Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Chapter 7 Appraising and Managing Performance 7-1

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-2 Chapter 7 Objectives  Explain why performance appraisal is important and describe its components.  Discuss the advantages and disadvantages of different performance rating systems.  Manage the impact of rating errors and bias on performance appraisals.

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-3 Chapter 7 Objectives  Discuss the potential role of emotion in performance appraisal and how to manage its impact.  Identify the major legal requirements for appraisal.  Use performance appraisals to manage and develop employee performance.

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-4 What is Performance Appraisal?

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-5 Uses of Performance Appraisals  Administrative purposes  Developmental purpose

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-6 Identification  Dimension—aspect of performance  Determines effective job performance  Should be based on job analysis  E.g. quality, quantity, and interpersonal skills  Competencies  Increasingly popular basis for performance appraisal dimensions

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-7 Measurement: Type of Judgment  Relative judgment appraisal format  Supervisors compare employees to each other  Rank employees in a work area  May not know actual performance levels  Absolute judgment appraisal format  Supervisors make judgments about workers  Performance based standards  Easier to defend in court

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-8 Measurement: Focus of Measure  Trait appraisal instruments  Focus is on individual, not performance  Subject to perceptual biases  Behavioral appraisal instruments  Assess worker’s behaviors  BARS (see Figure 7.7, p. 219)  Outcome appraisal instruments  Focus on specific outcomes  MBO and Naturally Occurring outcomes

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-9 Measurement Tools

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-10 Measurement  Person doing rating determines accuracy  Tool used less important  Most ratings “top-down”  Also have:  Self-rating  Peer review  Subordinate review  Customer review  360  feedback

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-11 Measurement Pitfalls and Challenges  Rater errors - r eflect underlying biases by the rater  Halo effect  Range restriction  Personal bias  Comparability  Frame-of-reference (FOR) training  Scenarios, role-playing, etc.  To “calibrate” raters to same standards

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-12 Measurement Pitfalls and Challenges  Precautions  Keep records, regularly  Reflect behavior, not opinions  If problem exists, address it immediately  Organizational Politics  Worker’s appraisal depends on supervisor’s goals  Most feel appraisals are political  “Liking”—influence of personal feelings

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-13 Measurement: Groups & Teams  Assess both group and individual contributions  Use behavioral measures for individuals  Develop individual measures with team input  Keep team measurements balanced  Financial outcomes are good, but not the only measures  Look at both outcome and process measures

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-14 Measurement: Legal Issues  Anti-discrimination laws apply to performance appraisals  Factors influencing judges’ decisions:  Use of job analysis  Providing written instructions  Allow employees to review appraisal results  Agreement among multiple raters  Presence of rater training

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-15 Managing Performance  The Appraisal Interview  Helpful or Dreadful?  Salary Discussion?

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-16 Performance Improvement  Performance from:  Ability, motivation and situation factors  Performance management should be an ongoing, day-to-day process  When problems arise, explore causes  Including situational or system factors  Fundamental Attribution Error (Actor/Observer Bias)

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-17 Managing Performance: Effective Managers  Recognize two roles: Judge and Coach  Four characteristics of effective managers  Direct attention to cause of problem  Develop action plan  Empower workers to reach a solution  Direct communication at performance  Provide effective feedback  Be as specific as possible

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-18 How to Determine and Remedy Shortfalls

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-19 Summary and Conclusions  Performance appraisals should be future oriented  Identify the dimensions of the job that determine effective performance  Rating quality function of raters  Thus, train the raters  Recognize and avoid rating biases  Provide useful feedback  Don’t save “laundry list” for annual appraisal  Manage performance regularly

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-20 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.