Understanding Performance Appraisal Processes and Methods

Performance Appraisal

>evaluating an employee's current and/or past performance relative to their performance standards
>formal system of review and evaluation of individual or team task performance
>it is a component of performance management
primary purpose: to remove performance deficiencies
>occurs at a specific time

Performance appraisal in employee's performance management

continuously ensuring that each employee's performance makes sense in terms of company's overall goals

Performance Appraisal Process

>setting work standards
>assessing employee's actual performance relative to standards
>providing feedback with the aim of eliminating performance deficiencies or reinforcing
performance strengths

Reasons to Appraise Performance

>most employers base pay, promotion, and retention decision in large part on the appraisal
>play a central role in the employer's performance management
>allows subordinate and manager to develop plans for correcting deficiencies and
reinforcing strengths
>provide an opportunity to review the employee's career plans in line with their strengths
and weaknesses
>allows identification of a training need and (if so), what training is required

Employee Goals and Performance Standards

performance appraisal should compare 'what should be' (performance standard) with 'what is' (current performance)

EFFECTIVE GOALS OF PERFORMANCE APPRAISAL (SMART goals

a. Specific
b. Measurable
c. Attainable
d. Relevant
e. Timely

Bases for performance standards

>extent to which employee is attaining numerical goals
>basic job dimensions
>mastery of competencies

Parts of performance management

• Training

• Appraisal

• Rewards

extent to which employee is attaining numerical goals

overall profitabilit, cost reduction, or efficiency goals

basic job dimensions or traits

assumes that a trait is a useful standard for "what should be"

mastery of competencies

skills, knowledge, and/or personal behaviors

Who Should do the Appraising?

>Immediate Supervisor
>Peer appraisals
>Rating committees
>Self- rating
>Appraisal by Subordinates
>360-Degree Feedback

Immediate Supervisor

>heart of most appraisals
>in the best position to observe and evaluate performance
>responsible for employee's performance

Problems in having the immediate supervisor primarily appraise the employees

• Focusing on one aspect of performance, and neglecting others

• Geographical separation (they do not work at the same site)

• Some cases where the subordinates are more technically knowledgeable than the supervisor.

HR department

>provides advice on what appraisal tools to use, but leave final
decisions on procedures to operating managers
>monitors the performance appraisal system but not involved in rating employees

An employee's direct supervisor

primarily responsible for
appraising an employee's
performance.

Supervisors

they are the one who conduct an actual appraisal; they are the heart of most appraisals

Peer Appraisals

>appraisals by one's peers
> have been shown to improve social loafing, group viability, cohesion, task motivation, and satisfterm-9action
>the employee gets to choose an appraisal chairperson who in turn selects peers to evaluate with them.
>the chairperson selects a supervisor and several peers to evaluate the employee's
work

Virtual Games

Employees use avatars for real-time feedback.

Rating Committees

>consists to employee's immediate supervisor and three or four other supervisors
>pre-determined to be immediate supervisor, supervisor's boss, another manager who is familiar with the work of the worker

Self-Ratings

>these are obtained along with supervisor's ratings
>employees usually rate themselves higher than do their supervisors or peers
>incompetent performers are not capable of objectively rating themselves

Appraisal by Subordinates

>subordinates rating their managers
>usually for developmental purposes rather than for pay
>anonymity affects feedback
-receiving feedback from non-anonymous subordinates view upward feedback
positively
>upward feedback improve managers' performance

360-Degree Feedback

>Performance data collected from all around the employee.
>supervisors, subordinates, peers, and internal or external customers
>usual process is to have all raters complete online appraisal surveys

The primary advantages of customers feedback

• Fosters change

• Shows commitment

• Holds employee accountable

Performance Criteria

Standards used to evaluate employee performance.

bases for performance criteria

Improvement Potential
Competencies
Behavior

Traits

>these are commonly subjective and may be unrelated to job performance or difficult to
define
-examples: adaptability, judgment, appearance, attitude

Behaviors

Task-related actions evaluated when outcomes are unclear.
>desired behaviors may be appropriate as evaluation criteria because if they are
recognized and rewarded, employees tend to repeat them

Competencies

>broad range of knowledge, skills, traits, and behaviors that may be technical in nature,
relate to interpersonal skills, or are business-oriented
>selected for evaluation purposes should be those that are closely
associated with job success

Five Key Areas of Competencies linked to success in HR

1.Strategic contribution
2.Business knowledge
3.Personal credibility
4. HR delivery
5.HR technology

Strategic Contribution

>connecting firms to makerts
>aligning employee behaviors with organizational needs

Business knowledge

• knowing how businesses are run and translating this into action

• the awareness of the business operations and capability to act upon it
  

Personal credibility

measurable value

HR delivery

efficient and effective service to customers in areas of staffing, performance
management, development, and evaluation

HR technology

using technology and Web-based means to deliver value to customers

Goal Achievement

outcomes established should be within the control of the individual or team and should
be those results that lead to organizational success

Upper level goals

financial aspects and market considerations

Lower level goals

meeting customer's needs and delivering according to schedule

Improvement Potential

>provides emphasis into the future
>assessment of the employees potential
>helps ensure more effective career planning and development

Graphic Rating Scale Method

>simplest and most popular method for appraising performance
>lists job dimensions or traits and a range of performance values ("unsatisfactory" to
"outsrtanding")
>lists traits = quality and reliability, or teamwork; also range of performance values

Competency-based graphic rating scale

>assesses the person's competencies and skills
>scale might rate how well the employee did with respect to achieving specific profit,
cost, or efficiency goals

Alternation Ranking Method

>Ranks employees from best to worst on a trait.
>choosing highest, then lowest, until all are ranked; >most popular method for ranking employees
>prevents central tendency, leniency, and strictness errors

Paired Comparison Method

>Compares every employee against every other employee
>uses a chart of all possible pairs of employees for each trait
ex.manager pairs up the employees from his department and determine the better employee of each pair

Forced Distribution Method

>Categorizes employees into predetermined performance percentages.
>similar to grading on a curve
ex. manager places predetermined percentages of ratees into performance categories (top
20%, middle 70%, and bottom 10%)
most of bottom 10% lost their jobs

Critical Incident Method

>supervisor keeps a log of positive and negative examples (critical incidents) of a
subordinate's work-related behaviors
>these are used as examples in performance appraisal

Narrative Forms

supervisor's narrative assessment helps employee understand where his or her
performance was good or bad, and how to improve that performance

Mix standard scales

aim is to reduce rating errors such as leniency, by making it less obvious, to the supervisor

Behaviorally Anchored Rating Scales (BARS)

• anchors a numerical rating scale with specific illustrative examples of good or bad performance

• the most legally defensible appraisal method to use

• combination of narrative critical incidents and quantified performance scales

• halo effect can be remedied

Five steps of Behaviorally Anchored Rating Scales (BARS)

write critical incidents ⇒ group into clusters according to performance dimension
⇒ have second team reallocate clusters ⇒ in each dimension, rate each critical
incident from least effective to most effective ⇒ choose behavioral anchors
(critical incidents in the same dimension)

Management by Objectives (MBO)

multistep company-wide goal-setting and appraisal program and then periodically reviewing the progress made

Steps in Management by Objectives (MBO)

company-wide plan and goals ⇒ departmental goals ⇒ individual goals ⇒
short-term performance targets for each individual goal ⇒ performance review ⇒
providing feedback

Potential Rating Problems

1.Unclear Standards
2. Halo Effect
3. Central Tendency
4. Leniency or Strictness
5. Recency Effects

Unclear Standards

>Result in unfair appraisals because traits and degrees of merit are ambiguous
>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; "influence of a rater's general impression on ratings of specific ratee qualities"
>tendency to have a general impression only based on one specific quality
ex. Amara was perceived to be lazy by her manager just because she was caught one time not doing any of the work

Central Tendency

Rating all employees as average distorts evaluations.

Leniency

>rating all subordinates consistently high ratings (two extremes)
>especially severe with graphic rating scales

Strictness

supervisors giving all of their subordinates consistently low ratings

Bias

the tendency to allow individual differences to affect the appraisal ratings that employees receive

Recency Effects

focusing on the most recent behavior of an employee rather than his/her performance over a year

Appraisal Interview

>culmination of appraisals
>the manager and subordinate review the appraisal and make plans to remedy
deficiencies and reinforce strengths
> making plans to correct employee weaknesses

> Aside from rating the employees, this skill should appraisers be trained for this as well.

Satisfactory-Promotable

>easiest interview
>objective: develop specific development plans (reinforce strengths)
>promotions or reinforcing strengths

Satisfactory-Not promotable

objective: maintain satisfactory performance (through incentives)

Unsatisfactory-Correctable

objective: lay out an action/development plan for correcting unsatisfactory
performance (remedy deficiencies)

Unsatisfactory-Uncorrectable

>particularly tense
>objective: dismissal

How to Conduct an Appraisal Interview

Before
>review the person's job description
>compare performance to standards
>review previous appraisals
>give employee a week's notice and set date and time for the interview
During
>conduct the interview with no interruptions
>duration for lower-level personnel ⇒ less than an hour
>duration for management employees ⇒ 1 to 2 hours
Process
>Preparation
>Planning
>Actual coaching
Guidelines
>Talk in terms of objective work data
>Don't go personal (compare performance to standard and to not compare
performance to that of others)
>Encourage the person to talk
>Get agreement (having the subordinate leave with an impression of strengths and
weaknesses as well as an action plan)

Preparation

understanding the problem and employee

Planning

reaching agreement on the problem and laying out a change plan
through steps to take, measures of success, and date to complete

Actual Coaching

offers ideas in a way that subordinates hear and respond to
them, and appreciate their value

Defensive Subordinate

>first reaction to being told poor performance feedback is denial
denial is a defense mechanism

criticizing subordinates

>criticize in a manner that lets the person maintain their dignity ⇒ private and
constructively
>provide examples of critical incidents and specific suggestions
>should be objective and unbiased

Handling a Written Warning

written warnings are given to employees who have very weak performance
>shake the employee out of their bad habits
>helps manager defend their rating to their boss and (if needed) to the courts

Performance Management

>continuous process of identifying, measuring, and developing the performance of
individuals and teams

> process of ensuring that the organizational processes are in place to maximize productivity and achieve organizational goals

Basic elements of performance management

1. Direction sharing
2. Goal alignment
3. Ongoing performance monitoring
4. Ongoing feedback
5. Coaching and developmental support
6. Recognition and rewards

Direction Sharing

>communicating the company's goals to all employees
>translating company's goals into departmental, team, and individual goals

Goal alignment

having a method that enables managers and employees to see the link between the
employees' goals and those of the department and company

Ongoing performance monitoring

>continuously measuring the team's and/or employee's progress towards meeting
performance goals

Ongoing feedback

>continuous feedback includes
face-to-face and computer-based
feedback regarding progress
toward goals

Coaching and developmental support

>integral part of the feedback process

Recognition and Rewards (Rewards, recognition, and compensation)

>provide incentives to keep the employee's goal-directed performance on track
>the consequences necessary to keep employee performance on target

Traditional methods

When an appraisal is for pay increases, promotions, and training

Collaborative methods

Focuses on employee development,

Top-performing employees

Manipulation of evaluation impacts the morale and motivation of the top-performing employees.

Conducting appraisal interviews

Aside from rating the employees, to which skill should be appraisers be trained for as well?