performance appraisals

PERFORMANCE APPRAISALS

Session 6

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Chapter Objectives

Define performance appraisal.

Identify the uses of performance appraisal.

Discuss performance appraisal environmental factors.

Explain informal and systematic performance appraisal.

Identify who may be responsible for performance

appraisal and the performance period.

Identify who does the appraisal.

Identify the various performance appraisal methods

used.

After studying this chapter, you should be able to:

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I. What is performance

appraisal? After an employee has been selected for a job, has been trained to do, and has work on

its for a period of time, his or her performance

should be reviewed.

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It also has been called employee rating, employee evaluation, performance

review, performance evaluation, and

result appraisal.

Performance appraisal is the process of evaluation how well employees do their jobs

compared with a set of standards and

communicating that information to employees.

I. What is performance appraisal? (Cont.) Performance Appraisal is a formal system

of review and evaluation of individual or

team task performance.

Performance appraisal involves the identification, measurement, &

management of human performance in

organizations.

Identification means determining what area of work the manager should be examining when measuring performance.

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I. What is performance appraisal? (Cont.)

Management is the overriding goal of any appraisal system.

Performance Mgt. : A management system consisting of all organizational processes

that determine how well employees, teams,

and ultimately, the organization perform.

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Measurement, the centerpiece of the appraisal system, entails making managerial judgments of how good or bad observed employee performance was.

II. Why appraise performance?

There are four reasons:

An appraisal provides information upon with you make promotion and salary decisions.

They provides an opportunity for you and your subordinate to review his or her work-related

behavior.

The appraisal is part of the firm's career plans in light of his/her strengths and weaknesses.

Appraisals help you better manage and improve your firm's performance.

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III. Uses of Performance Appraisal

The 3 major uses of PA are for compensation

administration, feedback for development, and

various administrative decisions such as

layoffs, promotions, and transfers.

Compensation

administration

Other

administrative

, decision

Feedback for

development

Uses of Performance Appraisal

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1) Compensation administration

A Performance appraisal system is link

between the reward that employee hope to

receive and his or her productivity.

The linkage can be thought of as:

ProductivityPerformance

AppraisalReward

If any link fails, the most productive

employees will not receive the larger reward,

resulting in all the problems that come from

perceived inequity in the workplace.8

2) Feedback for development

Performance appraisal is a primary source

of information and feedback, for employees

both on areas in which they are doing well

and ones where improvement is needed.

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So performance appraisal has a

developmental use.

2) Feedback for development (Cont.)

Managers & supervisor can identify employee's weakness, potentials and

training needs of employees through

performance appraisal feedback.

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They can inform employees about their progress and tell them what skills they

need to develop to become eligible for

promotion, transfers & other HR

activities.

3) Other administrative decisions

Several other uses of performance appraisal result can be classified as

administrative decisions such as

promotion, termination, layoff, and

transfer assignment decisions often are

made on basis of performance.

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Similarly, promotion and demotion base on differences in performance must be

documented with performance

appraisal.

Or III. Uses of Performance

Appraisal1) Human resource planning - Data must be available to identify those who have the

potential to be promoted.

2) Recruitment and selection - May be helpful in

predicting the performance of job applicants.

3) Training and development - Point out an

employees specific needs for training and development.

4) Career planning and development - Essential

in assessing an employees strengths and weaknesses and in determining the persons potential.

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Or III. Uses of P. A. (Cont.)

5) Compensation programs - Provide a

basis for rational decisions regarding

pay adjustments.

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7) Assessment of employee potential -

Some organizations attempt to assess

employee potential as they appraise

their job performance.

6) Internal employee relations - Used for

decisions in several areas of internal

employee relations, including promotion,

demotion, termination, layoff, and transfer .

IV. PA. Environment Factors

1) External Environment

Legislation requiring nondiscriminatory appraisal

systems

Labor unions

2) Internal environment

Factors within internal environment, such as type of corporate culture.

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(Cont.) Legislation Affecting Performance Appraisal

Mistretta v Sandia Corporation - Federal judge ruled against company, stating,

There is sufficient circumstantial evidence to indicate that age bias and

age based policies appear throughout the

performance rating process to the

detriment of the protected age group.

Albermarle Paper v Moody Supreme Court case supported validation

requirements for performance appraisals15


(Cont.) Labor Unions and Performance Appraisal

Have traditionally stressed seniority as the basis for promotions and pay

increases.

May vigorously oppose the use of a management-designed performance

appraisal system.

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Identify Specific Performance Appraisal

Goals

Establish Performance Criteria (Standards) and Communicate Them To

Employees

Examine Work Performed

Appraise the Results

Discuss Appraisal with Employee

Performance Appraisal ProcessExternal EnvironmentInternal Environment

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V. Informal and systematic

PA.1) Systematic / Formal PA: Is used when the contact between manager

and employee is formalized and a system is

established to report managerial impression

and observations on employee

performance.

The day-to-day working for employees performance is to be judged.

2) Informal PA:

Is conducted whenever the contacts between managers and employees are not

formalized periodically.18

VI. PA responsibilities:1) HR Department:

Designing, maintaining & establishing formal report system.

Making sure reports are on time Training ratters

2) Managers:

Rating actual performance of employees Making formal reports Review appraisals of employees

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VII. Timing of PAn Is important. Systematic appraisals typically

are conducted once or twice a year:

Usually near the employees anniversary date.

For new employees, an appraisal 90 days after employment, again at six months, and

annually thereafter is common timing.

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VIII. Who does the appraisal?1) Supervisor rating of subordinates:

Managers & supervisors in each department rate their employees performance.

2) A group of managers rating employees:

A group of managers from various departments can rate the employee's performance with different departments.

3) Peer ratings:

Use a group of peer as raters to evaluate another employees.

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VIII. Who does the appraisal?

(Cont.)4) Subordinates rate their supervisors: Used to evaluate managers & supervisors in

order to improve their decisions-making and leadership potentials.

5) Self ratings:

It is a self-development tool that force employees to think about their strengths, weakness & opportunities for improve themselves.

6) Outsider rating:

Rating also may be done by outsiders.

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IX. Method of Performance

Appraisals1. Job Ranking Method

Consists of listing all employees from the highest to lowest performance.

2) Paired Comparison Method

Normally compare each employee with other employees in the group and find out which employee is better.

3) Management By Objective (MBO):

Management by results/ Management of performance objectives.

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a) What is MBO ?

The process by which objectives/ goals/ targets are assigned through consultation to every

department, sub-unit, and individual in an

organization in order to increase individual and

organization performance.

McGregor believed that, instead of creating antagonisms because of judgments, the superior

should work with subordinates to set goals.

MBO is more than just an evaluation program and process. It is viewed as a philosophy of

managerial practice, a method by which

managers and subordinates plan, organize,

control, communicate, and debate.24

a) What is MBO ? (Cont.)

Usually, an MBO program follows a systematic process, such as the following:

! The superior & subordinate conduct meetings to define key tasks of the subordinate and to set a

limited number of objectives (goals).

! The participants set objectives that are realistic, challenging, clear, and comprehensive.

! The superior, after consulting with the subordinate, establishes the criteria for

assessing the accomplishment of the objectives.

! Dates for reviewing intermediate progress are agreed upon and used.

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! The superior and subordinate make any required modifications in the original

objectives.

! The final evaluation by the superior is made and a meeting is held with the subordinate in

a counseling, encouraging session.

! Objectives for the next cycle are set by the subordinate after consulting with the superior,

keeping in mind the previous cycle and future

expectations.

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The pitfalls and problems with MBO have been identified, such as the following:

! Too much paperwork is involved.! Too many objectives are set, and confusion occurs.! MBO is forced into jobs where establishing

objectives is extremely difficult.

! There may be a failure to tie in MBO results with rewards.

! There is too much emphasis on the short term.! Superiors are not trained in the MBO process and

the mechanics involved.

! Original objectives are never modified.! MBO is used as a rigid control device that

intimidates rather than motivates.27

b) MBO Approaches:

Bottom-Up: performance goals are set first at the working unit, based on what workers & supervisors can achieve. These goals that are converted to tactical levels

by middle managers. Finally, these goals are sent to strategic levels for

consideration by top managers.

Top-Down: Top-Down: Organizational goals/strategic goals

set by top managers who then consult with middle managers in order to set department goals.

Then middle managers discuss with supervisors to set goals at working unit.

Finally, supervisors have a meeting with their employees in order to establish individual goals.28

c) MBO Process:

Developing overall company's goals/ strategic goals set by top managers.

Establishing specific goals to various departments and individuals.

Formulating action plans:

When goals are set, action plans must be developed.

Action plans focus on methods or necessary activities such as.

What, Where, When, Whom, How, to achieve particular goals.

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c) MBO Process (Cont.)

Implementing action plans:

Once goals are set, action plans are determined; individuals should be given a

consideration in carrying out activities.

Reviewing progress periodically

Provide a good opportunity for managers to check employee's performance.

Identify and remove obstacles, solving problem and altering action plans that are

not achieving the expected result.

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c) MBO Process (Cont.)

Appraisal performance:

Usually, organizations appraise their employee's performance over a period of

one year.

They can compare actual performance of their employees with established goals.

The Results Can Be:

Achieved stated goals Remaining the same Not achieved stated goals Taking correction

as needed

Exceeded stated goals rewarding31

performance appraisals

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