HRM L7: performance management and employee appraisal process

importance of performance management and appraisal

• important if organization means business

• ensure employee performance is properly managed

• helps assess / appraise employee performance

• makes sure employees deliver the expected output for the salary they receive

performance appraisals

• a process, typically performed annually, by a supervisor for a subordinate designed to help employees understand their roles, objectives, expectations, and performance success

• not only measuring performance because it is tied with the roles, expectations, and objectives before the start of the performance appraisal period

• there must be objectives so employees evaluated are aware from the start on how he’s going to be measured

• part of the performance management cycle

performance management

• process of creating a work environment in which people can perform to the best of their abilities.

• encompasses training and development

• encompasses performance appraisal

difference between performance management and performance appraisals

performance management:

• more encompassing

• to make sure that your performance management program have all the systems, programs, and help needed to ensure that your employees perform to their best abilities.

• part of PM is performance appraisals

• not one time big time activity

performance appraisal:

• done annually or quarterly

• measuring effectiveness

6 steps in performance management

1. goals set to align with higher level goals

2. behavioral expectations and standards set and then aligned with employee and organizational goals

3. on going performance feedback provided during cycle

4. performance appraised by manager

5. formal review session conducted

6. HR decision making

1. goals set to align with higher level goals

• you set the objectives.

• performance objectives must align with business goals.

• you are managing the performance of each employee to ensure that the organization achieves its business objectives

• do not spend on someone who does not contribute to the investment / profit of the organization

2. behavioral expectations and standards set and aligned with goals

• identify specific expectations and standards.

• critical incident: how are you going to say that employee achieved those objectives?

• expectations indicate that you are able to measure the actual performance of the employee

• behavioral expectations and standards should be aligned to the performance objectives.

• example:

  • objective: conduct a training program

  • expectation: trainees are also expected to get a score of 5 or a 95% learning/reaction rating in all tests

  • basically, employee is not just evaluated on doing the training, but also on how effective the training was based on the trainees’ scores and feedback

3. on going performance feedback provided during cycle

• task of the supervisor.

• must provide feedback whether positive or negative.

• critical incidents observed must be discussed to inform employee because sometimes employee may not know that they are not performing as expected

• important because the objective of PM is to ensure the success of every employee

4. performance appraised by manager

• manager provides actual rating

• used for salary increases, bonuses, or improve training programs

5. formal review session conducted

• supervisor or manager discusses / review the scores or rating to employee

• some org use self-appraisal or 360-degree performance appraisal: employee assess themselves and manager, peers, and other evaluators assess employee performance

• depending on the structure of the organization, the question is which score are you going to follow

  • example: final appraisal score may be divided between the employee’s self-rating and the supervisor’s rating (50% each), or sometimes only the supervisor’s rating is used as the final score

6. HR decision making

• uses results of PA for promotion, pay increases, further training, and improving the PM system.

• results indicate what area must be improved by the organization for employees to perform better

2 kinds of appraisal programs

1. administrative

2. developmental

administrative appraisal program

• compensation

• job evaluation

• employee engagement program (EEO/AA support)

compensation

uses appraisals as a basis for salary increase

job evaluation

• provides value to each position

• to evaluate what is being done per position / job title. basically if aligned ba yung ginagawa nila sa job title / description

employee engagement program (EEO/AA support)

• the motivation / support levels given by the organization

• after evaluation, you try to to see what’s causing the improved or low performance

• to come up with initiatives to help people engage in what they do

developmental appraisal programs

• individual evaluation

• training

• career planning

individual evaluation

• to know what each individual employee needs in terms of training / development

• helps in career planning

training

initiatives / programs used to improve employee skills, knowledge, and performance

career planning

helps employees prepare for future roles, growth, and career development within the organization

5 reasons appraisal programs sometimes fail

• lack of top-management information and support

• unclear performance standards

• rater bias

• too many forms to complete

• use of the appraisal program for conflicting (political) purposes

1. lack of top-management information and support

• PM program is not driven by the top management it will be hard for HR to drive it due to managers / supervisors not overseeing the implementation

• basically, top management does not fully support / prioritize the PM / appraisal program

• some managers are too swamped with admin task they no longer give attention to initiatives that could help their employees perform better

• example:

  • government offices do not have PM systems which leads to people slacking off because they will receive the same salary regardless

unclear performance standards

• employees are not aware of what measures they will be measured with

• some employees may be focusing on something else that he is not measured for instead of focusing on the standards he is measured with

• example:

  • customer service agents expected to be rated by number of calls handled, but the actual standard focused on customer engagement and issue resolution.

rater bias

• one scored high not because he performed well, or he did not score well due to bias

• rating an employee that does not reflect his actual performance

• due to this, you will not be able to intervene later on how you’re going to help the employee

too many forms to complete

• appraisal process becomes too complicated due too many forms despite being swamped with other admin tasks

• chances are you are not able to accomplish the forms

• some simply answer without reading and just checking things randomly

use of the appraisal program for conflicting (political) purposes

• appraisals are used unfairly for personal / political reasons

• those who want to “manage people out”

• example:

  • manager gives low ratings to an employee they want to remove from the company

performance standards

• based on job-related requirements derived from job analysis, reflected in job description and job specifications.

• help translate an organization’s goals and objectives into job requirements.

• job analysis results are anchors to an effective performance management system.

• basically, you pay someone to do something to make sure that you measure them using the things you are paying them for

calibration

• process whereby managers meet to discuss the performance of employees to ensure their employee appraisals are in line with organizational standards

• to ensure those who are appraising / involved in PM have the same understanding / definition of what they are looking at

• happens before and after the appraisal period

  • before: appraisers would talk / define the standards

  • after: explanation of ratings to clarify what part is expected from employee

• important to prove that there is no bias.

performance standards and its characteristics

1. strategic relevance

2. criterion deficiency

3. criterion contamination

4. reliability

strategic relevance

• individual standards directly relate to strategic goals

• example:

  • a company wants to be known for high quality products. but employees are only evaluated based on quantity instead of quality in products.

  • hence, this is not strategically relevant because the company’s goal is quality and the appraisal measured something different instead

criterion deficiency

• standards should capture all of an individuals contribution

• example:

  • employee is expected to do many responsibilities, but only some of them are included in the evaluation

  • due to this, appraisals becomes incomplete / unfair → criterion deficiency

criterion contamination

• to ensure that performance capability is not reduced by external factors

• to provide all the equipment an individual needs to perform because if they lack something, it is not because they are incapable, it is due to the lack of external support

• basically out of control ng employee and naka depende na sa company

• example:

  • graphic designers are expected to finish projects immediately but the company provides an outdated computer that constantly crashes

reliability (consistency)

• standards are quantifiable, measurable, and stable

• standard remains / does not change for anyone. employees are evaluated using the same standards every time

legal guidelines for appraisals

• performance ratings must be job-related

• employees must be given a written copy of their job standards in advance of appraisals

• managers must be able to observe the behavior they are rating, they should have an information regarding the employee and not blindly rate without any basis

• supervisors must be trained to use the appraisal form correctly to reflect actual performance

• appraisals should be discussed openly with employees, counseling and corrective guidance offered

• an appeals procedure should be established to enable employees to express disagreement with appraisals

alternative sources of appraisal

• managers and employees: main actors since the system is not solely dependent on the manager but every employee is also expected to manage their own performance

• manager / supervisor: may use feedback from these individuals (mostly external) to rate the employee

manager and/or supervisor

• appraisal done by an employee’s manager and reviewed by a manager one level higher

• most frequently used protocol

self appraisal

• appraisal done by the employee being evaluated

• completed by employee prior to the performance interview

subordinate appraisal

• appraisal of a superior by an employee

• appropriate for developmental than administrative purposes

• if u do not have subordinates, there is no expectation for you to conduct a subordinate appraisal

peer appraisal

• appraisal by fellow employees compiled into a single profile for use in an interview conducted by the employee’s manager

• feedback from peers may be taken into consideration as part of the critical incidents but

• why it’s not used frequently:

  • can simply lead to a popularity test . higher rating = have lots of friends. lower rating = people who dislike you

  • managers are reluctant to give up control over appraisal

  • ratings can lead to stereotypes in ratings

• example: coming from top 4 univ = competent

team appraisal

• based on TQM (total quality management) concepts

• recognizes team accomplishment rather than individual performance.

customer appraisal

• based on TQM concepts.

• seeks evaluation from both external and internal customers

• example:

  • store feedback boxes where customers can indicate positive or negative interaction with employees

360 degree appraisal

pros:

• more comprehensive due to multiple gathered responses / perspective

• better quality of information (quality over quantity responses)

• lessens bias / prejudice due to quantity of responses

• increases employee self-development due to feedback from peers / others

• complements TQM initiatives

cons:

• complex system in combining responses

• feedback can be intimidating

• conflicting opinions

• requires training to work effectively

• employees may “game” the system by giving invalid evaluations to one another

360 degree performance appraisal system integrity standards

1. assure anonymity: ensures employees do not know who rated them

2. make respondents accountable: ratings should be validate through critical incidents

3. prevent gaming of the system: rating based on popularity / giving ratings without thinking

4. use statistical procedures

5. identify / quantify biases

common related errors

• error of central tendency

• leniency or strictness error

• recency error

• contrast error

• similar-to-me error

• halo / horn error

error of central tendency

rating error in which all employees are rated about average

leniency or strictness error

appraiser gives unusually high or unusually low ratings

recency error

appraisal is based largely on recent behavior rather than the whole appraisal period

contrast error

evaluation is biased upward or downward because of comparison with another employee

similar to me error

appraiser inflates evaluation because of a mutual personal connection

halo / horn error

tendency to rate a person high or low on all performance factors because of one characteristic

rating error training

happens due to evaluator is not trained to rate properly

feedback skills training

expectations were not set at the start / you identify a different cause for the performance / lack of performance

performance appraisal methods: traits methods

1. graphic rating-scale method

2. mixed-standard scale method

3. forced-choice method

4. essay method

graphic rating scaler method

• employees are rated using a scale based on different traits or characteristics

• identify as many characteristics there are

• one scale only

mixed standard scale method

• employees are evaluated by comparing their performance to a set standard (better than, equal to, or worse than)

• multiple employees you compare them to each other

force choice method

• requires rater to choose from statements designed to distinguish between successful / unsuccessful performance

• example:

  • choose one:

  • a) works hard

  • b) works quickly

essay method

• requires rater to compose a statement describing the employee

• difficult since it is not easy to assign score unless the evaluator has a structured way of writing the essay

• more useful for mentoring / coaching

performance appraisal methods: behavioral methods

• critical incident

• behavioral checklist method

• behavioral anchored rating scale (BARS)

• behavioral observation scale (BOS)