Performance Appraisal—An Important Component of Performance Management Dessler, Cole, Goodman and Sutherland Fundamentals of Human Resources Management in Canada 7 Chapter Seven Performance Appraisal—An Important Component of Performance Management © 2004 Pearson Education Canada Inc., Toronto, Ontario 7-1

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

The Performance Appraisal Process Why Should Performance Be Appraised? 1. Provides information for promotion and salary decisions 2. Provides opportunity for reinforcement and/or corrective action regarding performance 3. Provides opportunity to review career plans

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 job description often insufficient to clarify performance expectations measurable standards should be developed for each position

Step 2: Appraisal Methods—Who, How 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 and Solutions Validity and Reliability validity reliability unclear standards

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

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

Performance Appraisal: Problems and Solutions Avoiding Appraisal Problems 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—The 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 Prepare for the Appraisal Interview assemble the data prepare the employee choose the time and place

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 should be the bedrock of a performance appraisal accurate feedback is based on human rights legislation prohibitions