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Chapter 8 performance management & employee appraisal



• Definitions & Purpose of Performance Appraisal
• Common Problems with Performance Appraisals
• Constructive Feedback
• Training appraisers
• Who Should Appraise Performance?
• Performance Appraisal Methods
• Appraisal Interviews
Performance management systems

Performance management: the process of creating a work environment in which

people can perform to the best of their abilities

Performance appraisals:
 manager evaluates an employees performance relatives to the requirements
of their job
 Uses the information to show the person where improvements are needed
and why

Ongoing performance feedback: steps in the performance management process

figure 8.1

Purposes of performance appraisal: figure 8.2


Problems with performance appraisals

Managers dislike having to give negative feedback
Poorly trained
Fear of confrontation
 Find performance appraisals time consuming
 Too many forms to complete
 Feedback is infrequent
 Feedback is usually one-way and negative
 Haphazard and conflicting formal appraisals
 Content of formal appraisals comes as a surprise to employees
 Performance goals are lacking, unclear or unrelated to the job
 Use of the appraisal program for conflicting purposes - ex) is salary is
discussed, it becomes the focus of the appraisal

Constructive feedback 7 best practices

 Specific, not general
 Focus on behavior, not personality traits
 Focuses on controllable behavior
 Focuses on success – directs employee development (goal setting)
 Is timely
 Don’t pile on too much feedback at once
 Is active – practice active communication; ensure the employee is engaged

3 approaches to appraisal interviews

 Tell and sell: managers tell employees their ratings, justify, and persuade
employees to change
 Tell and listen: tell employees ratings have them explain
 Problem solving: solve problems together

Who should appraise performance?

 Manager/ supervisor
 Self-appraisal
 Subordinate
 Peers
 Teams
 Customer
 All of the above  360 appraisal

360-degree appraisal
 Ensure anonymity
 Make respondents accountable
 Prevent gaming of the system
 Use statistical procedures
 Identify and quantify biases

Training performance appraisers

 -Common rater related errors
 - Error of central tendency
 -Leniency or strictness of errors
 -Recency error
 -Contrast error
 -Similar to me error
Performance appraisal methods
Trait methods: graphic-rating scales, mixed standard scales, forces choice method,
and essay method
- Cheap
- Not fully related to the job

Behavioral methods: critical incident method, behavioral checklist method,

behaviorally anchored rating scale (BARS), behavior observation scale (BOS)

Results methods
- Productivity measures: appraisals based on quantitative measures
- Management by objectives
- Figure 8.7 pg 306-307
- Balanced scorecard



Performance management: The process of creating a work environment in which people

can perform to the best of their abilities

Performance appraisals: The result of an annual or biannual process in which a manager

evaluates an employee’s performance relative to the requirements of his or her job and uses
the information to show the person where improvements are needed and why

Steps in the Performance management system

Performance appraisal
Focal performance
appraisal: An appraisal
system in which all of an
employees are reviewed
at the same time of the
year rather than on the
anniversaries of the
individual hire dates
Problems with performance appraisals

Other reasons performance appraisal programs can fail:

1. There is little face-to-face discussion between the manager and the employee being
2. The relationship between the employee’s job description and the criteria on the appraisal
form is not clear.
3. Managers feel that little or no benefit will be derived from the time and energy they
spend on the process or are concerned only with bad performances.
4. Managers dislike the face-to-face confrontation of appraisal interviews.
5. Managers are not sufficiently adept at rating employees or providing them with appraisal
6. The judgmental role of appraisal conflicts with the helping role of developing employees.
7. The appraisal is just a once-a-year event, and there is little follow-up afterward.

Calibration: A process whereby managers meet to discuss the performance of individual

employees to ensure that their employee appraisals are in line with one another

Who should appraise performance?

Manager and/or supervisor appraisal: A performance appraisal done by an employee’s

manager and often reviewed by a manager one level higher

Self-appraisal: A performance appraisal done by the employee being evaluated, generally

on an appraisal form completed by the employee prior to the performance interview
Subordinate appraisal: A performance appraisal of a superior by an employee, which is
more appropriate for developmental than for administrative purposes

Peer appraisal: A performance appraisal done by fellow employees, generally on forms

that are compiled into a single profile for use in the performance interview conducted by
the employee’s manager

Team appraisal: A performance appraisal, based on total quality management concepts,

that recognizes team accomplishment rather than individual performance

Customer appraisal: Performance appraisal that, like team appraisals, is based on total
quality management concepts and seeks evaluation from both external and internal

360-Degree appraisal
360-degree feedback is intended to provide employees with as accurate a view of their
performance as possible by getting input from all angles, such as from supervisors, peers,
subordinates, and customers. What is involved in 360 appraisals?
 Ensure anonymity. Make certain that no employee ever knows how any evaluation
team member responded.
 Make respondents accountable. Supervisors should discuss each evaluation team
member’s input
 Prevent “gaming” of the system. Some individuals may try to help or hurt an
employee by giving either too high or too low an evaluation.
 Use statistical procedures. Use weighted averages or other quantitative
approaches to combining evaluations.
 Identify and quantify biases. Check for prejudices or preferences related to age,
gender, ethnicity, or other group factors.

Training appraisers: A weakness of many performance appraisal programs is that

managers and supervisors are not adequately trained for the appraisal task, so the feedback
they provide to their subordinates is not as useful. Goals of training appraisers 
 Eliminating rater error: focus on eliminating the subjective errors made by
managers in the rating process.
 Error of central tendency: A performance rating error in which all employees are
rated about average
 Leniency or strictness error: A performance rating error in which the appraiser
tends to give employees either unusually high or unusually low ratings.
 Recency error: A performance rating error in which the appraisal is based largely
on the employee’s most recent behaviour rather than on behaviour throughout the
appraisal period.
 Contrast error: A performance rating error in which an employee’s evaluation is
biased either upward or downward because of comparison with another employee
just previously evaluated
 similar-to-me error: A performance rating error in which an appraiser inflates the
evaluation of an employee because of a mutual personal connection


Graphic rating scale method: A trait approach to performance appraisal whereby each
employee is rated according to a scale of characteristics

Mixed-standard scale method: A trait approach to performance appraisal similar to other

scale methods but based on comparison with (better than, equal to, or worse than) a

Forced-choice method: A trait approach to performance appraisal that requires the rater
to choose from statements designed to distinguish between successful and unsuccessful

Essay method: A trait approach to performance appraisal that requires the rater to
compose a statement describing employee behavior

Critical incident: An unusual event that denotes superior or inferior employee
performance in some part of the job

Behaviourally anchored rating scale (BARS): A behavioural approach to performance

appraisal that consists of a series of vertical scales, one for each important dimension of job

Behaviour observation scale (BOS): A behavioural approach to performance appraisal

that measures the frequency of observed behavior


Productivity measures: Each measure directly links what employees accomplish and the
results that benefit the organization. In this way, results appraisals can directly align
employee and organizational goals.

Management by objectives (MBO): A philosophy of management that rates performance

on the basis of employee achievement of goals set by mutual agreement of employee and
Balanced scorecard: This appraisal takes into account four related categories: (1)
financial, (2) customer, (3) processes, and (4) learning.
3 types of appraisal interviews

Tell-and-Sell interview: The skills required in the tell-and-sell interview include the ability
to persuade an employee to change in a prescribed manner.

Tell-and-Listen interview: the skills required include the ability to communicate the
strong and weak points of an employee’s job performance during the first part of the
interview. During the second part of the interview, the employee’s feelings about the
appraisal are thoroughly explored. The tell-and-listen method gives both managers and
employees the opportunity to release any feelings of frustration they might have.

Problem-Solving interview: Listening, accepting, and responding to feelings are essential

elements of the problem-solving interview. It seeks to stimulate growth and development in
the employee by discussing the problems, needs, and on-the-job satisfactions and

Conducting the appraisal interview

 Ask for a Self-assessment
 Invite participation
 Express appreciation
 Minimize criticism
 Change the behaviour, not the person
 Focus on Solving problems
 Establish goals

This method is better than an appraisal  Follow Up Day to Day: As you have learned,
feedback is most useful when it is immediate and specific to a particular situation.

Improving performance:
 Identifying Sources of ineffective performance
 Performance Diagnosis
 Managing Ineffective Performance