© 2008 by Prentice Hall8-1 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

© 2008 by Prentice Hall8-2 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

© 2008 by Prentice Hall8-3 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

© 2008 by Prentice Hall8-4 Responsibility for Appraisal Immediate supervisor Subordinates Peers and team members Self-appraisal Customer appraisal

© 2008 by Prentice Hall8-5 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

© 2008 by Prentice Hall8-6 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

© 2008 by Prentice Hall8-7 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

© 2008 by Prentice Hall8-8 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

© 2008 by Prentice Hall8-9 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

© 2008 by Prentice Hall8-10 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

© 2008 by Prentice Hall8-11 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

© 2008 by Prentice Hall 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

© 2008 by Prentice Hall8-13 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

© 2008 by Prentice Hall8-14 Rating Scales Rates according to defined factors Judgments are recorded on a scale Many employees are evaluated quickly

© 2008 by Prentice Hall8-15 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

© 2008 by Prentice Hall8-16 Essay Brief narrative describing performance Tends to focus on extreme behavior Depends heavily on evaluator's writing ability Comparing essay evaluations might be difficult

© 2008 by Prentice Hall8-17 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

© 2008 by Prentice Hall8-18 Ranking All employees from group ranked in order of overall performance Comparison is based on single criterion, such as overall performance

© 2008 by Prentice Hall8-19 Paired Comparison Variation of ranking method Compares performance of each employee with every other employee in the group

© 2008 by Prentice Hall8-20 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

© 2008 by Prentice Hall8-21 Behaviorally Anchored Rating Scales (BARS) Combines traditional rating scales and critical incidents methods Job behaviors derived from critical incidents described more objectively

© 2008 by Prentice Hall8-22 Result-Based Systems Manager and subordinate agree on objectives for next appraisal Evaluation based on how well objectives accomplished

© 2008 by Prentice Hall8-23 Use of Computer Software Available in recording appraisal data Reduces required paperwork

© 2008 by Prentice Hall8-24 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

© 2008 by Prentice Hall8-25 Appraiser Discomfort Performance appraisal process cuts into manager’s time Experience can be unpleasant when employee has not performed well

© 2008 by Prentice Hall8-26 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

© 2008 by Prentice Hall8-27 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

© 2008 by Prentice Hall8-28 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

© 2008 by Prentice Hall8-29 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

© 2008 by Prentice Hall8-30 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