1. Performance Appraisal Basics
MANA 4328
Dr. George Benson 1

2. Why Conduct Performance Appraisals?

3. Developing an Appraisal System
GOAL SETTING
What type of work is examined?
Who sets the goals?
How difficult are the goals?
Team vs. individual goals?
What is measured?
TYPE OF APPRAISAL
What rating scale is used?
Includes a self-appraisal?
360 degree feedback?
Uses a forced ranking system?
ADMINISTRATION
How often?
Who conducts appraisals?
How frequent is feedback?
Is there an appeal process?
PERFORMANCE AND PAY
Tied to rewards?
Linked to development?
How are the results used?

4. Legal Issues Appraisal systems are more defensible if they:
Are based on job analysis (Validity)
Are consistent among multiple raters (Reliability)
Provide written instructions
Allow employees to review appraisal results
Train appraisers in the use of the system
The legal implications of an employee’s performance appraisal have become a major concern for managers. Shown here are five factors that have been shown to help defend the results of an appraisal in court.

5. Challenges for Performance Measurement
Rater errors and bias
Halo
Contrast effects
Range restriction / Central tendency
The influence of liking
Organizational politics
Rater errors can be addressed by training
Each appraisal format has both positive and negative aspects. Most appraisal systems were developed on the premise that companies could reduce or eliminate rater errors by using the right appraisal format. However, rating formats make little difference in the actual ratings that are obtained. So, how can managers ensure accurate measurement of worker performance? The primary means is to understand the barriers that stand in the way. Shown here are five of the most important challenges in this area.

6. Appraisal Forms Trait Behavior Results / Outcomes Global / Essay
“Least important elements of the appraisal process”
Appraisal forms are most often contain various styles
Performance focused vs. situation focused appraisal
Approaches to Appraisal Forms
Trait
Behavior
Results / Outcomes
Global / Essay

7. Trait-Based Appraisals
Characteristics that are enduring and general
e.g. “Leadership” “Communication” “Decisiveness”
Competency models vs. Trait-based appraisal
Are the characteristics really related to performance?
Potential Problems
Focus on person rather than performance
May be ambiguous or arbitrary
Poor feedback and goal setting
Poor reliability and validity

8. “An employer has no business with a man’s personality
“An employer has no business with a man’s personality. Employment is a specific contract calling for specific performance and nothing else. Any attempt of an employer to go beyond this is usurpation. It is an abuse of power. An employee owes no “loyalty,” he owes no “love,” and no “attitudes” – he owes performance and nothing else.”
Peter Drucker
Management Tasks, Responsibilities, Practices (1974)

9. Behavior-Based Appraisal
Focus on specific behaviors with examples
Behavioral Frequency / Observation Scale (BOS)
Behaviorally Anchored Rating Scales (BARS)
Positives
More valid and reliable
Acceptable to employees
Better for development and improvement

10. Developing Behavioral Scales
Identify critical incidents and behaviors
Sort similar behaviors into dimensions
Validate sorting
Collect data on relationship between behavior and performance
Assign a rating scale
Validate the scale

11. Behavior-Based Appraisal
Potential Problems
Difficult and expensive to develop
Needs to match jobs closely to be effective
Behaviors may be hard to develop and interpret
Emphasizes behaviors (at the expense of others?)
Focuses on behavior rather than results
May be no more reliable and valid than simple scale
Process of developing the rating system is more important than the system itself.

12. Results-Based Appraisal
Uses future results as performance targets
Challenge is setting goals and measures
Can the goals be quantified?
Unique goals for every individual
Appraisal forms tend to be very simple
Still need a rating scale

13. Results-Based Appraisal
Focus on results compared to specific goals
Should be clear and unambiguous
Requires alignment of expectations
May promote gaming of the system
Beware of results at any cost and excessive results orientation
Time consuming and needs constant updating

14. How to Judge Appraisal Types
Leads to desired behaviors
Minimizes negative behaviors
Reliability and validity
Perceived fairness (rater and employee)
Performance improvement and employee development
Flexibility and administrative cost

15. Comparison of Appraisal Forms
Ease of Use
Employee Development
Legal Defensibility
Traits
High
Low
Behaviors
Medium
Outcomes

16. Performance Diagnosis