2 Performance Appraisal

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PERFORMANCE

APPRAISAL ANDMANAGEMENT


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Objectives: What is performance? Performance appraisal vs Performance Management

(and Potential Appraisal).

Purposes of Performance appraisal Systems

Requirements of Effective Appraisal Systems Steps in Appraising performance

Appraisal Methods

Problems and Solutions in appraising performance

Who should appraise?

360 degree appraisal The Appraisal Interview

How to give effective feedback.


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Measuring performance vs Action (Bee-hive case)

Performance appraisal Evaluating an employees current and/or past

performance relative to his or her performance

standards.

Performance management The process employers use to make sure employees

are working toward organizational goals.

Potential Appraisal

To identify the potential of a given employee tooccupy higher positions in the organizational

hierarchy and undertake higher responsibilities


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114

PerformanceManagement

Linkage

Figure 111


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Copyright 2005 Thomson Business &

Professional Publishing. All rightsreserved. 115

Difference Between Performance Management and Performance

Appraisals

Performance

Management

Processes used to

identify, encourage,

measure, evaluate,improve, and reward

employee performance.

Performance

Appraisal

The process of evaluating

how well employees

perform their jobs and thencommunicating that

information to the

employees.


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Types of Performance Information

Figure 113


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Relevance of Performance Criteria

Overemphasis

Deficiency Contamination

PerformanceCriteria


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Performance Standards

Performance Standards

Expected levels of performance

Benchmarks, goals, and targets

Characteristics of well-defined standards

Realistic Measurable

Clearly understood


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Building Blocks of Performance

Managment

Direction sharing

Role clarification

Goal setting and planning

Goal alignment Developmental goal setting

Ongoing performance monitoring

Coaching and support

Performance assessment Rewards, recognition and compensation

Workflow, process control and ROI management


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Relationship between performance appraisal and job

analysis

Job Analysis Performance Standards Performance Appraisal

Describes work

and personnel

requirement of a

particular job

Translate job

requirements into

levels of acceptable

or unacceptable

performance

Describes the job-

relevant strengths and

weaknesses of each

individual


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Increasing use by employers of performancemanagement reflects:

The popularity of the total quality management (TQM)concepts.

The belief that traditional performance appraisals areoften not just useless but counterproductive.

The necessity in todays globally competitiveindustrial environment for every employees efforts tofocus on helping the company to achieve its strategicgoals.

Why Performance Management?


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Why appraise performance?

Appraisals play an integral role in the employersperformance management process.

Appraisals help in planning for correcting deficiencies

and reinforce things done correctly.

Appraisals, in identifying employee strengths andweaknesses, are useful for career planning

Appraisals affect the employers salary raise

decisions.


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Multiple Purposes of AppraisalTable 10.1. Multiple Purposes of Performance Assessment

General Applications Specific Purpose

Developmental Uses

Identification of individual needs

Performance feedback

Determining transfer and job assignments

Identification of individual strengths and developmental

needs

Administrative Uses/Decisions

Salary

Promotion

Retention or termination

Recognition of individual performance

Lay-offs

Identification of poor performers

OrganisationalMaintenance/Objectives

HR planning

Determining organisation training needs

Evaluation of organisational goal achievementInformation for goal identification

Evaluation of HR systems

Reinforcement of organisational development

Documentation

Criteria for validation research

Documentation for HR decisions

Helping to meet legal requirements

Source: Cynthia D. Fisher, et al. Human resource management, Houghton Mifflin, 1997, p.455


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The Performance Appraisal Process

Objectives of

Performance Appraisal

Establish Job

Expectations

Design an AppraisalProgramme

Appraise Performance

Performance Interview

Use Appraisal Data for

Appropriate Purposes


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Criteria for Effective Performance Appraisal Systems

1. Validity: are we measuring the right thing?

Are we really measuring job performance?

We want to measure important (relevant) aspects of jobperformance, in a way that is free from extraneous or

contaminating influences, and that encompasses the whole job

(i.e., our measures of job performance are not deficient: we

arent leaving out important aspects of job performance)

2. Reliability: consistency of measurement Example: inter-rater reliability

If two people observe a particular employees job performance,

do they agree in their rating of the employees performance?


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3. Freedom from bias It does not illegally discriminate (race, sex, age, etc.) It is free from rating errors (intentional or unintentional): Leniency errors Severity errors Central tendency errors Halo errors

4. PracticalityThe benefits the organization gets from using it should

outweigh the costs of developing & using it Utility analysis

It should be relatively easy to use It should be accepted by managers and employees


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Components of

Effective Performance

Management

Figure 112


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The performance appraisal methods may be classified into

three categories, as shown in Figure below.


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Performance Appraisal Methods

Graphic rating scale

A scale that lists a number of traits and a

range of performance for each that is used toidentify the score that best describes an

employees level of performance for each

trait.


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Graphic

Rating

Scale with

Space forComments


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Portion of an Administrative Secretarys

Sample Performance Appraisal Form

Source: James Buford Jr., Bettye Burkhalter, and Grover Jacobs, Link Job Descriptionto Performance Appraisals, Personnel Journal, June 1988, pp. 135136.


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Performance Management

Outline

Figure 95a

Source: www.cwru.edu.


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Figure 95b

PerformanceManagement

Outline

(contd)

Source: www.cwru.edu.


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Performance

Management

Outline

(contd)

Figure 95cSource: www.cwru.edu.


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Checklists A performance appraisal tool that uses a list of statements orwork behaviors that are checked by raters.

Can be quantified by applying weights to individual checklist

items.

Drawbacks

Interpretation of item meanings by raters

Weighting creates problems in appraisal interpretation

Assignment of weights to items by persons other than the

raters


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Alternation ranking method

Ranking employees from best to worst on a particular trait, choosing

highest, then lowest, until all are ranked.


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Paired comparison method

Ranking employees by making a chart of all possible

pairs of the employees for each trait and indicating

which is the better employee of the pair.

Paired comparisons: for all possible pairs ofemployees, subjectively decide which employee is

better # of paired comparisons = (N2 N)/2

Example: N = 4 (42 4)/2 = 6 paired comparisons:

Bob > Carol; Bob > Ted; Bob > Alice

Carol > Ted; Carol > Alice

Ted > Alice Example: N = 12 (122 12)/2 = 66 paired comparisons

Note that you are comparingone employee to another

Problem: inconsistent subjective comparisons: Bob > Carol;Carol > Ted; Ted > Bob (see the inconsistency here?)


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Ranking Employees by the

Paired Comparison Method

Note: + means better than. means worse than. For each chart, add up

the number of 1s in each column to get the highest-ranked empl oyee.


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Forced Distribution

Performance appraisal method in which ratings ofemployees are distributed along a bell-shapedcurve.

Drawbacks

Assumes a normal distribution of performance.

Resistance by managers to placing individuals in thelowest or highest groups.

Providing explanation for placement in a higher orlower grouping can be difficult.

Is not readily applicable to small groups of employees.


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Forced Distribution on a Bell-Shaped Curve


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Critical Incident Method

Keeping a record of uncommonly good or undesirableexamples of an employees work-related behaviour and

reviewing it with the employee at predetermined times.

A SAMPLEI saw Mishra closing the steam line valve

at the instant the pipeline got burst.We could save a lotof lives due to the above factor.


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Advantages of critical incident reportingmethod of appraisal

Persons caliber is best judged in critical conditions.

Continous appraisal ,not year end judgement.Thuseliminating recency effect.

As evaluation is incident specific, the rater bias isminimized.

Feedbacks can help improve the employeeperformance.

Greater role clarity and improvement of work methods.

Identifies near misses, which can have bearing on safetycritical applications.


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THE DISADVANTAGES

The term itself critical incident is subjective. The lack of time of the rater is one major hindrance for

critical apprisal.

Some of the major positive attitudes likeobidience,faithfulness,honesty etc are neglected here.

Relies on memory,some of the major incidents may beforgotten.

Unless used for disciplinary action,the scope is ratherrestricted.


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Examples of Critical Incidents for

an Assistant Plant Manager


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Behavioral/Objective Methods

Behavioral Rating Approach

Assesses employees behaviors instead of other

characteristicsConsists of a series of scales created by:

Identifying important job dimensions

Creating statements describing a range of desired and

undesirable behaviors (anchors) Example- Next Slide


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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 customerand to walk with customer to location of desired product4 = Could be expected to walk with customer tolocation of desired product when asked for help bycustomer3 = Could be expected to tell and point customer towhere the desired product is located when asked forhelp by customer

2 = Could be expected to shrug shoulders and walkaway when asked for assistance by customer1 = Could be expected to hide from customers in theemployee break-room


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Behaviorally-Anchored Rating Scale

for Customer Service Skills


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Developing a BARS:

Generate critical incidents

Develop performance dimensions

Reallocate incidents

Scale the incidents

Develop a final instrument Advantages of using a BARS

A more accurate gauge

Clearer standards

Feedback

Independent dimensions

Consistency


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Management by Objectives

(MBO) Management by Objectives

Specifying the performance goals that an individual

and his or her manager agree the employee will to try

to attain within an appropriate length of time.

Key MBO Ideas

Employee involvement creates higher levels of

commitment and performance.

Encourages employees to work effectively toward

achieving desired results.

Performance measures should be measurable and

should define results.


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Professional Publishing. All rights

reserved. 1141

The MBO Process

Job Review and Agreement

Development of Performance Standards

Objective Setting

Continuing Performance Discussions


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Computerized and Web-Based Performance

Appraisal

Performance appraisal software programs

Keep notes on subordinates during the year.

Electronically rate employees on a series of

performance traits.Generate written text to support each part of the

appraisal.

Electronic performance monitoring (EPM)

Having supervisors electronically monitor theamount of computerized data an employee is

processing per day, and thereby his or her

performance.


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Advantages and Disadvantages of Appraisal Tools

Table 93


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Potential Rating Scale Appraisal Problems

Unclear standards Halo effect

Central tendency

Strictness/leniency

Bias

Attractiveness Effect

Attribution bias

Negative and positive skew Recency effect

Similarto me effect

Stereotyping


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A Graphic Rating Scale with Unclear Standards

Note: For example, what exactly is meant by

good, quantity of work, and so forth?


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AN APPRAISER MUST:

BE AWARE OF THE OBJECTIVES & REQUIREMENTS OF THE

EMPLOYEES JOB

HAVE THE OPPORTUNITY TO FREQUENTLY OBSERVE THEEMPLOYEE OR HIS/HER WORK

BE CAPABLE OF EVALUATING AND RECORDING OBSERVED

WORK BEHAVIOR OR PERFORMANCE

AVOID OR MINIMIZE POTENTIAL APPRAISAL ERRORS AND

BIAS


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THE FUNDAMENTAL ATTRIBUTION ERROR

POOR WORK PERFORMANCE BY OTHERS

THEIR POOR WORK PERFORMANCE IS CAUSED BYPERSONAL FACTORS (No effort, laziness, they didnt try)

THE PERSON IS THE REASON FOR FA ILURE

MY POOR WORK PERFORMANCEMY POOR WORK PERFORMANCE IS DUE TOSITUATIONAL FACTORS BEYOND MY CONTROL (Poorsupport, uncooperative coworkers, unforeseen events)

THE ENVIRONMENT IS THE REASON FOR FA ILURE

Note the self-serving biaswe are not responsible for ourfailures, but others are responsible for theirs!

ATTRIBUTION THEORY


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ATTRIBUTION THEORYKELLEY 73

IS THE CAUSE OF BEHAVIOR SEEN AS INTERNAL (PERSONAL) OR EXTERNAL

(SITUATIONAL)? WE LOOK FOR THREE INDICATORS TO DECIDE.

DISTINCTIVE

IS THIS PERSONS PERFORMANCE DIFFERENT ON OTHER TASKS AND

IN OTHER SITUATIONS? (YES = EXTERNAL, NO = INTERNAL)

CONSISTENTOVER TIME, IS THERE A CHANGE IN BEHAVIOR OR RESULTS ON THIS

TASK BY THIS PERSON? (YES = EXTERNAL, NO = INTERNAL)

CONSENSUS

DO OTHERS PERFORM OR BEHAVE SIMILARLY WHEN ASSIGNED ASIMILAR POSITION OR TASK? (YES = EXTERNAL, NO = INTERNAL)

Consistent Yes answers lead us to external attributions Environmentally

caused

No answers lead us to internal attributions -- The person is responsible

ATTRIBUTIONAL MODEL OF FAILURE


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ATTRIBUTIONAL MODEL OF FAILURE

INTERNAL ATTRIBUTION Person Responsible?

LACK OF ABILITY

LACK OF EFFORT

EXTERNAL ATTRIBUTION Situation Responsible?

DIFFICULT TASKBAD LUCK

ENLIGHTENED SUPERVISOR RESPONSE

LACKS ABILITY -- Training or Transfer

LACKS EFFORT -- Reprimand or Motivational StrategyDIFFICULT TASK -- Job Redesign

BAD LUCK -- Sympathy and Support


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Problems in Performance Appraisal

Appraiser discomfort Lack of objectivity

Halo/horn error

Leniency/strictness Central tendency

Recent behavior bias

Personal bias

Manipulating the evaluation

Employee anxiety


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Appraiser Discomfort

Performanceappraisal process

cuts into managerstime

Experience can be

unpleasant whenemployee has notperformed well


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Lack of Objectivity

In rating scales method, commonly usedfactors such as attitude, appearance, and

personality are difficult to measure Factors may have little to do with

employees job performance

Employee appraisal based primarily onpersonal characteristics may placeevaluator and company in untenablepositions


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Halo/Horn Error

Halo error- Occurs when manager

generalizes onepositive performance

feature or incident to all aspects of

employee performance resulting inhigher rating

Horn error- Evaluation error occurs

when manager generalizes one

negativeperformance feature orincident to all aspects of employee

performance resulting in lower rating


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Leniency/Strictness

Leniency - Givingundeserved high ratings

Strictness - Being undulycritical of employees workperformance

Worst situation is when firmhas both lenient and strictmanagers and doesnothing to level inequities


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Central Tendency

Error occurs when employees are

incorrectly rated near average or middle of

scale May be encouraged by some rating scale

systems requiring evaluator to justify in

writing extremely high or extremely lowratings


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Recent Behavior Bias

Employees behavior often improves and

productivity tends to rise several days or

weeks before scheduled evaluation Only natural for rater to remember recent

behavior more clearly than actions from

more distant past Maintaining records of performance


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Personal Bias (Stereotyping)

Managers allow individual differencessuch as gender, race or age to affect

ratings they give Effects of cultural bias, or stereotyping,

can influence appraisals

Other factors Example: mild-manneredemployees may be appraised moreharshly simply because they do notseriously object to results


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Manipulating the Evaluation

Sometimes, managers control virtually

every aspect of appraisal process and are

in position to manipulate system Example: Want to give pay raise to

certain employee. Supervisor may give

employee a undeserved high performanceevaluation


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Employee Anxiety

Evaluation process may

create anxiety for

appraised employee Opportunities for

promotion, better work

assignments, andincreased compensation

may hinge on results

Reasons for Intentionally Inflating


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Ratings

Believe accurate ratings would damage subordinatesmotivation and performance.

Improve employees eligibility for merit raises.

Avoid airing departments dirty laundry.

Avoid creating negative permanent record that mighthaunt employee in future.

Protect good workers whose performance sufferedbecause of personal problems.

Reward employees displaying great effort even when

results were relatively low. Avoid confrontation with hard-to-manage employees.

Promote a poor or disliked employee up and out ofdepartment.

Reasons for Intentionally


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Reasons for Intentionally

Lowering Ratings

Scare better performance out of employee.

Punish difficult or rebellious employee.

Encourage problem employee to quit.

Create strong record to justify planned firing.

Minimize amount of merit increase a subordinate

receives.

Comply with organizational edict that discouragesmanagers from giving high ratings.

Common Rater Errors


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Common Rater Errors


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How to Avoid Appraisal Problems

Learn and understand the potential problems, and the solutionsfor each.

Use the right appraisal tool. Each tool has its own pros and cons.

Train supervisors to reduce rating errors such as halo, leniency,

and central tendency.

Have raters compile positive and negative critical incidents as

they occur. Ensure that raters observe ratees on an ongoing basis

Do not have the rater evaluate too many ratees

Make sure that the performance dimensions and standards arestated clearly

Avoiding terms that have different meanings for different raters


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Training of Managers and

Employees Appraisal Training Topics:

Appraisal process and timing

Performance criteria and job standards that should be

considered

How to communicate positive and negative feedback

When and how to discuss training and development

goals

Conducting and discussing the compensation review

How to avoid common rating errors


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Who Conducts Appraisals

Supervisors who rate their subordinates

Employees who rate their supervisors

Team members who rate each other

Employees self-appraisal

Outside sources rating employees

Multisource (360 feedback) appraisal


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Employee Rating of Managers Advantages

Helps in identifying

competent managers

Serves to make managers

more responsive toemployees

Can contribute to the

career development of

managers

Disadvantages Negative reactions by

managers to employee

ratings

Subordinates fear ofreprisals may inhibit them

from giving realistic

(negative) ratings


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Team/Peer Rating

Advantages Helps improve the

performance of lower-rated

individuals

Peers have opportunity to

observe other peers.

Peer appraisals focus on

individual contributions to

teamwork and team

performance.

Disadvantages Can negatively affect

working relationships.

Can create difficulties for

managers in determining

individual performance.

Organizational use of

individual performance

appraisals can hinder the

development of teamwork


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Multisource Appraisal

2 Performance Appraisal

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