1. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter 9 Performance Management

3. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Challenges of Performance Review  In forced ranking, all employees are ranked against each other and grades are distributed along a bell-shaped curve  Do you support the use of forced rankings?  If the criteria used to determine an employee’s rank are more qualitative than quantitative, does this undermine the forced- ranking system?  Suppose all the members of a given team are superstars. Can forced ranking deal with that situation?

4. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Facts About Performance Appraisals  Employees are often less certain where they stand after the appraisal interview than before it  Employees tend to evaluate their supervisors less favorably after the interview than before it  Employees feel that the authoritarian, “tell-and-sell” approach to appraisal is out of sync with today’s democratic business structure

5. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Purposes of Performance-Appraisal Systems  Appraisals provide legal and formal organizational justification for employment decisions  Appraisals are used as criteria in test validation  Appraisals provide feedback to employees  Appraisals can help establish objectives for training programs  Appraisals can help diagnose organizational problems

6. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Key Components of Effective Appraisal Systems  Relevance  Sensitivity  Reliability  Acceptability  Practicality

7. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. To Avoid Legal Problems with Performance Appraisals  Conduct a job analysis to determine characteristics necessary for effective job performance  Incorporate these characteristics into a rating instrument  Provide written instructions and train supervisors to use the rating instrument properly  Establish a system to detect potentially discriminatory practices  Include formal appeal mechanisms + higher-level review  Document all appraisals + reasons for any termination decisions  Provide performance counseling or guidance to assist poor performers

8. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Alternative Methods for Appraising Employee Performance  Behavior-oriented rating methods  Relative rating systems  Absolute rating systems  Results-oriented rating systems

9. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Behavior-Oriented Rating Methods  Narrative essay  Ranking  Simple ranking  Alternation ranking  Paired comparisons  Forced distribution  Behavioral checklist  Critical incidents  Graphic rating scales  Behaviorally anchored rating scales

10. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Who Should Evaluate Performance?  The immediate supervisor  Peers  Subordinates  Self-appraisal  Customers whom the employee has served  Computers

11. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. To Improve 360-Degree Feedback  Be clear about the purpose of the appraisal – employee development  Train raters to understand the overall process, show them how to complete forms, and to avoid common rating errors  Seek a variety of types of information about performance  Make all raters accountable to upper-level review  Help employees interpret and react to the ratings, and include goal setting.  Implement 360-degree reviews regularly, so employees can track their progress over time  Take the time to evaluate the overall system

12. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Incorporation of TQM into Appraisal  Customer expectations should generate individual or team performance expectations  Include results expectations that meet or exceed customer expectations  Consider individual behaviors that make a real difference in achieving total customer satisfaction, for example  Listening skills  Attention to detail  Initiative