Human Resource Management

Performance aPPraisal and Performance management

Performance appraisal

Evaluating an employee’s current and/or past performance relative to his or her performance standards.

Performance management

The process employers use to make sure employees are working toward organizational goals.

difference between Pm and Pa

Processes used to identify,

encourage, measure,evaluate,

improve, and reward

employee performance.

The process of evaluating how

well employees perform their

jobs and then communicating

that information to the

employees.

Performance aPPraisal

definitions

According to Newstrom, “It is the process of evaluating

the performance of employees, sharing that information with

them and searching for ways to improve their performance’’.

meaningPerformance appraisal is the step where the management

finds out how effective it has been at hiring and placing

employees.

A “Performance appraisal” is a process of evaluating an

employee’s performance of a job in terms of its requirements.

wHY tHe Performance aPPraising

Appraisals play an integral role in the employer’s performance management process.

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 affect the employer’s salary raise decisions.

benefits of Performance aPPraisal

continuous imProvement

A management philosophy that requires employers to continuously set and relentlessly meet ever-higher quality, cost, delivery, and availability goals by:

Eradicating the seven wastes:

overproduction, defective products, and unnecessary downtime, transportation, processing costs, motion, and inventory.

Requiring each employee to continuously improve his or her own personal performance, from one appraisal period to the next.

Performance aPPraisal roles

Supervisors

Usually do the actual appraising.

Must be familiar with basic appraisal techniques.

Must understand and avoid problems that can cripple appraisals.

Must know how to conduct appraisals fairly.

Performance aPPraisal roles (cont’d)

HR department

Serves a policy-making and advisory role.

Provides advice and assistance regarding the appraisal tool to use.

Prepares forms and procedures and insists that all departments use them.

Responsible for training supervisors to improve their appraisal skills.

Responsible for monitoring the system to ensure that appraisal formats and criteria comply with EEO laws and are up to date.

stePs in aPPraising Performance1.Defining the job

Making sure that you and your subordinate agree on his or her duties and job standards.

2.Appraising performance

Comparing your subordinate’s actual performance to the standards that have been set; this usually involves some type of rating form.

3.Providing feedback

Discussing the subordinate’s performance and progress, and making plans for any development required.

designing the aPPraisal tool

What to measure?

Work output (quality and quantity)

Personal competencies

Goal (objective) achievement

How to measure?

Graphic rating scales

Alternation ranking method

MBO

Performance Appraisal Methods

Performance aPPraisal methods

Graphic rating scale

A scale that lists a number of traits and a range of performance for each that is used to identify the score that best describes an employee’s level of performance for each trait.

Graphic Rating

Scale with Space for

Comments

© 2005 Prentice Hall Inc. All rights reserved.

9–16

Figure 9–3

comParative methods

Ranking

A listing of all employees from highest to lowest in performance.

Drawbacks

Does not show size of differences in performance between employees

Implies that lowest-ranked employees are unsatisfactory performers.

Becomes difficult process if the group to be ranked is large.

Forced-Choice Method

A trait approach to performance appraisal that requires the rater to choose from statements designed to distinguish between successful and unsuccessful performance.

Similar to grading on a curve; predetermined percentages of rates are placed in various performance categories.

Example:

15% high performers

20% high-average performers

30% average performers

20% low-average performers

15% low p

Behavioral /oBjective methods

Behavioral Rating Approach

Assesses employees’ behaviors instead of other characteristics

Consists of a series of scales created by:

Identifying important job dimensions

Creating statements describing a range of desired and undesirable behaviors (anchors)

Type of behavioral scale

Behaviorally anchored rating scales (BARS)

BARS is an appraisal tool that anchors numerical rating scale with specific examples of good or poor performance.

Behavioral /oBjective methods

Management by Objectives

Specifying the performance goals that an individual and his or her manager agree that employee will try to attain within an appropriate length of time.

Key MBO Ideas

Employee involvement creates higher levels of commitment and performance.

Encourages employees to work effectively toward achieving desired results.

Performance measures should be measurable and should define results.

Narrative methods

Critical Incident

Manager keeps a written record of highly favorable and unfavorable employee actions.

Drawbacks

Variations in how managers define a “critical incident”

Time involved in documenting employee actions

Most employee actions are not observed and may become different if observed

Narrative methods(coNtd..)

Essay

Manager writes a short essay describing an employee’s performance.

Drawback

Depends on the managers’ writing skills and their ability to express themselves.

360 Feed Back system

A system of collecting performance information from multiple parties.

Multiple parties include one’s subordinates peers, supervisors and customers

It is also used to design promotion and reward.

360 degree perFormaNce appraisal

poteNtial ratiNg scale appraisal proBlems

Unclear standards

An appraisal that is too open to interpretation.

Halo effect

Occurs when a supervisor’s rating of a subordinate on one trait biases the rating of that person on other traits.

For example, supervisors often rate unfriendly employees lower than the others, on all 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. Each tool has its own pros and cons.

Train supervisors to reduce rating errors such as halo, leniency, and central tendency.

Have raters compile positive and negative critical incidents as they occur.

Who Should do the ApprAiSing?

The immediate supervisor

Peers

Rating committees

Self-ratings

Subordinates

360-Degree feedback

performAnce mAnAgement

mAin purpoSeS of performAnce mAnAgement

Individual Rewards (Base and Incentive)

Feedback for Sub-Ordinate (Plus and Minus)

Recognition of Superior Performance

Documentation of Weak Performance

Personnel Decision-Making

Future Goal Commitments (Planned Achievements)

Why performAnce mAnAgement?

Increasing use by employers of performance management reflects:

The popularity of the total quality management (TQM) concepts.

The belief that traditional performance appraisals are often not just useless but counterproductive.

The necessity in today’s globally competitive industrial environment for every employee’s efforts to focus on helping the company to achieve its strategic goals.

SourceS of performAnce mAnAgement

Managers

Have the ability to rate employees

 Feedback from MANAGERS is strongly related to performance

Peers

Co-worker

Expert knowledge of job requirement

Observe employee daily!

Bring a different perspective in the evaluation process - provide extremely valid assessment of performance

Useful esp. if supervisor does not always observe employee (e.g. law enforcement)

SourceS of performAnce mAnAgement

Subordinates

Evaluation of managers

UPWARD FEEDBACK

Self

Not often used

Observe own behaviour

Customers

Often the only best person to observe employee performance

BEST source of information

Customer evaluation sheet

Random mail surveys

Telephone survey

performAnce mAnAgement: A four Step proceSS

Step 1: Performance Planning and Communication

Step 2: Coaching/Feedback

Step 3: Performance Review

Step 4: Staff Development

the componentS of An effective performAnce mAnAgement proceSS

Direction sharing

Role clarification

Goal alignment

Developmental goal setting

Ongoing performance monitoring

Ongoing feedback

Coaching and support

Performance assessment (appraisal)

Rewards, recognition, and compensation

Workflow and process control and return

objective Setting: be Sure it’S S.m.A.r.t.

Specific

Measurable

Achievable

Results Oriented

Time bound