Performance Appraisal Systems

performance appraisal is a formal assessment of how well employees are performing their jobs.

Performance appraisals are necessary to document employees’ progress toward achieving goals and paying attention to the advice of management on how to improve performance

Documentation is necessary to demonstrate fairness in promotion and termination

An employee performance appraisal is a process—often combining both written and oral elements—whereby management evaluates and provides feedback on employee job performance, including steps to improve or redirect activities as needed. Documenting performance provides a basis for pay increases and promotions.

Appraisals are also important to help staff members improve their performance and as an avenue by which they can be rewarded or recognized for a job well done.

Performance appraisal is supposed to be a developmental experience for the employee and a 'teaching moment' for the manager."

While the term performance appraisal has meaning for most small business owners, it might be helpful to consider the goals of an appraisal system. They are as follows:

To improve the company's productivity To make informed personnel decisions

regarding promotion, job changes, and termination

To identify what is required to perform a job (goals and responsibilities of the job)

PERFORMANCE APPRAISAL AND DEVELOPMENT

To assess an employee's performance against these goals

To work to improve the employee's performance by naming specific areas for improvement, developing a plan aimed at improving these areas, supporting the employee's efforts at improvement via feedback and assistance, and ensuring the employee's involvement and commitment to improving her performance.

In developing an appraisal system for a small business, an entrepreneur needs to consider the following:

Size of staff Employees on an alternative work schedule Goals of company and desired employee behaviors

to help achieve goals Measuring performance/work Pay increases and promotions Communication of appraisal system and individual

performance Performance planning

RATIONALE FOR A FORMAL PERFORMANCE APPRAISAL

SYSTEM

The dialogue from the appraisal process provides data for managers as well as data to employees from managers.

Role stress typically is viewed as having two components: A:role ambiguity and B: role conflict.

Role ambiguity exists when an employee is unsure about his or her responsibilities

Role conflict is the simultaneous occurrence of two or more role expectations

Performance appraisal methods typically are categorized into three broad types:

1. Absolute 2. Relative3. Outcome oriented

TYPES OF PERFORMANCEAPPRAISALS

Absolute systems require the rater to indicate whether or not the employee is meeting a set of predetermined criteria for performance

Absolute systems are the most commonly employed

The main advantage that absolute systems have over other types of appraisal methods is the feedback that is derived inherently from the process

Absolute Systems

relative systems require the manager to make comparisons among employees.

Relative systems have an advantage over absolute systems in that central tendency and leniency effects are minimized

They are not conducive to generating substantive feedback to employees

Relative Systems

Where absolute and relative systems focus on behaviors outcome-oriented systems are concerned with evaluating end results

Outcome-Oriented Systems

A community pharmacy is typically a for-profit organization that must be concerned with its financial position to remain over the long term

Community pharmacies must also conduct their business in an ethical manner.

A pharmacy will be more likely to achieve its goals when its employees derive gratification from performing their jobs

SPECIAL CONSIDERATIONS FOR APPRAISAL SYSTEMS IN

PHARMACY

Determine whether a similar performance appraisal should exist among technicians and pharmacists working within the same organization

There are certain values (e.g., dependability, dedication, and altruism) that the organization may want to assess in all its employees regardless of their position or status.

It may be fruitful to gather information from customers, or patients, when evaluating pharmacists for the services they provide

Given that the results of a performance appraisal are often used to support a promotion, termination, salary increase, or job change, they are looked at very closely in employee discrimination suits. Besides providing a written summary of the appraisal to the employee, a small business owner would be well-advised to ensure the following with regards to the system at large:

Job expectations as well as appraisal system and its impact on employee's work status are adequately communicated to all employees

LEGAL ISSUES

Performance measures are related to the job being performed

Managers or co-workers providing input into the appraisal must be sufficiently trained as to be able to provide objective input

Employees are given timely feedback on performance and reasonable amount of time and support in improving their performance

Regardless of the type of system selected appraisal should be accompanied by a formal interview of the employee.

During the interview the results of the written appraisal are discussed.

Some preparations may help in making the interview more fruitful like:

THE PERFORMANCEAPPRAISAL INTERVIEW

An appointment should be made with the employee well in advance, at least 3 to 4 weeks.

The employee should be provided with 1. A copy of the position description and

corresponding performance standards.2. A copy of the evaluation form used in the

appraisal process.3. A copy of the report of the previous formal

review, departmental/organizational objectives for the current and subsequent year,

4. Instructions on how to prepare for the meeting.

A:Preparing the Employee for the Interview

The employee may be instructed to prepare comments on how well objectives set during the last review were met and to prepare a list of new objectives.

Employees may be asked to complete a self-evaluation on an instrument similar to the one used by the employer.

The manager should enter the interview well informed of prior appraisals

The manager should also have appropriate documentation and evidence to support claims of the employee’s performance, in areas of deficiency & in areas of strength

B: Planning for the Interview

the manager should have answered the following questions

1. What results should the interview achieve?2. What good contributions is the employee

making?3. Is the employee working up to his or her

potential?4. Is the employee clear about the

manager’s performance expectations?5. What strengths does the employee have

that can be built on or improved?6. Is there any additional training available

that can help the employee improve?

Interview sequence(1) Review and update the position descriptionand performance standards. (2) Discuss the performance ratings assigned to

the employee using the prescribed appraisal form. (3) Highlight strengths and accomplishments since

the previous appraisal.(4) Discuss objectives that were not reached since

the previous review. (5) Discuss future performance and assist with

career planning.

C: Conducting the Interview

Some suggestions for addressing performance deficiencies

1. Limit criticism to one or two major problems. Do not search for significant problem areas when none exist.

2. Reserve critical remarks until after some of the positives have been accentuated.

3. Maintain open dialogue with the employee. Offer the employee a chance for self-criticism. Allow the employee to offer reasons why performance was below standard. Allow the employee to suggest ways and an appropriate time frame to expect significant improvement.

4. Avoid the use of terms that potentially could be misconstrued, such as attitude, work ethic, professionalism, and weakness

Implementing the System how frequently to conduct the formal

appraisal ? Annually – more frequent is better

Everyone in the organization should be well informed about the role each person plays in the appraisal process and how the appraisal results are used

ENSURING VALID RESULTS FROM THE PERFORMANCE APPRAISAL SYSTEM

Monitoring the Systemeffectiveness of the appraisal system itself

should be monitored.Quality of performance standards refers to the

standards being specific, challenging, realistic, dynamic, understandable, and consistent with organizational goals

Use of performance appraisal results refers to how well these results are tied with rewards and recognition and to what extent the appraisal process has contributed to improved performance among all employees

Tracking the raters consists of reviewing the ratings awarded by individual raters and giving them feedback concerning the quality of their ratings

RewardsA. intrinsic rewards (those internal to the

individual and derived from involvement in the job, such as achievement, feelings of accomplishment, informal recognition, satisfaction, and status)

B. extrinsic rewards (those controlled and distributed by the organization, such as formal recognition, incentive pay, fringe benefits, and promotions)

PERFORMANCE AND ORGANIZATIONAL REWARDS

Managers must consider internal, external, and individual equity

suggestions for allocating rewardsa) Consider the presence of performance

constraintsb) Provide a clear distinction between cost-of-

living, seniority, and merit pay increases.c) Enlist trust among employeesd) Make merit pay substantiale) Be flexible in scheduling rewardsf) Effectively communicate merit and total

pay policy to employees.

Pharmacy managers may consider the use of other strategies to recognize and reward good performers:

1. Offer to pay for attendance at a local continuing education program.

2. Provide funding for attendance at a national conference.

3. Offer to offset the cost of professional recognition and certification processes for pharmacists and technicians.

4. Fund membership in a professional association.5. Buy lunch.6. Allow someone to represent you at an

important meeting.7. Assign tasks with greater levels of

responsibility if the employee is ready to handle them.

What is a performance appraisal system? And are the types and the main advantage of each type?

Discuss the need for performance appraisal system.

Construct a performance appraisal interview.

In class practice

Does everyone with similar jobs in a pharmacy deserve the same level of pay raises, or should they be based more on performance?

What types of skills do you think are necessary for selecting and implementing a performance appraisal system? What about for conducting an appraisal interview?

How would you feel about having responsibility for determining whether or not an employee will receive merit pay?