Copyright © 2008 by Nelson, a division of Thomson Canada Limited.9–19–1 Part 3: Training and...

Copyright © 2008 by Nelson, a division of Thomson Canada Limited. 9–1

Part 3: Training and Developing Part 3: Training and Developing Human ResourcesHuman Resources

Part 3: Training and Developing Part 3: Training and Developing Human ResourcesHuman Resources

Chapter 9: Performance Management Chapter 9: Performance Management and Appraisaland Appraisal

Prepared by Linda Eligh, University of Western Ontario


Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives

After you have read this chapter, you should be able to:1. Identify the components of performance management systems.

2. Discuss important employee performance measures including individual performance factors.

3. Explain the administrative and developmental uses of performance appraisal and the legal implications of performance management.

4. Describe the decisions concerning the performance appraisal process.

5. Introduce the methods of appraising performance and their advantages and disadvantages.

6. Discuss the importance of training managers and employees about performance appraisal, and give examples of several rater errors.

7. Identify several concerns about appraisal feedback and ways to make it more effective.


Nature of Performance ManagementNature of Performance ManagementNature of Performance ManagementNature of Performance Management

• 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.


Performance Performance Management Linkage Management Linkage

Fig. 9-1Fig. 9-1

Performance Performance Management Linkage Management Linkage

Fig. 9-1Fig. 9-1


Difference Between Performance Difference Between Performance Management and Performance AppraisalsManagement and Performance Appraisals

Difference Between Performance Difference Between Performance Management and Performance AppraisalsManagement 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 then communicating that information to the employees.


Identifying and Measuring Employee Performance

Identifying and Measuring Employee Performance

• PerformanceWhat an employee does and does not do.

Quantity of output • Quality of output Timeliness of output • Presence at work

• Job Criteria Important elements in a given job


Types of Performance Information Types of Performance Information Fig. 9-2Fig. 9-2Types of Performance Information Types of Performance Information Fig. 9-2Fig. 9-2


Relevance of Performance CriteriaRelevance of Performance CriteriaRelevance of Performance CriteriaRelevance of Performance Criteria

OveremphasisOveremphasisOveremphasisOveremphasis

DeficiencyDeficiencyDeficiencyDeficiency ContaminationContaminationContaminationContamination

PerformancePerformanceCriteriaCriteria

PerformancePerformanceCriteriaCriteria


Relevance of Performance CriteriaRelevance of Performance CriteriaRelevance of Performance CriteriaRelevance of Performance Criteria

FairnessFairnessFairnessFairness

ReliabilityReliabilityReliabilityReliability PracticalityPracticalityPracticalityPracticality

PerformancePerformanceAppraisalAppraisal



Performance StandardsPerformance StandardsPerformance StandardsPerformance Standards

• Performance Standards Expected levels of performance

Benchmarks, goals, and targets S.M.A.R.T. approach for writing performance standards

S=Specific M=Measurable A=Attainable R=Relevant T=Time bound


Legal Concerns and Performance AppraisalsLegal Concerns and Performance AppraisalsLegal Concerns and Performance AppraisalsLegal Concerns and Performance Appraisals

• Legally Defensible PA System: Objective performance appraisal criteria based on job analysis

Absence of disparate impact and evidence of validity

Formal evaluation criteria that limit managerial discretion

A rating instrument linked to job duties and responsibilities

Documentation of the appraisal activities

Personal knowledge of and contact with the appraised individual

Training of supervisors in conducting appraisals

Review process to prevent undue control of careers

Counseling to help poor performers improve


Conflicting Uses for Performance Appraisal Conflicting Uses for Performance Appraisal Fig. 9-3Fig. 9-3Conflicting Uses for Performance Appraisal Conflicting Uses for Performance Appraisal Fig. 9-3Fig. 9-3


Uses of Performance AppraisalUses of Performance AppraisalUses of Performance AppraisalUses of Performance Appraisal

• Criticisms of Performance AppraisalFocus 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.


Developmental Uses of Developmental Uses of Performance AppraisalPerformance Appraisal

Developmental Uses of Developmental Uses of Performance AppraisalPerformance Appraisal



Giving Performance Giving Performance FeedbackFeedback

Giving Performance Giving Performance FeedbackFeedback

Administering Wages Administering Wages and Salariesand Salaries

Administering Wages Administering Wages and Salariesand Salaries

Identifying Strengths Identifying Strengths and Weaknessesand Weaknesses

Identifying Strengths Identifying Strengths and Weaknessesand Weaknesses


Typical Division of HR Responsibilities: Typical Division of HR Responsibilities: Performance Appraisal Performance Appraisal Fig. 9-4Fig. 9-4

Typical Division of HR Responsibilities: Typical Division of HR Responsibilities: Performance Appraisal Performance Appraisal Fig. 9-4Fig. 9-4


Decisions Concerning PA ProcessDecisions Concerning PA ProcessDecisions Concerning PA ProcessDecisions Concerning PA Process

• Performance Appraisal (PA)The process of evaluating how well employees

perform their jobs when compared to a set of standards, and then communicating the information to employees.

Informal Appraisal Day-to-day contacts, largely undocumented

Systematic Appraisal Formal contact at regular time intervals, usually documented

Timing of Appraisals Probationary (60-90 days), six months and annually


Who Conducts AppraisalsWho Conducts AppraisalsWho Conducts AppraisalsWho Conducts Appraisals

• Supervisors who rate their employees• Employees who rate their supervisors• Team members who rate each other• Employees’ rating themselves• Outside sources rating employees• Multisource (360° feedback) appraisal


Traditional Traditional Performance Performance

Appraisal Process Appraisal Process Fig 9-5Fig 9-5

Traditional Traditional Performance Performance

Appraisal Process Appraisal Process Fig 9-5Fig 9-5


Employee Rating of ManagersEmployee Rating of ManagersEmployee Rating of ManagersEmployee Rating of Managers

• Advantages Helps in identifying

competent managers Serves to make managers

more responsive to employees

Can contribute to the career development of managers

• Disadvantages Negative reactions by

managers to employee ratings

Subordinates’ fear of reprisals may inhibit them from giving realistic (negative) ratings

Ratings are useful only for self-improvement purposes


Team/Peer RatingTeam/Peer RatingTeam/Peer RatingTeam/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


Multisource Appraisal Multisource Appraisal Fig. 9-6Fig. 9-6Multisource Appraisal Multisource Appraisal Fig. 9-6Fig. 9-6


Methods for Appraising PerformanceMethods for Appraising PerformanceMethods for Appraising PerformanceMethods for Appraising Performance

Category ScalingBehavioural Rating ScalesComparative MethodsNarrative MethodsResults Based MethodsCombination Methods


Category Scaling MethodsCategory Scaling MethodsCategory Scaling MethodsCategory Scaling Methods

• Graphic Rating ScaleA scale that allows the rater to indicate an employee’s

performance on a continuum of job behaviours.Aspects of performance measured:

Descriptive categories, job duties, and behavioural dimensions

Drawbacks Restrictions on the range of possible rater responses Differences in the interpretations of the meanings of scale

items and scale ranges by raters Poorly designed scales that encourage rater errors Rating form deficiencies limit effectiveness of the appraisal


Sample Sample Performance Performance

Appraisal Appraisal Form Form Fig. 9-7Fig. 9-7

Sample Sample Performance Performance

Appraisal Appraisal Form Form Fig. 9-7Fig. 9-7


Terms Defining Standards at One Company Terms Defining Standards at One Company Fig. 9-8Fig. 9-8Terms Defining Standards at One Company Terms Defining Standards at One Company Fig. 9-8Fig. 9-8


Behavioural Rating ScalesBehavioural Rating ScalesBehavioural Rating ScalesBehavioural Rating Scales

• Behavioural Rating ApproachAssesses employees’ behaviours instead of other

characteristicsConsists of a series of scales created by:

Identifying important job dimensions Creating statements describing a range of desired and

undesirable behaviours (anchors)

Behaviourally anchored rating scales (BARS) Describes behaviours, differentiating between effective and

ineffective performers that can be observed, and anchors them at points on a scale.

Employee’s behaviour is compared against examples and rated accordingly


Behaviourally-Anchored Rating Scale Behaviourally-Anchored Rating Scale for Customer Service Skills for Customer Service Skills Fig. 9-9Fig. 9-9

Behaviourally-Anchored Rating Scale Behaviourally-Anchored Rating Scale for Customer Service Skills for Customer Service Skills Fig. 9-9Fig. 9-9


Comparative MethodsComparative MethodsComparative MethodsComparative Methods

• RankingA listing of all employees from highest to lowest in

performance.Drawbacks

Does not show size of differences in performance between employees.

Implies that lowest-ranked employees are unsatisfactory performers.

Becomes an unwieldy process if the group to be ranked is large.


Comparative Methods (cont’d)Comparative Methods (cont’d)Comparative Methods (cont’d)Comparative Methods (cont’d)

• Forced DistributionPerformance appraisal method in which ratings of

employees are distributed along a bell-shaped curve.

Drawbacks Assumes a normal distribution of performance.

Resistance by managers to placing individuals in the lowest or highest groups.

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

Is not readily applicable to small groups of employees.


Forced Distribution on a Bell-Shaped Curve Forced Distribution on a Bell-Shaped Curve Fig. 9-10Fig. 9-10Forced Distribution on a Bell-Shaped Curve Forced Distribution on a Bell-Shaped Curve Fig. 9-10Fig. 9-10


Narrative MethodsNarrative MethodsNarrative MethodsNarrative Methods

• Critical IncidentManager keeps a written record of highly favourable

and unfavourable employee actions.Drawbacks

Variations in how managers define a “critical incident”

• EssayManager writes a short essay describing an

employee’s performance.Drawback

Depends on the managers’ writing skills and their ability to express themselves.


Results Based MethodsResults Based MethodsResults Based MethodsResults Based Methods

• Results Based Performance Appraisal System focuses on concrete standards of performance that employees are expected to achieve.Management by Objectives

Specifies the performance goals that an individual and manager mutually identify.

Balanced Scorecard Links the strategy, resource allocation and performance

appraisal systems in an organization. Expands on MBO by considering multiple segments of the

organization from which to develop employee objectives. Four key perspectives measure: financial, internal business

process, customer and learning and growth.


The Management by Objectives (MBO) ProcessThe Management by Objectives (MBO) ProcessThe Management by Objectives (MBO) ProcessThe Management by Objectives (MBO) Process

Job Review and AgreementJob Review and AgreementJob Review and AgreementJob Review and Agreement

Development of Performance StandardsDevelopment of Performance StandardsDevelopment of Performance StandardsDevelopment of Performance Standards

Objective SettingObjective SettingObjective SettingObjective Setting

Continuing Performance DiscussionsContinuing Performance DiscussionsContinuing Performance DiscussionsContinuing Performance Discussions


The Balance Scorecard The Balance Scorecard Fig. 9-11Fig. 9-11The Balance Scorecard The Balance Scorecard Fig. 9-11Fig. 9-11

.


Combination of MethodsCombination of MethodsCombination of MethodsCombination of Methods

So what’s the best method? No single appraisal method is best for all situations.Using a combination of methods may be sensible in

certain circumstances.Using combinations may offset various advantages

and disadvantages of individual methods.When managers can articulate what they want a

performance appraisal system to accomplish, they can choose and mix methods for desired results.

Different categories of employees might require different combinations of methods.


Training of Managers and EmployeesTraining of Managers and EmployeesTraining of Managers and EmployeesTraining of Managers and Employees

• Appraisal Training Topics:Appraisal process and timingPerformance criteria and job standards that should be

consideredHow to communicate positive and negative feedbackWhen and how to discuss training and development

goalsConducting and discussing the compensation reviewHow to avoid common rating errors


Common Rater Errors Common Rater Errors Fig. 9-12Fig. 9-12Common Rater Errors Common Rater Errors Fig. 9-12Fig. 9-12


Appraisal FeedbackAppraisal FeedbackAppraisal FeedbackAppraisal Feedback

• Appraisal Feedback Interview:Communicate results to an employee after an

appraisal interviewProvide employee with a clear understanding of how

they stand in the eyes of immediate superiors and the organization

Clear up any misunderstandings on both sidesFocus on coaching and developmentAvoid “Here is how you rate and why” message


Appraisal Interview Hints Appraisal Interview Hints Fig. 9-13Fig. 9-13Appraisal Interview Hints Appraisal Interview Hints Fig. 9-13Fig. 9-13

DO Prepare in advance Focus on performance and

development Be specific about reasons for

ratings Decide on specific steps to be

taken for improvement Consider supervisor’s role in

employee’s performance• Reinforce desired behaviours• Focus on future performance

DON’T Do all the talking Lecture the employee Mix performance appraisal and

salary or promotion issues Concentrate only on the

negative Be overly critical or “harp” on a

failing Feel it is necessary that both

parties agree in all areas Compare the employee with

others



Action Based on Action Based on EvaluationEvaluation

Action Based on Action Based on EvaluationEvaluation

DataDataDataData EvaluationEvaluationof Dataof Data

EvaluationEvaluationof Dataof Data

Feedback as Feedback as a Systema System

Feedback as Feedback as a Systema System



• Effective Performance Management Systems

Consistent with the strategic mission of the

organizationBeneficial as development toolUseful as an administrative toolLegal and job-relatedViewed as generally fair by employeesEffective in documenting employee performance

Copyright © 2008 by Nelson, a division of Thomson Canada Limited.9–19–1 Part 3: Training and...

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Transcript of Copyright © 2008 by Nelson, a division of Thomson Canada Limited.9–19–1 Part 3: Training and...