1. Performance Management and Appraisal9
Performance Management and Appraisal

2. Human Resources Management 12e Gary Dessler
LEARNING OUTCOMES
Define performance management and discuss how it differs from performance appraisal.
Describe the appraisal process.
Set effective performance appraisal standards.
Develop, evaluate, and administer at least four performance appraisal tools.
Explain and illustrate the problems to avoid in appraising performance.
Discuss the pros and cons of using different raters to appraise a person’s performance.
Perform an effective appraisal interview.
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3. Basic Concepts in Performance Management and Appraisal
Human Resources Management 12e Gary Dessler
Basic Concepts in Performance Management and Appraisal
Performance Appraisal
Setting work standards,
Assessing performance,
Providing feedback to employees to motivate, correct, and continue their performance.
Performance Management
An integrated approach to ensuring that an employee’s performance supports and contributes to the organization’s strategic aims.
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4. Human Resources Management 12e Gary Dessler
FIGURE 9–1 Online Faculty Evaluation Form
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5. Why Appraise Performance?
Many employers still base pay, etc. on employee appraisals
Appraisals play an integral role in the employer's performance management process
The appraisal lets the boss and subordinate develop a plan for correcting any deficiencies, and reinforce those things the employee does correctly
They serve a useful career planning purpose
Appraisals play a role in identifying training and development needs

6. Performance Management
Performance management is a uniquely goal-oriented and continuous way to appraise and manage employees’ performance. It is the continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning their performance with the organizations’ goals.

7. Defining the Employee’s Goals and Work Standards
Human Resources Management 12e Gary Dessler
Defining the Employee’s Goals and Work Standards
Set SMART goals
Assign challenging/ doable goals
Assign specific goals
Guidelines for Effective Goal Setting
Assign measurable goals
Encourage participation
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8. Human Resources Management 12e Gary Dessler
Setting SMART Goals
Specific, and clearly state the desired results.
Measurable in answering “how much.”
Attainable, and not too tough or too easy.
Relevant to what’s to be achieved.
Timely in reflecting deadlines and milestones.
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9. Guidelines for Effective Goal Setting
Assign Specific Goals
Employees with specific goals usually perform better
Assign Measurable Goals
Express goals in quantitative terms and include target dates or deadlines
Assign Challenging but Doable Goals
Goals should be challenging, but not so difficult that they appear impossible or unrealistic
Encourage Participation
Participatively set goals do tend to be set higher

10. Employee’s Goals and Performance Standards
Basing appraisal standards on required competencies
The role of job descriptions

11. Who Should Do the Appraising?
Human Resources Management 12e Gary Dessler
Who Should Do the Appraising?
Self-rating
Subordinates
360-degree feedback
Potential Appraisers
Immediate supervisor
Peers
Rating committee
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

12. Performance Appraisal Methods
Human Resources Management 12e Gary Dessler
Performance Appraisal Methods
Appraisal Methodologies 1 6 2 3
Graphic rating scale 7 8
Narrative forms 4 9
Alternation ranking
Behaviorally anchored rating scales (BARS) 5 10
Paired comparison
Management by objectives (MBO)
Forced distribution
Computerized and Web-based performance appraisal
Critical incident
Merged methods
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

13. Performance Appraisal Methods
Graphic Rating Scale Method:
A scale is used to list a number of traits and a range of performance for each, then the employee is rated by identifying the score that best describes his/her performance level for each trait.
Managers must decide which job performance aspects to measure. Some options include generic dimensions, actual job duties, or behaviorally recognizable competencies.

14. Human Resources Management 12e Gary Dessler
FIGURE 9–3 Sample Graphic Rating Performance Rating Form
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15. Human Resources Management 12e Gary Dessler
FIGURE 9–3 One Item from an Appraisal Form Assessing Employee Performance on Specific Job-Related Duties
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16. Performance Appraisal Methods
Alternation Ranking Method is where employees are ranked from best to worst on a particular trait, choosing highest, then lowest, until all are ranked.
Since it is usually easier to distinguish between the worst and best employees, an alternation ranking method is most popular.
First, list all subordinates to be rated, and then cross out the name of any not known well enough to rank.

17. Human Resources Management 12e Gary Dessler
FIGURE 9–6 Scale for Alternate Ranking of Appraisee
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18. Performance Appraisal Methods
Paired Comparison Method helps make the ranking method more precise.
For every trait (quantity of work, quality of work, and so on), you pair and compare every subordinate with every other subordinate.

19. Human Resources Management 12e Gary Dessler
FIGURE 9–7 Ranking Employees by the Paired Comparison Method
Note: + means “better than.” - means “worse than.” For each chart, add up the number of +’s in each column to get the highest ranked employee.
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20. Performance Appraisal Methods
Forced Distribution Method is similar to grading on a curve.
With this method, you place predetermined percentages of rates into several performance categories. The proportion in each category need to be symmetrical.
One practical, if low-tech, way to do this is to write each employee’s name on a separate index card. Then, for each trait (quality of work, creativity, and so on), place the employee’s card in the appropriate performance category.
Role Model  Moderate Below Expectations
10 % % % % %

21. Performance Appraisal Methods
Critical Incident Method is where a supervisor keeps a record of positive and negative examples (critical incidents) of a subordinate’s work-related behavior. Every 6 months or so, supervisor and subordinate meet to discuss the latter’s performance, using the incidents as examples.
Advantages
It provides examples of good and poor performance the supervisor can use to explain the person’s rating.
It makes the supervisor think about the subordinate’s appraisal all during the year.
The list provides examples of what specifically the subordinate can do to eliminate deficiencies.

22. Human Resources Management 12e Gary Dessler
TABLE 9–1 Examples of Critical Incidents for Assistant Plant Manager
Continuing Duties
Targets
Critical Incidents
Schedule production
for plant
90% utilization of personnel and machinery in plant; orders delivered on time
Instituted new production scheduling system; decreased late orders by 10% last month; increased machine utilization in plant by 20% last month
Supervise procurement of raw materials and on inventory control
Minimize inventory costs while keeping adequate supplies on hand
Let inventory storage costs rise 15% last month; over-ordered parts “A” and “B” by 20%; under-ordered part “C” by 30%
Supervise machinery
maintenance
No shutdowns due to faulty machinery
Instituted new preventative maintenance system for plant; prevented a machine breakdown by discovering faulty part
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23. Performance Appraisal Methods
Narrative Forms involve rating the employee’s performance for each performance factor,
Writing down examples and an improvement plan,
Aiding the employee in understanding where his/her performance was good or bad,
Summarizing by focusing on problem solving.

24. Human Resources Management 12e Gary Dessler
FIGURE 9–8 Appraisal-Coaching Worksheet
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25. Behaviorally Anchored Rating Scale (BARS)
Human Resources Management 12e Gary Dessler
Behaviorally Anchored Rating Scale (BARS)
Developing a BARS
Write critical incidents
Develop performance dimensions
Reallocate incidents
Scale the incidents
Develop a final instrument
Advantages of BARS
A more accurate gauge
Clearer standards
Feedback
Independent dimensions
Consistency
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26. Human Resources Management 12e Gary Dessler
FIGURE 9–9 Example of a Behaviorally Anchored Rating Scale for the Dimension Salesmanship Skills
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27. Management by Objectives (MBO)
Human Resources Management 12e Gary Dessler
Management by Objectives (MBO)
A comprehensive and formal organizationwide goal-setting and appraisal program requiring:
Setting of organization’s goals
Setting of departmental goals
Discussion of departmental goals
Defining expected results (setting individual goals)
Conducting periodic performance reviews
Providing performance feedback
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28. Human Resources Management 12e Gary Dessler
Using MBO
Setting unclear objective
Conflict with subordinates over objectives
Potential Problems with MBO
Time-consuming appraisal process
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29. Computerized and Web-Based Performance Appraisal Systems
Human Resources Management 12e Gary Dessler
Computerized and Web-Based Performance Appraisal Systems
Allow managers to keep notes on subordinates.
Notes can be merged with employee ratings.
Software generates written text to support appraisals.
Allows for employee self-monitoring and self-evaluation.
Electronic Performance Monitoring (EPM) Systems
Use computer network technology to allow managers access to their employees’ computers and telephones.
Managers can monitor the employees’ rate, accuracy, and time spent working online.
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30. Dealing with Performance Appraisal Problems
Human Resources Management 12e Gary Dessler
Dealing with Performance Appraisal Problems
Unclear standards
Leniency or strictness
Halo effect
Potential Rating Scale Appraisal Problems
Central tendency
Bias
Recency effects
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31. Potential Rating Scale Appraisal Problems
Unclear Standards
This graphic rating scale seems objective. However, it would probably result in unfair appraisals, because the traits and degrees of merit are ambiguous.
For example, different supervisors would probably define “good” performance, “fair” performance, and so on differently.
The same is true of traits such as “quality of work” or “creativity”.

32. Human Resources Management 12e Gary Dessler
TABLE 9–2 A Graphic Rating Scale with Unclear Standards
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33. Potential Rating Scale Appraisal Problems
Halo Effect
Experts define halo effect as “the influence of a rater’s general impression on ratings of specific ratee qualities.
For example, supervisors often rate unfriendly employees lower on all traits, rather than just for the trait “gets along well with others”. Being aware of this problem is a big step toward avoiding it.

34. Potential Rating Scale Appraisal Problems
Central Tendency
Where supervisors stick to the middle of the rating scales, thus rating everyone average.
For example, if the rating scale ranges from 1 to 7, they tend to avoid the highs (6 and 7) and lows (1 and 2) and rate most of their people between 3 and 5. Central tendency basically means rating all employees’ average.
Doing so distorts the evaluations, making them less useful for promotion, salary, or counseling purposes.

35. Potential Rating Scale Appraisal Problems
Leniency or Strictness:
Supervisors have the tendency to rate everyone either high or low, just as some instructors are notoriously high or low graders. This strictness/leniency problem is especially severe with graphic rating scale. On the other hand, ranking forces supervisors to distinguish between high and low performers.
Recency Effects:
This involves letting what the employee has done recently blind the manager to the employee’s performance over the rest of the year.
Bias:
The tendency to allow individual differences such as age, race, and sex to affect the appraisal ratings employees receive, is a problem.

36. Guidelines for Effective Appraisals
Human Resources Management 12e Gary Dessler
Guidelines for Effective Appraisals
Know the problems
Get agreement on a plan
Use the right tool
How to Avoid Appraisal Problems
Keep a diary
Be fair
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37. Human Resources Management 12e Gary Dessler
TABLE 9–3 Important Advantages and Disadvantages of Appraisal Tools
Tool
Advantages
Disadvantages
Graphic rating scale
Simple to use; provides a quantitative rating for each employee.
Standards may be unclear; halo effect, central tendency, leniency, bias can also be problems.
BARS
Provides behavioral “anchors.” BARS is very accurate.
Difficult to develop.
Alternation ranking
Simple to use (but not as simple as graphic rating scales). Avoids central tendency and other problems of rating scales.
Can cause disagreements among employees and may be unfair if all employees are, in fact, excellent.
Forced distribution method
End up with a predetermined number or % of people in each group.
Employees’ appraisal results depend on your choice of cutoff points.
Critical incident method
Helps specify what is “right” and “wrong” about the employee’s performance; forces supervisor to evaluate subordinates on an ongoing basis.
Difficult to rate or rank employees relative to one another.
MBO
Tied to jointly agreed-upon performance objectives.
Time-consuming.
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38. Choosing the Right Appraisal Tool
Human Resources Management 12e Gary Dessler
Choosing the Right Appraisal Tool
Accessibility
Accuracy
Ease-of-use
Employee acceptance
Criteria for Choosing an Appraisal Tool
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39. The Appraisal Interview
Human Resources Management 12e Gary Dessler
The Appraisal Interview
Satisfactory—Promotable
Satisfactory—Not Promotable
Unsatisfactory—Correctable
Unsatisfactory—Uncorrectable
Types of Appraisal Interviews
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40. Appraisal Interview Guidelines
Human Resources Management 12e Gary Dessler
Appraisal Interview Guidelines
Talk in terms of objective work data
Get agreement
Don’t get personal
Encourage the person to talk
Guidelines for Conducting an Interview
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41. Human Resources Management 12e Gary Dessler
FIGURE 9–14 Checklist During Appraisal Interview
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42. Handling Defensive Responses
Human Resources Management 12e Gary Dessler
Handling Defensive Responses
How to Handle a Defensive Subordinate 1 2
Recognize that defensive behavior is normal. 3
Never attack a person’s defenses. 4
Postpone action.
Recognize your own limitations.
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43. How to Deliver Criticism
Human Resources Management 12e Gary Dessler
How to Deliver Criticism
How to Criticize a Subordinate 1 3 2
Do it in a manner that lets the person maintain his or her dignity and sense of worth. 4
Criticize in private, and do it constructively. 5
Give daily feedback so that the review has no surprises.
Never say the person is “always” wrong.
Criticism should be objective and free of biases.
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44. Formal Written Warnings
Human Resources Management 12e Gary Dessler
Formal Written Warnings
Purposes of a Written Warning
To shake your employee out of bad habits.
To help you defend your rating, both to your own boss and (if needed) to the courts.
A Written Warning Should:
Identify standards by which employee is judged.
Make clear that employee was aware of the standard.
Specify deficiencies relative to the standard.
Indicate employee’s prior opportunity for correction.
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45. Performance Management
Human Resources Management 12e Gary Dessler
Performance Management
Performance Management
Is the continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning their performance with the organization’s goals.
How Performance Management Differs From Performance Appraisal
A continuous process for continuous improvement
A strong linkage of individual and team goals to strategic goals
A constant reevaluation and modification of work processes
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46. Basic Building Blocks of Performance Management
Human Resources Management 12e Gary Dessler
Basic Building Blocks of Performance Management
Direction sharing
Goal alignment
Ongoing performance monitoring
Ongoing feedback
Coaching and development support
Rewards, recognition, and compensation
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47. Using Information Technology to Support Performance Management
Human Resources Management 12e Gary Dessler
Using Information Technology to Support Performance Management
Assign financial and nonfinancial goals to each team’s activities along the strategy map chain of activities leading up to the company’s overall strategic goals.
Inform all employees of their goals.
Use IT-supported tools like scorecard software and digital dashboards to continuously monitor and assess each team’s and employee’s performance.
Take corrective action at once.
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48. Human Resources Management 12e Gary Dessler
K E Y T E R M S
performance appraisal
graphic rating scale
alternation ranking method
paired comparison method
forced distribution method
critical incident method
behaviorally anchored rating scale (BARS)
electronic performance monitoring (EPM)
unclear standards
halo effect
central tendency
strictness/leniency
bias
appraisal interview
performance management
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall