1 HUMAN RESOURCEMANAGEMENTPERFORMANCEMANAGEMENTCHAPTER NO. 5
2 AFTER STUDYING THIS CHAPTER YOU SHOULD BE ABLE TO: Understand and differentiate between Performance Management and Performance Appraisal.Identify the factors that effect Performance.Narrate Performance Management Cycle.Describe two major purposes of Performance Management.Understand three job criteria and information types.Discuss the pros and cons of using different raters to appraise a person’s performance .Develop , evaluate, and administer at least four appraisal methods to measure performanceExplain several rater errors by giving examples of them.Perform an effective appraisal interview.Design Appraisal form to measure employee performance effectively.
3 Common Elements to Performance WHAT IS PERFORMANCEPERFORMANCEPerformance is essentially what an employee does or does not do.Quality of outputQuantity of outputTimeliness of outputPresence at workCooperativenessCommon Elements to Performance
5 PERFORMANCE MANAGEMENT A Process that Consolidates:1. Defining Performance2.Measuring Performance3. Feedback PerformanceInformationObjective of this system is to align employee work behaviors with the organization’s goals.
6 PERFORMANCE MANAGEMENT CYCLE Administrative Decisions (1)Set clear performance goals & make developmental plansAdministrative DecisionsPromotionPay raiseTransfer(4)Annual appraisal against goals adjust & plan for next year(2)Monitor goal progress(3)Coaching by supervisor throughout the year
7 PURPOSES FOR PERFORMANCE MANAGEMENT1. DEVELOPMENTALProvide Performance FeedbackRecognize Individual PerformanceAssist in Goal IdentificationEvaluate Goal AchievementIdentify Individual Training NeedsImprove Communication2. ADMINISTRATIVEDocument Personnel DecisionsDetermine Promotion CandidatesIdentify Poor PerformanceDecide Retention or TerminationDecide on LayoffsValidate Selection CriteriaMake Reward/Compensation Decisions
8 PERFORMANCE APPRAISAL DEFINITIONPerformance appraisal is the process of evaluating how well employees perform their jobs when compared to a set of standards, and then communicating that information.
9 Measure Performance PERFORMANCE MANAGEMENT VS. PERFORMANCE APPRAISAL is used to align employee’s performance with the organization’s goals .is the part of performance management in which an employee’s contribution to the organization during a specified period of time is measured.Defines PerformanceMeasure PerformanceFacilitates PerformanceEvaluate PerformanceEncourages PerformanceFeedback on Performance
10 2. Who Measure Performance WHAT IS IN PERFORMANCEAPPRAISAL SYSTEM1. What is Measured2. Who Measure Performance3. When is it Measured4. How is it Measured
11 1. WHAT IS MEASURED INFORMATION TYPE a. TRAIT BASED INFORMATIONIdentifies a subjective character trait—such as pleasant personality, initiative, or creativity but traits tend to be ambiguous.b. BEHAVIOR BASED INFORMATIONFocuses on specific behaviors that lead to job success but more difficult to identify.c. RESULT BASED INFORMATIONConsiders what the employee has done or accomplished but un measurable parts of the job may be left out.
12 2. WHO MEASURE PERFORMANCE TeamSupervisorPeersCustomersSelfSubordinates
13 360 DEGREE PERFORMANCE APPRAISAL Multisource feedback recognizes that the manager is no longer the sole source of performance appraisal information. Instead, Feed back from various colleagues and constituencies is obtained and given to the manager, thus allowing the manager to help shape the feedback from all sources.
14 3. WHEN IS IT MEASUREDTASK ORIENTEDMONTHLYQUARTERLYANNUALLY
15 Category Rating Methods Behavioral/Objectives Methods 4. HOW IS IT MEASURECategory Rating MethodsaComparative MethodsbBehavioral/Objectives MethodsdNarrative Methodsc
16 a. CATEGORY RATING METHODS The simplest methods for appraising performance are category rating methods which require a manager to mark an employee’s level of performance on a specific form divided into categories of performance.i. Adjective/Graphic Rating Scalesii. Checklist Appraisal
17 i. GRAPHIC/ADJECTIVE TRAIT RATING SCALEAllows the rater to mark an employee’s performance on a continuum. Because of its simplicity, this method is the one most frequently used. One of the oldest and most popular methods of appraisal is the adjective rating scale in which a rating scale list traits (such as quality, quantity, job knowledge & integrity etc) and range of performance values (from unsatisfactory to outstanding for each traits.
19 ii. CHECKLIST APPRAISAL This method is composed of a list of statements or words. Raters check statements most representative of the characteristics and performance of employees.
20 ii. FORCED DISTRIBUTION b. COMPARATIVE METHODSComparative methods require that managers directly compare the performance of their employees against one another.i. INDIVIDUAL RANKINGii. FORCED DISTRIBUTIONiii. PAIRED COMPARISON
21 i. INDIVIDUAL RANKINGThe ranking method consists of listing all employees from highest to lowest in performance.
22 ii. FORCED DISTRIBUTION High Average Performer The group order ranking method or forced distribution method is similar to grading on a curve and it requires the evaluator to place employee into a particular classification.High Performers15ExampleHigh Average Performer20Average Performer30Low Average Performer20Low Performer15
23 iii. PAIRED COMPARISONIn paired comparison method for every traits (quality of work, quantity of work, creativity etc) you pair and compare very subordinate. This method become unwieldy when large numbers are being compared.
24 i. Critical Incident Appraisal c. NARRATIVE METHODSNARRATIVE METHODSi. Critical Incident Appraisalii. Essay Appraisaliii. Field Review
25 i. CRITICAL INCIDENT APPRAISAL In the critical incident method, the manager keeps a written record of both highly favorable and unfavorable actions in an employee’s performance. A list of critical incidents is kept during the entire rating period for each employee.Critical incidents, with their focus on behaviors, judge performance rather then personalities.
27 ii. ESSAY APPRAISALThe essay, or “Free-Form,” appraisal method requires the manager to write a short essay describing each employee’s performance during the rating period. The rater usually is given a few general headings under which to categorize comments.
28 SAMPLE ESSAY APPRAISAL Name:Position:Department:Date started on job:Date of last rating:Date of this rating:Appraisal of Performance: ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Suggestions for Development:____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Prepared By: Position:Manager’s Signature: Employee’s Signature:
29 iii. FIELD REVIEWIn the field review, the outside reviewer becomes an active partner in the rating process. The outsider interviews the manager about each employee’s performance, then compiles the notes from each interview into a rating for each employee. Then the rating is reviewed by the supervisor for needed changes. This method assumes that the outsider knows enough about the job setting to help supervisors give more accurate and thorough appraisals.
30 d. BEHAVIORAL/OBJECTIVES METHODS Behavioral approaches hold promise for some situations in overcoming some of the problems with other methods.i. Behaviorally Anchored Rating Scales (BARS)ii. Management by Objective (MBO)
31 i. BEHAVIORALLY ANCHORED RATING SCALES (BARS)Assess an employee’s behaviors instead of other characteristics. BARS match descriptions of possible behaviors with what the employee most commonly exhibits i.e., Behavioral rating approaches describe examples of employee job behaviors.
32 BARS Dimensions (Sample) Quality of Group member input Group Member has read all agreed upon materialGroup Member participate in discussion, through not always prepareGroup members does little work & offer no valuable ideas or feedback54321EffectiveIneffectiveBARS Dimensions (Sample)Quality of Group member input
33 BARS for Supervision (Sample) Exhibits respect towards subordinates Can train and develop subordinatesCriticize of personnel in front of others.Sets a poor example.54321EffectiveIneffectiveBARS for Supervision (Sample)Exhibits respect towards subordinatesDoes not lead by example.
38 BENEFITS OF PERFORMANCE APPRAISAL For the AppraiseeFor the OrganizationFor the Management
39 BENEFITS OF PERFORMANCE APPRAISAL Cont . . .For the AppraiseeFor the OrganizationBetter understanding of hisrole.Clear understanding ofstrengths and weaknesses byemployees.Increased motivation, jobsatisfaction, and self-esteem.Opportunity of opendiscussion regarding workproblems & how to overcomethem.Improved working relationshipswith the superiors.Improved performancethroughout the organization.Creation of a culture ofcontinuous improvement andsuccess.Conveyance of message thatpeople are valued.
40 BENEFITS OF PERFORMANCE APPRAISAL Cont . . .For the ManagementIdentification of performers and non-performers and their development.Opportunity to prepare employees forassuming higher responsibilities.Opportunity to improve communicationbetween the employees andthe management.Identification of training an developmentneeds.Generation of ideas for improvements.Better identification of potential andformulation of career plans.
41 1. Problems of Varying Standards 4. Leniency and Strictness Errors RATERS ERRORS1. Problems of Varying Standards4. Leniency and Strictness ErrorsRATERSERRORS2. Recency Effect5. Rater Bias3. Central Tendency6. Halo Effect7. Contrast Error
42 1. Problems of Varying Standards RATERS ERRORS Cont . . .When appraising employees, a manager should avoid using different standards and expectations for employees performing similar jobs.1. Problems of Varying StandardsError in which the rater gives greater weight to recent events when appraising an individual’s performance.2. Recency EffectCentral tendency error Rating all employees in a narrow band in the middle of the rating scale.3. Central Tendency
43 4. Leniency, and Strictness Errors RATERS ERRORS Cont . . .The leniency error occurs when ratings of all employees are at the high end of the scale.The strictness error occurs when a manager uses only the lower part of the scale to rate employees.4. Leniency, and Strictness ErrorsRater bias occurs when a rater’s values or prejudices distort the rating.5. Rater BiasThe halo effect occurs when a manager rates an employee high or low on all items because of one characteristic.6. Halo Effect
44 RATERS ERRORS Cont . . . 6.Contrast Error The tendency to rate people relative to other people rather than to performance standards.6.Contrast Error
45 APPRAISAL FEEDBACK INTERVIEW After appraisals, interview is conducted in which the supervisor and subordinate review the appraisal and manager provide constructive feed back and mutually make developmental plans.
46 Performance management Factors that InfluencePerformance1. Motivation2. Environment3. Ability1. Set clear performance goals & make developmental plans2. Monitor Goal ProgressPerformance Management CycleAdministrative Decisions3. Caching by supervisor throughout the year4. Annual appraisal against goals adjust & plan for next yearPurposes for PerformanceManagement1. Developmental2. AdministrativePerformance Management Vs.Performance AppraisalPerformance ManagementDefines PerformanceFacilitates PerformanceEncourages PerformancePerformance AppraisalMeasure PerformanceEvaluate PerformanceFeedback on PerformanceWhat is in PerformanceAppraisal System1. What is Measured2. Who Measure Performance3. When is it Measured4. How is it MeasuredPerformance managementa. Trait Based InformationSupervisorTask OrientedCustomersMonthlyb. Behavior Based InformationSubordinatesPeersQuarterlyManagement Quality Circlec. Result Based InformationTeamAnnuallySelfd. Behavioral Methodsc. Narrative Methodsb. Comparative Methodsa. Category Rating MethodsCHAPTER 7i. Behaviorally Anchored Rating Scalesi. Critical Incident Appraisali. Individual Rankingi. Adjective Rating Scalesii. Management by Objective (MBO)ii. EssayAppraisalii. Forced Distributionii. Checklist Appraisaliii. Field Reviewiii. Paired ComparisonMBO Processa. Job review and Agreementb. Development Of Performance Standardsc. Guided Settings of Objectivesd. Continuing Discussion of PerformanceBENEFITS OF PERFORMANCEAPPRAISALa. For theAppraiseeb. For the Organizationc. For the Management1. Problems of Varying Standards2. Recency Effect3. Central TendencyRATERS ERRORS7. Contrast Error4. Leniency and Strictness Errors5. Rater Bias6. Halo Effect
47 THOUGHT OF THE DAYThe greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.“Michelangelo”