1. Performance Management and Appraisal
Chapter Thirteen
Performance Management and Appraisal

2. Learning Objectives
Describe the major purposes of performance appraisal
Explain how the performance appraisal process can affect employee morale either positively or negatively
Discuss the major considerations involved in developing an appraisal program
Identify common appraisal errors
Describe several performance appraisal methods

3. Learning Objectives (cont’d)
Cite the advantages and disadvantages of MBO and team MBO
Describe several procedures for conducting effective appraisal interviews and discussions
Identify several factors that can affect the choice of an appraisal method

4. Performance appraisal and review
Is the formal, systematic assessment of how well employees are performing their jobs in relation to established standards and the communication of that assessment to employees

5. Figure 13.1 The performance appraisal system as an extension of job design

6. Developing an Appraisal Program
Legal Requirements
Choosing Appraisers
Supervisor Appraisals
Self-Appraisals
Peer Appraisals
Appraisals by Direct Reports
Customer/Outside Appraisals
Group or Committee Appraisals
360-Degree Feedback

7. Developing an Appraisal Program (cont’d)
Reliability and Validity
Reliability: consistency with which a supervisor rates a subordinate in successive ratings (assuming consistent performance) or consistency with which two or more supervisors rate performance when they have comparable information
Validity: extent to which appraisal procedures measure real differences in performance

8. Role of the Human Resources Department
It plays a critical role in the design and implementation of the appraisal program It is the logical group to conduct research on the equity of appraisals throughout the organization and on the reliability and validity of whatever system is used.

9. Appraisal Errors affect reliability and validity
Halo error
Means that the rater has made positive generalizations from one dimension of a person’s performance to all performance dimensions.
Error of central tendency
Occurs when the rater tends to rate the performance of all or most of the persons being appraised around the center of the rating scale.
Leniency error
Means that the appraiser has given the employees higher ratings than they deserve

10. Performance Appraisal Methods
Graphic Rating Scale
Check List
Essay
Critical Incidents
Ranking
Behavioral Rating Scales
Management by Objectives

11. Graphic Rating Scale
Rating scales may be numerically based on adjectives or descriptive statements.
Contemporary rating scales tend to include only performance-related characteristics and identify different performance levels for each characteristic.

12. Checklist method
The rater is presented with a list of positive or negative adjectives or descriptive statements and is asked to check those that apply to the person being rated.
In the weighted checklist, each item receives a certain value based on its perceived importance to successful performance.
While easy to use, checklists are not free of problems. Raters may not be certain what the items measure and may have difficulty interpreting the results.

13. Essay method
The appraiser writes a freeform essay describing the subordinate’s performance in a number of broad categories (such as the employee’s promotability, strengths and limitations, and additional training needs).
1. This approach gives the appraiser great flexibility, but because of the method’s open-endedness, it is difficult to compare essay appraisals made by different supervisors.
2. This method, which is time‑consuming, also depends on the writing skills of the appraiser.

14. Critical‑incidents technique
Requires the appraiser to keep a record of unusually favorable or unfavorable occurrences in an employee’s work.
1. The advantage of this approach is that it provides a factual record of job‑related data.
2. However, the approach requires close and careful observation, which is time-consuming and costly and which may make employees apprehensive.

15. Ranking
It is a method that lists all employees from best to worst. Used less frequently than other methods, it obscures the differences in performance between employees and relies heavily on how a ranking is interpreted. Ranking has spawned class action lawsuits at companies such as Ford and Microsoft.

16. Behaviorally anchored rating scales (BARS)
Are used to rate employees on specific job behaviors, rather than traits or characteristics, which reduces the amount of subjective judgment required by the rater and increases the job relatedness of appraisal.

17. Behavioral observation scales (BOS)
Are similar to BARS except that several behaviors are listed individually for each performance dimension, and the rater is required to assess the individual on each behavior.
1. BARS and BOS are time‑consuming and costly to develop.
2. Because BARS and BOS are based on careful job analysis, they are likely to be acceptable to government labor agencies.

18. Management by Objectives
It is a system that features a periodic agreement between a superior and a subordinate on the subordinate’s objectives for a particular period and a periodic review of how well the subordinate achieved those objectives (which are stated in quantitative rather than qualitative terms whenever possible).

19. MBO, vantages and disvantages
It can give individual employees greater direction and self-control, build their self-confidence, motivate them, improve their performance, further their growth and development, and provide them with full knowledge of appraisal criteria In their worst forms, MBO programs can be one‑sided, autocratic, and time-consuming mechanisms designed to force employees to comply with a superior’s directives.

20. Appraisal Interview and Dialogue
Purposes:
To let employees know where they stand or how they are doing
To encourage good behavior
To explain what is expected of employees
To communicate results of salary or promotion decisions
To plan for future performance improvement
To improve supervisor‑subordinate relationships

21. Choosing the Appraisal Process
Organizational Considerations
Leadership style
Organizational climate
Training in appraisal procedures
Appropriateness to the Job
Selecting appraisal method based on traits, behavior or combination of both

22. Role of the Human Resources Department
Determines who evaluates and what method will be used
Holds training on how to use the system and to conduct appraisal interviews
Conducts research on equity, reliability, validity, and degree of acceptance of appraisal system

23. Key Terms Performance appraisal and review
Performance management system
Feedback
Evaluation goals
Coaching and development goals
Multi-rater feedback
360-degree feedback
Reliability
Validity
Halo error
Error of central tendency
Leniency error
Graphic rating scale
Check list method
Weighted check list
Essay method
Critical-incidents technique
Behaviorally anchored rating scales
Behavioral observation scales

24. Key Terms (cont’d) Management by objectives (MBO) Team MBO
Appraisal interview
Appraisal dialogue