9 49 Performance Management and Appraisal Learning Objectives

9 49 Performance Management and Appraisal

Learning Objectives 1. Describe the appraisal process. 2. Define performance management and discuss 49 how it differs from performance appraisal. 3. Develop, evaluate, and administer at least four performance appraisal tools.

Learning Objectives 4. Explain and illustrate the problems to avoid in appraising performance. 49 5. Perform an effective appraisal interview.

Describe the appraisal process 49

PERFORMANCE APPRAISAL • Every manager needs some way to appraise employees’ performance. If employees’ performance is good, you’ll want to reinforce it, and if it’s bad, you’ll want to take corrective action. 9 • Performance appraisal means evaluating an employee’s current and/or past performance relative to his or her performance standards. • The purpose of a performance appraisal is to provide employees with feedback on how they are doing, as well as give them an opportunity to give feedback.

The Basics of Performance Appraisal • The performance appraisal process steps 1. Sets work standards 49 2. Assesses performance 3. Provides feedback to the employee

Why Appraise Performance Five reasons: 1. Used for pay, promotion, and retention decisions 2. Links performance management to 49 company goals 3. The manager can correct deficiencies and reinforce strengths 4. With appraisals employee’s can review career plans 5. Training needs are identified

Define performance management and discuss how it differs from 49 performance appraisal.

Performance Management Performance management definition The continuous process of: o Identifying o Measuring 49 o Developing performance of individuals and teams o Aligning performance with the organization’s goals

Performance Management Six Elements • Direction sharing • Goal alignment 49 • Ongoing performance monitoring • Ongoing feedback • Coaching and developmental support • Recognition and rewards

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 9 The continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning their performance with the organization`s goals. .

Defining the Employee’s Goals and Performance Standards • Manager assess: o Attaining numerical goals o Meeting quality and quantity criteria o Mastering competencies 49 • Managers goals are SMART: o Specific o Measurable o Attainable o Relevant o Timely

PERFORMANCE APPRAISAL ROLES • The Supervisor’s Role • Usually do the actual appraising • Must be familiar with basic appraisal techniques • Must understand avoid problems that can cripple appraisals 9 • Must know how to conduct appraisals fairly • The HR Department’s Role • Serves a policy-making and advisory role. • Provides advice and assistance regarding the appraisal tool to use. • Trains supervisors to improve their appraisal skills. • Monitors the appraisal system effectiveness and compliance with EEO laws.

Who Should Do the Appraising? • Peer appraisals • Rating committees • Self-ratings 49 • Appraisal by subordinates • 360 -degree feedback

WHO SHOULD DO THE APPRAISING? 1. The Immediate Supervisor – is usually in the best position to observe and evaluate the subordinate’s performance, and is responsible for that person’s performance. 2. Peer Appraisals – becoming more popular with firms using self-managing teams. 3. Rating Committees – consist of multiple raters, typically the 9 employee’s immediate supervisor and three or four other supervisors. 4. Self-Ratings – tend to be higher than supervisor or peer ratings. . 5. Appraisal by Subordinates – or upward feedback, is where subordinates anonymously rate their supervisor’s performance. 6. 360 -Degree Feedback – where ratings are collected from the employee’s supervisors, subordinates, peers, and internal or external customers.

PERFORMANCE APPRAISAL METHODS (BIG PICTURE) Appraisal Methodologies 1 Graphic rating scale 6 Narrative forms 2 Alternation ranking 7 Behaviorally anchored rating scales (BARS) 9 3 Paired comparison 8 Management by objectives (MBO) 4 Forced distribution 9 Computerized and Web-based performance appraisal 5 Critical incident 10 Merged methods

PERFORMANCE APPRAISAL METHODS 1. Graphic Rating Scale Method – is the simplest and most popular performance appraisal technique. A scale is used to list a number of traits and a range of performance for each, then the employee is rated by identifying the score that best describes his/her performance level for each trait. (See example, Figure 9 -3) Managers must decide which job 9 performance aspects to measure. Some options include generic dimensions, actual job duties, or behaviorally recognizable competencies. Ø A graphic rating scale lists traits (such as “quality and reliability” or “teamwork”) and a range of performance values (from “unsatisfactory” to “outstanding, ” or “below expectations” to “role model”) for each trait.

FIGURE 9– 2 Sample Graphic Rating Performance Rating Form 49 Copyright © 2011 Pearson

PERFORMANCE APPRAISAL METHODS – CONT’D 2. Alternation Ranking Method – is where employees are ranked from best to worst on a particular trait, choosing highest, then lowest, until all are ranked. 9 ØSupervisors choosing the alternation ranking method would use a form like that in Figure 9 -5 to alternately choose and list employees who are the highest on the characteristic being measured and the ones who are the lowest.

FIGURE 9– 5 Scale for Alternate Ranking of Appraisee 49 Copyright © 2011 Pearson

PERFORMANCE APPRAISAL METHODS – CONT’D 3. Paired Comparison Method – involves ranking employees by making a chart of all possible pairs of employees for each trait and indicating which is the better employee of the pair. 9 Ø The paired comparison method helps make the ranking method more precise. For every trait (quantity of work, quality of work, and so on), you pair and compare every subordinate with every other subordinate. In the paired comparison method, you make a chart, as in Figure 9 -6, of all possible pairs of employees for each trait.

FIGURE 9– 6 Ranking Employees by the Paired Comparison Method 49 Note: + means “better than. ” - means “worse than. ” For each chart, add up the number of +’s in each column to get the highest ranked employee. Copyright © 2011 Pearson Education 9– 22

PERFORMANCE APPRAISAL METHODS – CONT’D 4. Forced Distribution Method – is where predetermined percentages of rates are placed in various performance categories; similar to grading on a curve. 5. Critical Incident Method – is where a supervisor keeps a 9 record of uncommonly good and/or undesirable examples of an employee’s work-related behavior, and reviewing it with the employee at predetermined times. ØWith the critical incident method, the supervisor keeps a log of positive and negative examples (critical incidents) of a subordinate’s work-related behavior. Every 6 months or so, supervisor and subordinate meet to discuss the latter’s performance, using the incidents as examples.

PERFORMANCE APPRAISAL METHODS – CONT’D 6. Narrative Forms – involve rating the employee’s performance for each performance factor, writing down examples and an improvement plan, aiding the employee in understanding where his/her performance was good or 9 bad, and summarizing by focusing on problem solving. Ø All or part of the written appraisal may be in narrative form as shown in Figure 9 -7. The supervisor’s narrative assessment aids the employee in understanding where his or her performance was good or bad, and how to improve that performance.

FIGURE 9– 7 Appraisal-Coaching Worksheet 49 Copyright © 2011 Pearson Education 9– 25

PERFORMANCE APPRAISAL METHODS – CONT’D 7. A behaviorally anchored rating scale (BARS) is an appraisal tool that anchors a numerical rating scale with specific examples of good or poor performance. Its proponents say it provides better, more equitable appraisals than do the other appraisal tools. It takes more time to develop a BARS, but the tool has several 9 advantages. Behaviorally Anchored Rating Scales (BARS) – combines the benefits of narratives, critical incidents, and quantified scales, by anchoring a scale with specific behavioral examples of good or poor performance. Advantages of BARS - A more accurate gauge -Clearer standards - Feedback -Independent dimensions -Consistency

FIGURE 9– 8 Example of a Behaviorally Anchored Rating Scale for the Dimension Salesmanship

PERFORMANCE APPRAISAL METHODS – CONT’D 8. Management by Objectives (MBO) – is a comprehensive and formal organization wide goal-setting and appraisal program that requires the manager to set specific measurable goals with each employee and then periodically discuss his/her progress toward these goals. 9 Potential Problems with MBO Setting unclear objective Time-consuming appraisal process Conflict with subordinates over objectives

9. COMPUTERIZED AND WEB-BASED PERFORMANCE APPRAISAL SYSTEMS Ø About 1/3 of employers use online performance management tools for at least some employees. Ø Employers increasingly use computerized and web-based performance appraisal systems that enables managers to : • Allow managers to keep computerized notes on subordinates during 9 the year. • Notes then can be merged with employee ratings on several performance traits. • The Software then generates written text to support appraisals by support ting each part of the appraisal. • Allows for employee self-monitoring and self-evaluation. • Most appraisal software combines several of the basic methods such as graphic ratings plus critical incidents or BARS. 10. Merging the Methods ( Using Multiple Methods) ; Most firms’ tools include combining several methods. it improves reliability and validity of the appraisal scale.

Explain and illustrate the problems to avoid in 49 appraising performance.

Dealing with Appraisal Problems and Interviews • Potential appraisal problems o Unclear standards o Halo effect 49 o Central tendency o Leniency or strictness o Recency effects o Bias

APPRAISING PERFORMANCE: PROBLEMS AND SOLUTIONS It can be difficult to rate performance for several reasons. Much depends on a good rating, including career progress, or being able to obtain a raise. There also technical problems that can affect the fairness of the process. 9 1. Unclear Standards – Ambiguous traits and degrees of merit can result in an unfair appraisal. 2. Halo Effect – the influence of a rater’s general impression on ratings of specific qualities, can be a problem. 3. Central Tendency – where supervisors stick to the middle of the rating scales, thus rating everyone average.

APPRAISING PERFORMANCE: PROBLEMS AND SOLUTIONS 4. Leniency or Strictness – supervisors have the tendency to rate everyone either high or low. • RECENCY EFFECTS - means letting what the employee has done recently blind you to what his or her performance has been over the year. The main solution is to accumulate critical incidents all year long. (p 304) 9 6. Bias – the tendency to allow individual differences such as age, race, and gender to affect the appraisal ratings employees receive, is a problem. TABLE 9 -3 Important Advantages and Disadvantages of Appraisal Tools (p 305) Ø Research Insight –Bias can influence the way a person appraises another person. In one study, for example, the identical employee was rated differently if pregnant. Figure 9 -10 lists other sample rating errors.

Guidelines for Effective Appraisals • Know the problems • Use the right tool • Keep a diary 49 • Get agreement on a plan • Ensure fairness • Appraisals and the law

Perform an effective appraisal interview. 49

How to Conduct the Appraisal Interview • Prepare • Plan • Coach • Be objective 49

How to Conduct the Appraisal Interview • Types of appraisal interviews • How to conduct the appraisal interview o Objective data 49 o Don’t get personal o Encouragement o Agreement

THE APPRAISAL INTERVIEW The Appraisal Interview is an interview in which the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths. Types of Appraisal Interviews : 1) Satisfactory – Promotable, this is the easiest interview, with 9 the objective to make development plans. 2) Satisfactory – Not Promotable, this type of interview has the objective of maintaining performance when promotion is not possible. 3) Unsatisfactory – Correctable with the objective to plan correction via the development of an action plan. 4) Unsatisfactory – Uncorrectable, you can usually skip the interview. You either tolerate the person’s poor performance for now, or dismiss the person.

THE APPRAISAL INTERVIEW Satisfactory—Promotable Types of Appraisal Interviews Satisfactory—Not Promotable 9 Unsatisfactory—Correctable Unsatisfactory—Uncorrectable

Managing the Appraisal Interview • Handling a defensive subordinate • Criticizing a subordinate 49 • The formal written warning • Realistic appraisals

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