1. Appraising and Managing Performance

2. In This Section…
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
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

3. What is Performance Appraisal?
Evaluating an employee’s current and/or past performance relative to his or her performance standards.
The identification, measurement, and management of human performance in organizations.
Performance Management
The process employers use to make sure employees are working toward organizational goals.

4. Uses of Performance Appraisal
Administrative purposes
Working conditions
Promotions
Termination
Rewards
Developmental purposes
Improving Performance
Strengthening job skills
Providing feedback
Counseling
Training

5. Identifying Performance Dimensions
Defined as an aspect of performance that determines effective job performance
Performance dimensions are defined based on the job and the work itself
Identified based on the job analysis
Performance dimensions help answer the question: “How does someone act and/or behave when s/he does the job well?”
May be further defined through use of competencies
Characteristics associated with successful performance

6. Identifying Performance Dimensions (Cont.)
Examples of Performance Dimensions:
Strong Interpersonal Skills
Customer Service Orientation
Teamwork
Effective Communication
Valuing Diversity
Analysis and Problem-Solving
Decision-Making and Results Orientation
Adaptability
Fostering a Safe and Secure Environment

7. Identifying Performance Dimensions (Cont.)
For dimensions to be an effective means of measuring performance, they must have two characteristics:
Have a clear general definition
Team work might then be defined in terms of competencies
Have well-defined levels of performance at each point along a rating scale.

8. Measuring Performance
administering numbers or labels towards performance is difficult to quantify
Two formats that are most common, legally defensible, and promising are classified by
type of judgment required
(relative or absolute)
focus of the measure
(trait, behavior or outcome)

9. Measurement Tools Type of Judgment Required Relative Judgment:
An appraisal format that asks supervisors to compare an employee’s performance to the performance of other employees doing the same job
Rank order
Grouping
Pros: Forced differentiation
Cons: No absolute rankings and may force differences where none truly exist and create conflict among employees when discussed

10. Measurement Tools (Cont.)
Type of Judgment Required
Absolute Judgment:
An appraisal format that asks supervision to make judgments about an employee’s performance based solely on performance standards.
Pros: Can be more specific, helpful and create less conflict, easier to defend against legal issues
Cons: Different supervisors may have different standards, all employees may get same score if supervisor reluctant to differentiate

11. Measurement Tools (Cont.)
Focus of the Measure – Trait Appraisal Instruments:
Focuses on the person rather than on the performance
Graphic rating scale
A scale that lists a number of traits and a range of performance for each that is used to identify the score that best describes an employee’s level of performance for each trait.
Example: Reliability 1 (very low) to 5 (very high)
Pros: We are good at it
Cons: Legal Concerns because traits can be ambiguous and focus is on person, not conducive to performance development

12. Measurement Tools (Cont.)
Focus of the Measure – Behavioral Appraisal Combines traditional rating scales and critical incidents methods
Job behaviors derived from critical incidents described more objectively
Pros – Legally defensible and provides specific examples of behavior to engage in
Cons - Can be time consuming to create and behavior ‘may’ occur

13. Measurement Tools (Cont.)
Focus of the Measure – Behavioral Appraisal Behaviorally Anchored Rating Scale (BARS)
An appraisal method that uses quantified scale with specific narrative examples of good and poor performance.
Developing a BARS:
Generate critical incidents
Develop performance dimensions
Reallocate incidents
Scale the incidents
Develop a final instrument

14. Measurement Tools (Cont.)
Focus of the Measure – Outcome Appraisal Instrument (Management by Objectives MBO)
Involves setting specific measurable goals with each employee and then periodically reviewing the progress
Set the organization’s goals.
Set departmental goals.
Discuss departmental goals.
Define expected results (set individual goals).
Performance reviews.
Provide feedback.
Pros: tied to organizational strategy, unambiguous
Cons: may develop results at any cost mentality

15. Who Does the Appraisals?
Self Reviews
Peer Reviews
Subordinate Reviews
360-degree feedback
Customers

16. Who Does the Appraisals? (Cont.)
360 Degree Feedback:
Multi-rater evaluation
Input from multiple levels with firm and external sources
Focuses on skills needed across organizational boundaries
More objective measure of performance
Process more legally defensible
360 Degree Feedback

17. Challenges to Effective Performance Measurement
Rater Errors
An error in performance appraisals that reflects consistent biases on the part of the rater
Frame-of-reference (FOR) training can help combat this problem

18. Challenges to Effective Performance Measurement (Cont.)
Rater Errors and Bias:
Lack of objectivity
Halo error
Restriction of range errors:
Leniency errors
Central tendency errors
Severity errors
Recent behavior bias
Personal bias – conscious or unconscious

19. Challenges to Effective Performance Measurement (Cont.)
Rater Errors and Bias – Why a Supervisor May Inflate or Lower Rates:
Believe accurate ratings would have a damaging effect on subordinate’s motivation and performance.
Improve employee’s eligibility for merit raises.
Avoid airing department’s “dirty laundry.”
Avoid creating negative permanent record that might haunt employee in the future.
Protect good workers whose performance suffered because of personal problems.
Reward employees displaying great effort even when results were relatively low.

20. Challenges to Effective Performance Measurement (Cont.)
Rater Errors and Bias – Why a Supervisor May Inflate or Lower Rates (Cont.):
Avoid confrontation with hard-to-manage employees.
Promote a poor or disliked employee up and out of the department.
Scare better performance out of an employee.
Punish a difficult or rebellious employee.
Encourage a problem employee to quit.
Create a strong record to justify a planned firing.
Minimize the amount of merit increase a subordinate receives.
Comply with an organizational edict that discourages managers from giving high ratings.

21. Challenges to Effective Performance Measurement (Cont.)
Rater Errors
The Influence of Liking
Precautions
Accurate record keeping - journals
Individual or Group Focus
Organizational Politics

22. Challenges to Effective Performance Measurement (Cont.)
Legal Issues
Factors influencing judges’ decisions in cases involving performance appraisals
Use of job analysis
Providing written instructions
Allowing employees to review appraisal results
Agreement among multiple raters
The presence of rater training

23. Managing Performance
Because formal appraisal interviews typically are conducted only once a year, they may not always have a substantial and lasting impact on worker performance. Supervisors who manage performance effectively generally share four characteristics.
Exploring the causes of performance problems
Directing attention to the causes of problems
Developing an action plan and empowering workers to reach a solution
Directing communication at performance & provide effective feedback

24. Managing Performance (Cont.)
Communication in Performance Appraisals uses…
Direct eye contact
Active listening
Open - ended questions
Paraphrasing to clarify
Empathy and sensitivity

25. Managing Performance (Cont.)
Causes of Worker Performance Problems:
Ability
Motivation
Situational or system factors

26. Managing Performance (Cont.)
Situational or System Factors:
Poor coordination of work activities
Inadequate information or instructions
Low-quality materials
Lack of necessary resources
Poor supervision
Poor interpersonal communication
Inadequate training
Insufficient time to produce
Poor work environment (cold, noisy)

27. Identify and Correct Ability Problems
Has the worker ever been able to perform adequately?
Can others perform the job adequately, but not this worker?
Train Transfer Redesign job Terminate

28. Identify and Correct Motivation Problems
Is the worker’s performance level declining?
Is performance lower on all tasks?
Clarify linkage between performance and rewards
Recognize and reward good performance

29. Identify and Correct Situational Problems
Do performance problems exist in all workers,
even those with proper supplies / equipment?
Streamline work process
Clarify needs to suppliers
Change suppliers
Eliminate conflicting signals or demands
Provide adequate tools