Lecture 10: Performance Appraisal

Class Overview n Course Administration n Performance Appraisal Discussion

Introduction to Performance Appraisal

Case: The Hallway Appraisal

n How can such positive feedback result in such a mixture of feelings? n How is Performance Appraisal currently practiced in your company? n What are the critical elements of a good and defensible performance appraisal system?

Performance Appraisal Defined n Performance Appraisal is the systematic assessment of an individual’s job related strengths and weaknesses.

Design and Implementation Considerations n See Handout Booklet for Systems Model

This discussion will attempt to cover the following factors: 1. Goals and Uses of PA. 2. Legal Considerations of PA. 3. Selecting a Method/Instrument u Characteristics of the effective PA system. 4. Training Managers. u Sources of errors in rating employee performance

Today’s discussion focuses on Recording Work Behaviors. 6. Evaluate Employees. 7. PA Interviewing and Counseling u Who should conduct PA’s? 8. Evaluating the PA System.

Uses and Goals of P.A.

1. Compensation n One of the most important rewards is pay. n It is logical that amount of an employee’s pay increase should be related to job performance. n In fact it is quite common for an organization to base the amount of merit increases directly to performance ratings.

Two reasons to tie pay to performance. 1. Society is committed to a sense of equity that suggests reward and performance should be related. 2. Research in motivation shows that if pay is to be a motivator, employees must see a clear correlation or relationship with performance. u If pay is based on PA. Then the system must be valid in that it accurately measured important employee contributions.

2. Placement n Many organizations promote from within whenever possible. u This helps decrease turnover, increase motivation, and attract good applicants.

2. Placement... u Job behaviors are much better predictors of future performance than test score or interviews. u By observing behavior it is possible to identify specific aspects of performance that are determined by a Job Analysis to be necessary for the next level.

2. Placement... u Another aspect of placement comes into play when an employee must be transferred out of a job who he/she is performing poorly to a job where there is a better chance for acceptable performance.

3. Employee Development n Many personnel professionals consider this to be the most productive aspect of P.A.

Feedback Objectives 1. Employees find out where they stand with the supervisor and the organization. 2. Supervisor-Subordinate relationships are strengthened because they encourage mutual agreement on performance expectations.

Feedback Objectives 3. Training and Development needs are identified. 4. Provides an opportunity for the supervisor and subordinate to express themselves on a variety of performance related issues.

4. Validation of Selection Instruments uTitle VII of the 1964 Civil Rights Act and its amendments (specifically stated in the EEOC guidelines on Employee Selection Procedures) have required that selection instruments be job related.

5. Discipline n Dealing with problem employees is probably one of the most troublesome aspects of a supervisor’s job. n P.A. can be used to identify job related problems and through frequent observation and feedback, the employee can be made aware of the problems and what corrections are necessary.

5. Discipline n Also P.A. (if reliable and valid) can be used as legal justification for termination.

Legal Considerations n Under the Guidelines, PA is considered a test and falls under the requirements of all other selection procedures. In fact, anything used to make an employment decision is a “test.”

Prescriptions for legally defensible appraisal systems n Ensure that procedures for personnel decisions do not differ as a function of the race, sex national origin, religion, or age of those affected by such decisions. n Use objective and uncontaminated data whenever they are available.

Prescriptions for legally defensible appraisal systems n Provide a formal system of review or appeal to resolve disagreements regarding appraisals. n Use more than one independent evaluator of performance. n Use a formal, standardized system for personnel decisions.

Prescriptions for legally defensible appraisal systems n Ensure that evaluators have ample opportunity to observe rate performance before they rate their subordinates. n Avoid ratings on traits such as dependability, drive, aptitude or attitude.

Prescriptions for legally defensible appraisal systems n Provide documented performance counseling prior to performance-based termination decisions. n Communicate specific performance standards to employees. n Provide raters with written instructions on how to complete performance evaluations.

Prescriptions for legally defensible appraisal systems n Evaluate employees on specific work dimensions, rather than on a single overall or global measure. n Require documentation in terms of specific behaviors (e.g.., critical incidents) for extreme ratings. n Base the content of the appraisal form on a job analysis.

Prescriptions for legally defensible appraisal systems n Provide employees with an opportunity to review their appraisals. n Educate personnel decision-makers regarding laws on discrimination.

Selecting a PA Method/Instrument

Types of PA Methods n Ranking n Behavioral Checklists n Narrative Essays n Graphic Rating Scales u Behaviorally Anchored Rating Scales n Goal Setting u MBO

Training Managers

Typical Rating Errors n Leniency Errors - Leniency Errors can be either in the negative or positive direction. They occur when a rater consistently gives all subordinates high or low ratings. It can be controlled by reducing the ambiguity in the rating scales (see your booklet) and by forcing raters to justify any high or low ratings.

Typical Rating Errors... n Central Tendency - Central Tendency occurs when a rater rates everyone average. This can be avoided by having the supervisor rank his/her employees before rating them.

Typical Rating Errors... n Halo Effects - Halo Effects occur when a rater generalizes performance on one duty to performance on other job duties. Just because an employee does well in one area of the job does not mean they will do well in all other areas as well. Use as much factual information as possible and take your time when rating employees.

Typical Rating Errors... n Contrast Effects - Contrast Effects occur when a rater lets an extremely bad or extremely good employee evaluation color any subsequent employee's evaluation. Do not rate all your employees at one sitting. Put some time and distance between each rating so that the glow of the previous evaluation does not carry over to the next evaluation.

Recording Work Behaviors n Utilizing the Employee Log uCritical Incidents

Evaluating Employees n Review causes of rating errors n Allow subordinate to self-evaluate n See page 43 of handout booklet for other recommendations

Conducting the PA Interview n Consider interview type. u Tell and Sell u Tell and Listen n Consider type of employee. n It should not be the only feedback given to an employee.

Conducting the PA Interview... n Allow the employee to participate. n Utilize goal-setting. n Never talk money! n See pages of handout booklet for other recommendations.

Evaluating the PA Process

Three important questions 1. Do employees accurately perceive feedback during the interview? 2. Do employees react favorable to feedback immediately following the interview? 3. Is there a change in performance during the next appraisal period?

Any Questions?