Chapter Nine

1
Chapter Nine

• Appraising and Managing Performance

2
Chapter Outline

• Why Organizations Conduct Performance Appraisals
• The Performance Appraisal Process
• Methods for Appraising Performance
• Understanding the Limitations of Performance
  Appraisals
• Performance Management and Providing Feedback

3
Chapter Outline (contd)

• Performance Management and Follow-Up Measures
• Evaluating the Performance Appraisal and
  Management Processes
• Legal Issues in Performance Appraisal

4
Chapter Objectives

• Describe the purposes of performance appraisal in
  organizations.
• Summarize the performance appraisal process in
  organizations.
• Identify and describe the most common methods
  that managers use for performance appraisal.
• Discuss the limitations of performance appraisal
  in organizations.

5
Chapter Objectives (contd)

• Describe how performance feedback should be
  provided by managers.
• Identify and discuss frequently used performance
  appraisal follow-up measures.
• Identify and describe the basic legal issues in
  performance appraisal.

6
Terminology

• Performance appraisal
• The specific and formal evaluation of an employee
  conducted to determine the degree to which the
  employee is performing his or her job effectively
• Performance management
• The general set of activities carried out by the
  organization to change (improve) employee
  performance

7
Why Organizations ConductPerformance Appraisals

• Both managers and employees tend to be
  dissatisfied with performance appraisals.
• The fact that performance appraisals are so
  widely used in spite of this dissatisfaction is
  an indicator that managers believe that
  performance appraisals are important and play a
  meaningful role.

8
The Importance of Performance Appraisal

• It provides a benchmark for assessing recruiting
  and selection processes.
• It plays an important role in training.
• It should be fundamentally linked to the
  compensation system.
• It provides legal documentation.
• It plays a role in employee motivation and
  development.
• It provides valuable and useful information for
  HR planning.

9
Goals of Performance Appraisal

• Provide a valid and reliable measure of employee
  performance along all relevant dimensions.
• Provide useful and appropriate information for
  the organization with regard to HR planning,
  recruiting and selection, compensation, training,
  and the legal context.
• The ultimate goal is to improve performance on
  the job.

10
The Performance Management Process
11
The Performance Management Process (contd)
12
The Performance Appraisal Process

• The role of the organization
• Develop the process
• Determine how the information will be used
• Determine timing
• Ensure that performance standards and clear and
  specific for managers and employees

13
The Performance Appraisal Process (contd)

• The Role of the Rater
• Compare performance information with standards
• Consider the context of performance so that
  extenuating conditions can be considered
• Communicate standards to the ratee
• Collect information about behaviors and translate
  that into ratings
• Communicate results and consequences to the ratee
• Prepare the ratee to perform at desired levels

14
The Performance Appraisal Process (contd)

• The Role of the Ratee
• Have a clear and unbiased view of his or her
  performance
• Have information about performance
• Be receptive to feedback

15
Sources of Information forPerformance Appraisal
16
360-Degree Feedback

• An approach to performance appraisal that
  involves gathering performance information from
  people on all sides of the managerabove, beside,
  below, and so forth
• Feedback from different sources is likely to be
  inconsistent.
• This approach is potentially helpful, especially
  when used for feedback purposes only.

17
What Gets Rated?
18
Who Should Be Rated?

• With work teams, the organization must decide
  whether to evaluate individual performance or
  team performance.

19
Methods for Appraising Performance

• Simple ranking method
• Having the manager rank-order, from top to bottom
  or from best to worst, each member of a
  particular work group or department
• Paired comparison method
• Comparing each individual employee with every
  other individual employee, one at a time

20
Methods for Appraising Performance (contd)

• Forced distribution method
• Grouping employees into predefined frequencies of
  performance ratings
• Graphic rating scale
• A statement or question about some aspect of an
  individuals job performance

21
Example of Graphic Rating Scales
22
Methods for Appraising Performance (contd)

• Critical incident method
• Using instances of especially good or poor
  performance on the part of the employee
• Behaviorally Anchored Rating Scales (BARS)
• Appraisal systems that represent a combination of
  the graphic rating scale and the critical
  incident method

23
Behaviorally Anchored Rating Scales
24
Methods for Appraising Performance (contd)

• Behavioral Observation Scales (BOS)
• Use critical incidents like BARS but use
  substantially more critical incidents to define
  specifically all the measures necessary for
  effective performance
• Goal-based or management-by-objectives (MBO)
• Based largely on the extent to which individuals
  meet their personal performance objectives

25
Which System Is Best?

• It is difficult to suggest which system is best
  because it is difficult to predict how a set of
  employees will react to a given system.

26
Understanding the Limitations of Performance
Appraisals

• Contextual performance
• Tasks an employee does on the job that are not
  required as part of the job but that still
  benefit the organization in some way
• Projection
• The tendency to see in others characteristics
  that we ourselves have and that we think
  contribute to effectiveness

27
Understanding the Limitations of Performance
Appraisals (contd)

• Contrast errors
• Occurs when we compare people against one another
  instead of against an objective standard
• Distributional error
• Occurs when the rater tends to use only one part
  of the rating scale
• Can be severity, leniency, or central tendency

28
Understanding the Limitations of Performance
Appraisals (contd)

• Halo error
• Occurs when one positive performance
  characteristic causes the manager to rate all
  other aspects of performance positively
• Horns error
• Occurs when the manager downgrades other aspects
  of an employees performance because of a single
  performance dimension

29
Understanding the Limitations of Performance
Appraisals (contd)

• Organizations should work to reduce rating error
• Train managers to overcome weaknesses
  (rater-accuracy training)
• Reward raters for doing a good job in performance
  appraisal
• Punish raters who do not take the task seriously
• Convince raters that it is in their best interest
  to do the best job they can in appraising
  employee performance

30
Performance Management andProviding Feedback

• After the appraisal is completed, the next major
  activity is the provision of feedback, coaching,
  and counseling.
• Performance appraisals tend to focus on negatives
  and, as a result, managers may have a tendency to
  avoid giving feedback because when employees hear
  negative feedback they may be angry, hurt,
  discouraged, or argumentative.

31
Performance Management andProviding Feedback
(contd)

• If employees are not told about their
  shortcomings, they have no reason to try to
  improve and have no guidance concerning how to
  improve.
• It is critical that the rater follow-up the
  appraisal by providing feedback to the employee.

32
The Feedback Interview

• Provide feedback on a regular, ongoing basis.
• Have the individual appraise his or her own
  performance before an appraisal interview.
• Encourage participation and two-way
  communication.
• The manager should try to balance negative and
  positive feedback.
• The manager should take a developmental and
  problem-solving orientation to the process.
• Conclude with a future-oriented discussion.

33
Archiving Performance Appraisal and Management
Results

• The results of the performance appraisal should
  be stored so that the records can be attained and
  referred to later.
• It is important that the manager have access to
  this information when the next performance
  appraisal is completed.
• Archiving results is important in terms of equal
  employment opportunity issues.

34
Performance Management and Follow-Up Measures

• Effective performance management involves some
  type of reward to employees who meet goals or
  improve their performance.
• There are many types of rewards that can be used.
• When performance is deficient corrective measures
  should take place such as training and
  development.

35
Evaluating the Performance Appraisal and
Management Process

• Performance appraisal feeds into the performance
  management process, and because the ultimate goal
  of this process is to improve performance on the
  job, managers should be able to see real
  improvements in organizational performance if the
  process is working.

36
Legal Issues in Performance Appraisal

• When performance appraisals are used as the basis
  for human resource decisions, they are considered
  the same as any other test under law.
• Appraisals that show evidence of disparate impact
  must be validated the same as any selection
  technique.