Performance Appraisal

PERFORMANCE APPRAISAL is a systematic and objective way of evaluating both work related behaviour and potential of employees.

It is not a past oriented activity It is not a past oriented activity. The intention is not to put poor performers in a spot. Instead, it shows employees where things have gone wrong, how to set things in order and deliver superior performance using their potential fully The focus of appraisals is on employee growth and development. It forces managers to be coaches rather than judges.

Objectives The performance appraisal process serves several important purposes Compensation decisions Promotion decisions Training and development programmes Feedback to the employee Personal growth and development

What is to be appraised? The content to be appraised is determined on the basis of job analysis. Usually it comprises of: Behaviours, including observable physical actions, movements Objectives which measure job related results Traits which are measured in terms of personal characteristics

Who will appraise? When to appraise? Supervisors Peers Subordinates Users of services consultants Self appraisal When to appraise? Conducted informally Carried out systematically at regular intervals, sticking to a definite plan

The Performance Appraisal Process Establish performance standards . Good performance goals should speak about What is the task to be accomplished? What will it look like when it is accomplished? When must it be completed? What are the cost considerations? What are the likely payoffs to the employee?

Communicate the standards The Appraiser should prepare job descriptions clearly Help the appraisee set own goals and targets Analyse results objectively Offer coaching and guidance The Appraisee should be clear about what he is doing and why he is doing

Measure actual performance Compare actual performance with standards and discuss the appraisal Not an easy job Emotional factors to be taken into account Affects the self esteem of the appraisee Criteria likely to be questioned, if the appraisal turns out to be negative Take corrective action, if necessary

Performance Appraisal Programs A process, typically performed annually by a supervisor for a subordinate, designed to help employees understand their roles, objectives, expectations, and performance success. Performance management The process of creating a work environment in which people can perform to the best of their abilities.

Training Performance Appraisers Common rater-related errors Error of central tendency Adverse impact is a concept that refers to the rejection of a significantly higher percentage of a protected class for employment, placement, or promotion than the successful, nonprotected class. Adverse Rejection Rate (Four-Fifths Rule). In the Uniform Guidelines on Employee Selection Procedures, a selection program has adverse impact if the selection rate for any protected racial, ethnic, or sex class is less than four-fifths (or 80%) of the rate of the class with the highest selection rate. Standard Deviation Analysis. Handed down from the U.S. Supreme court in Hazelwood School District v United States (1977), this uses the statistical concept of standard deviation to measure whether the difference between the expected selection rates for protected groups and the actual selection rates could be attributed to chance. If chance is eliminated, then it is assumed that the selection technique has an adverse impact. The concept of standard deviation. It is a measure of how far and how many individual occurrences in a population will be from the mean (average case). In a bell-shaped distribution, 95% of all occurrences fall within two standard deviations. In social science, the number of standard deviations used to rule out occurrences due to chance is subjective. Most social science disciplines use 2 standard deviations (.05); some use 3 standard deviations (.01). McDonnell-Douglas Test. McDonnell-Douglas Corp. v Green (1973) This test provides four guidelines for individuals who believe they have been unjustly rejected for employment: Guidelines are: The person is a member of a protected class. The person applied for a job for which he or she was qualified. The person was rejected despite being qualified. The employer continued to seek other applicants with similar qualifications. Leniency or strictness errors Similar-to-me errors Recency errors Contrast and halo errors 5

Rater Errors Error of Central Tendency Leniency or Strictness Error A rating error in which all employees are rated about average. Leniency or Strictness Error A rating error in which the appraiser tends to give all employees either unusually high or unusually low ratings. Recency Error A rating error in which appraisal is based largely on an employee’s most recent behavior rather than on behavior throughout the appraisal period.

Rater Errors Contrast Error Similar-to-Me Error A rating error in which an employee’s evaluation is biased either upward or downward because of comparison with another employee just previously evaluated. Similar-to-Me Error An error in which an appraiser inflates the evaluation of an employee because of a mutual personal connection.

Trait Methods Graphic Rating-Scale Method A trait approach to performance appraisal whereby each employee is rated according to a scale of individual characteristics.

Trait Methods Forced-Choice Method Essay Method Requires the rater to choose from statements designed to distinguish between successful and unsuccessful performance. 1. ______ a) Works hard _____ b) Works quickly 2. ______ a) Shows initiative _____ b) Is responsive to customers 3. ______ a) Produces poor quality _____ b) Lacks good work habits Essay Method Requires the rater to compose a statement describing employee behavior.

Behavioral Methods Critical Incident Method Critical incident An unusual event that denotes superior or inferior employee performance in some part of the job

Behavioral Methods Behaviorally Anchored Rating Scale (BARS) Consists of a series of vertical scales, one for each dimension of job performance; typically developed by a committee that includes both subordinates and managers.

Example of a BARS for Municipal Fire Companies FIREFIGHTING STRATEGY: Knowledge of Fire Characteristics. Source: Adapted from Landy, Jacobs, and Associates. Reprinted with permission.

Results Methods Management by Objectives (MBO) A philosophy of management that rates performance on the basis of employee achievement of goals set by mutual agreement of employee and manager.

Performance Appraisal under an MBO Program MANAGEMENT BY OBJECTIVES

The Balanced Scorecard Source: Robert Kaplan and David Norton, “Strategic Learning and the Balanced Scorecard,” Strategy & Leadership 24, no. 5 (September/October 1996): 18–24.

The Balanced Scorecard The appraisal focuses on four related categories Financial, customer, processes, and learning Ensuring the method’s success Translate strategy into a scorecard of clear objectives. Attach measures to each objective.

Cascade scorecards to the front line. Provide performance feedback based on measures. Empower employees to make performance improvements. Reassess strategy.

Alternative Sources of Appraisal Source: From The Wall Street Journal—permission, Cartoon Features Syndicate.

90 degree = one person review (self or another, the boss) • 180 degree = two person review (self and boss/manager) • 270 degree = three person review (self, boss, and peers or direct reports) • 360 degree = four person review (self, boss, peers, and direct reporters)

Then, 540 degree appraisal add more external customers and suppliers

We have 360 feedback/appraisal and it is1st feedback=360, then 2nd feedback=720, 3rd feedback=1080 and so on.