PERFORMANCE APPRAISALS

Performance Management

Performance Appraisal
The identification, measurement, and management of human performance in organizations.

 Performance Management
Processes used to identify, encourage, measure, evaluate, improve, and reward employee performance
Provide information to employees about their performance. Clarify organizational performance expectations. Identify the development steps that are needed to enhance employee performance.

Document performance for personnel actions.

Provide rewards for achieving performance objectives.

Difference Between Performance Management and Performance Appraisals

Performance Management Performance Appraisal Processes used to The process of evaluating identify, encourage, how well employees measure, evaluate, perform their jobs and then improve, and reward communicating that employee performance. information to the employees.

Objectives
Opportunity to Regularly Discuss Results Supervisor Identifies Strengths and Weaknesses Fair and Equitable Format Basis for Salary/Promotion Recommendations

Main Purposes of Performance Management

Individual Rewards (Base and Incentive) Feedback for Sub-Ordinate (Plus and Minus) Recognition of Superior Performance Documentation of Weak Performance Personnel Decision-Making Future Goal Commitments (Planned Achievements)

Appraisal Data Is Needed For...

Assessment of current employee performance
are performance standards being met?

Training needs
what does the employee need to learn in order to improve current work performance?

Career planning and development

assessing an employees strengths and weaknesses to determine advancement

Compensation programs
provides a basis for rational decisions regarding pay adjustments (raises and bonuses)

Internal employee relations

used for decisions in several areas of internal employee relations, including promotion, demotion, termination, layoff, and transfer (transfers, layoffs, terminations)

Recruitment and selection

generates data to validate selection criteria

Human resource planning

assessment data is helpful in building replacement or succession charts

Performance Appraisal Process

External Environment Internal Environment

Identify Specific Performance Appraisal Goals

Establish Performance Criteria (Standards) and Communicate Them To Employees Examine Work Performed Appraise the Results

Discuss Appraisal with Employee

Trends in Managing Performance

Appraising/Evaluating
VERSUS

Managing Performance

Superior Performance leads to Superior Rewards

Issue: How to objectively measure specific goals!

Who Performs the Appraisal?

Immediate Supervisor Higher Management Self-Appraisals Peers (Co-Workers) Evaluation Teams Customers 360 Appraisals

Supervisor Appraisal
Performance appraisal done by an employees manager and often reviewed by a manager one level higher.

Self-Appraisal
Performance appraisal done by the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance review.

Subordinate Appraisal
Performance appraisal of a superior by an employee, which is more appropriate for developmental than for administrative purposes.

Peer Appraisal
Performance appraisal done by ones fellow employees, generally on forms that are complied into a single profile for use in the performance interview conducted by the employees manager.

Team Appraisal
Performance appraisal, based on TQM concepts, that recognizes team accomplishment rather than individual performance.

The 360 Appraisal Interview

Supervisor

Other Superiors

Other Superiors

Peers

Individual Staff
Self-Assessment

Customers

Teams

Teams

Sub-Ordinates

Types of Appraisals Errors/Problems

Leniency/Strictness Error Central Tendency Recency Error Halo/Horn Error Similar to me Error Personal Biases

Error of Central Tendency

Performance-rating error in which all employees are rated about average.

Leniency or Strictness Error

Performance-rating error in which the appraiser tends to give employees either unusually high or unusually low ratings.

Recency Error
Performance-rating error in which the appraisal is based largely on the employees most recent behavior rather than on behavior throughout the appraisal period.

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

Rating Errors Example

Halo
Job Rating Scale EXCELLENT on all factors Job Rating Scale Employee A EXCELLENT Job Rating Scale Employee A AVERAGE Job Rating Scale Employee B EXCELLENT Job Rating Scale Employee B AVERAGE Job Rating Scale Employee C SUPERIOR Job Rating Scale Employee C AVERAGE Job Rating Scale Employee D EXCELLENT Job Rating Scale Employee D AVERAGE

Leniency

Central Tendency

Recency Bias

Job rating scale behavior during the last month has been POOR.

Similar-To-Me Error
Performance-rating error in which an appraiser inflates the evaluation of an employee because of a mutual personal connection.

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

Scheduling the Performance Appraisal

1. Schedule the review and notify the employee ten days or two weeks in advance. 2. Ask the employee to prepare for the session by reviewing his or her performance, job objectives, and development goals. 3. Clearly state that this will be the formal annual performance appraisal.

Trait Appraisal, Behavioral Appraisal, and Outcome Appraisal Instruments Trait Appraisal
An appraisal tool that asks a supervisor to make judgments about worker characteristics that tend to be consistent and enduring.

Behavioral Appraisal
An appraisal tool that asks managers to assess a workers behaviors.

Outcome Appraisal
An appraisal tool that asks managers to assess the results achieved by workers.

Types of Performance to Measure

Results-based (results-oriented): measure the results produced by the employee
Examples for a retail store manager (examples of some results for which the store manager has responsibility and so should be held accountable):
Sales of the store Profit per square foot Inventory shrinkage Customer satisfaction

Types of Performance to Measure

Behavior-based (behavior-oriented): measure the employees behaviors
Examples for a retail store manager:
Good attendance Completes management reports correctly & on time Monitors customers and employees for theft Coaches employees to welcome customers to the store & offer assistance within 3 minutes, and to thank customers as they leave Conducts regular sessions with employees to develop teamwork

Types of Performance to Measure

Trait-based (trait-oriented): measure the employees personal characteristics

Examples for a retail store manager:
Ability to make decisions Loyalty to the company Communication skills Level of initiative

Performance Appraisal Methods

Once we decide which results & behaviors we want to measure, we next need to decide how to measure those results & behaviors
We have 3 categories of choices:
Objective measures of performance Subjective measures of performance Essay Method Management By Objectives

Performance Appraisal Methods

Objective measures: measure an employees job performance in terms of things we can see and count with no (or minimal) use of opinion
Production measures: count units produced by an employee Sales measures: count the sales ($) of an employee Personnel data: count things in the employees personnel file
Examples:
Number of times late to work Number of times absent Number of disciplinary actions taken

Performance Appraisal Methods

Subjective measures: measure an employees job performance using human judgment
Ranking: subjectively rank employees from best to worst
Example: 1. Bob 2. Carol 3. Ted 4. Alice Note carefully that the ranking is in terms of subjective opinion (e.g., who is your best salesperson overall?), not objective factors (e.g., which salesperson sold the most?) Note the ranking requires you to compare one employee to another Problem: it can be hard to determine the subjective ranking position of employees who are in the middle (it all blurs together)

Performance Appraisal Methods

Subjective measures (more)
Rating scale (graphic rating scale): subjectively rate the employees job performance on a labeled numeric measuring scale
Rating scales are perhaps the most commonly used method of subjectively evaluating an employees job performance Before we use a rating scale to subjectively rate an employees job performance, we need to:
Identify the aspects of job performance (results & behaviors) that are to be evaluated (rated) using the rating scale Develop the rating scale itself

Performance Appraisal Methods

Rating Scale Examples
Examples of a 5-point scale: 5 = Excellent 4 = Very satisfactory 3 = Satisfactory 2 = Unsatisfactory 1 = Very unsatisfactory 5 = Greatly exceeds standards 4 = Exceeds standards 3 = Meets standards 2 = Below standards 1 = Far below standards

Rating Scale Examples

Example of a 7-point scale: 7 = Truly exceptional 6 = Excellent 5 = Very good 4 = Good 3 = Satisfactory 2 = Unsatisfactory 1 = Very unsatisfactory

Performance Appraisal Methods

Subjective measures (more)
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

Performance Appraisal Methods

Subjective measures (more)
Behavioral Observation Scale (BOS): evaluators rate the frequency with which an employee engages in specific behaviors
Example: on a list of possible employee behaviors, rate how often the employee engages in each behavior using a rating scale where: 1 = almost never 5 = almost always

Essay Method
A trait approach to performance appraisal that requires the rater to compose a statement describing employee behavior.

Essay Method
Write a Behavioral Statement Strengths versus Weaknesses Describe Selected Traits Evaluate Performance Advantages Disadvantages

Management By Objective (MBO)

Philosophy of management that rates performance on the basis of employee achievement of goals set by mutual agreement of employee and manager.

Management by Objectives (Peter Drucker)

Integrates performance and goal setting Frequent intervals Record maintenance Objective review jointly Mutual buy-in

Advantages of MBO
Employees Can Measure Performance Quantifiable Goals Joint Effort Employee Satisfaction in Participation

Disadvantages of MBO
Success Not Validates by Research Studies Easy to Set Unrealistic Goals Hard to Get Full Commitment to Process Difficult to Define Some Goals