MGTO 231 Human Resources Management Performance appraisal I Dr. Kin Fai Ellick WONG

Prologue Performance appraisal for employees = academic report for students Normally, firms perform 1 to 2 appraisal per year Performance appraisal could be more “terrible” than academic report, because …. Normally, there are appraisal interviews

Questions for you What objectives does an HR manager want to achieve from performance appraisal? Why and how these objectives are important? What will the consequences be if the HR manager fails to achieve these objectives?

Outline Some basic concepts of performance appraisal Identifying performance dimensions Measuring performance (next lesson) Managing performance (next lesson)

Outline Some basic concept of performance appraisal Identifying performance dimensions Measuring performance (next lesson) Managing performance (next lesson)

What is performance appraisal? Evaluation for improvement, not just for criticism Future-oriented activity (useful feedback) based on past performance –Training and development

The basic three-stage model –Identification  measurement  management

A Model of Performance Appraisal Identification Measurement Management Source: Managing Human Resources, 4th Edition, p.223

Identification –What areas should be examined? –Examining the relevance instead of irrelevance (e.g., sex, gender, religion) Measurement –The development of standard and measure –Again, the issues of reliability and validity

Management –Providing feedback –Coaching the ways to achieve higher level of performance

The uses of PA 1 Administrative purpose –Used as the basis for determining employees’ work conditions, promotions, termination, and rewards –It helps manager “justify” his/her HR decisions –A clear-cut criterion is usually mentioned

“ 但為何一畢業才知 一世我也要考試 ” – 小星星（唱：楊千嬅；詞：林夕） But why don ’ t I Not Realize There are examinations in my whole life ” Small stars (Singer: Miriam Yeung; Lyrics: Lam Jik)

The uses of PA 2 Developmental purpose –Used as the basis for improving employees’ performance –Providing feedback for improvement Do you remember goal-setting theory?

Benefits of PA (Employer) Assessing individual differences after selection Documentation of employees’ performance (legal defense) Rational basis for bonus and merit system Set appraisal dimensions that fit the strategic goals Create appropriate expectation to employees Management process Validation of selection tools

Benefits of PA (employees) Performance feedback and assessment for improving performance Fairness, effects (rewards and punishments) based on relatively standardized measures Goal-setting Increasing motivation

Questions for you What objectives does an HR manager want to achieve from performance appraisal? Why and how these objectives are important? What will the consequences be if the HR manager fails to achieve these objectives?

Outline Some basic concept of performance appraisal Identifying performance dimensions Measuring performance (next lesson) Managing performance (next lesson)

A Model of Performance Appraisal Identification Measurement Management Source: Managing Human Resources, 4th Edition, p.223

What are to be measured? Dimension –An aspect of performance that determines effective job performance The very first step –The development of dimension can be quite complicated

What constitute a good computer programmer? –Quality of programs –Quantity of programs –Interpersonal effectiveness –Hardworking –Good writing skills –Being familiar with updated computer knowledge –Good typing skills –Etc.

What are the “REAL” dimensions Job analysis –The dimensions can be defined through job analysis –Critical incident technique, task inventory analysis, position analysis questionnaire, etc.

Outline Some basic concept of performance appraisal Identifying performance dimensions Measuring performance (next lesson) Managing performance (next lesson)

A Model of Performance Appraisal Identification Measurement Management Source: Managing Human Resources, 4th Edition, p.223

What are to be measured? The dimensions derived in the first step Through the measurement tools (analogous to selection tools), the employee’s performance on a specific dimension is usually quantified Thus, similar to selection tools, the reliability and validity of the measures should be well established before conducting performance appraisal.

Appraisal formats Type of judgment –Relative or absolute Scale format –Nominal, ordinal, interval, or ratio Focus of the measure –Trait, behavior, outcome

Relative vs. absolute judgment Relative judgment –Rating based on comparing an employee’s performance to the performance of other employees doing the same job –“Your performance is 1.2 SDs below mean” –Emphasis on individual differences, but somehow may be artificial (e.g., when all are excellent or poor employees) –Used mainly for administrative need –E.g., attention ranking scale, paired comparison method

Alternation Ranking Scale Source: Human Resource Management, 10 th Edition, p.321

Ranking Employees by 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. Source: Human Resource Management, 10 th Edition, p.321

Absolute judgment –Rating based on performance standards –A score of 70 out of 100 reveals that the performance is acceptable, but it does not reveal how well this rating is when being compared with others’ –Different raters may have different standards

Relative performance assessment of your grade For Required Core Courses: GradesSenate Guidelines A-, A, A+15.0% B-, B and B+32.5% C-, C and C+40.0% D7.5% F0-5%

Scale formats Nominal scales –Name or category Country (e.g. China, U.S.A., Japan) Department (MGTO, ECON, ACCT, etc.) Categorical Not so popular in PA

Ordinal scales –Order –Distances between levels may not be equal Rank (e.g., 1 st, 2 nd, 5 th ) –Useful for relative or absolute judgment?

Interval scales –Equal distances –Did not have absolute zero Degree Celsius (20ºC  double of 10 ºC)

Ratio scales –Equal distances –Have absolute zero Length (1000m = double of 500m) To be continued…