1. Performance Management and Performance Appraisal
Chapter 9

2. Basic Concepts in Appraisal
Performance appraisal
Evaluating an employee’s current and/or past performance relative to his or her performance standards.

3. Why Performance Appraisal?
Appraisals affect the employer’s salary raise and promotion decisions.
Appraisals help in planning for correcting deficiencies and reinforce things done correctly.
Appraisals, in identifying employee strengths and weaknesses, are useful for career planning.
Appraisals play an integral role in the employer’s performance management process.

4. How to Appraise Performance?
Performance appraisal always involves:
Setting work standard (e.g. producing 10 contracts per week)
Assessing/appraising employees’ actual performance relative to standards
Providing feedback to the employees on the performance

5. Defining Work Standards and Work Efforts
2 Choices
Use generic criteria (e.g. quality of work, teamwork, communication)
Use a specific standard or duty (e.g. produce 10 new contracts per week, add 100 new customers next year)
SMART goals are:
Specific: clearly state the desired results.
Measurable: try to express the goals in numbers
Attainable/ Achievable: Assign challenging but doable goals.
Relevant: Goals should be aligned with actual jobs.
Timely: in reflecting deadlines and milestones.

6. Assessing Performance
Ask two basic questions-
What to measure?
Look into the standards
Example, quality of work, quantity of work, effectiveness teamwork, communication and know-how
2. How to measure?
- Look into the appraisal methods

7. Appraisal Methods Graphic Rating Scale Method
It is the simplest and most popular method
It lists traits (e.g. quality of work, quantity of work, efficiency, teamwork, communication, leadership) and a range of performance values (from “unsatisfactory” to “outstanding” or “below expectations” to “role model”) for each trait.

8. Graphic Rating Scale

9. Graphic Rating Scale (cont.)

10. Graphic Scale Rating: for Specific Dimensions
Position: Chef
Duty: Maintain adequate Rating
Inventory of pizza dough
Description:
Each round pizza dough must Needs improvement Satisfactory Excellent
be between 12 and 14 ounces
Each, kneaded at least 2
Minutes before being placed
in the temperature and humidity
cooler, And kept there for at
least 5 hours prior to use.

11. Alteration Ranking Method
This method involves ranking employees from best to worst on traits
Since it is easier to distinguish between the worst and best employees, an alteration method is quite popular
For the trait you are measuring, list all the employees you want to rank
On a form, indicate the employees who is the highest on the characteristics being measured and the one who is the lowest

12. Alternation Ranking Scale

13. Paired Comparison Method
It helps make the ranking method more accurate
Ranking employees by making a chart of all possible pairs of the employees for each trait and indicating which is the better employee of the pair.

14. Paired Comparison Method (cont.)
Note: + means “better than.” − means “worse than.” For each chart, add up the number of 1’s in each column to get the highest-ranked employee.

15. Performance Appraisal Methods (cont.)
Forced distribution method
Similar to grading on a curve;
predetermined percentages of ratees are placed in various performance categories
Example:
Top 20% (high performers)
Middle 70% (average performers)
Bottom 10% (low performers)

16. Performance Appraisal Methods (cont.)
Sun Microsystems force-ranks its 43,000 employees.
Managers appraise employees in groups of 30
Those of bottom 10% of each group get 90 days to improve
If they are still in the bottom 10%, they can resign and take dismissal pay
Some prefer to resign and some stay
Those who stay must perform and if they fail, the firm fires them without dismissal

17. We are done with part one! More methods will be covered next week.
Thank you!

18. Critical Incident Method
With this method, an appraiser involves keeping the record of positive and negative examples or incidents of subordinates’ work-related performance
Ideally, every 6 months the appraiser and subordinate meet to discuss the latter’s performance, using the incidents as example

19. Examples of Critical Incidents for an Assistant Plant Manager

20. Pros and Cons of Critical Incident Method
Compiling incidents will provide the good and bad examples of performance
It makes the supervisor think think about the subordinates’ appraisal all during the year
The examples show the subordinates what can de done to remove performance deficiencies
Cons
No use of numerical rating
It is not possible to compare between employees due to lack of numerical rating
It is not possible to take salary decision as well

21. Performance Appraisal Methods (cont’d)
Behaviorally anchored rating scale (BARS)
An appraisal method that anchors a numerical rating scale with specific narrative examples of good and poor performance.
Developing a BARS:
1. Generate critical incidents
2. Develop performance dimensions
3. Reallocate incidents/ verify the findings
4. Scale the incidents
5. Develop a final instrument

22. Example
3 researchers developed a BAR for grocery checkout clerks. They collected many critical incidents, and then grouped them into eight performance dimensions such as 1. Salesmanship skills 2. Conscientiousness 3. Skills in Human Relations 4. Skill in Operation of Register 5. Skill in Bagging 6. Organizational Ability of Check-stand Work 7. Skill in Monetary Transactions 8. Observational Ability

24. Performance Appraisal Methods (cont’d)
Advantages of using a BARS
A more accurate measurement
Clearer standards
Feedback
Independent dimensions
Consistency

25. Management by Objectives (MBO)
Involves setting specific measurable goals with each employee and then periodically reviewing the progress made.
Set the organization’s goals.
Set departmental goals.
Discuss departmental goals.
Define expected results (set individual goals).
Performance reviews.
Provide feedback.

26. Computerized and Web-Based Performance Appraisal
Performance appraisal software programs
Keep notes on subordinates during the year.
Electronically rate employees on a series of performance traits.
Generate written text to support each part of the appraisal.

27. Potential Rating Scale Appraisal Problems
Unclear standards
An appraisal that is too open to interpretation
Note: For example, what exactly is meant by “good,” “quantity of work,” and so forth?

28. Clearly Defining the Standards

29. Potential Rating Scale Appraisal Problems (cont.)
Halo effect
Occurs when a supervisor’s rating of a subordinate on one trait biases the rating of that person on other traits
Central tendency
A tendency to rate all employees the same way, such as rating them all average

30. Potential Rating Scale Appraisal Problems (cont’d)
Strictness/leniency
The problem that occurs when a supervisor has a tendency to rate all subordinates either high or low.
Bias
The tendency to allow individual differences such as age, race, and sex to affect the appraisal ratings employees receive.

31. How to Avoid Appraisal Problems
Learn and understand the potential problems, and the solutions for each.
Use the right appraisal tool and consider the pros and cons of individual tools
Train supervisors to reduce rating errors such as halo, leniency, and central tendency
Have raters compile positive and negative critical incidents as they occur (keep a diary)
Every appraisal you give as a supervisor should be fair

32. Advantages and Disadvantages of Appraisal Tools

33. Who Should Do the Appraising?
The immediate supervisor
Peers
Rating committees
Self-ratings
Subordinates

34. Feedback System 360-degree feedback
Ratings are collected “all around” an employee
A multi-source rating system in which an employee receives feedback peers, bosses or supervisors, subordinates, peers and internal and external customers
540-degree feedback
540-degree includes more raters or sources of feedback
Employees receive feedback from peers, subordinates, bosses, customers and, also from suppliers and distributors

35. Performance Management
Performance management is the continuous process of identifying, measuring and developing performance of individuals and teams and aligning their performance with the organization’s goals

36. Performance Management Versus Performance Appraisal
Performance appraisal involves reviewing the performance of the employees once or twice a year
Performance management means continuous, daily or weekly interactions and feedback to ensure continuous improvement
Performance appraisal only involves measuring or evaluating the performance
Performance management is always goal directed. The performance reviews always involve comparing the employee’s or team’s performance against goals
Performance appraisal evaluate the performance but doesn’t take the corrective action
Performance management continuously reevaluate the performance and take the corrective actions

37. Basic Building Blocks of Performance Management
Direction Sharing
Communicating the company’s higher levels goals (including its vision, mission and strategy)
Translate the goals into achievable department, team and individual goals
Goal alignment
It means having a process establishing a process that enable the managers to see the link between an employee’s goals and his organizational and departmental goals

38. Basic Building Blocks of Performance Management
Ongoing feedback
It means face-to-face or computerized feedback regarding progress toward goal
Coaching and development support
It should be an integral part of the feedback system
Reward, recognition and compensation
Reward and compensate those who play a role in providing the consequences needed to keep the employee’s goal-directed performance on track

39. Key Terms Used throughout the Session
performance appraisal
performance management
graphic rating scale
alternation ranking method
paired comparison method
forced distribution method
critical incident method
behaviorally anchored rating scale (BARS)
management by objectives (MBO)
electronic performance monitoring (EPM)
unclear standards
halo effect
central tendency
strictness/leniency
bias
appraisal interview

40. Thank You!