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Chapter 10: Establishing the Performance Management System

Purposes of a Performance Management System Feedback - let employees know how well they have done and allow for employee input. Development - identify areas in which employees have deficiencies or weaknesses. Documentation - to meet legal requirements Difficulties in Performance Management Systems Focus on the individual: Discussions of performance may elicit strong emotions and may generate conflicts when subordinates and supervisors do not agree. Focus on the process: Company policies and procedures may present barriers to a properly functioning appraisal process. Additionally, appraisers may be poorly trained. Performance Management and EEO HRM practices must be bias free, objective and job-related. Valid performance appraisals are conducted at established intervals and are done by trained appraisers. The Appraisal Process

ESTABLISHING PERFORMANCE STANDARDS. The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. COMMUNICATING THE STANDARDS Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators.

MEASURING THE ACTUAL PERFORMANCE The most difficult part of the process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work. COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees performance. DISCUSSING RESULTS The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better.
APPRAISAL METHOD Three approaches: *Absolute standards measuring an employees performance against established standards. *Relative standards *Objective Evaluating absolute standards:

Katleyas Report

*Essay Appraisal : Appraiser writes narrative describing employee performance & suggestions. *Critical Incident Appraisal : Based on key behavior anecdotes illustrating effective or ineffective job performance. *Checklist Appraisal : Appraiser checks off behaviors that apply to the employee. *Graphic Rating Scale Appraisal : A performance appraisal method that list traits and a range of performance for each.

Katleya M. Lucasan Written Report

(...continuation of Appraisal Methods) Forced-Choice Appraisal

A performance evaluation in which the rater must choose between two specific statements about an employees work behavior.

Behaviorally Anchored Rating Scales (BARS)

A performance appraisal technique that generates critical incidents and develops behavioral dimensions of performance. The evaluator appraises behaviors rather than traits.


Evaluating an employees performance by comparing the employee with other employee

Group Order Ranking

Employees are placed in a classification reflecting their relative performance, such as top one-fifth.

Individual ranking
Ranking employees performance from highest to lowest.

Paired Comparison
Ranking individuals performance by counting the times any one individual is the preferred member when compared with all other employees.

Using Achieved Outcomes to Evaluate Employees

Management by Objectives (MBO) A performance appraisal method that includes mutual objective setting and evaluation based on the attainment of the specific objectives. Goal Specificity Participative Decision Making An Explicit Time Period Performance Feedback


Leniency Error Performance appraisal distortion caused by evaluating employees against ones own value system. Halo Error The tendency to let our assessment of an individual on one trait influence our evaluation of that person on other specific traits. Similarity Error Evaluating employees based on the way an evaluator perceives himself or herself. Low Appraiser Motivation Evaluators may be reluctant to be accurate if important rewards for the employee depend on the results. Central Tendency The tendency of a rater to give average ratings. Inflationary Pressures Pressures for equality and fear of retribution for low ratings leads to less differentiation among rated employees.

Sheila Mae L. Damuag

Inappropriate Substitutes for Performance - Effort, enthusiasm, neatness, positive attitudes, conscientiousness, promptness, and congeniality are less relevant for some jobs than others. - An appropriate substitute for performance in one job may be totally inappropriate in another. Attribution Theory - Evaluations are directly affected by a supervisors perceptions of who is believed to be in control of the employees performance the employer or the manager. - Attempts to differentiate between elements the employee controls (internal) versus those the employee cannot control (external).

One research study found support for two key generalizations regarding attribution: When appraisers attribute an employees poor performance to internal control, the judgment is harsher than when the same poor performance is attributed to external factors. When an employee performs satisfactorily, appraisers will evaluate the employee more favorably if the performance is attributed to the employees own efforts than if the performance is attributed to outside forces.

Impression Management - An extension of attribution theory which takes into account how the employee influences the relationship with his or her supervisor. - If the employee positively impresses his or her supervisor, there is a strong likelihood that the individual is likely to receive a higher rating.

Creating More Effective Performance Management Systems Use Behavior Based Measures

Measures based on specific descriptions of behavior are more job related and elicit more inter rater agreement than traits, such as loyalty, initiative, courage, reliability and self-expression. Absolute standards tend to be biased by positive leniency; relative standards suffer when there is little actual variability among the subjects. The appraiser should discuss with the employee both the expectations and disappointments on a frequent basis. Increasing the number of raters leads to more reliable and valid ratings. As the number of raters increases, the probability of attaining more accurate information increases.

Combine Absolute and Relative Standards

Provide Ongoing Feedback

Use Multiple Raters

Use Peer Evaluations - A performance assessment in which co workers provide input into the employees performance. - Main advantages of Peer Evaluation : 1. The tendency for co-workers to offer more constructive insight to each other so that, as a unit, each will improve; 2. Recommendations tend to be more specific regarding job behaviors. Upward Appraisals or the Reverse Review - Employees provide frank and constructive feedback to their supervisors on such areas as leadership and communication skills. 360 Degree Appraisals - Performance evaluations in which supervisors, peers, employees, customers, and the like evaluate the individual. Appraisers should rate only in those areas in which they have significant job knowledge. Appraisers should be organizationally as close as possible to the individual being evaluated. More effective raters are asked to do the appraisals. Untrained appraisers who do poor appraisals can demoralize employees, decrease productivity and increase legal liability for the company.

Rate Selectively

Train Appraisers

International Performance Appraisal Who performs the evaluation?

Companies must consider who will be responsible for the evaluations: the hostcountry management or the parent-country management. Different cultural perspectives and expectations between the parent and local country may make evaluation difficult. Evaluation forms may not be translated accurately. May make sense to use different forms for parent-country nationals and hostcountry nationals. Performance criteria for a particular position should be modified to fit the overseas position and site. Include a current expatriates insights as part of the evaluation.

Quantitative measures may be misleading. Evaluation Formats

Chapter 10 Written Report

Group 5
Submitted by: Sheila Mae Damuag Dorothy Joy Galay Katleya Lucasan

Submitted to: Prof. Melissa B. Mangali