PERFORMANCE APPRAISAL AND MANAGEMENT

Objectives:

What is performance? Performance appraisal vs Performance Management (and Potential Appraisal). Purposes of Performance appraisal Systems Requirements of Effective Appraisal Systems Steps in Appraising performance Appraisal Methods Problems and Solutions in appraising performance Who should appraise? 360 degree appraisal The Appraisal Interview How to give effective feedback.
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Measuring performance vs Action (Bee-hive case) Performance appraisal Evaluating an employees current and/or past performance relative to his or her performance standards. Performance management The process employers use to make sure employees are working toward organizational goals. Potential Appraisal To identify the potential of a given employee to occupy higher positions in the organizational hierarchy and undertake higher responsibilities

Performance Management Linkage

Figure 111

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Difference Between Performance Management and Performance Appraisals

Performance Management

Performance Appraisal

Processes used to identify, encourage, measure, evaluate, improve, and reward employee performance.

The process of evaluating how well employees perform their jobs and then communicating that information to the employees.

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Types of Performance Information

Copyright 2005 Thomson Business & Professional Publishing. All rights reserved.

Figure 113

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Relevance of Performance Criteria

Deficiency Contamination

Performance Criteria

Overemphasis

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Performance Standards

Performance Standards Expected levels of performance Benchmarks, goals, and targets Characteristics of well-defined standards Realistic Measurable Clearly understood

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Building Blocks of Performance Managment

Direction sharing Role clarification Goal setting and planning Goal alignment Developmental goal setting Ongoing performance monitoring Coaching and support Performance assessment Rewards, recognition and compensation Workflow, process control and ROI management

Relationship between performance appraisal and job analysis

Job Analysis

Performance Standards

Performance Appraisal

Describes work and personnel requirement of a particular job

Translate job requirements into levels of acceptable or unacceptable performance

Describes the jobrelevant strengths and weaknesses of each individual

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Why Performance Management?

Increasing use by employers of performance management reflects: The popularity of the total quality management (TQM) concepts. The belief that traditional performance appraisals are often not just useless but counterproductive. The necessity in todays globally competitive industrial environment for every employees efforts to focus on helping the company to achieve its strategic goals.

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Why appraise performance?

Appraisals

play an integral role in the employers performance management process. Appraisals help in planning for correcting deficiencies and reinforce things done correctly. Appraisals, in identifying employee strengths and weaknesses, are useful for career planning Appraisals affect the employers salary raise decisions.

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Multiple Purposes of Appraisal

Table 10.1. Multiple Purposes of Performance Assessment General Applications Specific Purpose Identification of individual needs Performance feedback Determining transfer and job assignments Identification of individual strengths and developmental needs Salary Promotion Retention or termination Recognition of individual performance Lay-offs Identification of poor performers HR planning Determining organisation training needs Evaluation of organisational goal achievement Information for goal identification Evaluation of HR systems Reinforcement of organisational development Criteria for validation research Documentation for HR decisions Helping to meet legal requirements

Developmental Uses

Administrative Uses/Decisions

Organisational Maintenance/Objectives

Documentation

Source: Cynthia D. Fisher, et al. Human resource management, Houghton Mifflin, 1997, p.455

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The Performance Appraisal Process

Objectives of Performance Appraisal

Establish Job Expectations

Design an Appraisal Programme

Appraise Performance

Performance Interview

Use Appraisal Data for Appropriate Purposes

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Criteria for Effective Performance Appraisal Systems

1. Validity: are we measuring the right thing? Are we really measuring job performance? We want to measure important (relevant) aspects of job performance, in a way that is free from extraneous or contaminating influences, and that encompasses the whole job (i.e., our measures of job performance are not deficient: we arent leaving out important aspects of job performance) 2. Reliability: consistency of measurement Example: inter-rater reliability If two people observe a particular employees job performance, do they agree in their rating of the employees performance?
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3. Freedom from bias It does not illegally discriminate (race, sex, age, etc.) It is free from rating errors (intentional or unintentional): Leniency errors Severity errors Central tendency errors Halo errors 4. Practicality The benefits the organization gets from using it should outweigh the costs of developing & using it Utility analysis It should be relatively easy to use It should be accepted by managers and employees
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Components of Effective Performance Management

Figure 112

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The performance appraisal methods may be classified into three categories, as shown in Figure below.

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Performance Appraisal Methods

Graphic rating scale

A

scale that lists a number of traits and a range of performance for each that is used to identify the score that best describes an employees level of performance for each trait.

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Graphic Rating Scale with Space for Comments

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Portion of an Administrative Secretarys Sample Performance Appraisal Form

Source: James Buford Jr., Bettye Burkhalter, and Grover Jacobs, Link Job Description to Performance Appraisals, Personnel Journal, June 1988, pp. 135136.

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Performance Management Outline

Source: www.cwru.edu.

Figure 95a

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Performance Management Outline (contd)

Source: www.cwru.edu.

Figure 95b

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Performance Management Outline (contd)

Source: www.cwru.edu.

Figure 95c

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 Checklists

A performance appraisal tool that uses a list of statements or work behaviors that are checked by raters. Can be quantified by applying weights to individual checklist items. Drawbacks Interpretation of item meanings by raters Weighting creates problems in appraisal interpretation Assignment of weights to items by persons other than the raters

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Alternation ranking method

Ranking employees from best to worst on a particular trait, choosing highest, then lowest, until all are ranked.

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Paired comparison method

Ranking

employees by making a chart of all possible pairs of the employees for each trait and indicating which is the better employee of the pair. Paired comparisons: for all possible pairs of employees, subjectively decide which employee is better

# of paired comparisons = (N2 N)/2 Example: N = 4 (42 4)/2 = 6 paired comparisons:

Bob > Carol; Bob > Ted; Bob > Alice Carol > Ted; Carol > Alice Ted > Alice

Example: N = 12 (122 12)/2 = 66 paired comparisons Note that you are comparing one employee to another Problem: inconsistent subjective comparisons: Bob > Carol; Carol > Ted; Ted > Bob (see the inconsistency here?)
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Ranking Employees by the Paired Comparison Method

Note: + means better than. means worse than. For each chart, add up the number of 1s in each column to get the highest-ranked employee.
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Forced Distribution
Performance

appraisal method in which ratings of employees are distributed along a bell-shaped curve. Drawbacks
Assumes a normal distribution of performance. Resistance by managers to placing individuals in the lowest or highest groups. Providing explanation for placement in a higher or lower grouping can be difficult. Is not readily applicable to small groups of employees.

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Forced Distribution on a Bell-Shaped Curve

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Critical Incident Method

Keeping a record of uncommonly good or undesirable examples of an employees work-related behaviour and reviewing it with the employee at predetermined times. A SAMPLEI saw Mishra closing the steam line valve at the instant the pipeline got burst.We could save a lot of lives due to the above factor.

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Advantages of critical incident reporting method of appraisal

Persons caliber is best judged in critical conditions. Continous appraisal ,not year end judgement.Thus eliminating recency effect. As evaluation is incident specific, the rater bias is minimized. Feedbacks can help improve the employee performance. Greater role clarity and improvement of work methods. Identifies near misses, which can have bearing on safety critical applications.

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THE DISADVANTAGES

The term itself critical incident is subjective. The lack of time of the rater is one major hindrance for critical apprisal. Some of the major positive attitudes like obidience,faithfulness,honesty etc are neglected here. Relies on memory,some of the major incidents may be forgotten. Unless used for disciplinary action,the scope is rather restricted.

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Examples of Critical Incidents for an Assistant Plant Manager

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Behavioral/Objective Methods

Behavioral Rating Approach

Assesses

employees behaviors instead of other characteristics Consists of a series of scales created by:
Identifying important job dimensions Creating statements describing a range of desired and undesirable behaviors (anchors) Example- Next Slide

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 Behaviorally

Anchored Rating Scale (BARS): replace the vague descriptors in a rating scale with specific examples of performance

Example: Customer assistance 5 = Could be expected to volunteer to help customer and to walk with customer to location of desired product 4 = Could be expected to walk with customer to location of desired product when asked for help by customer 3 = Could be expected to tell and point customer to where the desired product is located when asked for help by customer 2 = Could be expected to shrug shoulders and walk away when asked for assistance by customer 1 = Could be expected to hide from customers in the employee break-room
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Behaviorally-Anchored Rating Scale for Customer Service Skills

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Developing a BARS:
Generate

critical incidents Develop performance dimensions Reallocate incidents Scale the incidents Develop a final instrument

Advantages of using a BARS

A

more accurate gauge Clearer standards Feedback Independent dimensions Consistency

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Management by Objectives (MBO)

Management by Objectives Specifying the performance goals that an individual and his or her manager agree the employee will to try to attain within an appropriate length of time. Key MBO Ideas Employee involvement creates higher levels of commitment and performance. Encourages employees to work effectively toward achieving desired results. Performance measures should be measurable and should define results.
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The MBO Process

Job Review and Agreement

Development of Performance Standards

Objective Setting

Continuing Performance Discussions

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Computerized and Web-Based Performance Appraisal

Performance appraisal software programs Keep notes on subordinates during the year. Electronically rate employees on a series of performance traits. Generate written text to support each part of the appraisal. Electronic performance monitoring (EPM) Having supervisors electronically monitor the amount of computerized data an employee is processing per day, and thereby his or her performance.
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Advantages and Disadvantages of Appraisal Tools

Table 93

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Potential Rating Scale Appraisal Problems

Unclear standards Halo effect Central tendency Strictness/leniency Bias Attractiveness Effect Attribution bias Negative and positive skew Recency effect Similar to me effect Stereotyping
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A Graphic Rating Scale with Unclear Standards

Note: For example, what exactly is meant by good, quantity of work, and so forth?

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AN APPRAISER MUST:

BE AWARE OF THE OBJECTIVES & REQUIREMENTS OF THE EMPLOYEES JOB

HAVE THE OPPORTUNITY TO FREQUENTLY OBSERVE THE EMPLOYEE OR HIS/HER WORK BE CAPABLE OF EVALUATING AND RECORDING OBSERVED WORK BEHAVIOR OR PERFORMANCE AVOID OR MINIMIZE POTENTIAL APPRAISAL ERRORS AND BIAS

THE FUNDAMENTAL ATTRIBUTION ERROR

POOR WORK PERFORMANCE BY OTHERS THEIR POOR WORK PERFORMANCE IS CAUSED BY PERSONAL FACTORS (No effort, laziness, they didnt try)
THE PERSON IS THE REASON FOR FAILURE

MY POOR WORK PERFORMANCE MY POOR WORK PERFORMANCE IS DUE TO SITUATIONAL FACTORS BEYOND MY CONTROL (Poor support, uncooperative coworkers, unforeseen events)
THE ENVIRONMENT IS THE REASON FOR FAILURE

Note the self-serving biaswe are not responsible for our failures, but others are responsible for theirs!

ATTRIBUTION THEORY
KELLEY 73

IS THE CAUSE OF BEHAVIOR SEEN AS INTERNAL (PERSONAL) OR EXTERNAL (SITUATIONAL)? WE LOOK FOR THREE INDICATORS TO DECIDE.

DISTINCTIVE
IS THIS PERSONS PERFORMANCE DIFFERENT ON OTHER TASKS AND IN OTHER SITUATIONS? (YES = EXTERNAL, NO = INTERNAL)

CONSISTENT
OVER TIME, IS THERE A CHANGE IN BEHAVIOR OR RESULTS ON THIS TASK BY THIS PERSON? (YES = EXTERNAL, NO = INTERNAL)

CONSENSUS
DO OTHERS PERFORM OR BEHAVE SIMILARLY WHEN ASSIGNED A SIMILAR POSITION OR TASK? (YES = EXTERNAL, NO = INTERNAL) Consistent Yes answers lead us to external attributions Environmentally caused No answers lead us to internal attributions -- The person is responsible

ATTRIBUTIONAL MODEL OF FAILURE

INTERNAL ATTRIBUTION Person Responsible?
LACK OF ABILITY LACK OF EFFORT

EXTERNAL ATTRIBUTION Situation Responsible?

DIFFICULT TASK BAD LUCK

ENLIGHTENED SUPERVISOR RESPONSE

LACKS ABILITY LACKS EFFORT DIFFICULT TASK BAD LUCK ----Training or Transfer Reprimand or Motivational Strategy Job Redesign Sympathy and Support

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

Appraiser Discomfort
Performance

appraisal process cuts into managers time Experience can be unpleasant when employee has not performed well

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 employees job performance Employee appraisal based primarily on personal characteristics may place evaluator and company in untenable positions

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

Leniency/Strictness
Leniency - Giving undeserved high ratings Strictness - Being unduly critical of employees work performance Worst situation is when firm has both lenient and strict managers and does nothing to level inequities

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

Recent Behavior Bias

Employees 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

Personal Bias (Stereotyping)

Managers allow individual differences such as gender, race or age to affect ratings they give Effects of cultural bias, or stereotyping, can influence appraisals Other factors Example: mild-mannered employees may be appraised more harshly simply because they do not seriously object to results

Manipulating the Evaluation

Sometimes, managers control virtually every aspect of appraisal process and are in position to manipulate system Example: Want to give pay raise to certain employee. Supervisor may give employee a undeserved high performance evaluation

Employee Anxiety
Evaluation process may create anxiety for appraised employee Opportunities for promotion, better work assignments, and increased compensation may hinge on results

Reasons for Intentionally Inflating Ratings

Believe accurate ratings would damage subordinates motivation and performance. Improve employees eligibility for merit raises. Avoid airing departments dirty laundry. Avoid creating negative permanent record that might haunt employee in future. Protect good workers whose performance suffered because of personal problems. Reward employees displaying great effort even when results were relatively low. Avoid confrontation with hard-to-manage employees. Promote a poor or disliked employee up and out of department.

Reasons for Intentionally Lowering Ratings

Scare better performance out of employee. Punish difficult or rebellious employee. Encourage problem employee to quit. Create strong record to justify planned firing. Minimize amount of merit increase a subordinate receives. Comply with organizational edict that discourages managers from giving high ratings.

Common Rater Errors

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How to Avoid Appraisal Problems

Learn and understand the potential problems, and the solutions for each.

Use the right appraisal tool. Each tool has its own pros and cons.
Train supervisors to reduce rating errors such as halo, leniency, and central tendency. Have raters compile positive and negative critical incidents as they occur. Ensure that raters observe ratees on an ongoing basis Do not have the rater evaluate too many ratees Make sure that the performance dimensions and standards are stated clearly Avoiding terms that have different meanings for different raters

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Training of Managers and Employees

Appraisal Training Topics: Appraisal process and timing Performance criteria and job standards that should be considered How to communicate positive and negative feedback When and how to discuss training and development goals Conducting and discussing the compensation review How to avoid common rating errors
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Who Conducts Appraisals

Supervisors who rate their subordinates Employees who rate their supervisors Team members who rate each other Employees self-appraisal Outside sources rating employees Multisource (360 feedback) appraisal

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Employee Rating of Managers

Advantages

Disadvantages

Helps in identifying competent managers Serves to make managers more responsive to employees Can contribute to the career development of managers

Negative reactions by managers to employee ratings Subordinates fear of reprisals may inhibit them from giving realistic (negative) ratings

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Team/Peer Rating

Advantages

Disadvantages

Helps improve the performance of lower-rated individuals Peers have opportunity to observe other peers. Peer appraisals focus on individual contributions to teamwork and team performance.

Can negatively affect working relationships. Can create difficulties for managers in determining individual performance. Organizational use of individual performance appraisals can hinder the development of teamwork

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Multisource Appraisal

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