Performance Management and Performance Appraisal Chapter 9
Basic Concepts in Appraisal Performance appraisal Evaluating an employee’s current and/or past performance relative to his or her performance standards.
Why Performance Appraisal? • Appraisals affect the employer’s salary raise and promotion decisions. • Appraisals help in planning for correcting deficiencies and reinforce things done correctly. • Appraisals, in identifying employee strengths and weaknesses, are useful for career planning. • Appraisals play an integral role in the employer’s performance management process.
How to Appraise Performance? 1. 2. 3. Performance appraisal always involves: Setting work standard (e. g. producing 10 contracts per week) Assessing/appraising employees’ actual performance relative to standards Providing feedback to the employees on the performance
Defining Work Standards and Work Efforts 2 Choices Use generic criteria (e. g. quality of work, teamwork, communication) Use a specific standard or duty (e. g. produce 10 new contracts per week, add 100 new customers next year) SMART goals are: Specific: clearly state the desired results. Measurable: try to express the goals in numbers Attainable/ Achievable: Assign challenging but doable goals. Relevant: Goals should be aligned with actual jobs. Timely: in reflecting deadlines and milestones.
Assessing Performance Ask two basic questions- 1. What to measure? - Look into the standards - Example, quality of work, quantity of work, effectiveness teamwork, communication and knowhow 2. How to measure? - Look into the appraisal methods
Appraisal Methods Graphic Rating Scale Method - It is the simplest and most popular method - It lists traits (e. g. quality of work, quantity of work, efficiency, teamwork, communication, leadership) and a range of performance values (from “unsatisfactory” to “outstanding” or “below expectations” to “role model”) for each trait.
Graphic Rating Scale
Graphic Rating Scale (cont. )
Graphic Scale Rating: for Specific Dimensions Position: Chef Duty: Maintain adequate Inventory of pizza dough Rating Description: Each round pizza dough must Excellent be between 12 and 14 ounces Each, kneaded at least 2 Minutes before being placed in the temperature and humidity cooler, And kept there for at least 5 hours prior to use. Needs improvement Satisfactory
Alteration Ranking Method This method involves ranking employees from best to worst on traits Since it is easier to distinguish between the worst and best employees, an alteration method is quite popular For the trait you are measuring, list all the employees you want to rank On a form, indicate the employees who is the highest on the characteristics being measured and the one who is the lowest
Alternation Ranking Scale
Paired Comparison Method Paired comparison method It helps make the ranking method more accurate 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 Comparison Method (cont. ) Note: + means “better than. ” − means “worse than. ” For each chart, add up the number of 1’s in each column to get the highest-ranked employee.
Performance Appraisal Methods (cont. ) Forced distribution method Similar to grading on a curve; predetermined percentages of ratees are placed in various performance categories Example: Top 20% (high performers) Middle 70% (average performers) Bottom 10% (low performers)
Performance Appraisal Methods (cont. ) Sun Microsystems force-ranks its 43, 000 employees. Managers appraise employees in groups of 30 Those of bottom 10% of each group get 90 days to improve If they are still in the bottom 10%, they can resign and take dismissal pay Some prefer to resign and some stay Those who stay must perform and if they fail, the firm fires them without dismissal
We are done with part one! More methods will be covered next week. Thank you!
Critical Incident Method With this method, an appraiser involves keeping the record of positive and negative examples or incidents of subordinates’ work-related performance Ideally, every 6 months the appraiser and subordinate meet to discuss the latter’s performance, using the incidents as example
Examples of Critical Incidents for an Assistant Plant Manager
Pros and Cons of Critical Incident Method Pros Compiling incidents will provide the good and bad examples of performance It makes the supervisor think about the subordinates’ appraisal all during the year The examples show the subordinates what can de done to remove performance deficiencies Cons No use of numerical rating It is not possible to compare between employees due to lack of numerical rating It is not possible to take salary decision as well
Performance Appraisal Methods (cont’d) Behaviorally anchored rating scale (BARS) An appraisal method that anchors a numerical rating scale with specific narrative examples of good and poor performance. Developing a BARS: 1. Generate critical incidents 2. Develop performance dimensions 3. Reallocate incidents/ verify the findings 4. Scale the incidents 5. Develop a final instrument
Example 3 researchers developed a BAR for grocery checkout clerks. They collected many critical incidents, and then grouped them into eight performance dimensions such as 1. Salesmanship skills 2. Conscientiousness 3. Skills in Human Relations 4. Skill in Operation of Register 5. Skill in Bagging 6. Organizational Ability of Check-stand Work 7. Skill in Monetary Transactions 8. Observational Ability
Performance Appraisal Methods (cont’d) Advantages of using a BARS A more accurate measurement Clearer standards Feedback Independent dimensions Consistency
Management by Objectives (MBO) Involves setting specific measurable goals with each employee and then periodically reviewing the progress made. 1. Set the organization’s goals. 2. Set departmental goals. 3. Discuss departmental goals. 4. Define expected results (set individual goals). 5. Performance reviews. 6. Provide feedback.
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.
Potential Rating Scale Appraisal Problems Unclear standards An appraisal that is too open to interpretation Note: For example, what exactly is meant by “good, ” “quantity of work, ” and so forth?
Clearly Defining the Standards
Potential Rating Scale Appraisal Problems (cont. ) Halo effect Occurs when a supervisor’s rating of a subordinate on one trait biases the rating of that person on other traits Central tendency A tendency to rate all employees the same way, such as rating them all average
Potential Rating Scale Appraisal Problems (cont’d) Strictness/leniency The problem that occurs when a supervisor has a tendency to rate all subordinates either high or low. Bias The tendency to allow individual differences such as age, race, and sex to affect the appraisal ratings employees receive.
How to Avoid Appraisal Problems Learn and understand the potential problems, and the solutions for each. Use the right appraisal tool and consider the pros and cons of individual tools Train supervisors to reduce rating errors such as halo, leniency, and central tendency Have raters compile positive and negative critical incidents as they occur (keep a diary) Every appraisal you give as a supervisor should be fair
Advantages and Disadvantages of Appraisal Tools
Who Should Do the Appraising? The immediate supervisor Peers Rating committees Self-ratings Subordinates
Feedback System 360 -degree feedback - Ratings are collected “all around” an employee - A multi-source rating system in which an employee receives feedback peers, bosses or supervisors, subordinates, peers and internal and external customers 540 -degree feedback - 540 -degree includes more raters or sources of feedback - Employees receive feedback from peers, subordinates, bosses, customers and, also from
Performance Management Performance management is the continuous process of identifying, measuring and developing performance of individuals and teams and aligning their performance with the organization’s goals
Performance Management Versus Performance Appraisal Performance Management Performance appraisal involves reviewing the performance of the employees once or twice a year Performance management means continuous, daily or weekly interactions and feedback to ensure continuous improvement Performance appraisal only involves measuring or evaluating the performance Performance management is always goal directed. The performance reviews always involve comparing the employee’s or team’s performance against goals Performance appraisal evaluate the performance but doesn’t take the corrective action Performance management continuously reevaluate the performance and take the corrective actions
Basic Building Blocks of Performance Management Direction Sharing - Communicating the company’s higher levels goals (including its vision, mission and strategy) - Translate the goals into achievable department, team and individual goals Goal alignment - It means having a process establishing a process that enable the managers to see the link between an employee’s goals and his organizational and departmental goals
Basic Building Blocks of Performance Management Ongoing feedback - It means face-to-face or computerized feedback regarding progress toward goal Coaching and development support - It should be an integral part of the feedback system Reward, recognition and compensation - Reward and compensate those who play a role in providing the consequences needed to keep the employee’s goal-directed performance on track
Key Terms Used throughout the Session performance appraisal performance management graphic rating scale alternation ranking method paired comparison method forced distribution method critical incident method behaviorally anchored rating scale (BARS) management by objectives (MBO) electronic performance monitoring (EPM) unclear standards halo effect central tendency strictness/leniency bias appraisal interview