Session 8Performance Appraisal

The Gentleman’s Three by Brian J. Hall & Andrew Wasynczuk

-When they are going to get time?

-They‘ll make time.

-Don’t they have real work to do?

-This is the real work.

The Gentleman’s Three by Brian J. Hall & Andrew Wasynczuk

Conflicting Roles for Performance Appraisal

Types of Performance Information

Trait-basedInformation

Trait-basedInformation

Behavior-basedInformation

Behavior-basedInformation

Results-basedInformation

Results-basedInformation

JobPerformance?

JobPerformance?

Uses of Performance Appraisal

Criticisms of Performance Appraisal

◦Focus is too much on the individual and does little to develop employees.

◦Employees and supervisors believe the appraisal process is seriously flawed.

◦Appraisals are inconsistent, short-term oriented, subjective, and useful only at the extremes of performance.

Potential Performance Criteria Problems

ObjectivityObjectivity

DeficiencyDeficiency ContaminationContamination

PerformanceCriteria

PerformanceCriteria

© 2002 Southwestern College Publishing. All rights reserved.

11–7

Common Rater Errors

Figure 11–11

8

The Balanced ScorecardBalanced Scorecard

21 languages

17 languages

What is the BSC?

InitiativeTargetsMeasuresObjectives

FinancialTo succeed financially, how should we appear to our shareholders?

InitiativesTargetsMeasuresObjectives

Learning & GrowthTo achieve our vision, how will we sustain our ability to change and improve?

Init

iati

ves

Targ

ets

Measu

res

Ob

ject

ive

s

Cust

om

er

To a

chie

ve

ou

r vis

ion

, h

ow

sh

ou

ld

we a

pp

ear

to o

ur

cust

om

ers

?

Initia

tives

Targ

ets

Measu

res

Obje

ctives

Inte

rnal B

usin

ess

Pro

cess

To sa

tisfy

ou

r sh

are

hold

er

s an

d

custo

mers,

wh

at

bu

siness

pro

cesse

s m

ust w

e

exce

l at?

VISION AND

STRATEGY

10

Performance Measures in Financial Perspective

Return on investmentEconomic value addedSales growth rate by

segmentPercentage revenue

from new product, service, or customer

Share targeted customer an account

Cross-selling

Cross-selling Customer and product

line profitability Revenue/employee Cost reduction rate Unit cost Payback Return on Capital

Employed Working capital ratios

(cash-to-cash cycle)

11

Information about market & customer

Customer selection, acquisition, retention & growth

Who are profitable customers? — Target Segmentations

What do they need? [same as the thing we serve them]— Customer Values Propositions (e.g. QSC&V – quality, services, cleanliness, and value)

Customer Perspective

12

Performance Measures in Customer Perspective

Market Share: Reflects the proportion of business in a given market (in term of number of customer, dollar spent, or unit volume sold) that a business unit sells.

Customer Acquisition: Measures, in absolute or relative, the rate at which a business unit attracts wins new customers or business.

Customer Retention: Measures, in absolute or relative, the rate at which a business unit retains or maintains ongoing relationships with its customers.

Customer Satisfaction: Assesses the satisfaction level of customers along specific performance criteria within the value proposition.

Customer Profitability: Measures the net profit of a customer, after allowing for the unique expenses required to support customer.

13

Performance Measures in Customer Perspective

Market Share: Reflects the proportion of business in a given market (in term of number of customer, dollar spent, or unit volume sold) that a business unit sells.

Customer Acquisition: Measures, in absolute or relative, the rate at which a business unit attracts wins new customers or business.

Customer Retention: Measures, in absolute or relative, the rate at which a business unit retains or maintains ongoing relationships with its customers.

Customer Satisfaction: Assesses the satisfaction level of customers along specific performance criteria within the value proposition.

Customer Profitability: Measures the net profit of a customer, after allowing for the unique expenses required to support customer.

14

Performance Measures in Internal Process Perspective

QualityResponse timeCostYieldsWasteScrap

Rework New product

introduction Service error rate Product development

cycle Hours with customer Time to market

15

Performance Measures in Learning & Growth Perspective

Employee satisfactionEmployee retention/turnover rateEmployee productivityInformation system availabilityOrganizational Climate IndexPersonal Goals Alignment IndexStaff development