Performance Management and and Appraisal- Gary Dessler

PerformanceThe results of activities of an

organization or investment over a given period of time.

Accomplishment of a given task measured against pre-set standards of accuracy, completeness, cost, and speed.

(Wikipedia)

Constituents of Individual Performance

Employee Performance

Ability to do

Willingness to do

xOpportunity to do x

Degree of control over technology and external factors

= Content Factors

Context Factors

x

x

=

Performance Management Performance management is a

continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization

(Herman Aguins)

Stage 1Planning thePerformance

Stage 2 Supporting the Performance

Stage 3

Ongoing Performance Review

Needs DevelopmentRewards

Stage 4

Formal Cyclic Performance

Review

Performance AppraisalPerformance appraisal means

evaluating an employee`s current and/or past performance in comparison with the set standards.

Performance Management V/S

Performance Appraisal

P.Mo Strategic business

considerations

o Ongoing feedback so

employee can improve

performance

o Driven by line

manager

P.Ao Assesses employee

o Strengths &

o Weaknesses

o Once a year

o Lacks ongoing

feedback

o Driven by HR

Contributions of performance management- For EmployeesClarifies job definitions and

expectationsIncreases motivation to performEnhances urge for self

developmentPossibly happier at workRecognition and appreciation to

the contributionsDirection to capitalize your

strengths

Contributions of Performance Management- For Organization/ HR dept

Clarifies organizational goalsFairer and more appropriate

administrative actionsBetter protection from law suitsMore engaged and focused workforceHigher ability to retain top performersSuccession planningIdentification of coaching and training

needs

Dangers of poorly implemented PM systems

For Employees: Lowered self esteem Job dissatisfactionDamaged relationshipsUse of false or misleading

information

Dangers Continued……..For Managers:Rise in the employee turnoverLower motivationPotential conflicts between the

managers and employees

Dangers Continued……For Organization:Wastage of time and moneyUnclear rating systems which

fails to highlight correct elementsIncreased risk of lawsuits

Aims and Role of PM System 1. Strategic Purpose- link individual goals with

organizational goals, communicate most crucial areas of the

business.

2. Administrative purpose- salary adjustments, promotions,

retention, termination, recognition of performance, layoffs

3. Informational purpose- To communicate the company

expectations to employees, what they are doing, how they

need to improve

Development Purpose- performance feedback, identification of individual strengths and weaknesses, causes of performance deficiencies,

Organization Maintenance purpose- plan effective workforce, assess future training needs, evaluate effectiveness of HR activities.

Documentation purpose- document administrative activities, supporting legal requirements.

How does a good PM system look like ?????

Criteria for EffectivePerformance Management

Fit with strategy

Validity

Reliability

Acceptability

Specific feedback

Appraising Performance

METHODS

Graphic Rating Scale:

One of the most commonly used methods for appraising performance. It lists traits and provides a rating scale for each trait.

The employer uses the scale to indicate the extent to which an employee displays each trait.

Graphic Rating Scale

Graphic rating scales appraisal forms generally contain questions related to common traits of the particular job such as communication, knowledge, technical abilities etc.

A drawback of this approach is that it leaves to the particular manager the decisions about what is “excellent knowledge” or “worthy judgment” or “poor interpersonal skills

Competency Based Appraisal FormsManager focuses on appraising

employee`s performance based on looking at the ‘competencies’ that are essential for the particular position.

Competency based appraisal form

Duty 1 Need improvement

Satisfactory Excellent

Each one page document must be completely typed at the speed of 80 words per minute and able to compose passages in Urdu at the speed 65 words per minute

[ ]

[ ]

[ ]

Position- Typist

Alternation Ranking Method Ranking method which ranks the

employees from highest to lowest performing. In this employees are rated firstly and then the names are crossed out of those who are NOT known well enough to rank. Then they are all ranked on each separate trait (lowest to highest) until all the employees are ranked.

Paired Comparison MethodThis approach pairs employees in

a group and rate them against one another. This method compares each employee with each other employee to establish rankings.

Trait Rated: ‘Quality of Work’

A – Rameez

B – Govind

C – Hamid

D – Jamal

E – Raheel

A – Rameez

+ + -- --

B – Govind

-- -- -- --

C – Hamid

-- + + --

D – Jamal + + -- +

E – Raheel

+ + + --

Govind ranks the highest

Forced Distribution MethodAssigns a certain percentage of

employees to each category in a set of categories.

Forced ranking is a method of performance appraisal to rank employee but in order of forced distribution. For example, the distribution requested with 10 or 20 percent in the top category, 70 or 80 percent in the middle, and 10 percent in the bottom

Forced Distribution- Example

Trait Forced Distribution

Result

Customer Service 10% are top performers; exceeding expectations

Receive highest compensation; in line for promotion

80% are good; meeting expectations

Receive moderate compensation increment

10% are not meeting expectations

Receive little or NO compensation; coached for improvement; termination

Critical Incident MethodSupervisor 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 performance using the incidents as examples.

• Critical incident method- Recording of events by appraiser. An incident is critical when it illustrates what the employers has done good or failed to do• The critical incidents for performance appraisal is a method in which the manager writes down positive and negative performance behavior of employees throughout the performance period.• Each employee will be evaluated as such and one’s performance appraisal will be based on the logs that are put in the evaluation form.• The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behavior.• At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers’ performance.• The critical incidents file of performance appraisal is a form of documentation that reflect all data about employee performances.

Advantages of CIT in Performance AppraisalIt’s based on direct

observations- The greatest strength of this approach is that performance evaluations are based on actual performance that is observed firsthand by the employee’s manager.

It’s time-tested- In this approach, managers gather data over a full year, so it’s less likely to be influenced by a mad last-minute.

It provides more face time. By definition, the critical incident approach encourages managers to spend time on the floors with their employees, which allows them to provide more coaching, guidance, and feedback, while also learning more about overall developments in the department.

Disadvantages of CIT in performance appraisal Negative incidents may be more noticeable

than positive incidents.• It results in very close supervision which may not be liked by the employee.• The recording of incidents may be an unpleasant task for the manager concerned or may be too busy or forget to do it.

The supervisors have a tendency to unload a series of complaints about incidents during an annual performance review session.

Not too numeric so may not be effective in salary decisions

It delays the giving of feedback. In order for feedback to be truly effective (whether the feedback is positive or negative), it should be linked as closely as possible to the behavior in question. With critical incidents, a greater emphasis may be placed on gathering data and tallying it than actually using it to inform, educate, and motivate employees.

BARS- Behavior Anchored Rating ScaleA good way of overcoming the

drawbacks of graphic rating scale is to evaluate employee behavior.

BARS uses numeric rating scale with specific examples of good and poor performance

Example BARS- Patrol Officer

Management by Objectives (MBO): people at each level of the organization set goals in a process that flows from top to bottom, so that all levels are contributing to the organization’s overall goals.

These goals become the standards for evaluating each employee’s performance.

Management by Objectives – Two Objectives of a Bank

Assessment CentersThey are generally used for

selection purposes but some companies also use them for employee performance appraisal. Multiple raters evaluate employees` performance on a number of exercises.

360 Degree Performance appraisal360 degree measures manners

and capacities.• 360 degree improves such

skills as listening, planning and goal-setting.

• 360 degree concentrates on subjective areas, for example efficiencies of teamwork, character, and leadership.

• 360 degree supplies on the way others think about a specific staff.

360 degree appraisal has four components:

• Self appraisal• Subordinate’s appraisal• Peer appraisal.• Superior’s appraisal

AdvantagesOffer a more comprehensive view

towards the performance of employeesThe mix of ideas can give a more

accurate assessment.• Opinions gathered from lots of staff are

sure to be more persuasive.Not only manager should make

assessments on its staff performance but other colleagues should do, too.

People who undervalue themselves are often motivated by feedback from others.

DisadvantagesREQUIREMENT OF PERFORMANCE

MANAGEMENT SYSTEM IS A MUSTTaking a lot of time, and being complex

in administrationExchange feedback can cause troubles

and tensions to several staffFeedback can be useless if it is not

carefully and smoothly dealtCan impose an environment of

suspicion if the information is not openly and honestly managed

Performance MeasurementRating ErrorsHalo effect error: In some

cases managers tends to overemphasize one aspect of a worker performance and neglect all other aspect. This increased focus on one parameter gets reflected in overall performance rating and leads to artificially magnifying the ratings known as Halo effect

For example let's take the case of a worker who is very good in oral and written communication and generally takes care of the managers written communications and mail, but he is a very inefficient and lousy worker. But this worker may be given an excellent performance rating because manager is extremely happy with one aspect of his performance.

Horn effect error: This type of error comes into play when manager while awarding rating to a worker give overwhelming importance to one negative incident and factor rather than taking the complete picture of a workers performance into account. Manager outweighs one negative incident / information rather than the comprehensive performance related to a workers performance

Horn and Halo come into rater bias

Distributional errors: the rater tends to use only one part of a rating scale.◦Leniency: the reviewer rates everyone near the top◦Strictness: the rater favors lower rankings◦Central tendency: the rater puts everyone near

the middle of the scale

Initial idea effect error: According to a research it is found that in majority of cases the managers construct and make a favorable or unfavorable impression about a worker in the first meeting and then they tend to mostly ignore subsequent information that does not support the initial impression.

Typecast effect error: Typecast means to categorize a certain group of workers based upon gender, race, ethnicity, culture or group. This type of error happens when Manager allows his own preconceived belief about these aspects takes precedence over other documentary evidence and his own rational judgment. (stereotyping)

Resembling to me effect error: Managers being human often fall into the trap of being positively disposed and inclined to workers who have resemblance to them in attitudes, look, temperament, performance, personality, race and gender. Most of the times managers end up awarding higher performance rating to such workers.

Preferential treatment error / Nepotism error: This type of error is a deliberate error committed by the manager in the award of performance management rating. The manager indulges into this type of error when he illegally wants to provide career benefit to some of the workers who are either related to him/her or are liked by him/her. This error can have a very drastic effect on the work group morale.

Wrong meaning Understood effect error: This type of error manifest itself when there are large numbers of employees and more than one manager is doing the performance management. If the managers do not have similar perception of the performance criteria's then they tend to interpret the same parameter with different meaning. For example if a worker takes initiative and comes out with positive suggestions related to execution of work assignment, this may be understood as a sign of good behavior by one manager but may be the other manager can take it as a sign of insubordination.

Giving Performance FeedbackConducting the Feedback

Session◦During the feedback session, managers can take

any of three approaches:1.“Tell-and-Sell” – managers tell employees their

ratings and then justify those ratings.2.“Tell-and-Listen” – managers tell employees their

ratings and then let the employees explain their side of the story.

3.“Problem-Solving” – managers and employees work together to solve performance problems.