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Chapter 4

Performance Management and Appraisal

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Basic Concepts in Performance Management and Appraisal

Performance Appraisal:Setting work standards, assessing

performance, and providing feedback to employees to motivate,

correct, and continue their performance.

Performance Management:An integrated approach to

ensuring that an employee’s performance supports and

contributes to the organization’s strategic aims.

ComparingPerformance Appraisal

and Performance Management

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Performance Management

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Performance management: is an ongoing process of communication between a supervisor and an employee that occurs throughout the year, in support of accomplishing the strategic objectives of the organization.

The communication process includes:•Setting Objectives •Discussing Expectations and Performance Standards•Identifying Goals •Providing Feedback•Evaluating Results

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Performance Management Goals

• Communication between supervisor and employee.

• Feedback on performance.

• Documentation.

• Development Goals.

• Alignment with strategic planning goals.

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Performance appraisal

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Performance appraisal : A formal performance review conducted by a manager to (1) examines and evaluates an employee's work behavior by comparing it with preset standards, (2) documents the results of the comparison, and (3) uses the results to provide feedback to the employee to show where improvements are needed and why. Performance appraisals are employed to determine who needs what training, and who will be promoted, demoted, retained, or fired.

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Why Appraise the performance of employees?

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Compensation (raises, value pay, bonuses)

Personnel Decisions (e.g., promotion, transfer,

dismissal)

Training (Identify specific requirements)

Career planning

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Performance Management and Performance Appraisal

Performance management:

•Dynamic, continuous process.

•Improves organizational effectiveness.

•Strategic goals.

Performance appraisal:

•Periodic (usually annual) event.

•Formal review.

•Last step in performance management process.

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Performance Management and Performance Appraisal

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HR’s Role in Performance Management

• Participate in strategic planning.

• Conduct job analysis.

• Support performance management.

• Design appraisal system.

• Maintain documents.

• Ensure integrity of the system.

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Performance Management Process

1. Performance planning.

2. Performance implementation.

3. Performance appraisal.

4. Performance Review.

5. Performance renewal and re-contracting.

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1. Performance Planning

• Employees must have detailed knowledge of the performance management system.

• Meeting between employee and manager.

• Set SMART goals and measurement standards:

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SMART Goals

• SMART Goals:

- Specific, and clearly state the desired results

- Measurable in answering “how much”

- Attainable, and not too tough or too easy

- Relevant to what’s to be achieved

- Timely in reflecting deadlines and milestones

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2. Performance implementation

Shared responsibility

•Employee responsibility:–Commitment to established goals.–Communication and update with manager.

•Manager responsibility:–Feedback, coaching and reinforcement.–Resource support.–Accurate observation and documentation.

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3. Performance Appraisal

Assignment of Overall Performance Rating:

• Overall performance ratings are qualified by four areas:

1. Exceeds Job Expectations

2. Meets Job Expectations

3. Partially Meets Job Expectations

4. Does Not Meet Job Expectations

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Appraising performance

Steps in Appraising Performance

Defining the job

Providing feedback

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3

3. Performance Appraisal

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3.1 Performance Appraisal Roles

• Who should appraise?

1. Supervisors.

2. The HR Department

1. Supervisors: - Usually do the actual appraising

- Must be familiar with basic appraisal techniques

- Must know how to conduct appraisals fairly

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2. The HR Department:

- Provides advice and assistance regarding the appraisal tool to use

- Trains supervisors to improve their appraisal skills

- Monitors the appraisal system’s effectiveness

- Corrects any deviations from procedures

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3.2 Performance Appraisal Problems

• lack of objectivity.

• Central tendency error.

• Recent behavior.

• Supervisor unable to observe behavior.

• Employees lack motivation.

• No performance documentation.

• Manager and employee don’t agree on results.

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Know the Problems

Control Outside

Influences

Use the Right Tool

How to Avoid Appraisal Problems

Train Supervisors

Keep a Diary

Appraising Performance: Problems and Solutions (cont)

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4. Performance Review

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During the performance review:

1. Results of the performance appraisal are discussed.

2. Identify what the employee has done well and poorly.

3. Giving feedback

4. Discuss the suggestions of changing behaviors.

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5. Performance Renewal and Re-Contracting

• Final step in performance management process.

• Readjust based on insight from completed process.

• Plan for next performance management cycle.

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Poorly Implemented PM Systems

Reasons for Poorly Implemented PM Systems:

• False and misleading information.

• Increased turnover.

• Wasted time and money.

• Damaged relationships.

• Decreased motivation.

• Job dissatisfaction.

• Unfair standards.

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