1. Performance Appraisals
Chapter 11

2. Nature of Performance Appraisals
You can’t manage what you don’t understand
You don’t understand what you don’t measure
What gets measured is what gets done
What gets measured is what gets rewarded
What gets rewarded is what gets repeated

3. The Role of Performance Appraisals in Compensation Decisions
Employees often frustrated about the appraisal process
Appraisals are too subjective
Possibility of unfair treatment by a supervisor
Experts argue that rather than throwing out the entire performance appraisal process, total-quality-management principles should be applied to improving it
Recognize part of performance influenced more by work environment and systems than by ee behaviors

4. Exhibit 11.1: Common Errors in the Appraisal Process

5. Exhibit 11.2: Ratings of Managers

6. Strategies to Better Understand and Measure Job Performance
Clearly define job performance
Recognize definition of performance and its components is expanding
Improve appraisal formats
Select the right raters
Understand way raters process information and mistakes that may be made
Train raters to improve rating skills

7. Categories of Appraisal Formats
Ranking - Rater compares employees against each other
Categories
Rating - Rater evaluates employees on some absolute standard (measured on a continuum scale)
Essay - Rater answers open-ended questions in essay form describing employee performance

8. Ranking Formats Straight ranking Alternation ranking
Paired-comparison ranking
See Ex. 11.3

9. Rating Formats Two common elements
Raters evaluate employees on some absolute standard
Each standard is measured on a scale -performance variation is described along a continuum

10. Rating Formats (cont.) Types of descriptors Adjectives Behaviors
Standard rating scale (Ex. 11.4)
Behaviors
Behaviorally anchored rating scales (Ex. 11.5)
Outcomes
Management by objectives (Ex. 11.7, 11.8)

11. Exhibit 11.9: Usage of Performance Evaluation Formats

12. Exhibit 11.10: An Evaluation of Performance Appraisal Formats

13. Training Raters to Rate More Accurately
Rater-error training
Goal is to reduce psychometric errors by familiarizing raters with their existence
Performance-dimension training
Exposes supervisors to performance dimensions used
Performance-standard training
Provides raters with a standard or frame of reference for making appraisal

14. Ways to Improve Rater Training
Straightforward lecturing to ratees is ineffective
Individualized or small group discussions more effective
When sessions are combined with extensive practice and feedback, rating accuracy improves
Longer training programs are generally more successful than shorter programs
Performance-dimension and performance-standard training more effective than rater-error training
Success results from efforts to reduce halo errors and improve accuracy

15. Putting it All Together: The Performance Appraisal Process
Need a sound basis for establishing performance appraisal dimensions and scales associated with each dimension
Need to involve employees in every stage of developing performance dimensions and building scales
Need to ensure raters are trained in use of appraisal system and that all employees understand how system operates

16. Putting it All Together: The Performance Appraisal Process (cont.)
Need to ensure raters are motivated to rate accurately
Raters should maintain a diary of employee performance
Raters should attempt a performance diagnosis to determine if performance problems exist

17. Exhibit 11.11: Tips on Appraising Employee Performance

18. Exhibit 11.11: Tips on Appraising Employee Performance (con’t)

19. EEO 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

20. Tying Pay to Subjectively Appraised Performance
How do we get employees to view raises as a reward for performance?
Central issue involving merit pay

21. Pay Increase Guidelines with Low Motivational Impact
Provide equal increases to all employees regardless of performance
General increase
Cost-of-living adjustments
Pay increases based on a preset progression pattern based on seniority

22. Requirements to Link Pay to Performance
Define performance
Behaviors
Competencies
Traits
Specify a continuum describing different levels from low to high on performance measure
Decide how much of a merit increase is given for different levels of performance

23. Exhibit 11.12: Performance-based Guidelines

24. 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?

25. Exhibit 11.14: Merit Pay Grid

26. Promotional Increases as a Pay-for-Performance Tool
Promotion should be accompanied by a salary increase - 8 to 12%
Characteristics of promotional pay increases
Size of increment is approximately double a normal merit increase
Represent a reward to employees for commitment and exemplary performance