Appraising and Improving Performance Managing Human Resources Bohlander

Appraising and Improving Performance Managing Human Resources Bohlander • Snell © 2007 Thomson/South-Western. All rights reserved. 14 th edition Power. Point Presentation by Charlie Cook The University of West Alabama

Objectives After studying this chapter, you should be able to: 1. Explain the purposes of performance appraisals and the reasons they can sometimes fail. 2. Identify the characteristics of an effective appraisal program. 3. Describe the different sources of appraisal information. 4. Explain the various methods used for performance evaluation. 5. Outline the characteristics of an effective performance appraisal interview. © 2007 Thomson/South-Western. All rights reserved. 8– 2

Performance Appraisal Programs • Performance Appraisal Ø A process, typically performed annually by a supervisor for a subordinate, designed to help employees understand their roles, objectives, expectations, and performance success. • Performance management Ø The process of creating a work environment in which people can perform to the best of their abilities. © 2007 Thomson/South-Western. All rights reserved. 8– 3

Performance Appraisal Ap p rai sal P ro g rams Administrative Developmental Compensation Ind.

Figure 8– 1 Purposes for Performance Appraisal © 2007 Thomson/South-Western. All rights reserved. 8–

Reasons Appraisal Programs Sometimes Fail • Lack of top-management information and support • Unclear performance standards • Rater bias • Too many forms to complete • Use of the appraisal program for conflicting (political) purposes. © 2007 Thomson/South-Western. All rights reserved. 8– 6

Figure 8– 2 Let Me Count the Ways. . . There are many reasons why performance appraisal systems might not be effective. Some of the most common problems include the following: • Inadequate preparation on the part of the manager. • Employee is not given clear objectives at the beginning of performance period. • Manager may not be able to observe performance or have all the information. • Performance standards may not be clear. • Inconsistency in ratings among supervisors or other raters. • Rating personality rather than performance. • The halo effect, contrast effect, or some other perceptual bias. Sources: Patricia Evres, “Problems to Avoid during Performance Evaluations, ” Air Conditioning, Heating & Refrigeration News 216, no. 16 (August 19, 2002): 24– 26; Clinton Longnecker and Dennis Gioia, “The Politics of Executive Appraisals, ” Journal of Compensation and Benefits 10, no. 2 (1994): 5– 11; “Seven Deadly Sins of Performance Appraisals, ” Supervisory Management 39, no. 1 (1994): 7– 8. © 2007 Thomson/South-Western. All rights reserved. 8– 7

Managerial Issues Concerning Appraisals 1. There is little face-to-face discussion between the manager and the employee being appraised. 2. The relationship between the employee’s job description and the criteria on the appraisal form isn’t clear. 3. Managers feel that little or no benefit will be derived from the time and energy spent in the process, or they are concerned only with bad performances. 4. Managers dislike the face-to-face confrontation of appraisal interviews. © 2007 Thomson/South-Western. All rights reserved. 8– 8

Managerial Issues Concerning Appraisals (cont’d) 5. Managers are not sufficiently adept at rating employees or providing them with appraisal feedback. 6. The judgmental role of appraisal conflicts with the helping role of developing employees. 7. The appraisal is just a once-a-year event, and there is little follow-up afterward. © 2007 Thomson/South-Western. All rights reserved. 8– 9

Performance Standards Characteristics Strategic Relevance Individual standards directly relate to strategic goals. Criterion Deficiency Standards capture all of an individual’s contributions. Criterion Performance capability is not Contamination reduced by external factors. Reliability (Consistency) © 2007 Thomson/South-Western. All rights reserved. Standards are quantifiable, measurable, and stable. 8– 10

Figure 8– 4 Alternative Sources of Appraisal Source: From The Wall Street Journal—permission, Cartoon

Sources of Performance Appraisal • Manager and/or Supervisor Ø Appraisal done by an employee’s manager and reviewed by a manager one level higher. • Self-Appraisal Ø Appraisal done by the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview. • Subordinate Appraisal Ø Appraisal of a superior by an employee, which is more appropriate for developmental than for administrative purposes. © 2007 Thomson/South-Western. All rights reserved. 8– 12

Sources of Performance Appraisal • Peer Appraisal Ø Appraisal by fellow employees, compiled into a single profile for use in an interview conducted by the employee’s manager. Ø Why peer appraisals are used more often: 1. 2. 3. 4. Peer ratings are simply a popularity contest. Managers are reluctant to give up control over the appraisal process. Those receiving low ratings might retaliate against their peers. Peers rely on stereotypes in ratings. © 2007 Thomson/South-Western. All rights reserved. 8– 13

Sources of Performance Appraisal • Team Appraisal Ø based on TQM concepts, that recognizes team accomplishment rather than individual performance • Customer Appraisal Ø A performance appraisal that, like team appraisal, is based on TQM concepts and seeks evaluation from both external and internal customers © 2007 Thomson/South-Western. All rights reserved. 8– 14

Figure 8– 5 Pros and Cons of 360 -Degree Appraisal • PROS Ø The system is more comprehensive in that responses are gathered from multiple perspectives. Ø Quality of information is better. (Quality of respondents is more important than quantity. ) Ø It complements TQM initiatives by emphasizing internal/external customers and teams. Ø It may lessen bias/prejudice since feedback comes from more people, not one individual. Ø Feedback from peers and others may increase employee selfdevelopment. Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, “Has 360 -Degree Feedback Gone Amok? ” Academy of Management Executive 12, no. 2 (May 1998): 86– 94; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, “Does 360 -Degree Feedback Negatively Affect Company Performance? ” HRMagazine 47, no. 6 (June 2002): 54– 59; Maury Peiperl, “Getting 360 -Degree Feedback Right, ” Harvard Business Review 79, no. 1 (January 2001): 142– 47; Joyce E. Bono and Amy E. Colbert, Understanding Responses to Multi-Source Feedback: The Role of Core Self-Evaluations, ” Personnel Psychology 58, no. 1 (Spring 2005): 171– 205. © 2007 Thomson/South-Western. All rights reserved. 8– 15

Figure 8– 5 Pros and Cons of 360 -Degree Appraisal (cont’d) • CONS Ø The system is complex in combining all the responses. Ø Feedback can be intimidating and cause resentment if employee feels the respondents have “ganged up. ” Ø There may be conflicting opinions, though they may all be accurate from the respective standpoints. Ø The system requires training to work effectively. Ø Employees may collude or “game” the system by giving invalid evaluations to one another. Ø Appraisers may not be accountable if their evaluations are anonymous. Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, “Has 360 -Degree Feedback Gone Amok? ” Academy of Management Executive 12, no. 2 (May 1998): 86– 94; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, “Does 360 -Degree Feedback Negatively Affect Company Performance? ” HRMagazine 47, no. 6 (June 2002): 54– 59; Maury Peiperl, “Getting 360 -Degree Feedback Right, ” Harvard Business Review 79, no. 1 (January 2001): 142– 47; Joyce E. Bono and Amy E. Colbert, Understanding Responses to Multi-Source Feedback: The Role of Core Self-Evaluations, ” Personnel Psychology 58, no. 1 (Spring 2005): 171– 205. © 2007 Thomson/South-Western. All rights reserved. 8– 16

360 -Degree Performance Appraisal System Integrity Safeguards • Assure anonymity. • Make respondents accountable. • Prevent “gaming” of the system. • Use statistical procedures. • Identify and quantify biases. © 2007 Thomson/South-Western. All rights reserved. 8– 17

Training Performance Appraisers Common rater-related errors Error of central tendency Leniency or strictness errors Similar-to-me errors Recency errors Contrast and halo errors © 2007 Thomson/South-Western. All rights reserved. 8– 18

Rater Errors • Error of Central Tendency Ø A rating error in which all employees are rated about average. • Leniency or Strictness Error Ø A rating error in which the appraiser tends to give all employees either unusually high or unusually low ratings. • Recency Error Ø A rating error in which appraisal is based largely on an employee’s most recent behavior rather than on behavior throughout the appraisal period. © 2007 Thomson/South-Western. All rights reserved. 8– 19

Rater Errors • Contrast Error Ø A rating error in which an employee’s evaluation is biased either upward or downward because of comparison with another employee just previously evaluated. • Similar-to-Me Error Ø An error in which an appraiser inflates the evaluation of an employee because of a mutual personal connection. © 2007 Thomson/South-Western. All rights reserved. 8– 20

Rater Errors: Training and Feedback • Rating Error Training Ø Observe other managers making errors Ø Actively participate in discovering their own errors Ø Practice job-related tasks to reduce the errors they tend to make • Feedback Skills Training Ø Communicating effectively Ø Diagnosing the root causes of performance problems Ø Setting goals and objectives © 2007 Thomson/South-Western. All rights reserved. 8– 21

Performance Appraisal Methods Graphic Rating Scale Trait Methods Mixed Standard Scale Forced-Choice Essay ©

Trait Methods • Graphic Rating-Scale Method Ø A trait approach to performance appraisal whereby each employee is rated according to a scale of individual characteristics. • Mixed-Standard Scale Method Ø An approach to performance appraisal similar to other scale methods but based on comparison with (better than, equal to, or worse than) a standard. © 2007 Thomson/South-Western. All rights reserved. 8– 23

Highlights in HRM 2 Graphic Rating Scale with Provision for Comments © 2007 Thomson/South-Western.

Highlights in HRM 3 Example of a Mixed-Standard Scale © 2007 Thomson/South-Western. All rights

Trait Methods • Forced-Choice Method Ø Requires the rater to choose from statements designed to distinguish between successful and unsuccessful performance. Ø 1. ______ a) Works hard Ø 2. ______ a) Shows initiative Ø 3. ______ a) Produces poor quality _____ b) Works quickly _____ b) Is responsive to customers _____ b) Lacks good work habits • Essay Method Ø Requires the rater to compose a statement describing employee behavior. © 2007 Thomson/South-Western. All rights reserved. 8– 26

Behavioral Methods Critical Incident Behavioral Checklist Behavioral Methods Behaviorally Anchored Rating Scale (BARS) Behavior Observation Scale (BOS) © 2007 Thomson/South-Western. All rights reserved. 8– 27

Behavioral Methods • Critical Incident Method Ø Critical incident v An unusual event that denotes superior or inferior employee performance in some part of the job Ø The manager keeps a log or diary for each employee throughout the appraisal period and notes specific critical incidents related to how well they perform. • Behavioral Checklist Method Ø The rater checks statements on a list that the rater believes are characteristic of the employee’s performance or behavior. © 2007 Thomson/South-Western. All rights reserved. 8– 28

Behavioral Methods • Behaviorally Anchored Rating Scale (BARS) Ø Consists of a series of vertical scales, one for each dimension of job performance; typically developed by a committee that includes both subordinates and managers. • Behavior Observation Scale (BOS) Ø A performance appraisal that measures the frequency of observed behavior (critical incidents). Ø Preferred over BARS for maintaining objectivity, distinguishing good performers from poor performers, providing feedback, and identifying training needs. © 2007 Thomson/South-Western. All rights reserved. 8– 29

Highlights in HRM 4 Example of a BARS for Municipal Fire Companies FIREFIGHTING STRATEGY: Knowledge of Fire Characteristics. Source: Adapted from Landy, Jacobs, and Associates. Reprinted with permission. © 2007 Thomson/South-Western. All rights reserved. 8– 30

Highlights in HRM 5 Sample Items from Behavior Observation Scales © 2007 Thomson/South-Western. All

Results Methods • Productivity Measures Ø Appraisals based on quantitative measures (e. g. , sales volume) that directly link what employees accomplish to results beneficial to the organization. Criterion contamination v Focus on short-term results v • Management by Objectives (MBO) Ø A philosophy of management that rates performance on the basis of employee achievement of goals set by mutual agreement of employee and manager. © 2007 Thomson/South-Western. All rights reserved. 8– 32

Highlights in HRM 6 The Balanced Scorecard Source: Robert Kaplan and David Norton, “Strategic Learning and the Balanced Scorecard, ” Strategy & Leadership 24, no. 5 (September/October 1996): 18– 24. © 2007 Thomson/South-Western. All rights reserved. 8– 33

The Balanced Scorecard • The appraisal focuses on four related categories Ø Financial, customer, processes, and learning • Ensuring the method’s success Translate strategy into a scorecard of clear objectives. Attach measures to each objective. Cascade scorecards to the front line. Provide performance feedback based on measures. Empower employees to make performance improvements. Reassess strategy. © 2007 Thomson/South-Western. All rights reserved. 8– 34

Summary of Appraisal Methods • Trait Methods Ø Advantages Are inexpensive to develop v Use meaningful dimensions v Are easy to use v Ø Disadvantages Have high potential for rating errors v Are not useful for employee counseling v Are not useful for allocating rewards v Are not useful for promotion decisions v © 2007 Thomson/South-Western. All rights reserved. 8– 35

Summary of Appraisal Methods (cont’d) • Behavioral Methods Ø Advantages Use specific performance dimensions v Are acceptable to employees and superiors v Are useful for providing feedback v Are fair for reward and promotion decisions v Ø Disadvantages Can be time-consuming to develop/use v Can be costly to develop v Have some potential for rating error v © 2007 Thomson/South-Western. All rights reserved. 8– 36

Summary of Appraisal Methods (cont’d) • Results Methods Ø Advantages Have less subjectivity bias v Are acceptable to employees and superiors v Link individual to organizational performance v Encourage mutual goal setting v Are good for reward and promotion decisions v v Ø Disadvantages Are time-consuming to develop/use v May encourage short-term perspective v May use contaminated criteria v May use deficient criteria v © 2007 Thomson/South-Western. All rights reserved. 8– 37

Appraisal Interviews Types of Appraisal Interviews Tell and Sell - persuasion Tell and Listen - nondirective Problem Solving - focusing the interview on problem resolution and employee development © 2007 Thomson/South-Western. All rights reserved. 8– 38

Appraisal Interview Guidelines Invite Participation Ask for a Self-Assessment Change Behavior Problem Solving Focus Minimize Criticism Express Appreciation Establish Goals Be Supportive Follow Up Day by Day © 2007 Thomson/South-Western. All rights reserved. 8– 39