Performance Management and Appraisal Chapter Thirteen Performance Management and Appraisal

Learning Objectives Describe the major purposes of performance appraisal Explain how the performance appraisal process can affect employee morale either positively or negatively Discuss the major considerations involved in developing an appraisal program Identify common appraisal errors Describe several performance appraisal methods

Learning Objectives (cont’d) Cite the advantages and disadvantages of MBO and team MBO Describe several procedures for conducting effective appraisal interviews and discussions Identify several factors that can affect the choice of an appraisal method

Performance appraisal and review Is the formal, systematic assessment of how well employees are performing their jobs in relation to established standards and the communication of that assessment to employees

Figure 13.1 The performance appraisal system as an extension of job design

Developing an Appraisal Program Legal Requirements Choosing Appraisers Supervisor Appraisals Self-Appraisals Peer Appraisals Appraisals by Direct Reports Customer/Outside Appraisals Group or Committee Appraisals 360-Degree Feedback

Developing an Appraisal Program (cont’d) Reliability and Validity Reliability: consistency with which a supervisor rates a subordinate in successive ratings (assuming consistent performance) or consistency with which two or more supervisors rate performance when they have comparable information Validity: extent to which appraisal procedures measure real differences in performance

Role of the Human Resources Department It plays a critical role in the design and implementation of the appraisal program It is the logical group to conduct research on the equity of appraisals throughout the organization and on the reliability and validity of whatever system is used.

Appraisal Errors affect reliability and validity Halo error Means that the rater has made positive generalizations from one dimension of a person’s performance to all performance dimensions. Error of central tendency Occurs when the rater tends to rate the performance of all or most of the persons being appraised around the center of the rating scale. Leniency error Means that the appraiser has given the employees higher ratings than they deserve

Performance Appraisal Methods Graphic Rating Scale Check List Essay Critical Incidents Ranking Behavioral Rating Scales Management by Objectives

Graphic Rating Scale Rating scales may be numerically based on adjectives or descriptive statements. Contemporary rating scales tend to include only performance-related characteristics and identify different performance levels for each characteristic.

Checklist method The rater is presented with a list of positive or negative adjectives or descriptive statements and is asked to check those that apply to the person being rated. In the weighted checklist, each item receives a certain value based on its perceived importance to successful performance. While easy to use, checklists are not free of problems. Raters may not be certain what the items measure and may have difficulty interpreting the results.

Essay method The appraiser writes a freeform essay describing the subordinate’s performance in a number of broad categories (such as the employee’s promotability, strengths and limitations, and additional training needs). 1. This approach gives the appraiser great flexibility, but because of the method’s open-endedness, it is difficult to compare essay appraisals made by different supervisors. 2. This method, which is time‑consuming, also depends on the writing skills of the appraiser.

Critical‑incidents technique Requires the appraiser to keep a record of unusually favorable or unfavorable occurrences in an employee’s work. 1. The advantage of this approach is that it provides a factual record of job‑related data. 2. However, the approach requires close and careful observation, which is time-consuming and costly and which may make employees apprehensive.

Ranking It is a method that lists all employees from best to worst. Used less frequently than other methods, it obscures the differences in performance between employees and relies heavily on how a ranking is interpreted. Ranking has spawned class action lawsuits at companies such as Ford and Microsoft.

Behaviorally anchored rating scales (BARS) Are used to rate employees on specific job behaviors, rather than traits or characteristics, which reduces the amount of subjective judgment required by the rater and increases the job relatedness of appraisal.

Behavioral observation scales (BOS) Are similar to BARS except that several behaviors are listed individually for each performance dimension, and the rater is required to assess the individual on each behavior. 1. BARS and BOS are time‑consuming and costly to develop. 2. Because BARS and BOS are based on careful job analysis, they are likely to be acceptable to government labor agencies.

Management by Objectives It is a system that features a periodic agreement between a superior and a subordinate on the subordinate’s objectives for a particular period and a periodic review of how well the subordinate achieved those objectives (which are stated in quantitative rather than qualitative terms whenever possible).

MBO, vantages and disvantages It can give individual employees greater direction and self-control, build their self-confidence, motivate them, improve their performance, further their growth and development, and provide them with full knowledge of appraisal criteria In their worst forms, MBO programs can be one‑sided, autocratic, and time-consuming mechanisms designed to force employees to comply with a superior’s directives.

Appraisal Interview and Dialogue Purposes: To let employees know where they stand or how they are doing To encourage good behavior To explain what is expected of employees To communicate results of salary or promotion decisions To plan for future performance improvement To improve supervisor‑subordinate relationships

Choosing the Appraisal Process Organizational Considerations Leadership style Organizational climate Training in appraisal procedures Appropriateness to the Job Selecting appraisal method based on traits, behavior or combination of both

Role of the Human Resources Department Determines who evaluates and what method will be used Holds training on how to use the system and to conduct appraisal interviews Conducts research on equity, reliability, validity, and degree of acceptance of appraisal system

Key Terms Performance appraisal and review Performance management system Feedback Evaluation goals Coaching and development goals Multi-rater feedback 360-degree feedback Reliability Validity Halo error Error of central tendency Leniency error Graphic rating scale Check list method Weighted check list Essay method Critical-incidents technique Behaviorally anchored rating scales Behavioral observation scales

Key Terms (cont’d) Management by objectives (MBO) Team MBO Appraisal interview Appraisal dialogue