1. Performance Appraisals
Chapter 11
Performance Appraisals
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2. Learning Objectives
Role of performance appraisals in compensation decisions
Strategies for better understanding and measuring job performance
Putting it all Together: The performance evaluation process
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3. Learning Objectives
Equal employment opportunity and performance evaluation
Tying pay to subjectively appraised performance
Promotional increases as a pay-for-performance tool
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4. The Role of Performance Appraisals in Compensation Decisions
Used for organizational decisions
Performance ratings are influenced by:
Employee behaviors observed by raters
Organization values
Competition among departments
Inter-departmental status differences
Economic conditions
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5. The Role of Performance Appraisals in Compensation Decisions
Drawbacks of appraisal
Are too subjective
Possibility of unfair treatment by supervisor
Ways to improve performance appraisal
Recognize the influence of work environment and system on performance
Identify strategies for measuring job performance better
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6. Strategies to Better Understand and Measure Job Performance
Define job performance
What exactly should be measured
Determine counterproductive performance
Based on negative employee behavior
Focus on performance dimensions of:
Planning and organizing
Training and coaching
Developing subordinates and technical proficiency
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7. Strategies to Better Understand and Measure Job Performance
Balance score card approach
Determines what contributes value in an organization
Success depends on satisfied:
Customers
Employees
Measures four dimensions
Customer satisfaction
Employee internal growth and commitment
Operational efficiency in internal processes
Financial measures
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8. Strategies to Better Understand and Measure Job Performance
Improve appraisal formats
Select the right raters
Understand how raters process information
Training raters to rate more accurately
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9. Improve Appraisal Formats
Ranking format: Raters compare employees against each other to:
Determine the relative ordering of the group on some performance measure
Straight ranking: Employees are ranked relative to each other
Alternation ranking: Raters are asked to indicate the best and worst employee
Paired-comparison ranking: Raters to make ranking judgments about discrete pairs of people
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10. Improve Appraisal Formats
Rating formats
Require raters to evaluate employees on some absolute standard
Each performance standard is measured on a scale
Standard rating scale: Adjectives are used as anchors
Behaviorally anchored rating scales (BARS): Behaviors are used as descriptors
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11. Exhibit 11.2 - Rating Scale Using Absolute Standards
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12. Exhibit 11.3 - Standard Rating Scale with Behavioral Scale Anchors
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13. Exhibit 11.3 - Standard Rating Scale with Behavioral Scale Anchors
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14. Improve Appraisal Formats
Management by objectives (MBO)
A planning and an appraisal tool
Organization objectives are identified:
From the strategic plan of the company
Such that they support attainment of organizational goals
Essay format: Supervisors describe employee performance:
In essay form
By answering open- ended questions
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15. Exhibit 11.6 - Components of a Successful MBO Program
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16. Exhibit 11.7 - An Evaluation of Performance Appraisal Formats
Employee
Development
Criterion
Administration Criterion
Personnel Research Criterion
Economic Criterion
Validity Criterion
Ranking
Poor
Average
Good
Standard
rating scales
Behaviorally
anchored
Management
by objectives
Excellent
Essay
Unknown
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17. Evaluating Performance Appraisal Formats
Five dimensions
Employee development potential
Administrative ease
Personnel research potential
Cost
Validity
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18. Select the Right Raters
360-degree feedback
Assesses employee performance from points of view of:
Supervisor, peer, self, customer, subordinate
Improves employee understanding and self-awareness
Promotes communication and better performance
Supervisors as raters
Have prior experience in rating employees
Have idea about expected level of performance
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19. Select the Right Raters
Peers as raters
Work more closely with the ratee
Have an undistorted perspective of typical performance
Self as rater
Generally more lenient and possibly more unreliable
Enables realistic assessment
Customer as rater
Result of recognizing the importance of customers
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20. Select the Right Raters
Subordinate as rater - Allows seniors to:
Know how they are viewed by their subordinates
See their strengths and their weaknesses as a leader and modify their behavior
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21. Understand How Raters Process Information
The rater
Observes the behavior of a ratee
Encodes ratee behavior
Stores information in memory
When evaluating a ratee:
Review performance dimensions
Retrieve stored observations to determine relevance of performance dimensions
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22. Common Errors in Appraising Performance
Errors in observation (attention)
Errors in storage and recall
Errors in the actual evaluation
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23. Exhibit 11.9 - Common Errors in the Appraisal Process
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24. Common Errors in Appraising Performance
Factors that lead raters to give inaccurate appraisals:
Guilt
Embarrassment about giving praise
Taking things for granted
Not noticing good or poor performance
The halo effect
Dislike of confrontation
Spending too little time on preparation of the appraisal
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25. Training Raters to Rate More Accurately
Rater-error training
Reduces psychometric errors by familiarizing raters with their existence
Performance-dimension training
Exposes supervisors to the performance dimensions to be used in rating
Performance-standard training
Provides raters with a standard or frame of reference for making appraisals
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26. Generalizations About Ways to Improve Rater Training
Straightforward lecturing to ratees is ineffective
Individualized or small group discussions are more effective
Extensive practice and feedback significantly improves rating accuracy
Longer training programs are more successful
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27. Generalizations About Ways to Improve Rater Training
Combining performance-dimension and performance-standard training
Is more effective than rater-error training
Success results from reducing halo errors and improving accuracy
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28. The Performance Evaluation Process
Provides a sound basis for establishing
Performance appraisal dimensions and scales associated with each dimension
Involves employees
Ensure that:
Raters are trained in use of appraisal system and motivated to rate accurately
All employees understand how the system operates
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29. The Performance Evaluation Process
Raters should maintain a diary of employee performance
Raters should attempt a performance diagnosis to:
Determine in advance if performance problems arise because of:
Motivation, skill deficiency, or external environmental constraints
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30. Preparation for the Performance Interview
Keep a weekly log of individual’s performance
Provide continual feedback to the employee on his or her performance
Allow sufficient time to write up the evaluation
Have employees fill appraisal form
Set up an agreed-upon, convenient time to hold the interview
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31. Preparation for the Performance Interview
Be prepared
Arrange the room in such a way as to encourage discussion
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32. Performance Appraisal Steps
Set the subordinate at ease
Give a general, overall impression of the evaluation
Discuss each dimension separately
Develop action plans to correct problem areas
Close the interview on an optimistic note
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33. Equal Employment Opportunity and Performance Evaluation
Key Issues: Establishing a Performance Appraisal System 1
Provide specific written instructions on how to complete appraisal 2
Incorporate clear criteria for evaluating performance - Performance dimensions should be written, objective, and clear 3
Provide a rational foundation for personnel decisions via adequately developed job descriptions 4
Require supervisors to provide feedback about appraisal results to employees 5
Incorporate a review of performance ratings by higher level supervisors 6
Consistent treatment across raters, regardless of race, color, religion, sex, and national origin should be evident
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34. Tying Pay to Subjectively Appraised Performance
Pay increase guidelines with low-motivation potential provide:
Equal increases to all employees regardless of performance
General increase
Cost-of-living adjustments
Seniority increases
Pay increases based on a preset progression pattern based on seniority
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35. Tying Pay to Subjectively Appraised Performance
Tying pay to performance requires:
Defining performance on basis of
Behaviors, competencies, and traits
A continuum that describes different levels on the performance measure
Deciding how much of a merit increase will be given for different levels
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36. Exhibit 11.11 - Performance-based Guidelines
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37. Designing Merit Guidelines
Four Questions . . . 1
What should the poorest performer be paid as an increase? 2
How much should average performers be paid as an increase? 3
How much should top performers be paid? 4
What should be the size of the percentage increase differential between different levels of performance?
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38. Promotional Increases as a Pay-for-Performance Tool
Effective method of rewarding good performance
Promotion accompanied by a salary increase - 8 to 12%
Characteristics of promotional pay increases
Size of increment is approximately double a normal merit increase
Reward employees for commitment and exemplary performance
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