1. Strategy for Human Resource Management Lecture 21 HRM 765

2. Last Lecture Fundamentals of Human Resource Management 8e, DeCenzo and Robbins Performance Management System The performance management systems need to include: –decisions about who should evaluate performance –what format should be used –how the results should be utilized The Appraisal Process Difficulties in Performance Management Systems Three approaches: Absolute standards Relative standards Objectives

3. Topic Establishing the Performance Management System Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

4. Factors that can Distort Appraisals Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

5. Factors that can Distort Appraisals Leniency error –Each evaluator has his/her own value system. –Some evaluate high (positive leniency) and others, low (negative leniency). Halo error: Evaluator lets an assessment of an individual on one trait influence evaluation on all traits. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

6. Factors that can Distort Appraisals Similarity error: Evaluator rates others in the same way that the evaluator perceives him or herself. Low appraiser motivation: Evaluators may be reluctant to be accurate if important rewards for the employee depend on the results. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

7. Factors that can Distort Appraisals Central tendency: The reluctance to use the extremes of a rating scale and to adequately distinguish among employees being rated. Inflationary pressures: Pressures for equality and fear of retribution for low ratings leads to less differentiation among rated employees. Inappropriate substitutes for performance: Effort, enthusiasm, appearance, etc. are less relevant for some jobs than others. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

8. Factors that can Distort Appraisals Attribution Theory Evaluations are affected based on whether someone’s performance is due to –internal factors they can control –external factors which they cannot If poor performance is attributed to internal control, the judgment is harsher than when it is attributed to external control. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

9. Factors that can Distort Appraisals Impression management: If employee positively influences the relationship with the supervisor, he/she is likely to receive a higher rating. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

10. Creating More Effective Performance Management Systems Use Behavior-Based Measures: Measures based on specific descriptions of behavior are more job-related and elicit more inter-rater agreement than traits, such as “loyalty” or “friendliness”. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

11. Creating More Effective Performance Management Systems Combine Absolute and Relative Standards: Absolute standards tend to be positively lenient; relative standards suffer when there is little variability. Combining the standards tends to offset the weaknesses of each. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

12. Creating More Effective Performance Management Systems Provide Ongoing Feedback: Expectations and disappointments should be shared with employees on a frequent basis. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

13. Creating More Effective Performance Management Systems Use Multiple Raters: Increasing the number of raters leads to more reliable and valid ratings. –Use peer evaluations: Coworkers offer constructive insights and more specific evaluations. –Upward appraisals allow employees to give their managers feedback. –360-Degree appraisals: Supervisors, peers, employees, team members, customers and others with relevant information evaluate the employee. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

14. Creating More Effective Performance Management Systems Rate Selectively –Appraisers only evaluate in those areas about which they have sufficient knowledge. –Appraisers should be organizationally as close as possible to the individual being evaluated. –More effective raters are asked to do the appraisals. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

15. Creating More Effective Performance Management Systems Train Appraisers: Untrained appraisers who do poor appraisals can demoralize employees and increase legal liabilities. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

16. Creating More Effective Performance Management Systems Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

17. International Performance Appraisal Who performs the evaluation? –Different cultural perspectives and expectations between the parent and local country may make evaluation difficult. –Evaluation forms may not be translated accurately. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

18. International Performance Appraisal Evaluation Formats –May make sense to use different forms for parent-country nationals and host-country nationals. –Performance criteria for a particular position should be modified to fit the overseas position and site. –Include a current expatriate’s insights as part of the evaluation. Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

19. Summary Factors that can Distort Appraisals – Leniency error – Halo error – Similarity error – Low appraiser motivation – Central tendency – Inflationary pressures – Inappropriate substitutes for performance – Attribution Theory – Impression management Fundamentals of Human Resource Man agement 8e, DeCenzo and Robbins

20. Summary Creating More Effective Performance Management Systems – Use Behavior-Based Measures – Combine Absolute and Relative Standards – Provide Ongoing Feedback – Use Multiple Raters – Rate Selectively – Train Appraisers International Performance Appraisal Fundamentals of Human Resource Management 8e, DeCenzo and Robbins