactory – Not Promotable Unsatisfactory – but correctable Unsatisfactory – but correctable Unsatisfactory – Uncorrectable Unsatisfactory – Uncorrectable

30. Guidelines for Appraisal Interviews  Preparation  Review & compare with performance standards  Give ample time to the employee to review too  Find a mutually agreed time, privacy must be ensured with fewer interruptions

31. Guidelines for Appraisal Interviews  Talk in terms of objective work data  Don’t get personal  Encourage the person to talk  Don’t tiptoe around (avoid vagueness)  Ensure interview leads to improvements – providing tools and support

32. Handling Appraisee  Handling Defensive Subordinate Appriasee deny, often reacts with anger, avoid his incompetence being discussed Appriasee deny, often reacts with anger, avoid his incompetence being discussed Recognize the defensive behavior as normal Recognize the defensive behavior as normal Never attack, concentrate on work/act Never attack, concentrate on work/act Postpone action Postpone action Recognize your own limitations Recognize your own limitations  How to criticize a subordinate Let him maintain his respect & dignity Let him maintain his respect & dignity Criticize in private Criticize in private Constructive criticism Constructive criticism Provide specific examples and specific suggestions while criticizing Provide specific examples and specific suggestions while criticizing Free of personal biases Free of personal biases

33. Handling Appraisee  Handling Formal Written Warning Purpose is to help employee identify his bad habits and shake them off Purpose is to help employee identify his bad habits and shake them off Also serve the purpose of defending the supervisor’s ratings Also serve the purpose of defending the supervisor’s ratings Warnings must identify the standards Warnings must identify the standards Making it clear that employee is aware of those standards Making it clear that employee is aware of those standards Specify deficiencies relative to the standards Specify deficiencies relative to the standards Show him that he has an opportunity to correct himself Show him that he has an opportunity to correct himself