Effective Employee Performance Appraisal Notes IDS 705 Business Communications Amanda Chen Damian Glenn

Performance Appraisal The process by which an employee’s contribution to the organization during a specified period of time is assessed. Lets employees know how well they have performed in comparison with the standards of the organization Performance Feedback

STRATEGIC IMPORTANCE Consistency between job behavior and Organizational strategy Organization values Performance Management as an Employee development tool Administrative tool

A GOOD APPRAISAL SYSTEM Criteria Validity Reliability Freedom from bias: errors Practicality

PA and other HRM Functions Training & Development Recruitment Compensation Selection Labor Relations

Mgr not taking PA seriously Ineffective discussion Why PA May Fail Unclear Language Mgr not taking PA seriously Mgr not prepared No on-going feedback Mgr not honest or sincere Ineffective discussion Lack appraisal skills Mgr Lacks Infor. Insuff. Rewards

Alternative Sources of Appraisal SUPERIOR CUSTOMERS TEAM PEERS SELF SUBORDINATES

Training Appraisers Error of Central Tendency Recency Error Common Appraisal Errors to Address in Training Error of Central Tendency Recency Error One weakness in many performance appraisal programs is that managers and supervisors conducting the appraisal are not adequately trained for that task. Appraisal training, at the least, should focus on eliminating the subjective errors made by managers in the rating process. Common types of errors include: Error of Central Tendency. A type of distributional error that involves a group of ratings given across various employees (occurs when all employees are rated about average). Leniency or Strictness Error. Another distributional error, in which the appraiser tends to give employees either too high or too low a rating. Recency Error. Recency is a performance-rating error in which the appraisal is largely based on the employee’s most recent behavior rather than on behavior throughout the appraisal period. Contrast Error. Contrast error occurs when an employee’s evaluation is biased either upward or downward because of another employee’s performance who was just evaluated previously. Teaching Tip: This tendency is explained in part by Sherif’s Social Judgment Theory in which positions similar to our own are believed to be closer to what we believe than they actually are (assimilated) and those different from our own are believed to be even more different from what they actually are (contrasted). By extension, a manager either improves or depresses an appraisal becasue of the similarity or difference of a particularly salient appraisal recently given another employee. Similar-to-Me Error. This occurs when appraisers inflate the evaluations of people with whom they have something in common. Teaching Tip: Again, Social Judgment Theory applies, as does Balance Theory. Leniency or Strictness Error Contrast Error Similar-to-Me Error

Types of Performance to Measure Measurement Methods Objective Production Dollar Sales Performance Tests Subjective Comparative Procedures Ranking Forced Distribution 3 Types of Methods Trait based Behavior based Results based Trait based--assesses the abilities or other personal characteristics of an employee. Behavior based--measures the extent to which an employee engages in specific, relatively well-defined behaviors while on the job. Results based--measures the “bottom line” associated with an employees work.

Common Trait Methods of Appraisal Graphic Rating Scale Trait approaches to performance appraisal are designed to measure the extent to which an employee possesses certain characteristics that are viewed as important for the job and the organization in general. The trait method approach continues to be the most popular appraisal method, although such appraisals can be easily biased and subjective. Common traits methods are: Graphic Rating Scale Method. Here each trait or characteristic to be rated is represented by a scale on which the rater indicates the degree to which an employee possess that trait or characteristic. Mixed Standard Scale Method. The mixed standard scale is a modification of the basic rating scale method by basing the comparison for appraisal in relation to some standard (often an idealized one). Employee performance is then categorized as better, equal, or worse than the standard. Forced-Choice Method. This trait approach requires that the rater choose from statements designed to distinguish between successful and unsuccessful performance. Essay Method. This method requires the rater to compose a statement describing employee behavior. Typically, the rater must describe the employee’s strengths and weaknesses and make recommendations for her or his development. Common Trait Methods of Appraisal Mixed Standard Scale Forced-Choice Essay

Behavioral Methods Behavioral Checklist Critical Incidents Behavioral methods seek to overcome the often vague and subjective drawbacks of trait methods by focusing on describing specifically which actions should or should not be exhibited on the job and appraising employees on the basis of this observable action. Common behavioral methods include: Critical Incidents Method. As in job design, this is an unusual event that denotes superior or inferior employee performance in some part of the job. One advantage of this method is that it forces the appraiser to examine the entire appraisal period self-consciously for critical incidents, thus guarding against recency error. Behavioral Checklist Method. This consists of having a rater check those statements on a list that the rater believes are characteristic of the employee’s performance or behavior. Behaviorally Anchored Rating Scale (BARS). This approach consists of a series of vertical scales, one for each important dimension of job performance. One advantage of a BARS is that it is typically developed by a committee that includes both subordinates and managers. ABARS requires considerable time and effort to develop, but it also shows a high degree of content validity. Behavior Observation Scales (BOS). This approach measures the frequency of observed behavior. The value of a BOS is that it allows the appraiser to play the role of observer rather than judge. Behaviorally Anchored Rating Scale (BARS) Behavior Observation Scales Common Behavioral Appraisal Methods

Results-based Methods Used when It is not important how results are achieved There are many different ways to succeed Practicality Contamination Deficiency Teamwork CONTAMINATION: Results based measures may be difficult to obtain for some jobs. E.g. What are the performance results of a HS teachers behavior. Results are not always under the control of an individual employee. E.g. equipment breakdowns, a change inn the economy, bad luck, inadequate budgetary or staff support, or other factors not directly controlled by an employee may greatly affect the job results. May foster a “results at all cost mentality”.--e.g., hanging up on customers calling to cancel orders or arrange for returns. DEFICIENCY Teamwork among employees may suffer if individuals are preoccupied with their own personal results and will not take the time to help coworkers. May not tap into such aspects of performance as cooperation. Do not always provide clear information on how to improve work performance. CONCLUSION: Avoid trait-based appraisals, unless a clear link between traits and job effectiveness can be shown. A carefully constructed combination of behavior-based and results-based approaches may be most appropriate for many jobs.

PA Methods Vary upon Task Types Knowledge of the transformation process High Low Behavioral / Result Ex: assembly workers Result Ex: sales Behavioral Ex: reporters Extensive selection/ training Ex: researchers Reliability and Validity of PA Measurement

Contemporary PA Concepts Management by objectives (MBO) 360-degree feedback Self-managed teams

New inputs are then provided PA under a MBO Program Step 5a: Inappropriate goals/metrics deleted Step 1: Org. goals & metrics Step 5b: New inputs are then provided Step 2: Dpt. Goals & metrics Step 3: Spvr lists goals & metrics Step 4: Mutual agreement Step 3: Sbt. proposes goals & metrics Step 7: Review org. performance Step 6: Final review Step 5: Interim review

Self-Managed Teams Characteristics Focusing group result Larger Span of control More part-time/contract workers More cross-functional workers Challenges Measuring individual result  Unfair & Hard Quality and commitment std.  Diverse Measure cross-functional performance  Tough

360° Feedback

Example Communication Leadership Personal Development Adaptability of Others Relationships Production Task Management

CONCLUSION Purposes of performance appraisal Characteristics of an effective appraisal Different sources of appraisal information Various methods used for evaluation