Performance Appraisal Chapter # 07 Performance Appraisal Reference Books: Human Resource Management (Mondy) Human Resources and Personnel Management ( keith Davis) Fundamentals of HRM (David A. DeCenzo) Resource person: Furqan-ul-haq Siddiqui

Performance Appraisal The ongoing process of evaluating the behavior and outcomes in the workplace. Its goal is to provide an accurate picture of past and / or future employee performance. Performance appraisal means evaluating an employee’s current and/or past performance related to his or her performance standards Appraisals provide important input on which promotion and salary raise decisions can be made.

Performance Standards Performance Management Benchmarks against which Performance is measured. To hold employees accountable, a written record of the standards should exist and employees should be advised of those standards before the evaluation occurs. Performance Management Performance management includes activities to ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service, as well as many other areas. Employees PM practices through which the manager defines the employee’s goals and work, develops the employee’s capabilities, and evaluates and rewards the person’s efforts

WHY is performance measured? (use) WHAT is measured? HOW is it measured? WHO measures performance? WHEN is it measured? (timing) Organization... 3

Performance Measures The Ratings/methods used to evaluate Performance. These ratings may be through Observations which may be Direct or Indirect. Direct Observation occurs when the rater actually sees the performance. Indirect Observation, which is less accurate, occurs when the rater can evaluate only substitutes for actual performance these substitutes are called constructs.

Performance measures also may be Objective or Subjective. Objective Performance Measures are indications of job performance that are verifiable by others and are usually quantitative. Subjective Performance Measures are ratings that are based on the personal standards or opinions of those doing the evaluation and are not verifiable by others.

Performance measures also may be Absolute or Relative. Absolute standards: An employee’s performance is measured against established standards. Evaluation is independent of any other employee. Relative standards: Employees are evaluated by comparing their performance to the performance of other employees.

Uses of Performance Appraisal Performance Improvement Compensation Adjustments Placement Decisions Training and Development needs Staffing Process Deficiencies Feedback to Human Resources Career Planning and Development Assessment of Employee Potential

Performance Appraisal Process

Problems/Challenges in Performance Appraisal Lack Of Objectivity- A potential weakness of traditional performance appraisal methods is that they lack objectivity. Halo Error Horn Error Leniency- Giving an undeserved high performance appraisal rating to an employee Strictness- Being unduly critical of an employees work performance Central Tendency-

Costly & time consuming The serial position effect Cross Cultural Biases- Application of one owns cultural expectations on others Personal Biases Work interruptions Costly & time consuming The serial position effect Primacy effect Recency effect Stereotyping- Its is a commonly held public belief about specific social groups, or types of individuals or ideas that groups of people hold about others who are different from them. Legal Constraints- PA must be free of Illegal Discrimination

Characteristics of an Effective Appraisal System Job-related Criteria Realistic Performance Expectations Trained Appraisers Continuous Open Communication before, during and after the process. Reviews

Who Should Do the Appraising? Self-Rating Subordinates 360-Degree Feedback Potential Appraisers Immediate Supervisor Peers Rating Committee

Past-Oriented Appraisal Methods (Performance that has already been occurred) Performance Tests and Observations Forced Choice Appraisals 360 Degree Feed back Point Allocation Forced Choice Narrative/Pen Picture Rating Scales Ranking Method Paired Comparison Checklists Critical Incident Method Accomplishment Records Behaviorally Anchored Rating Scales Field Review Method

1. Rating Scales It requires the Rater to provide a Subjective Evaluation of an individual’s performance along a scale from low to high. The Rater is usually immediate Supervisor. It is inexpensive Need little time But Rater’s biases are likely Limit specific feedback 1(Low) 2 3 4 5 6 7 (High)

Rating Scale with Space for Comments

Rating Scale with Unclear Standards Note: For example, what exactly is meant by “good,” “quantity of work,” and so forth?

2. Alternation ranking method Ranking employees from best to worst on a particular trait, choosing highest, then lowest, until all are ranked.

Paired comparison method Ranking employees by making a chart of all possible pairs of the employees for each trait and indicating which is the better employee of the pair. Note: + means “better than.” − means “worse than.” For each chart, add up the number of 1’s in each column to get the highest-ranked employee.

4. Checklists It requires the Rater (Supervisor) to select words or statements that describe the Employee’s Performance and Characteristics. Sometimes Weighted Checklists are used as by assigning weights to different items on checklist. This method is; Cost effective and Standardized Easy to Administer Limited training for Raters Includes Rater Biases and Misrepresentation of Checklist items.

Checklists Employee works over time when asked Employee is well organized Employee is hard working Employee is well equipped Check lists may be in the form dichotomous statements/questions.

5. Critical Incident Method It requires the Rater to record statements that describe extremely good or bad behavior related to job performance. The statements are called Critical Incident Recorded incidents include a brief explanation of what happened. The main drawback is that supervisor may not record incidents properly or may record them on his/her own wish.

6. Accomplishment Records These are employee-produced listings of accomplishments such as publications, speeches, leadership roles, and other professionally related activities. This information is typically used to generate an annual report detailing the professional’s contributions during the year.

7. Behaviorally Anchored Rating Scales They are a family of Evaluation Approaches that identify and evaluate relevant job-related behaviors. The most popular approaches are; Behavioral Expectation Scales (BES) use specific named behaviors as benchmarks to help the rater. Behavioral Observation Scales (BOS) use specific named behaviors as benchmarks and require the rater to report the frequency of those behaviors. Advantages of using a BARS A more accurate gauge Clearer standards Feedback Independent dimensions Consistency

Behavioral Expectation Scales (BES) Extremely outstanding Good Fairly Good Acceptable Fairly Poor Poor Extremely poor Help Customer in need Calm down when C misbehave misbehave

8. Field Review Method In this method, a Skilled representative of the HR department goes into the “field” and assists supervisors with their ratings. HR specialist ask Specific Information about the employee’s performance from the immediate Supervisor. Then the expert prepares an evaluation that is based on this information.

9. Performance Tests and Observations This method is particularly appropriate when a Company relies on a Pay-for-knowledge or Pay-for-skills approach to compensation, rewarding employees primarily on the basis of the skills or job knowledge they have mastered. Tests may be of the Paper-and-pencil variety, interviews or may require an actual Demonstration of Skill.

10. Forced distribution method Similar to grading on a curve; predetermined percentages of ratees are placed in various performance categories. usually with specified proportions in each category.

12. Point Allocation Method: 11. 360-Degree Evaluation A multi-rater Evaluation that involves input from multiple levels within the firm and external source as well. The raters include; Peers (Coworkers) Subordinates Super-ordinates Customers 12. Point Allocation Method: It requires the rater to allocate a fixed number of points among employees in the group.

13. Forced Choice Appraisals A performance evaluation in which the rater must choose between two specific statements about an employee’s work behavior often both statements are either negative or positive. This method reduces the rater biases because some employees must be rated as superior to others Table: Forced Choice Items A B Learns Quickly Works Hard Work is Reliable Good example for others Effective Efficient Absent too often Usually Tardy

14. Narrative Forms/ Pen Picture

Future-Oriented Appraisals It focus on future performance by evaluating an employee’s potential or setting future performance goals. Common approaches to evaluating future performance are; Psychological Appraisals Management by Objective Self-Appraisals Assessment Centers

Self Appraisals Evaluation of one’s own self. Management by Objective (MBO) A performance appraisal method that includes mutual objective setting and evaluation based on the attainment of the specific objectives. Four common ingredients of MBO are Psychological Appraisals Assessment by industrial psychologists, usually consists of interviews, discussions, psychological tests etc. Assessment Centers are standardized employees appraisals by multiple raters and evaluations. Used for highly responsible jobs. Interviews, psychological tests, peer rating, simulated work environments, leadership style etc. Goal specificity Participative decision making Explicit time period Performance feedback