1. Performance Appraisal
Chapter 11

2. Performance Appraisal: Definition And Uses
The process of evaluating and communicating to an employee how well he or she is performing the job
Uses:
Used for making administrative decisions relating to promotions, layoffs, and merit pay increases
Input for determining training needs analysis
Input for making performance improvement
Input to validation of selection procedures
Input to human resource planning
How often to conduct performance appraisals?
It is recommended that informal performance appraisals be conducted two or three times a year in addition to an annual formal performance appraisal
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3. Performance Appraisal Methods
Methods of performance appraisals include
Multi-rater assessment (or 360-degree feedback)
Management by objectives (MBO)
Graphic rating scale
Critical-incident appraisal
Behaviorally anchored rating scale (BARS)
Essay appraisal
Checklist
Forced-choice rating
Ranking methods
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4. Multi-Rater Assessment (or 360-Degree Feedback)
Managers, peers, customers, suppliers, or colleagues are asked to rate the performance of the employee being assessed
Person assessed also evaluate him/herself
Human resources department provides results to the employee, who in turn gets to see how others’ opinions differ from his or her assessment regarding one’s performance
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5. Management by Objectives (MBO)
More commonly used with professional and managerial employees
Consists of
Establishing clear and precisely defined statements of objectives for the work to be done by an employee
Establishing an action plan indicating how these objectives are to be achieved
Allowing employee to implement the action plan
Measuring objective achievement
Taking corrective action when necessary
Establishing new objectives for the future
(Relating appraisal results to salary adjustment)
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6. Management by Objectives (MBO)
For this system to be successful, several requirements must be met
Objectives should be quantifiable and measurable
Objectives whose attainment cannot be measured or at least verified should be avoided
Objectives should also be challenging yet achievable, and they should be expressed in writing and in clear, concise, unambiguous language
Employees participate in objective-setting process
Employee’s active participation is also essential in developing the action plan
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7. Examples of Quantified Objectives
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8. Typical Areas of Supervisory Objectives
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9. Graphic Rating Scale
Requires rater to indicate on a scale where the employees stand on factors such as
Quantity of work
Dependability
Job knowledge
Cooperativeness
Rating scales include both numerical ranges and written descriptions
Potential weakness
Evaluators are unlikely to interpret written descriptions in the same manner due to differences in background, experience, and personality
Choice of rating categories
possible to choose categories that have little relationship to job performance
Omit categories that have a significant influence on job performance
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10. Sample Items on a Graphic Rating Scale
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11. Critical-Incident Appraisal
Rater keeps a written record of incidents that illustrate both positive and negative employee behaviors
Rater then uses these incidents as a basis for evaluating the employee’s performance
Incidents recorded should involve job behaviors illustrating both satisfactory and unsatisfactory performance of employee being rated
Drawback
Rater is required to jot down incidents regularly, which can be burdensome and time-consuming
Definition of a critical incident is unclear and may be interpreted differently by different people
Method may lead to friction between manager and employees when employees believe manager is keeping a “book” on them
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12. Behaviorally Anchored Rating Scale (BARS)
Determines an employee’s level of performance based on whether or not certain specifically described job behaviors are present
Focus of BARS is not on performance outcomes but on functional behaviors demonstrated on the job
Assumption is that these functional behaviors will result in effective job performance
Job dimensions – Means broad categories of duties and responsibilities that make up a job(e.g., customer orientation)
Each job is likely to have several job dimensions, and separate scales must be developed for each
Scale values – Define specific level of performance for a given dimension
Anchors – Specific written statements of actual behaviors that indicate the level of performance on the scale
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13. Behaviorally Anchored Rating Scale (BARS)
Rating performance using a BARS requires
Rater to read list of anchors on each scale to find the group of anchors that best describe the employee’s job behavior during the period being reviewed
Scale value opposite the group of anchors is then checked. Process is followed for all the identified dimensions of the job
Total evaluation combines the scale values checked for all job dimensions
BARSs are normally developed following these steps:
Managers and job incumbents identify relevant job dimensions for the job
Managers and job incumbents write behavioral anchors for each job dimension
As many anchors as possible should be written for each dimension
Managers and job incumbents reach consensus concerning scale values to be used and matching anchor statements for each scale value
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14. Behaviorally Anchored Rating Scale (BARS)
Advantages
BARSs are developed through active participation of both managers and job incumbents
Anchors are developed from observations and experiences of employees who actually perform the job
Increases the likelihood that the method will be accepted
BARSs can be used to provide specific feedback concerning an employee’s job performance
Drawbacks
Takes considerable time and commitment to develop
Separate forms must be developed for different jobs
From a technical point of view, BARS is a graphic rating scale that was developed to help overcome errors in performance appraisals
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15. Example of a Behaviorally Anchored Rating Scale
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16. Essay Appraisal
Rater prepares a written statement describing an individual’s strengths, weaknesses, and past performance
Requires that evaluation describe an employee’s performance in written narrative form
Instructions are often provided as to the topics to be covered
Typical essay appraisal question might be
“Describe, in your own words, this employee’s performance, including quantity and quality of work, job knowledge, and ability to get along with other employees.”
“What are the employee’s strengths and weaknesses?”
Drawback
Their length and content can vary considerably, depending on rater
Essay appraisals are difficult to compare
Writing skill of appraiser can also affect appraisal
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17. Checklist
Rater answers with a yes-or-no series of questions about the behavior of the employee
Checklist can also assign varying weights to each question
Normally, human resource department keeps the scoring key for the checklist method
Evaluator is generally not aware of weights associated with each question
Drawbacks
Raters can see positive or negative connotation of each question, which introduces bias
It is time-consuming to assemble questions for each job category
Separate listing of questions must be developed for each job category
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18. Sample Checklist Questions
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19. Forced-Choice Rating
Requires rater to rank a set of statements describing how an employee carries out the duties and responsibilities of the job
Statements are normally weighted
Rater generally does not know the weights
After rater ranks all the forced-choice statements, human resource department applies weights and computes a score
Attempts to eliminate evaluator bias by forcing rater to rank statements that are seemingly indistinguishable or unrelated
Drawbacks
Been reported to irritate raters, who feel they are not being trusted
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20. Sample Set of Forced-Choice Statements
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21. Ranking Methods
Performance of an employee is ranked relative to the performance of others
More commonly used ranking methods are
Alternation
Paired comparison
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22. Alternation Ranking
Lists names of employees to be rated on the left side of a sheet of paper
Rater chooses most valuable employee on the list, crosses that name off the left-hand list, and puts it at the top of the column on the right-hand side of the paper
Appraiser then selects and crosses off name of least valuable employee from left-hand column and moves it to bottom of right-hand column
Rater repeats this process for all names on the left-hand side of the paper
Resulting list of names in right-hand column gives a ranking of employees from most to least valuable
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23. Paired Comparison Ranking
Best illustrated with an example
Suppose a rater is to evaluate six employees; their names are listed on the left side of a sheet of paper
Evaluator then compares first employee with second employee on a chosen performance criterion, such as quantity of work
If he or she believes the first employee has produced more work than second employee, a check mark is placed by the first employee’s name
Rater then compares the first employee to the third, fourth, fifth, and sixth employee on the same performance criterion, placing a check mark by the name of employee who produced most work in each paired comparison
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24. Paired Comparison Ranking
Process is repeated until each employee has been compared to every other employee on all of the chosen performance criteria
Employee with most check marks is considered to be best performer
Employee with fewest check marks is lowest performer
Drawback
It becomes unwieldy when comparing more than five or six employees
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25. Paired Comparison Ranking (Example)
Employee 1 2 3 4 5 6 #
Marks
Ranking - V

26. Potential Errors In Performance Appraisals
Leniency
Occurs when a manager’s ratings are grouped at the positive end instead of being spread throughout the performance scale
Central tendency
Tendency of a manager to rate most employees’ performance near the middle of the performance scale
Recency
Tendency of a manager to evaluate employees on work performed most recently
Halo effect
Occurs when a rater allows a single prominent characteristic of an employee to influence his or her judgment on other items in the performance appraisal
Results in employee receiving approximately same rating on every item
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27. Overcoming Errors In Performance Appraisals
One approach to overcoming errors is to make refinements in the design of appraisal methods
Forced-distribution method of performance appraisal attempts to overcome errors of leniency and central tendency
Behaviorally anchored rating scales are designed to reduce halo, leniency, and central tendency errors as they provide managers with specific examples of performance
But refining appraisal instruments alone will not totally overcome errors in performance appraisals
Since refined instruments frequently do not overcome all the obstacles
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28. Overcoming Errors In Performance Appraisals
Another approach to overcoming errors is to improve the skills of raters by training
At a minimum, raters should receive training in
Performance appraisal method(s) used by company
Importance of rater’s role in total appraisal process
Errors that can be made commonly in the appraisal
Use of performance appraisal information
Communication skills necessary to provide feedback to employee
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29. Providing Feedback Through the Appraisal Interview
Unless feedback interview is properly conducted, it can and does result in an unpleasant experience for both manager and employee
The manager should remember several basic guidelines in conducting the interview:
Manager must know the employee’s job description
Evaluation must be based on employee’s performance and not on his or her personality
Manager must be positive and build on the employee’s strengths
Manager must be candid and specific
Manager must listen to the employee as well as presenting her or his own views
Manager must elicit employee feedback on how to improve performance
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30. Factors Influencing Success or Failure of Appraisal Interviews
More the employees are allowed to participate in the appraisal process, the more
Satisfied they will be with the appraisal interview
Satisfied they will be with the manager
Likely they will be to accept and meet performance improvement objectives
More a manager uses positive motivational techniques, the more satisfied the employee is likely to be with appraisal interview and with manager
Discussing and solving problems which hampers employee’s current job performance improve employee’s performance
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31. Developing Performance Improvement Plans
Step of drawing up a performance improvement plan in a performance appraisal is often ignored
Performance improvement plan consists of the following components:
Where are we now? (Current status; as-is)
Answered in the performance appraisal process
Where do we want to be? (Objective; to-be)
Requires evaluator and person being evaluated to mutually agree on areas that can and should be improved
How does the employee get from where he or she is now to where he or she wants to be? (Means)
Critical to performance improvement plan
Manager and employee must agree upon specific steps to be taken including training or manager’s help
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