Performance Appraisal Training Module

Joseph FeldmanBrandman University

Training and DevelopmentHRCU 646

October 3, 2015

Goals Successful organizations are a product of good employees.

One factor in maintaining good employees is establishing expectations based on the needs of the organization.

“Performance appraisals are a good way to let your employees know what is expected from them and how well they are meeting those expectations” (Teckchandani & Pichler, 2015, p. 16).

The key to performance appraisals is understanding the effectiveness of it and determining how to successfully conduct an appraisal.

Goals Successfully prepare, conduct, and implement an annual performance appraisal

Teach managers how to administer performance appraisals for the purpose of (1) performance management, (2) promotions, (3) and termination.

To maintain an environment of employee satisfaction.

Discuss and analyze knowledge and skills required to administer performance appraisal.1. Impact on new and existing employees in relations to engagement, transparency, and

relevant value to work.2. Understand relationship and impact of appraisal in relation to employee growth,

promotion within organization, and gaps in skills

Incorporate the principles of an Instructional Systems Design (ISD) in the creation of the performance appraisal.

Objectives “Behavioral objectives have served HRD professionals extremely well for the past fifty

years, because they put the focus squarely on what the trainee is expected to do at the completion of training” (Werner & DeSimone, 2012, p. 146).

Ability to provide feedback that is connects with organization’s mission, vision, and/or objectives.

Ability to provide feedback (effective communication) that is relevant to employees and their job duties.

Provide an effective employee rating system that goes beyond rating employees with mere numbers (e.g. narrative performance appraisal).

Perceived Fairness “[T]he acceptance or rejection of the performance appraisal system may depend on perceptions of its fairness” (Harington & Lee, 2015, p. 215).

Studies show that employees' perceived fairness of performance reviews is an important part of a positive performance review.

“Perceived fairness of appraisal system is a multidimensional process, encompassing distributive, procedural, and interactional justice components” (Harington & Lee, p. 219).

In 2012 The U.S. Office of Personnel Management (OPM) designed a performance appraisal for 82 different agencies with three major components that includes (1) relational contracts (2) transactional process and (3) perceived supervisory support which helps to ensure perceived fairness (Harington & Lee, p. 220).

Example of Relational Contract, Transactional Process, and Perceived Supervisory Support

Relational Contract- “I am given a real opportunity to improve my skills in my organization” (Harington & Lee, p. 222).

Transactional Process- “Promotions in my work unit are based on merit” (Harington & Lee, p. 222).

Perceived Supervisory Support- “Supervisors/team leaders in my work unit support employee development” (Harington & Lee, p. 222).

Effective Performance Management (EPM)

According to Becom & Insler (2013) “An effective performance management process is a critical characteristic that sets high-performing organizations apart from low-performing organizations” (p. 43).

Despite these findings, a majority of executives believe their performance management programs are ineffective.

Data from a State of Performance Management study reveals that 3 to 5 % of organizations rate their performance management programs with an “A” (Becom & Insler, p. 43).

“High performing organizations consider performance management as a true dynamic business process that enables performance and drives organizational and individual success — not as a static yearly appraisal process” (Becom & Insler, p. 43).

Leadership

Execution

Effective PerformanceManagement

Program Design

Effective Performance Management (EPM)

Effect leadership includes the CEO being part of the performance process.

Aligning goals to not just the “job description, function, or department, but the organization” at large (Becom & Insler, p. 44).

According to Becom & Insler, “leaders set performance norms in terms of what they expect as a distribution of performance” (p. 44).

Setting norms is accomplished as a general guidelines format, and not a stack and rank format which compensates for the majority of employees being rated in the middle or average (Becom & Insler, p. 44).

Becom & Insler suggest that the rating system uses descriptive words (in addition to the preferred 5 star rating scales method) to differentiate employees that are rated as “average” (p. 44).

Narrative Performance Appraisal According to David (2013) “A difficulty with using numerical feedback is that often very little context is given; hence it can be unclear to an employee why he or she received a particular score” (p. 431).

Quality feedback includes language that is aimed at “(1) specific goals for improvement and (2) increased motivation and self-efficacy” (David, p. 432).

“Although providing direction for employees through specific, lengthy, and goal-oriented comments is a fundamental component of quality feedback, it is just as crucial that it contain a motivational element that inspires effort as well as instills self-efficacy” (David, p. 433).

Data suggests that HR management has to be cautious when using negative feedback only as it tends to bring out negative emotions within the reviewed employee (e.g. anger towards employer, low self-esteem, and lower performance) (David, p. 433).

Narrative Performance Appraisal A study on narrative performance appraisal was conducted in 2008-2010 that included 1019

nurses from an unnamed hospital in the southern part of the United States.

The following describes the performance appraisal methodology includes (David, p. 435):

i. “Employees were first given the opportunity to perform a self-evaluation by providing numerical ratings and narrative comments for each of the individual categories.”

ii. “Managers began their evaluations (also including numerical ratings and narrative comments) of the individual items.”

iii. “The managers were able to see the employee self-evaluations as they completed their own ratings, and they were able to incorporate this information into their assessment as they saw fit.”

iv. “Managers were also asked to indicate an overall numerical performance rating.”v. “The managers then scheduled individual meetings discuss the reviews with the

employees.”vi. “As a final step, the employees were then encouraged to add overall comments and

reactions into the system.”

Narrative Performance Appraisal In assessing the nurse study, David used a “deductive approach to qualitative analysis” (p. 436).

Part of the nurse study reveals (David, p. 436):

Six raters were analyzed that includes employee negative emotion, employee positive feedback, favorability, specificity, goal content, and interactional justice (David, p. 436).

Despite the allowance of employee input and feedback, which usually supports “favorable outcomes,” the study showed a few lack luster results (David, p. 443).

Managerial Responses7- 460 words

Mean110.50 words

Standard Deviation78.77 words

Employee Responses1-3235 words

Mean51.81 words

Standard Deviation120.80 words

Nurse Study Results

Negative1. A low number, “45% of employees received any precise goals for the future” (Davis, p. 443). 2. Only “41% were left without any specific examples regarding their behavior over the past year” (Davis, p. 443). 3. “44% of the employees received roughly five sentences of text or fewer regarding their performance for the entire preceding year” (Davis, p. 443). 4. “Only 14% of manager comments contained any area of improvement at all.”

Positive1. “73% of all feedback given to employees was delivered in a considerate and respectful manner” (Davis, p. 443). 2. This suggests that there was a high score in in the interactional justice category. 3. Further studies illustrate that interactional justice is achieved at higher levels when there is a “face-to-face appraisal review, and desired word choice, body language, and voice tone are used” (Davis, p. 444).

Nurse Study Results Davis suggests that poor year end performance ratings was in part caused by poor feedback (p. 443).

The following depicts employees performance changes from Year 1 to Year 2 (after the performance appraisal was conducted (Davis, p. 443):

11.1% Decline

63.8%Unchange

d25.1%

Improved

Davis argues that HR can implement changes to improve employee performance.

i. One step a manager can take is to conduct a face-to-face meetings throughout the year (Davis, p. 444).

ii. A second step would include “ongoing coaching throughout the year” (Davis. p. 444).

Nurse Study Results One limitation found within the study is that many participants cited working in departments

that were “short-staffed.” (Davis, p. 444).

Working under short-staffed conditions may vary from organizations to organization, and external factors may induce this setting (e.g. reduction in staff due to economic downturn)

In agreement with Kirkpatrick Evolution Framework, “the most effective way to improve employee performance is through a continuous performance review cycle that included gathering evidence to support the appraisal, providing the appraisal in an interview, formulating a performance improvement plan, and providing continuous guidance and coaching throughout the year” (Davis, p. 444).

Continuous coaching creates “self-awareness,, rewards positive behavior, and ensures the performance improvement plan is being implemented” (Davis, p. 444).

“Coaches also serve as a source of social and task support to help the employees meet their goals” (Davis, p. 444).

Data also shows that the combination of coaching and feedback leads to “higher levels of job satisfaction and turnover intention, than feedback alone” (Davis, p. 444).

Deloitte Study In a recent study Deloitte exposed how “executives questioned (58%) believe that their current performance management approach drives neither employee engagement nor high performance” (Buckingham & Goodall, 2015, p. 42).

Deloitte calculated that their firm was spending over 2 million hours per year in processing performance reviews for their 65,000 plus workforce (Buckingham & Goodall, p. 42).

According to Deloitte, “Once-a-year goals are too “batched” for a real-time world, and conversations about year-end ratings are generally less valuable than conversations conducted in the moment about actual performance” (Buckingham & Goodall, p. 43).

Deloitte attempted to design a new performance management program that incorporated findings from a “1990s Gallop poll of 1.4 million employees, 50,000 teams, and 192 organizations” (Buckingham & Goodall, p. 43).

Deloitte Study The Gallop asked high and low performing teams “questions on numerous subjects, from

mission and purpose to pay and career opportunities, and isolated the questions on which the high-performing teams strongly agreed and the rest did not” (Buckingham & Goodall, p. 44).

According to Buckingham & Goodall, the question that offered the most powerful variation between high and low performing groups was “at work, I have the opportunity to do what I do best every day” (Buckingham & Goodall, p. 44).

Employers who “strongly agreed” with the above question had “higher customer satisfaction rates (44%), lower employee turnover rates (50%), and more likely to be productive (38%)” (Buckingham & Goodall, p. 44).

In a controlled case study at Deloitte, the most meaningful question that had the most impact on employees was “I have the chance to use my strengths every day” (Buckingham & Goodall, p. 44).

Deloitte Study Three Deloitte management objectives in redesigning their performance management system

includes (1) recognizing performance , (2) how to see performance and (3) how to fuel performance ” (Buckingham & Goodall, p. 45).

In agreement with the Nurse Study, Deloitte believes in leadership proactively engaging employees with weekly coaching and input.

A major finding that Deloitte implements is asking team leaders not to evaluate the individual employee's skills, but to “ask what the team leader's own future actions will be with respect to that person” (Buckingham & Goodall, p. 46).

A second major finding includes the concept “it’s not the particular number we assign to a person that’s the problem; rather, it’s the fact that there is a single number” (Buckingham & Goodall, p. 46).

Deloitte Study Additional key questions that are asked to Deloitte managers in what the company describes

as a “performance snapshot” are measured on standard x and axis chart.

The question of whether the manager would offer the highest possible compensation to the employee is asked in conjunction with the following questions (Buckingham & Goodall, p. 46). • “I would always want this person on my team?” • “Is there enough variation among people to fairly allocate pay?” • “Is this person ready for promotion today?”• ”Is this person at risk for low performance?”

Criteria Rater Testing Frequency Transparency

Overall Process

Performance Appraisal As organizations vary (e.g. size, industry), management must decide what type of

performance appraisal best fits their company.

In Deloitte's case, management sought a plan that involved constant feedback on a weekly basis.

According to Schumacher (2011), a few advantages of giving feedback throughout the year includes (1) not relying on your memory for an end of year performance review and (2) employees hearing “positive and corrective feedback” in the present moment (p. 29).

“The end-of-year performance review should be nothing new [as] it’s simply formalizing what you’ve told them already” (Schumacher, p. 29).

Schumacher corroborates the use of narrative performance as he argues that “rating employees with numbers (e.g. 1 or 5) may be more confusing than using simple terminology that includes “meets, exceeds or does not meet” expectations (Schumacher, p. 28).

Performance Appraisal “A survey by Ed Lawler and colleagues at the Center for Effective Organizations (CFEO)

found that almost every organization uses performance appraisals, yet only 6 percent perceive appraisals as being effective” (Teckchandani, & Pichler, 2015, p. 17).

The CFEO case study revealed employee performance declined by 60% after a performance review was conducted.

Recall the nurse case study had similar findings where employees performance was mostly the same or had declined.

These two studies suggest that the design of performance appraisals will have an impact on employee performance.

The following describes a suggested practice in enhancing employee performance (Teckchandani, & Pichler, p. 17):

TRUST

SUPPORT

Relationship Quality

Appraisal Reaction

PerformanceAppraisal Effectiveness

Performance Appraisal As detailed by Teckchandani & Pichler, five strategies that can help develop high quality

relationships with employees includes “finding common ground, practicing reciprocity, understanding employees, being accessible, and giving informal feedback” (p. 19).

Finding common ground

• “Seek out opportunities to have informal conversations with your staff to learn about their interests.”

Practice reciprocity • “Trigger the virtuous cycle of reciprocity by offering help

to help an employee with a work-related challenge.”

Understanding employees

• “Seek to understand what it is like to be in your employee's shoes by having one-on-one meetings, setting up a way to receive anonymous feedback, and facilitating cross-departmental meetings to share information.”

Being accessible• “Show your employees that you truly care about their

success and well by having an open-door policy and getting to know each employee on an individual basis.”

Giving informal feedback

• “Don’t wait for the annual performance appraisal; give your employees feedback year-round. Make sure the feedback is tailored to their unique needs and preferences.”

Performance Appraisal At minimum, management may want to consider the following steps in conducting a

performance appraisal.

i. Plan the meeting: Set up a meeting timeframe. Ask the employee to appraise their own performance with a determined appraisal method. Collect previous performance feedback/appraisals, if applicable.

ii. Evaluate each employee’s previous year’s performance: Rate employees’ demonstration of competencies. Rate employee’s performance of goals. Determine overall rating.

iii.Establish objectives for upcoming year: Define the goals with the employee and the measurements and objectives in which they should be determined. Work with them on professional development and goals in their plan.

iv. Throughout the year, provide feedback and coaching. Collect data and assess any perceived gaps.

Promotions “When organizations implement an evaluative performance appraisal, employees perceive that

their relationship with the organization is a type of economic-interest exchange relationship” (Qui, Hu, Zhang, & Li, 2015, p. 1102).

Most employees have a desire to get ahead in life and in their organization.

In order for such promotions, they need to understand what is expected of them in the organization.

By conducting performance appraisals, the organization, the supervisor and the employee have an understanding of how the employee measures to warrant any type of promotions within the organization.

Promotions In an on-going performance appraisal, an employee can be assessed on their continual skill

level and whether they are continually meeting or exceeding expectations.

If an employee stays stagnant in their skill level, and they don’t perform to upper-level positions, then the performance appraisals can clearly define their level and can be used as the reasoning for not being promoted.

Supervisors need to be able to see that the employee is capable of handling higher level positions to warrant such promotions.

Termination If consistent feedback to improve skills are not being heard, then the employer is not suited

for the position they are in.

“When poor performance is identified, managers must try to identify contributory factors” (Ellis, 2008, p. 29).

A system should be put in place to determine that termination is the only and last resort for the employee.

The following table describes a few examples of failed performance that have been identified by the Department of Health (Ellis, p. 29):

“FAILING TO FOLLOW DIRECTIONS.”

“MAKING FREQUENT MISTAKES.”

“FAILING TO COMPLETE WORK.”

“FAILING TO ACHIEVE OBJECTS.”

Termination If an employee does not perform at the level that is needed in that position, for the

organization, then it could be cause for termination.

Ellis suggests progressive discipline when handling employees who do not meet expectations.

The progression of discipline may be viewed in four stages that includes a verbal warning, written warning, suspension and ultimately termination.

i. Verbal/oral warning: Should be conducted in private, between the employee and the supervisor. Should be presented calmly and objectively.

ii. Written Warning: Should be given after a verbal warning and in writing to the employee. Re-iterate what was discussed in the verbal warning, the misconduct, cause of action and understanding of not being repeated, and if it is, there could be a cause for termination. If necessary, develop and action plan.

iii.Suspension: Can vary in time and is determined by employer and organization. iv. Termination: Review employee’s file and determine that termination is the only means of

action. Should be done with sensitivity and outline the cause of termination.

Conclusion

A variety of performance appraisal approaches have been discussed in this Power Point.

One common theme amongst the different approaches includes being flexible and proactive

Data suggest that high performance is achieved when management takes an active role in listening to employees.

Data also suggests that employees are more receptive to constant feedback and narrative ratings that accompany numerical ratings.

Employers can enhance employee performance by showing support and building trusting relations with their employees.

References

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