Chapter 13 Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Employees

2. Explain how often performance feedback should be provided. After studying this chapter, you will be able to: 1. Define performance appraisal and clarify the supervisor’s role in the process. 2. Explain how often performance feedback should be provided. 3. Discuss the advantages of a formal performance appraisal system. 4. Explain the concepts and techniques in using a written employee appraisal form. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

5. Discuss the process of conducting a sound appraisal meeting. After studying this chapter, you will be able to: 5. Discuss the process of conducting a sound appraisal meeting. 6. Discuss coaching as a follow-up to performance appraisal. 7. Identify the benefits derived from applying a policy of promotion from within. 8. Discuss the supervisor’s role in employee compensation and outline the goals of an effective compensation program. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

SUPERVISOR’S ROLE IN PERFORMANCE APPRAISAL 1 Performance appraisal—a systematic assessment of how well employees are performing their jobs, and the communication of that assessment to them. Supervisors establish performance standards or targets that subordinates are expected to achieve. Effective supervisors provide subordinates with regular feedback on their performance. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

SUPERVISOR’S ROLE IN PERFORMANCE APPRAISAL 1 Supervisors usually evaluate employees’ performance formally; supervisors should view this process as an extension of the planning, leading, and organizing functions. Supervisors must keep accurate records of employee performance to document fulfillment of equal employment opportunity regulations. Long-term success depends on the performance of a organization’s workforce. Employees must know what is expected of them, and receive regular feedback. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

SUPERVISOR’S ROLE IN PERFORMANCE APPRAISAL 1 An appraisal should be done by an employee’s immediate supervisor. Supervisors should be trained in the use of the appraisal instrument. Peer evaluation—Evaluation of employee’s performance by other employees of relatively equal levels. 360-degree evaluation—Evaluation based on feedback from people all around the employee—customers, vendors, supervisors, peers, and subordinates. Self-evaluation—Allows supervisors to supplement their judgments with self-ratings from employees. A self-evaluation and supervisor’s evaluation should match closely. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

2 PERFORMANCE FEEDBACK In most organizations, upper-level management decides who should appraise and how often it should be done. New employees are usually evaluated at the end of their probationary periods, then on a regular basis after that. Ongoing feedback, both positive and negative, rewards good performance and guides improvement. An employee given ongoing feedback should receive no surprises at appraisal time. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

A FORMAL PERFORMANCE APPRAISAL SYSTEM 3 A FORMAL PERFORMANCE APPRAISAL SYSTEM Most large firms in the U.S. use some type of formal appraisal system. Some reasons for this are: 1. Provides systematic judgments to support salary increases, promotions, transfers, layoffs, demotions, and terminations. 2. Means of telling subordinates how they are doing and suggesting needed changes in behavior, attitudes, skills, or job knowledge. 3. Used as a basis for coaching and counseling of employees by supervisors. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

A FORMAL PERFORMANCE APPRAISAL SYSTEM 3 A FORMAL PERFORMANCE APPRAISAL SYSTEM Formal appraisals usually become part of an employee’s record, and are used to answer such questions as: Who should be promoted? Who should get merit raises? What should be the raise differential? Who needs training? An employee is appealing termination. Do we have adequate documentation? Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

A FORMAL PERFORMANCE APPRAISAL SYSTEM 3 A FORMAL PERFORMANCE APPRAISAL SYSTEM Another purpose of the formal appraisal system is to provide clues to the supervisor’s performance. Poor employee performance may point to inadequate supervision, and may suggest where the supervisor needs to improve. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

USING A WRITTEN APPRAISAL FORM 4 USING A WRITTEN APPRAISAL FORM A typical formal employee performance appraisal by a supervisor involves (a) completing a written form (b) conducting an interview Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

USING A WRITTEN APPRAISAL FORM 4 USING A WRITTEN APPRAISAL FORM Most forms include factors that serve as criteria for measuring job performance. Including some of the following: job knowledge quality of work conduct ability to learn quantity of work timeliness of output suggestions and ideas dependability Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

4 USING A WRITTEN APPRAISAL FORM Computerized performance appraisal software packages Recently, vendors have developed software packages that allow supervisors to “point-and-click” easily through the appraisal process. Supervisors have to remember that they are still responsible for keeping ongoing records, either on paper or electronically, on employee performance throughout the year. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

4 USING A WRITTEN APPRAISAL FORM Problems with Appraisal Forms Terms are subjective. What does exceptional or fair mean? Some supervisors rate employees consistently low because they feel no one is sufficiently capable or they fear that they will lose them to promotion. Others rate employees consistently high because they feel it boosts morale or they fear antagonizing the employee. A leniency error occurs when supervisors give employees higher ratings than they deserve. Supervisors should avoid the “halo or horns” effect. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

USING A WRITTEN APPRAISAL FORM Appraisals Should Be Job Based 4 USING A WRITTEN APPRAISAL FORM Appraisals Should Be Job Based The appraisal rating should be: made within the context of each employee’s particular job. based on the total performance of the employee. based on an employee’s total record for the appraisal period. free of the supervisor’s personal biases. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

CONDUCTING A SOUND APPRAISAL MEETING 5 CONDUCTING A SOUND APPRAISAL MEETING After the appraisal form has been completed, the supervisor must arrange a time to meet with the employee. Appraisal meetings must be handled well, because misunderstanding, conflict, and resentment may result. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

CONDUCTING A SOUND APPRAISAL MEETING 5 CONDUCTING A SOUND APPRAISAL MEETING The Right Purpose The primary purpose of the appraisal meeting is to let the employee know how he or she is doing. The meeting is the place to explain past behavior that needs correction and improvement. Use the meeting to help the employee develop plans for improved future performance. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

CONDUCTING A SOUND APPRAISAL MEETING The Right Time and Place 5 CONDUCTING A SOUND APPRAISAL MEETING The Right Time and Place An appraisal meeting should be held shortly after the performance rating form has been completed, preferably in a private setting. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

CONDUCTING A SOUND APPRAISAL MEETING 5 CONDUCTING A SOUND APPRAISAL MEETING Conducting the Appraisal Meeting Be sure the employee understands the standards of performance upon which the appraisal is based, and how the appraisal system meets legal requirements for nondiscrimination. Review and compliment achievements, identify strengths, and proceed to any areas needing improvement The employee and supervisor need to agree on what needs improvement, and the problem solving method to achieve that improvement. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

CONDUCTING A SOUND APPRAISAL MEETING 5 CONDUCTING A SOUND APPRAISAL MEETING Conducting the Appraisal Meeting Emphasize that everybody in the same job is evaluated using the same standards. Back-and-forth discussion may be involved. Discuss opportunities. Do not to make promises for training or promotion that may not materialize in the foreseeable future. Include the opportunity for the employee to ask questions, which should be answered as fully as possible. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

5 Difficult Responses in the Appraisal Meeting CONDUCTING A SOUND APPRAISAL MEETING 5 Difficult Responses in the Appraisal Meeting Supervisors may encounter difficult responses to their appraisals; they should not ignore or short-circuit the appraisal process. Some difficult responses include: 1. “You hired me; therefore, how can I be so bad?” 2. “You’re just out to get me!” 3. “You don’t like my lifestyle. This has nothing to do with my on-the-job performance.” 4. “This evaluation is not fair!” 5. “I didn’t know that was important. You never told me that.” Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

CONDUCTING A SOUND APPRAISAL MEETING 5 CONDUCTING A SOUND APPRAISAL MEETING Closing the Meeting Be certain that the employee has a clear understanding of the performance rating. Some organizations require employees sign acknowledgement that the meeting has taken place; this does not constitute agreement of the appraisal. Some organizations require supervisors discuss appraisals with a manager or human resources department; some decisions may be challenged and all may be evaluated by the employer. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

COACHING AS A FOLLOW-UP 6 COACHING AS A FOLLOW-UP Coaching: The supervisor’s role in providing information, instructions, and suggestions relating to employee’s job assignments and performance. The amount and type of coaching varies with the appraisal assessment. Employee performance usually improves when specific improvement goals are established during the performance appraisal. Good coaching can avoid termination in many cases. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

6 GUIDELINES FOR COACHING Some guidelines to help the employee improve performance: 1. Have you identified specific areas of performance that need improvement? 2. Is it worth your time and effort to help the employee improve? 3. Does the employee understand that his or her performance needs improvement? 4. Does he or she know what is expected (standards of performance)? 5. Are there barriers beyond the employee’s control that influence the current performance? Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

7 PROMOTION FROM WITHIN Promotion from within provides a steady source of trained personnel and incentive to employees who see a link between performance and promotion. Supervisors should encourage and counsel employees they feel are worthy of promotion. Situations occur where it is difficult or detrimental to promote from within. These include: • need for skills current employees don’t possess • no qualified internal candidates Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

Criteria for Promotion from Within 7 PROMOTION FROM WITHIN Criteria for Promotion from Within SENIORITY Seniority is an easily measured and objective criterion applied to reduce favoritism and discrimination. Advantages: loyalty, abilities, and knowledge improve. Disadvantages: the best employees are not always the most senior; younger employees may have little motivation to perform well. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

Criteria for Promotion from Within 7 PROMOTION FROM WITHIN Criteria for Promotion from Within Merit and ability: Merit refers to the quality of an employee’s job performance. Ability means an employee’s capability or potential to perform, or be trained to perform, a higher-level job. Good supervisory practice attempts to attain a workable balance between the concepts of merit and ability on the one hand, and seniority on the other. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

EFFECTIVE COMPENSATION 8 EFFECTIVE COMPENSATION Wage rates and salary schedules are formulated by higher-level management, human resources departments, union contracts, or government legislation and regulation. Supervisors have major input in determining appropriate compensation for employees. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

EFFECTIVE COMPENSATION Objectives of a compensation 8 EFFECTIVE COMPENSATION Objectives of a compensation program include: Eliminate pay inequities to minimize dissatisfaction and complaints Establish and/or maintain attractive pay rates to attract and retain qualified employees Conduct periodic employee merit ratings to provide the basis for comparative performance rewards Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

The Supervisor’s Role in Compensation Decisions EFFECTIVE COMPENSATION The Supervisor’s Role in Compensation Decisions Every supervisor should make an effort to make higher- level managers aware of serious compensation inequities. How much should an employee’s raise be? Satisfactory performance = recommend normal increase Unsatisfactory performance = suspend increase and discuss this with employee Outstanding performance = recommend higher than average increase if this can be done within the wage structure Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

EFFECTIVE COMPENSATION 8 EFFECTIVE COMPENSATION Employee Incentives Incentive programs include: Piecework Pay for Performance Gain sharing Plan Skill-based Pay Suggestion Plans Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

EFFECTIVE COMPENSATION 8 EFFECTIVE COMPENSATION Employee Incentives The company must clearly define what it wants to reward. Regardless of the incentive plan used, the supervisor must fully comprehend the plan and be able to answer employee questions. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

EFFECTIVE COMPENSATION 8 EFFECTIVE COMPENSATION Employee Benefits Most organizations provide supplementary benefits for employees in addition to monetary compensation H vacations H holidays H health plans Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

EFFECTIVE COMPENSATION 8 EFFECTIVE COMPENSATION Employee Benefits Supervisors must stay informed about the compensation system in their companies and consult human resources or other sources when questions arise. Concerns can arise if feelings of inequity arise in regard to benefits. Be honest and open in communication. Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001

END Chapter 13/Performance Appraisal and Managing the Results: Coaching, Promoting, and Compensating Hilgert & Leonard © 2001