1. Chapter 8 Appraising Employee Job Performance

2. Outline 8-1 Gaining Competitive Advantage 8-2 HRM Issues and Practices
8-3 The Manager’s Guide

3. 8-1 Gaining Competitive Advantage
Performance appraisals
Should accurately assess the quality of employee job performance
Improving job performance
Directing behavior
Monitoring behavior
Making the correct employment decisions
Ensuring legal compliance
Minimizing job dissatisfaction and turnover

4. 8-2 HRM Issues and Practices
Standards for effective performance appraisal systems
The quality of the rating form
Accuracy of the ratings
Legal standards

5. The Quality of the Rating Form
Relevance
The degree to which the rating form includes necessary information, that is, information that indicates the level or merit of a person’s job performance
To be relevant, the form must:
Include all the pertinent criteria for evaluating performance
Exclude criteria that are irrelevant to job performance
Criterion deficiency
The omission of pertinent performance criteria
Criterion contamination
When irrelevant criteria are included on the rating form

6. Accuracy of the Ratings
Leniency and severity errors
Central tendency error
Halo effect
The rater’s use of implicit personality theory
Recency error

7. Leniency & Severity Errors
Leniency error
Occurs when raters provide ratings that are unduly high
Severity error
Occurs when ratings are unduly low
Causes of leniency and severity errors:
Political reasons
Raters’ lack of conscientiousness
Personal bias

8. Central Tendency Error
Occurs when appraisers purposely avoid giving extreme ratings even when such ratings are warranted
Causes of central tendency error:
Result of administrative procedures
When the end points of the rating scale are unrealistically defined

9. Halo Effect
Occurs when an appraiser’s overall impression of an employee is based on a particular characteristic
Such as intelligence of appearance
Causes of the halo effect:
When rating standards are vague
The rater fails to conscientiously complete the rating form

10. The Rater’s Use of Implicit Personality Theory
When the rater’s estimation is based on a personal “theory” of how different types of people behave in certain situations
Rater cannot observe all aspects of a worker’s performance
Rater classifies employee by “type of person”
Based on perceived personality type
Using this theory organizations are unable to identify employees’ specific strengths and weaknesses

11. Recency Error Memory decay
Ratings are heavily influenced by recent events that are more easily remembered
Ratings that unduly reflect recent events can present a false picture of the individual’s job performance during the entire rating period

12. Legal Standards
Appraisal systems must meet all the criteria imposed by EEO laws
A court would examine:
The nature of the appraisal instrument
The fairness and accuracy of the ratings

13. Types of Rating Instruments
Employee comparison systems
Graphic rating scales
Behaviorally anchored rating scales (BARS)
Behavior observation scales (BOS)
Management-by-objectives (MBO)

14. Employee Comparison Systems
Employee performance is evaluated relative to other employees’ performances
Use rankings rather than ratings
Ranking formats:
Simple rankings
Require raters to rank-order their employees from best to worst, according to their job performance
Paired comparison
A rater compares each possible pair of employees
Forced distribution
Requires a rater to assign a certain percentage of employees to each category of excellence, such as “best,” “average,” or “worst”

15. Employee Comparison Systems—Strengths & Weaknesses
Low cost
Practical
Take very little time & effort
Eliminates some rating errors
Employment decisions become much easier to make
Weaknesses
Accuracy
Fairness
Do not specify what a worker must do to receive a good rating
Cannot compare the performance of people from different departments

16. Graphic Rating Scales
Presents appraisers with a list of traits assumed to be necessary to successful job performance
Examples—cooperativeness, adaptability, maturity, motivation
A five- or seven-point rating scale accompanies each trait
Points on the scale are defined by numbers and/or descriptive words or phrases that indicate level of performance

17. Graphic Rating Scales—Strengths & Weaknesses
Practical
Low cost
Can be developed quickly
A single form is applicable to all or most jobs within an organization
Weaknesses
Vaguely defined traits to evaluate (e.g. demeanor or attitude)
Do not effectively direct behavior
Fail to provide specific, nonthreatening feedback
Accuracy

18. Behaviorally Anchored Rating Scales (BARS)
Similar to graphic rating scale
Requires appraisers to rate employees on their traits
Typical BARS include seven or eight traits, referred to as “dimensions”
Each anchored by a seven- or nine-point scale
BARS anchors each trait with examples of specific job behaviors that reflect varying levels of performance

19. BARS—Strengths & Weaknesses
Ability to direct and monitor behavior
Lets employees know what types of behaviors are expected
Weaknesses
Not found to be substantially superior than other rating scales
Selecting one behavior that is most indicative of the employee’s performance
Time consuming to develop
Requires a lot of effort to develop

20. Behavior Observation Scales (BOS)
Contains a list of desired behaviors required for the successful performance of specific jobs
Developed like BARS
Critical incidents are collected and categorized into dimensions
An appraiser rates job performance by indicating the frequency with which the employee engages in each behavior
A five-point scale is used ranging from “almost never” (1) to “almost always” (5)

21. BOS—Strengths & Weaknesses
Preferred by managers and subordinates
Believed to be more legally defensible than BARS or graphic rating scale
Effective in directing employees’ behavior
Used to monitor behavior and give specific feedback
Weaknesses
Time consuming to develop
Not always cost-effective
A separate instrument is needed for each job since different jobs call for different behaviors

22. Management-by-Objectives (MBO)
A management system designed to achieve organizational effectiveness by steering each employee’s behavior toward organization’s mission
MBO process includes:
Goal setting
Planning
Evaluation

23. MBO—Strengths & Weaknesses
Widely practiced
Improves job performance
Performance standards are stated in relatively objective terms
Practical
Cost effective
Allows employees to have a say in how their performance will be measured
Weaknesses
Does not specify the behaviors required to reach goals
Success may be attributed to factors outside employee’s control
Performance standards vary from employee to employee
Performance pressures and stress placed on employee’s

24. Developing an Appraisal System
Step 1: Gain support for the system
Step 2: Choose the appropriate rating instrument
Step 3: Choose the rater(s)
Step 4: Determine the appropriate timing of appraisals
Step 5: Ensure appraisal fairness

25. Step 1: Gaining Support for the System
Gain the support of upper-level managers
Gain the support of employees

26. Step 2: Choosing the Appropriate Rating Instrument
Practicality
Cost
Development costs
Constructing an appraisal system
Implementation costs
Training appraisers
Developing written guidelines
Utilization costs
Appraiser’s time observing, rating, and giving performance feedback
Nature of job

27. Step 3: Choosing the Rater(s)
Supervisory ratings
Peer ratings
Self-ratings
Using multiple raters: 360-degree feedback systems

28. Step 4: Determining the Appropriate Timing of Appraisals
Mostly conducted annually
Appraisers may have a difficult time remembering events of the past year
Appraisers should maintain records of employee performance to minimize this problem
Record keeping also serves as documentation for EEO suits

29. Step 5: Ensuring Appraisal Fairness
Upper-level management review
Appeals system

30. 8-3 The Manager’s Guide—Performance Appraisal & Managers
Complete the ratings
Provide performance feedback
Set performance goals

31. Performance Appraisal & HRM Department
Develop the appraisal system
Provide rater training
Monitor and evaluating the appraisal system

32. HRM Skill-Building for Managers
Conducting periodic performance review sessions
Conducting the annual performance review conference
Setting goals for MBO
Consistent with goals set at higher organizational levels
Specific and challenging
Realistic and achievable
Measurable