L7: Performance Appraisal

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

performance management

Performance Appraisal  is a component of ______________.

1. setting work standards

2. assessing employee’s actual performance relative to standards

3. providing feedback with the aim of eliminating performance deficiencies or reinforcing performance strengths

Performance Appraisal Process:

• Helps employers make decisions on pay, promotion, and retention.

• Supports performance management by aligning employee performance with company goals.

• Allows managers and employees to plan improvements and build on strengths.

• Gives a chance to review career plans based on strengths and weaknesses.

• Identifies training needs and what training should be provided.

Reasons to Appraise Performance

• “what should be” (performance standard) 

• “what is” (current performance)

performance appraisal should compare:

• extent to which employee is attaining numerical goals

• basic job dimensions or traits

• mastery of competencies

3 bases of performance appraisal

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

1. Immediate Supervisor

2. Peer Appraisals

3. Rating Committees

4. Self-Ratings

5. Appraisal by Subordinates

6. 360-Degree Feedback

Who Should do the Appraising?

Immediate Supervisor

• heart of most appraisals

• in the best position to observe and evaluate performance

• responsible for employee’s performance

operating managers

HR department provides advice on what appraisal tools to use, but leave final decisions on procedures to ________________

operating managers

appraisal tool ⇒ HR dept; appraisal procedure ⇒ ____________

danger of bias

Performance Appraisal by Immediate Supervisor can lead to __________

Peer Appraisal

• appraisals by one’s peers

• Crowd appraisals

appraisal chairperson

In Peer Appraisal, employee chooses an _____________

supervisor and several peers

chairperson chosen in peer appraisal selects a _________ and _________ to evaluate the employee’s work

TRUE 

TRUE OR FALSE:

Peer Appraisal allows co-workers the aspects that the boss may never see. 

behavior

knowing colleagues will appraise you can change ____.

social media tools

almost everyone in the company continuously appraising one’s work through __________.

Virtual games

• helps employees evaluate and reqrd each other

• employees have avatars used to give real-time feedback to each other, along with gifts and points

Rating Committees

• consists to employee’s immediate supervisor and three or four other supervisors

• immediate supervisor, supervisor’s boss, another manager who is familiar with the work of the worker

• cancels out problems such as bias on the part of individual raters

• picks up different facets of an employee’s performance observed by different appraisers

Advantages of Rating Committes

Self-Ratings

these are obtained along with supervisor’s ratings

TRUE

TRUE OR FALSE:

• employees usually rate themselves higher than do their supervisors or peers

• incompetent performers are not capable of objectively rathing 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

• collecting performance information all around the employee

• supervisors, subordinates, peers, and internal or external customers

• for developmental purposes rather than for pay

• to have all raters complete online appraisal surveys

• make sure that the feedback the person is receiving is productive, unbiased, and development-oriented

How usually 360-Degree Feedback happens?

Traits

• these are commonly subjective and may be unrelated to job performance or difficult to define

• it is important to establish a connection between a trait and its relation to the job performance

traits

adaptability, judgment, appearance, attitude

task-related behavior or competencies

when task outcome is difficult to determine,  __________ or ______________ may be evaluated

recognized and rewarded

desired behaviors may be appropriate as evaluation criteria because if they are _____________, 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

closely associated with job success

competencies selected for evaluation purposes should be those that are _____________________.

1. Strategic contribution

2. Business knowledge

3. Personal credibility

4. HR delivery

5. HR delivery

Five Key Areas of Competencies linked to success in HR

Strategic contribution

• connecting firms to makets

• aligning employee behaviors with organizational needs

Business Knowledge

knowing how businesses are run and translating this into action

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

financial aspects and market considerations

Upper level goals ⇒ __________________________

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

1. Graphic Rating Scale Method

2. Alternation Ranking Method

3. Paired Comparison Method

4. Forced Distribution Method

5. Critical Incident Method

6. Narrative Forms

7. Behaviorally Anchored Rating Scales (BARS)

8. Management by Objectives (MBO)

8 Traditional Tools for Appraising Performance

• simplest and most popular method

• lists job dimensions or traits and a range of performance values (”unsatisfactory” to “outsrtanding”)

• supervisor rates each subordinate by identifying the score that best describes the subordinate’s performance for each trait, and the ratings are totaled

• scale might rate how well the employee did with respect to achieving specific profit, cost, or efficiency goals

How does Graphic Rating Scale Method conducted?

Competency-based graphic rating scale

assesses the person’s competencies and skills

trait, competencies, or goals

rating scales based on:

Alternation Ranking Method

ranking employees from best to worst on a trait

1. list all subordinates to be rated

2. cross out names of any not known well enough to be ranked

3. indicate the employee who is highest, then the lowest in the performance dimesion

4. choose the next highest and lowest in alternating fashion until all employees have been ranked

4 Process of Alternation Ranking Method

Paired Comparison Method

• for every trait, every employee is compared with every other employee

• uses a chart of all possible pairs of employees for each trait

• choose who the better employee of the pair is for each trait

Forced Distribution Method

• similar to grading on a curve

• manager places predetermined percentages of ratees into performance categories (top 20%, middle 70%, and bottom 10%)

• a committe should review any employee’s low ranking

bottom 10%

In Forced Distribution Method,  most of  _____ lost their jobs

advantage: preventing supervisors from simply rating all or most employees “satisfactory” or “high”

disadvantage:

• increase risk of discriminatory adverse impact

• \may motivate effort and performance, but leaves many employees feeling that their appraisal were dyfunctional

What are the advantages and disadvantages of Forced Distribution Method?

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

• anchors the eventual appraisal in reality and this improves outcomes

FALSE:

supervisor think about the subordinate’s appraisal all during the year (not just recent performance)

TRUE OR FALSE:

Critical Incident Method, allows the supervisor think about the subordinate’s appraisal recent performance.

Narrative Forms

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

Behaviorally Anchored Rating Scales (BARS)

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

1. Write critical incidents

2. Develop performance dimensions

3. Reallocate incidents

4. Scale the incidents

5. Develop a final instrument

Five Steps of Behaviorally Anchored Rating Scales (BARS)

Write critical incidents

Step of Behaviorally Anchored Rating Scales (BARS)

• ask jobholders or supervisors to write specific critical incidents indicative of effective and ineffective performance

Develop performance dimensions

Step of Behaviorally Anchored Rating Scales (BARS)

• have them cluster incidents into performance dimensions

Reallocate incidents

Step of Behaviorally Anchored Rating Scales (BARS)

• have a second team verify groupings

• have them reallocate original critical incidents into the dimension they think it fits best

if most of the second team assigns it to the same cluster as did the first

when a critical incident must only retain?

Scale the incidents

Step of Behaviorally Anchored Rating Scales (BARS)

• second group rates the behavior described by the incident as to how effectively or ineffectively represents performance on the dimension

Develop a final instrument

Step of Behaviorally Anchored Rating Scales (BARS)

• choose six or seven critical incidents as the performance dimensions  behavioral anchors.

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)

Summarize the steps in Behaviorally Anchored Rating Scales (BARS)

• illustrates what to look for in terms of superior, average, and poor performance

• make it easier to explain the ratings to apraisees

• clustering similar critical incidents into performance dimensions help make dimensions more independent of one another.

Advantages of Behaviorally Anchored Rating Scales (BARS)

Management by Objectives (MBO)

multistep company-wide goal-setting and appraisal program

1. Set organization goals

2. Set departmental goals

3. Discuss departmental goals

4. Define expected results

5. Conduct performance review

6. Provide feedback

6 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

Summarize the process of MBO:

1. Unclear Standards

2. Halo Effect

3. Central Tendency

4. Leniency or Strictness

5. Recency Effects

5 Potential Rating Problems

Unclear Standards

Result in unfiar appraisals because traits and degrees of merit are ambiguous

include descriptive phrases that define or illustrate each trait

How to fix unclear standards?

Halo Effect

• the influence of a rater’s general impression on rating of specific ratee qualities

• tendency to have a general impression only based on one specific quality

• supervisory training

• using BARS wherein performance dimensions are independent of each other

How to fix Halo Effect?

Central Tendency

• rating all employees average

• distorts evaluations

ranking employees

How to fix central tendency?

Leniency or Strictness

• rating all subordinates high or low (two extremes)

• especially severe with graphic rating scales

• ranking employees

• employer recommendation to avoid leniency and/or strictness error for all nemployees

• require a forced distribution

How to fix Leniency or Strictness?

Recency Effects

letting what the employee has done recently overshadow what they did for the past year

accumulate critical incidents throughout the year to use as examples in appraisal

How to fix Recency Effects?

Appraisal Interview

• culmination of appraisals

• the manager and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths

1. Satisfactory-Promotable

2. Satisfactory-Not promotable

3. Unsatisfactory-Correctable

4. Unsatisfactory-Uncorrectable

4 types of Appraisal Interview

Satisfactory-Promotable

• easiest interview

• objective: develop specific development plans (reinforce 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

• 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

How to Conduct an Appraisal Interview Before

• conduct the interview with no interruptions

• duration for lower-level personnel ⇒ less than an hour

• duration for management employees ⇒ 1 to 2 hours

How to Conduct an Appraisal Interview During

• 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

Process Effective interview requires effective coaching skills

• 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)

Guidelines in Conducting an Appraisal Interview

equal partners (meaning subordinate is also heard and given the chance to voice out)

The best appraisal interviews are dialogues between:

denial - a defense mechanism

first reaction to being told poor performance feedback is _______.

• 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

How to criticize a subordinate?

Handling a Written Warning

written warnings are given to employees who have very weak performance

• shake the mployee out of their bad habits

• helps manager defend their rating to their boss and (if needed) to the courts

Purposes of Handling a Written Warning

• list employee’s standards

• make it clear that the employee is aware of the standard

• specify deficiencies relative to the standard

• show that the employee had an opportunity to correct performance

Warnings should:

Performance Management

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

• goal-oriented process directed towards ensuring that organizational processes are in place to

• maximize productivity of employees, teams, and the organization

• aligning employee performance with the organization’s goals