Dessler, Cole, Goodman, and Sutherland In-Class Edition Management of Human Resources Second Canadian Edition 7 Chapter Seven Performance Appraisal: The Key to Effective Performance Management © 2007 Pearson Education Canada 7-1

Performance Management –entire process affecting how well an employee performs –foundation is performance appraisal

The Performance Appraisal Process Three steps: 1. Defining performance expectations 2. Appraising performance 3. Providing feedback to employee regarding performance

The Performance Appraisal Process Performance Appraisal Problems lack of standards; irrelevant, subjective, unrealistic standards poor measures of performance rater errors poor feedback to employees; eg. arguing failure to use evaluation results for decision making

Step 1: Defining Performance Expectations quantifiable and measurable standards of performance required more specific than job descriptions ensure employees clearly understand expectations

Step 2: Appraising Performance Performance Appraisal Methods Graphic rating scale Forced distribution Critical incident Behaviourally anchored rating scale Management by objectives Technology-based

Appraisal Methods Graphic Rating Scale Trait: _____ ____ Outstanding ____ Very Good ____ Good ____ Improvement Needed ____ Unsatisfactory ____ Not Rated

Critical Incident Method Appraisal Methods Critical Incident Method keep a record of: uncommonly good undesirable work-related behaviours review with employee at predetermined times

Management by Objectives (MBO) Appraisal Methods Management by Objectives (MBO) Set the organization’s objectives Allocate objectives to departments Set objectives for business units Define expected results (individual) Define action plans for individuals Implement action plans Performance reviews: measure the results Provide rewards for meeting objectives

Management by Objectives (MBO) Appraisal Methods Management by Objectives (MBO) Problems 1. Setting unclear, unmeasurable objectives 2. Time consuming 3. Tug of war between manager and employee

Technology-based Methods Appraisal Methods Technology-based Methods New software programs enable employees to check their own performance against prescribed criteria

Performance Appraisal Problems Validity: criteria must be relevant, specific and cover all aspects of the job in order to be accurate Reliability: criteria must provide consistent measures of performance across many employees and many raters Unclear performance standards

Performance Appraisal Problems Who Should Do the Appraisal? immediate supervisor peers rating committees self employees/subordinates 360-degree appraisal (all of the above)

Dealing with Rater Errors Performance Appraisal Dealing with Rater Errors halo effect central tendency leniency or strictness appraisal bias recency effects similar-to-me bias

Performance Appraisal Avoiding Rater Errors Ensure rater awareness of problems Train supervisors to eliminate rating errors Ensure that appraisals are reviewed by the supervisor’s immediate boss

Step 3: Providing Feedback Appraisal Interview An interview in which the supervisor and employee review the appraisal and make plans to remedy deficiencies and reinforce strengths

The Appraisal Interview How to Conduct an Appraisal Interview be direct and specific focus on job-related behaviours encourage the person to talk develop an action plan

The Appraisal Interview How to Handle a Defensive Employee recognize that defensive behaviour is normal never attack a person’s defenses postpone action recognize human limitations

The Appraisal Interview constructive criticism within a dignified context ensure the interview leads to improved performance consider appropriate use of formal written warnings

Legal and Ethical Issues use rating instruments based on specific job behaviours provide an honest assessment of performance requires raters to have regular contact with employees accurate feedback is critical to defend charges of biases based on prohibited grounds