Chapter 8 Performance Appraisals and Retention HFT 2220 Chapter 8 Performance Appraisals and Retention

What is a Performance Appraisal? A meeting held between a manager and employee for the purpose of evaluating the performance, behaviors, knowledge and skills of the employee

Purposes for Performance Appraisals Assess quality of job performance Provide feedback regarding job performance Plan future performance goals and objectives Improve job performance through recognition and coaching Establish a better knowledge of the employee to understand what motivates them Document unsatisfactory performance Serve as the basis for compensation changes

Relationship to Performance Performance defined in company standards Defines accountability Evaluate effectiveness of training programs

Relationship to Communication Feedback: information provided by the manager to the employee during a performance appraisal. Helps to prevent misunderstandings when performance standards are communicated to employees who are held accountable

Relationship to Development Identify employees who need additional training or are ready to move up Provide effective employee guidance and career counseling Helps measure predictive validity – the extent to which management predicts future behavior

Relationship to Training Helps management evaluate training programs Allows managers to discuss good and/or bad points of training programs with employees

Relationship to Compensation Long used as basis for increases in compensation. Make sure criteria are based on measurable outcomes based on the current job

Judge versus Coach Development appraisal Coaching. Manager and employee agree on training and development agenda Performance appraisal (evaluation) Judge. Manager provides employee with information on their success or failures in the organization

Performance Appraisals Should be based on previously established goals which should always be Logical Specific Realistic Measurable Time Sensitive Results Oriented Mutually Acceptable

Appraisal Document Basic information Name Date Job position Date of the interview Who is conducting the interview

Subjectivity/Objectivity Subjective rating systems not illegal but must be applied equally Cannot misuse objective information Retroactive documentation illegal Criticism cannot be Extreme and outrageous Intentionally reckless Intended to cause emotional distress Any distress to the criticized employee is not severe

Criteria for Performance Appraisals Construct validity Must measure what they claim to measure Content validity Must measure the entire issue Inter-rater validity More than one appraiser Consistency All instances, not just one or two points in time

Methods of Appraising Performance Critical incident Capture and record incidents Behaviorally Anchored Ratings Scales (BARS) Rating system based on specific behaviors Competency approach Focuses on knowledge and sets of skills 360 Degree appraisals Provide feedback from multiple sources

Mistakes to Avoid in Performance Appraisals Halo Errors Positive Negative – Horn error Bias Recency Bias Past anchoring errors Courts have held the appraisals are free from bias if they meet the requirements of Title VII

Other Mistakes to Avoid Attractiveness Personalities Employee backgrounds Lacking clear standards of evaluation Managers can’t or don’t observe employee adequately Comparing one employee to another Bureaucratic – more interested in regulations and legal protection than being honest

Appraisals and the Law Appraisals must not be discriminatory Key issues must be Job relatedness Objectivity Should be based on content and due process issues

Content (Job Related) Issues Performance standards must be based on analysis of job requirements Based on specific dimensions of the job Standards should be objective and observable Ratings should be documented Validity of appraisers ratings should be assessed

Due Process Issues Standards must be communicated and understood by the employee Specific appraisal instructions should be put in writing Use more than one appraiser if possible Review results Establish legitimate, formal appeal procedures

Retention Programs Aimed at decreasing turnover The rate at which employees leave a company Turnover costs – Tangible and intangible Tangible – Out of pocket expenses. Separation costs Replacement costs Training costs Intangible – Do not relate to out of pocket expenses Managerial time Lost productivity Morale

Decreasing Turnover Hire the right people Make sure the job fits the employee Meaningful new hire orientation Effective training Set clear expectations Dignity and respect Review compensation and benefit packages Improve quality of work life Sense of community