Spring Performance Appraisal

2 Spring 2008 Performance Appraisal Performance appraisal vs. performance management Why it doesn’t happen PA formats Problems with PA 360º feedback

3 Spring 2008 Why Performance Appraisal ? Why?  Reward good performance  Feedback to employees  Employee development  Documentation for future managers, legal purposes

4 Spring 2008 What Makes Good Performance Appraisal? PA should be based on job performance alone PA also should be an ongoing process, not a once-a-year ritual 6 characteristics of effective PA  Subordinate participation  Subordinate acceptance  Goal setting  Discussing problems with performance  Minimal criticism (defensiveness)  Subordinate voice

5 Spring 2008 Defining Performance Objective vs. subjective What can the individual control? Job related vs. organization related behaviors Dimensions to rate on

6 Spring 2008 Who Evaluates Performance? Supervisor Self Subordinate Peers Customers

7 Spring 2008 Appraisal Formats Trait ratings Rankings Outcome measures Dimensional scales BARS MBO

8 Spring 2008 Trait Ratings Traits (i.e., “industrious”) mean different things to different people  Lack of reliability Not specific enough for useful feedback  What, specifically, does the employee need to do to be “industrious”? Still used, though It’s quick and easy, and appealing to managers (“looks” good)

9 Spring 2008 Currently popular  Managers required to rate a certain proportion of employees in each category  General Electric (“Rank-and-Yank”) However….  All employees may be equally good or bad, so forced distribution isn't the answer  May be comparing apples and oranges, if employees in different jobs  No anchor points (The employee on the bottom of the list may be satisfactory, but all of the others are simply better)  Not specific enough, in terms of areas and specific behavior, for useful feedback Rankings and Forced Distribution

10 Spring 2008 Nothing wrong with measuring outcomes..… Need to chose correct outcomes Focus on results not always helpful in showing employees what to do to get results Outcomes may not be under employee’s control Outcome Measures

11 Spring 2008 Behaviorally Anchored Rating Scales (BARS) Format:  Scales for different areas or dimensions (usually 8-10 scales per job)  Each scale has 9 points or levels  At least three levels are anchored or defined with representative behaviors, describing superior, average, and below average levels of performance The supervisor:  Responds to the question “This is the type of employee who would...”  Rates the employee from 9 (best) to 1 (worst), for each scale

12 Spring 2008 Management by Objectives (MBO) About goals  Goals must be challenging, yet reachable  Must have meaningful employee participation Three steps in process:  Employee and manager agree on goals  Progress toward goals monitored during appraisal period  At end of period, employee and supervisor meet again to determine if goals met

13 Spring 2008 Systematic Problems With Performance Appraisal No performance appraisal or performance appraisal as a ritual only Lack of top management support for performance appraisal or for meaningful appraisal Appraisal should be (but too often isn’t) an ongoing process of feedback

14 Spring 2008 Problems in the Appraisal Interview Disagreement (between employee and manager) Defensiveness (when employee is given bad news in a non-constructive manner) Manager’s unwillingness to confront problem employees One-way communication (top-down only; employee has no opportunity to respond)

15 Spring 2008 Rater Errors (I) Systematic errors/biases; normally, rater is unaware of these Errors in rating process  Irrelevant information Errors in observation  Stereotypes  Employee similar/not similar to rater  Pattern of performance (improve/decline)  Variability of performance

16 Spring 2008 Rater Errors (II) Errors in storage and recall  Trait recall  Memory decay Errors in actual evaluation  Political goals  Forced distribution/limited pot of money  Fear of confronting problem employees  Desire to look good

 Contrast Error  First and Last Impressions  Halo Effect  Stereotyping  “Similar-to-Me Effect”  Central Tendency Error  Negative and Positive Leniency

18 Spring º Appraisal Also called “multisource feedback” Gather information on performance from multiple sources  Supervisor  Peers  Subordinates  Self  Customers