1. Performance Appraisal Basics MANA 4328 Dr. Jeanne Michalski michalski@uta.edu

2. Why Conduct Performance Appraisals?

3. Performance Appraisal Programs  Performance Appraisal  A process, typically performed annually by a supervisor for a subordinate, designed to help employees understand their roles, objectives, expectations, and performance success.  Performance Management  The process of creating a work environment in which people can perform to the best of their abilities.

4. Performance Ethic  High-performing companies place a premium on setting demanding standards and measuring performance against those tough-minded goals. Specifically, they:  Have a mission  Have challenging goals and clear accountability  Are excellent at performance feedback  Apply consequences, both positive and negative, to individual performance (McKinsey & Company, 1999)

5. Setting Objectives Coaching Performance Developing Capability Assessing Performance Providing Feedback

6. Performance Management Cycle  Planning Performance for the Upcoming Period  Defining key results/expectations for each position (usually 5-8) that support the organization’s business strategy  Establishing performance standards against which key result areas will be measured  May assign a weight to each key result since all key results are NOT equal – adds complexity  Coaching Performance and Giving Feedback Throughout the Period  Structured feedback like mid-period, quarterly, or monthly progress reviews  Informal feedback throughout the process

7. Performance Management Cycle continued  Rating Performance for the Just Completed Period  One of the most challenging aspects is the approach for rating employee performance

8. Developing an Appraisal System GOAL SETTING TYPE OF APPRAISAL ADMINISTRATION PERFORMANCE AND PAY

9. Legal Issues Appraisal systems are more defensible if they:

10. Challenges for Performance Measurement Rater errors and bias  Halo  Contrast effects  Range restriction / Central tendency  The influence of liking/similar to me Rater errors can be addressed by training

11. Appraisal Forms  “Least important elements of the appraisal process”  Appraisal forms most often contain various styles  Approaches to Appraisal Forms  Trait  Behavior  Results / Outcomes  Global / Essay

12. 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

13. “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)

14. Behavior-Based Appraisal  Focus on specific behaviors with examples 1. Behavioral Frequency / Observation Scale (BOS) 2. Behaviorally Anchored Rating Scales (BARS)  Positives  More valid and reliable  Acceptable to employees  Better for development and improvement

15. Developing Behavioral Scales 1.Identify critical incidents and behaviors 2.Sort similar behaviors into dimensions 3.Validate sorting 4.Collect data on relationship between behavior and performance 5.Assign a rating scale 6.Validate the scale

16. 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.

17. 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

18. 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

19. 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

20. Comparison of Appraisal Forms Ease of Use Employee Development Legal Defensibility Traits HighLow Behaviors MediumHigh Outcomes LowMedium

21. Comparison of Appraisal Forms Ease of Use Employee Development Legal Defensibility Traits HighLow Behaviors MediumHigh Outcomes LowMedium

22. Key Questions to Consider When Receiving Feedback  Do I understand it?  Is it accurate/valid?  Is it important?  Do I want to change? At its heart feedback is only information. How you choose to think and feel about the feedback will determine the value you gain from it.

23. Possible Reactions To Feedback DENIAL ANGER / FLIGHT WITHDRAWAL ACCEPTANCE ANALYSIS ACTION PLANNING

24. 360 Degree Feedback  Evaluation method that incorporates feedback from the:  worker,  his/her peers,  supervisors,  direct reports, and  customers.  Results of these confidential surveys are tabulated and shared with the worker.  Interpretation of the results, trends and themes are discussed as part of the feedback.

25. 360 Degree Feedback Worker SupervisorPeersCustomers Direct Reports

26. 360 Successful in Organizations When:  Organizational climate fosters individual growth  Proper framing of feedback method by management  Assurance that feedback will be kept confidential  Development of feedback tool based on organizational goals and values  Feedback tool includes area for comments  Brief workers, evaluators and supervisors about purpose, uses of data and methods of survey prior to distribution of tool  Train workers in appropriate methods to give and receive feedback  Support feedback with back-up services or customized coaching

27. 360 Degree Feedback Errors  Feedback tied to merit pay or promotions  Comments traced to individuals causing resentment between workers  Feedback not linked to organizational goals or values  Use of the feedback tool as a stand alone without follow-up  Poor implementation of 360-degree tool negatively affects motivation  Excessive number of surveys are required of each worker with few tangible results provided to individuals

28. Recommended 360 Degree Process  Leaders invite direct reports to evaluate them (if less than 5 direct reports, include second level direct reports)  Direct reports rate the leader through a survey tool (often web-based)  Outside consultant analyzes data and generates reports  Leaders and human resources consultant receive feedback report & have opportunity discuss results  Leaders give feedback to their direct reports through a facilitated high performing team session  Leaders create preliminary development plan and discuss with their supervisor