Strategic Human

Resource
Management

TRAINING AND DEVELOPMENT

 Training & Development
Training & Development
▪ Represents ongoing investment in employees and realizes employees are assets
Importance of Training & Development
▪ Rapid technological changes cause skill obsolescence; need for continuous learning
▪ Redesign of work created more responsibilities thus bringing the need for new skills
▪ Mergers and acquisitions have increased the need for integrating employees and new
hires into a different culture
▪ Globalization of business requires new knowledge and skills related to cultural differences
 Training & Development
Training new hires/employees assuming new
responsibilities
▪ The orientation/onboarding program enables new employees to understand the
rules, policies, and procedures, be socialized into the company operations and
employee networks, and how their individual jobs are critical to the organization’s
success
▪ The rotation program allows employees to sample different kinds of work within the
organization and allows a better understanding of how their individual jobs contribute to
the whole
 Benefits of Training & Development
Individual employee
▪ Increased employee marketability
▪ Increased employee employability security
Organization
▪ Improved bottom line, efficiency, and profitability
▪ Increased flexibility in employees who can assume different and varied responsibilities
▪ Reduced layers of management
▪ Makes employees more accountable for results
Strategizing Training
Levels of Needs Assessment
 Setting Training Objectives
▪ Align/match identified training needs with training
objectives
▪ Define objectives in specific, measurable terms
- Desired employee output
- Results expected to follow from such behaviors
▪ One source of information for setting objectives
- Performance deficiency data contained in the performance management system
 Setting Training Objectives
Examples:
▪By the end of this training session, you will be able to answer (action word)
customer questions (item) about loan rates without asking others (condition) 90%
of the time (standard).
▪By the end of this training session, you will be able to balance (action word) the
teller drawer (item) without assistance (condition) in 30 minutes with no errors
(standard).
▪By the end of this training session, you will be able to compute (action word)
adverse impact levels (item) using Excel (condition) with no errors (standard).
 Design and Delivery

Critical training design issues

▪ Interference from and difficulty in overcoming prior training, learning, and habits
▪ Transfer of newly learned skills back to the job
Choice of training environment to approximate or simulate actual
working conditions
▪ Organizational culture supportive of training and development
 Computer-Based Instruction
Benefits Drawbacks
▪ Self-paced ▪ Learners must be self-motivated
▪ Adaptive to different needs ▪ Cost of producing online,
interactive materials
▪ Can be customized
▪ Lack of interaction with others may
▪ Easy to deliver
work against needs and preferred
▪ Usually less expensive to administer learning styles
▪ Can be conducted when convenient
for the employee
 Evaluation

▪ An integral part of the overall training program

▪ Provides feedback on the effectiveness of the
training program
▪ Evaluation criteria should be established in tandem
with and parallel to training objectives
Four Levels of Training Evaluation
 Organizational Development
▪ Training programs focus on individual skill acquisition and
development to improve productivity as well as assist in obtaining
strategic objectives
▪ In a rapidly changing global environment, organizations must be
able to change in response by undertaking larger-scale changes
▪ Such activities constitute organizational development which
focuses on the entire organization rather than individual
employees
 Organizational Development
▪ OD initiatives usually focus on organizational processes and/or
culture and might include culture change, facilitating mergers and
acquisitions, organizational learning, knowledge management,
process improvement, and organization design and structure

▪ They look at the organization from the macro perspective,

utilizing a systems approach to appreciate the
interrelatedness of functions and processes. This is frequently
accomplished through the establishment of an in-house corporate
university.
The Link between Training and Performance
Management and Compensation
 The Link between Training and Performance
Management and Compensation
▪ When employees expend the effort to learn new skills and knowledge
(training) and are expected to implement such learning in their jobs
(performance management), there should be some incentive to do so and
some acknowledgment and reinforcement of that performance once it is
achieved (compensation)
▪ A training program that is not linked to the organization’s performance
management and compensation systems has far less chance of success than
one that does. Training should be conceptualized, designed, and delivered
within a larger strategic context and receive an organization-wide
commitment to ensure its success
 DESIGNING AND
EVALUATING TRAINING
SYSTEMS
 Determining Training Needs
• Training Needs Analysis (TNA)
• The first step in developing an employee training system.
• The process of determining the training needs of an organization.
• Three (3) Steps for TNA
1. Organizational Analysis
• The process of determining the organizational factors that will either
facilitate or inhibit training effectiveness.
• Focuses on:
• The goals of the organization wants to achieve;
• The extent to which training will help achieve those goals;
• The organization’s ability to conduct training (finances, time,
physical space); and
• The extent to which employees are willing and able to be trained
(ability, commitment, motivation, stress).
 Determining Training Needs
2. Task Analysis
– The process of identifying the tasks to be performed and competencies
(knowledge, skills, abilities) needed by each employee and then determining
how employees learn to perform each task or obtain each competency.

3. Individual / Person Analysis

– The process of identifying the employees who need training and determining
the areas in which each individual employee needs to be trained.
Steps for Needs Assessment
 Methods of TNA
1. Performance Appraisal Score
• A rating representing some aspects of an employee’s work
performance.
• The easiest method of TNA.

• Disadvantages in Using Performance Appraisal

• Leniency errors and strictness errors of the rater can reduce the
accuracy of the performance appraisal score;
• Rarely do all employees score either high or low on a dimension
but common for a few employees to score poorly on a
dimension.
• The performance appraisal system may not provide the type of
information needed to conduct a TNA.
 Methods of TNA
2. Survey
• Questionnaires asking about the areas in which they feel they
need training.
• Advantages in Using Surveys
• They eliminate the problem of performance rating errors.
• Employees often know their own strengths and weaknesses best.
• Training need can be determined even if the organization has not
designed an effective performance appraisal system.
• Disadvantages of Using Surveys
• Employees may not be honest in answering the survey.
• The organization may not be able to afford the training suggested
by the employee.
 Methods of TNA
3. Interviews
• Not used as extensively as surveys.
• Can yield even more in-depth answers to questions about
training needs.
• Advantage of Using Interviews
• Employee feelings and attitudes are revealed more clearly than
with the survey approach.
• Disadvantage of Using Interviews
• Interview data are often difficult to quantify and analyze.
 Methods of TNA
4. Skill Test and Knowledge Test
• Skill Test measures an employee’s level of some job-related skill.
• Free throw shooting for basketball players
• Knowledge Test measures the level of an employee’s knowledge
about a job-related topic.
• Knowledge of lending laws for loans officers
• Knowledge of company policies for new employees

• Disadvantage of Using Skill and Knowledge Test

• The organization may need to construct its own tests as few tests
are available of this purpose.
 Methods of TNA
5. Critical Incident Techniques (CIT)
• Developed by John Flanagan
• written reports of actual incidents on good and bad employee
behavior that make a difference between a job’s successful or
unsuccessful performance.
 Setting Training Objectives and Measures
1. Align/match identified training needs with training
objectives.

2. Training goals and objectives should clearly state:

• What the learners are expected to do;
• The conditions under which they are expected to do it; and
• The level at which they are expected to do it.

3. Define objectives in specific, measurable terms.

• Desired employee behaviors
• Results expected to follow from such behaviors
 Setting Training Objectives and Measures
Examples:
• By the end of this training session, you will be able to answer
(action word) customer questions (item) about loan rates
without asking others (condition) 90% of the time (standard).
• By the end of this training session, you will be able to balance
(action word) the teller drawer (item) without assistance
(condition) in 30 minutes with no errors (standard).
• By the end of this training session, you will be able to compute
(action word) adverse impact levels (item) using Excel
(condition) with no errors (standard).
 Choosing the Best Training Method/Design
Classroom Setting
1. Using lectures to provide knowledge
2. Using case studies to apply knowledge
3. Using simulation exercises to practice new skills
4. Practicing interpersonal skills through role-play
5. Increasing interpersonal skills through behavior modeling
 CLASSROOM SETTING

• Using lectures to provide knowledge

• Are good training source but unless they are accompanied by
other techniques such as simulations and role-plays, they are not
effective if the goal is for employees to obtain knowledge.
• Trainer takes a great deal amount of time to put together
(estimate of 16-50 hours preparation for every hour of training):
• Research a topic
• Develop a training outline
• Create visuals (PPT slides)
• Create handouts
• Obtain or create supporting materials (videos or role-playing
exercises)
 CLASSROOM SETTING
• Using lectures to provide knowledge
• Handouts are comprehensive notes that are important because
research says people forget about half the training content once
they leave the classroom then forget about 25% within 48 hours.
• Handouts should include:
• Cover sheet with the title/date/venue of the training program;
• List of goals and objectives;
• Schedule of the training (ex: breaks and ending time);
• Biographical sketch of the trainer;
• Notes in outline form, full text or copies of the PPT slides;
• Activity sheets;
• References and suggestions for further reading; and
• Form to evaluate the quality of the training program.
 CLASSROOM SETTING
• Using case studies to apply knowledge
• Training technique in which employees, usually in a group, are
presented with a real or hypothetical workplace problem and are
asked to propose the best solution.

• Effective in applying knowledge and learning problem solving skills.

• Similar to leaderless group discussion and situational interview

problems, they are good sources for developing analysis, synthesis, and
evaluation skills.

• Best if the case study is based on a real situation or living case.

• Will be interesting if written in a form of a story, contain dialogue

between characters, use realistic details, are descriptive and easy to
follow, contain all information necessary to solve the problem, and are
difficult enough to be challenging.
 CLASSROOM SETTING
• Using simulation exercises to practice new skills
• Are exercises designed to place an applicant in a situation that is
similar to the one that will be encountered on the job.
• Allows trainees to practice newly learned skills on equipment under
actual work conditions without the consequences of mistakes.
• Research says employees trained with simulations learned more
and retained more than employees trained using lecture or reading.
• Less expensive and less life-threatening than actual situations.
Ex: - airline simulations for pilots;
- simulated medical emergencies;
- simulated computer breakdown;
- dummy simulation in administering CPR
 CLASSROOM SETTING
• Practicing interpersonal skills through role-play
• Training technique in which employees act out simulated roles.
• Allows trainees to perform necessary interpersonal skills by acting
out simulated roles.
EX: - practice presentation skills for sales people,
- sales trainee takes the role of an irate customer while
manager takes the role of the sales clerk and learns how the
situation is handled by the manager.
• Role play can later be replaced by real play, in which employees
practice their skills on actual customers then discusses the
techniques.
EX: Sales staff sits around a conference table and take turns
making calls to actual customers.
 CLASSROOM SETTING
• Increasing interpersonal skills through behavior
modeling
• Training technique in which employees observe correct
behavior, practice that behavior, and then receive feedback
about their performance.
• Similar to role-playing except that trainees role-play ideal/
correct behavior rather than the behavior they might normally
perform.
• Learning points are proper and necessary behavior based on
rules to be followed in solving a problem.
• Best shown by viewing a video of a model performing correct
behavior and another performing incorrect behavior.
 Delivery of Training Program
Conducting classroom training
Who will conduct the training?
• In-house trainers – are employees of the company and used when a
training program will be presented too frequently to justify the cost.
• External trainers – used when in-house trainers lack the expertise on a
particular topic or more expensive than internally developing a training
program.
Where will the training be held?
• On-site – training done inside the company premises is less expensive.
• Off-site – used when the company doesn’t have the needed space nor
equipment.
Advantage: employees get away from work site and concentrate on
their training, may be done at hotels in tourist spots as incentive or
reward for performing well at work
 Delivery of Training Program
Conducting classroom training
How long should the training be?
• For the highest level of learning, training materials should be presented in
small, easily remembered chunks distributed over a period of time
(distributed learning) rather than learned all at once (massed
learning).
EX: reviewing for exams distributed over several days VS waiting until
the night before the test to read the chapters/PPT slides.
 Delivery of Training Program
Conducting classroom training
1. Preparing for classroom training
• Trainer must consider the characteristics of the audience:
• Size (large or small);
• Demographics (male or female; young or old); and
• Ability level (highly-skilled or lower-skilled; less or more experienced)
2. Delivering the training program
• Introducing the trainer and the training session:
• Introduction of the trainer should be short and establish his/her
credentials.
• Announce the training schedules (starting time, break time, meal
times) and seminar rules (eg. turning off cellphones, not smoking, not
criticizing audience members)
 Delivery of Training Program
Conducting classroom training
2. Delivering the training program
• Using icebreakers and energizers
• Must consider the following considerations:
• The goal of the icebreaker (get to know one another, wake them
up, get them think about the topic);
• The length of the training seminar (icebreakers should be short if
the training will last a few hours); and
• The nature of the audience
• EX:
• Asking each trainee to introduce the person next to him
• Activities where trainees are given a question or problem to solve
• Open-ended questions to elicit audience response and encourage
discussions.
• Jokes or stories
 Delivery of Training Program
Conducting classroom training
2. Delivering the training program

Delivering the presentation tips:

• Make eye contact with audience.
• Use gestures effectively.
• Don’t read your presentation.
• Don’t hide behind the podium.
• Use a conversational style.
• Be confident.
• Don’t force humor.
• Speak at a pace that is neither
too fast nor to slow.
 Delivery of Training Program
Conducting training through distance learning
• Research says it is as effective as classroom training and their
effectiveness increases when learners control the pace and when
feedback is given regarding the learner’s progress.
• Two (2) categories of distance learning:
1. Asynchronous distance learning – employees can complete the training
at their pace and at the time of their choosing.
• Information is provided through printed materials, pre-recorded videos,
and web-based programs.
• Interactive video – a training techniques in which an employee is
presented with a videotaped situation and is asked to respond to the
situation and then receives feedback based on the response.
• To increase effectiveness, trainees can have access to an instructor or
other trainees through email, chat rooms, message board forums.
 Delivery of Training Program
Conducting training through distance learning
• Two (2) categories of distance learning:
2. Synchronous distance learning – requires employees to complete the
training at the same time and at the same pace although they may be in a
different physical locations.
• Webinars – short for web seminar, an interactive training method in which
training is transmitted over the internet.
• Webcast – A non-interactive (one-way communication) training method in
which the trainer transmit training information over the internet.
• Blog – a website in which the host regularly post commentaries on a topic
that readers can respond to.
 Delivery of Training Program
Conducting training through distance learning
• Two (2) categories of distance learning:
2. Synchronous distance learning – requires employees to complete the
training at the same time and at the same pace although they may be in a
different physical locations.
• Wiki – a collection of web pages in which users can create web pages on a
topic and readers can freely edit those pages.
• Listserv – a program that automatically distributes e-mail messages to a
group of people who have a common interest.
 Delivery of Training Program
Conducting training through distance learning
Learning Management Systems
• A combination of e-learning techniques, employee assessment
tools and other training functions which helps managers assess
the skill of employees, register them for courses, deliver
interactive learning modules, etc.
 Delivery of Training Program
Conducting on-the-job training
• Informal training by experienced peers and supervisors that occurs
on the job and during job tasks.
• Works best for teaching skills that require supervision to learn
• Best learned through repetition, and benefit from role-modeling

Four (4) types of on-the-job training

1. Learning by modeling others
2. Learning through job rotation
3. Learning through apprentice training
4. Learning through coaching and mentoring
 Delivery of Training Program
Conducting on-the-job training
1. Learning by modeling others
• Also called social learning (Bandura)
• Employees learn by watching how other employees perform, or
model, a behavior.
• Characteristics of the model – should be similar to the employees
both in gender and age.
• Characteristics of the observer:
• Employee must pay attention to the behavior of other
employees;
• Employee must be able to retain the information that is being
modeled; and
• Employee must have the ability or skill to reproduce the
behavior that is seen.
 Delivery of Training Program
Conducting on-the-job training
2. Learning through job rotation
• System in which employees are given the opportunity to perform
several different jobs in an organization.
• Popular in management training because it allows manager trainees
to experience and understand the jobs within the organization that
his subordinates will perform.
• Can be used for non-managerial employees as it allows for both
lateral transfers within the organization and greater flexibility in
replacing absent workers.
• Cross-training – teaching employees how to perform tasks
traditionally performed by other employees.
 Delivery of Training Program
Conducting on-the-job training
3. Learning through apprentice training
• A training program usually found in the craft and building trades, in
which employees combine formal coursework with formal on-the-
job training.
EX: jobs in construction, manufacturing, and plumbing

• An individual spends a minimum of 144 hours of formal class work

and works with an expert for 4 years to learn a particular trade.
 Delivery of Training Program
Conducting on-the-job training
4. Learning through coaching and mentoring
• Two (2) types of coaching:
1. Experienced employees as coaches – a new employee is
assigned to an experienced employee, who is told to “show the ropes”
• Pass-through programs – a formal method of coaching in which
excellent employees spend a period of time in the training
department learning training techniques and training employees.

2. Professional coaches – or corporate coaches are similar to

consultants but rather than working with the organization as a whole ,
they are hired to coach a particular employee, usually a manager.
• Mentor – an experienced or veteran employee who advises and
looks out for a new employee.
 Strategic Human
Resource
Management
PERFORMANCE MANAGEMENT AND
FEEDBACK
 Performance Management and Feedback
Performance Management
▪ Also called performance evaluation, performance appraisal, or performance
measurement
▪ A process to manage employee performance and ensure that performance
measures are consistent with the organization’s needs.
Performance Feedback
▪ A way for employees to understand and accept the performance management
system and provide them with meaningful information to be effective.
 Performance Management and Feedback
Performance appraisal and performance evaluation
▪ imply a one-sided judgmental approach to performance management, where
employees have little involvement in the process;
▪ involves hierarchical, downward communication from supervisor to subordinate
concerning the subordinate’s performance; and
▪ puts employees in a defensive position
 Performance Management and Feedback
Performance feedback
▪ involves a mutual exchange of information that both parties share, discuss,
and jointly assess in planning future work activities;
▪ usually perceived as more neutral; and
▪ a process over which employees have some control and influence
Key Differences Between Performance
Feedback and Performance Appraisal
 Performance Management and Feedback
Effective performance management systems require employees and supervisors to
work together to set performance expectations, review results, assess organizational and
individual needs, and plan for the future
Effective performance management systems are one that connect three time periods and
utilize data about past performance to set goals, plans, and objectives for the present that
would result in high levels of performance in the future
Performance Management and Feedback
Organizations need broader performance
measures to ensure:
▪ Performance deficiencies addressed in a timely manner through employee
development programs
▪ Employee behaviors channeled in an appropriate direction toward the
performance of specific objectives
▪ Employees provided with appropriate and specific feedback to assist with
career development
Strategic Choices in Performance Management Systems
How the Performance Management System
will be Used
Purposes of the Performance Management
Systems:
▪ Facilitate employee development
▪ Determine rewards and compensation
▪ Enhance motivation
▪ Facilitate legal compliance
▪ Facilitate human resource planning
How the Performance Management System
will be Used
Facilitate employee development
▪ By assessing deficiencies in performance levels and skills, an organization
can determine specific training and development needs.
▪ The performance feedback process can be designed to provide information
to fuel the organization’s training and development programs.
▪ Assessing individual and team strengths and weaknesses can allow
employee and team development plans to be established.
Reciprocal Relationship Between Training and
Development and Performance Management

A reciprocal relationship exists between the two, as desired outcomes of

training and development initiatives must be incorporated into the performance
management system.
How the Performance Management System
will be Used
Determine the appropriate rewards and
compensation
▪ Salary, promotion, retention, and bonus decisions are frequently based
on data collection as part of performance measurement.
▪ Employees must understand and accept the performance feedback
system as a prerequisite for accepting decisions made relative to rewards
and compensation.
▪ Any perceived unfairness of the performance feedback system on the part of
employees will result in a perceived unfairness of the compensation system.
How the Performance Management System
will be Used
Enhance employee motivation
▪ Allows for employee acknowledgment and praise can reinforce the
behaviors and outcomes that are beneficial to the unit or organization.
▪ Employees are specifically told what the organization’s expectations for them
are, and the employees can inform their employers of the types of job
assignments and responsibilities they want and desire.
How the Performance Management System
will be Used
Facilitate legal compliance
▪ Claims of unfair dismissal and discrimination violations are best
supported when the organization has documentation of performance
deficiencies.
▪ This information can be admitted into court to prove nondiscriminatory
means of taking remedial action against employees for termination of
employment.
How the Performance Management System
will be Used
Facilitate the human resource (HR) planning
process
▪ Performance data can alert the organization to deficiencies in the overall
level and focus of employee skills which can be used in critically planning
for future staffing needs relative to the skills and abilities of current employees
▪ Since performance feedback has multiple functions, organizations must
decide how it will be used prior to developing the system and determine the
specifications of its design.
 Who Evaluates?
Problems with immediate supervisors conducting
performance evaluations
▪ Lacking appropriate information to provide informed feedback on employee
performance
▪ Insufficient observation of employee’s day-to-day work to validly assess performance
▪ Lack of knowledge about technical dimensions of subordinate’s work
▪ Lack of training or appreciation for evaluation process
▪ Perceptual errors by supervisors that create bias or lack of subjectivity in evaluation
 Perceptual Errors of Raters
Halo error/Halo effect
▪ Rater allows a single trait, outcome, or consideration to influence other measures
of performance
Horn error/Stereotyping
▪ Rater makes performance judgments based on the employee’s personal
characteristics rather than the employee’s actual performance
Recency error
▪ Recent events and behaviors of employee bias rater’s evaluation of employee’s
overall performance
 Perceptual Errors of Raters
Central tendency error
▪ Evaluator avoids higher and lower ends of rating in favor of placing all employees
at or near the middle of the scales
Leniency or strictness error
▪ Evaluator’s tendency to rate all employees above (leniency) or below (strictness)
actual performance level
Personal biases and organizational politics
▪ Have a significant impact on ratings employees receive from supervisors
 Other Performance Feedback Sources
Peers
▪ Must be administered with care especially when used for political or self-serving
purposes, when employees compete with each other or peer has personal gain or
loss at stake in assessing a co-worker.
▪ Can raise havoc in the organization by escalating conflict which is detrimental to
employee morale and teamwork
▪ Effective when political considerations and consequences are minimized (peers
have nothing at stake in assessing colleagues) and when employees have a sense
of trust in the organization and its performance measurement system.
 Other Performance Feedback Sources
Subordinates
▪ Provide insights into the interpersonal and managerial styles of employees
▪ Assist the organization in addressing high-potential employee developmental
needs
▪ Excellent measures of an individual’s leadership capabilities and ability to
manage others (behavior and skills)
▪ Suffer the same political problems as peer evaluations
▪ Supervisors or subordinates can retaliate against each other
 Other Performance Feedback Sources
Customers
▪ Feedback most free from bias
▪ Have nothing at stake in their assessment of employee performance
▪ Critical for facilitating employee development and determining rewards
Self-evaluations
▪ Allow employees to participate in critical employment decisions
▪ More holistic assessment of performance
 Other Performance Feedback Sources
Multi-rater system or 360-degree feedback system
▪ Can be very time-consuming
▪ Excessive amount of information can cause the most relevant and critical
performance data to be lost or obscured in the process
▪ More performance data collected, greater overall facilitation of assessment and
development of employee
▪ Costly to collect and process
▪ Consistent view of effective performance relative to strategy
 What to Evaluate?
Traits measures
▪ Focus on the general abilities and characteristics of the employee (loyalty to the
organization, industriousness, or gregariousness)
▪ Determines how an employee fits with the organization’s culture, but such
measures may ignore what s/he actually does
Behavior-based measures
▪ Focus on what an employee does correctly and what an employee should do
differently (getting along with others, punctuality, willingness to take initiative, ability
to meet deadlines)
 What to Evaluate?
Results-based measures
▪ Focus on accomplishments or outcomes that can be measured objectively
▪ Limitations:
o Results are difficult to obtain for certain job responsibilities (jobs involved in the future/
forecasting or jobs dependent on the external environment)
o Results sometimes are beyond employees’ control (budget cuts, resource availability)
o Focuses on the ends or outcomes/goals but ignores means or processes by which the
results were obtained
o Fails to tap some critical performance areas – such as teamwork, initiative, and
openness to change
 Job Performance Competencies
In addition to traits, behaviors, and outcomes, employers are also
beginning to measure job performance competencies displayed by
employees:
▪ Competencies can be closely tied to the organization’s strategic objectives
▪ Can take a tremendous amount of time to establish
▪ Must be communicated clearly to employees
▪ Must be tied in with the organization’s reward structure
Multilevel Corporate Competency Model
Success Factors and their Competencies
 How to Evaluate?
Absolute measurements
▪ measured strictly by absolute performance requirements or standards of jobs
Relative assessment
▪ measured against other employees and ranked on distance from next higher to
next lower-performing employee
▪ Ranking allows for comparison of employees but does not shed light on
distribution of performance
 Forced Ranking/Distribution
Arguments in favor of forced ranking
▪ best way to identify the highest-performing employees
▪ data-driven bases for compensation decisions
▪ forces managers to make and justify tough decisions
Arguments critical of forced ranking
▪ can be arbitrary, unfair and expose organizations to lawsuits
▪ inherent subjectivity
Forces ranking tends to be more effective in organizations with high-pressure,
results-driven cultures.
 Measures of Evaluation
▪ Graphic rating scales
▪ Weighted checklists
▪ Behaviorally anchored rating scales (BARS)
▪ Behavioral observation scales (BOS)
▪ Critical incident methods
▪ Management by objectives (MBO)
Example of Graphic Rating Scales
Example of a Weighted Checklist
Example of a Behaviorally Anchored
Rating Scale
Example of a Behavioral Observation Scale
Objectives-Based Performance Measurement
▪ Enhances employee motivation because employees are allowed to
provide input in determining their job responsibilities
▪ Employees can be far more committed to reaching performance
objectives they have agreed to and negotiated for themselves
▪ When an employee participates in the process, his/her trust and
dependability are placed on the line
Objectives-Based Performance Measurement
Three common oversights that inhibit effectiveness:
▪ Setting vague objectives
▪ Setting unrealistically difficult objectives
▪ Not clarifying how performance will be measured
The objectives selected must be valid;
Selection measures need to be valid;
Objective performance measures must also be valid.
 Reasons Managers Resist or Ignore
Performance Management
▪ Process is too complicated
▪ No impact on job performance
▪ Possible legal challenges
▪ Lack of control over process
▪ No connection with rewards
▪ Complexity and length of forms
 Strategies for Improving Performance
Management Systems
▪ Involve managers in the design of the system
▪ Hold managers accountable for the performance and development of
subordinates
▪ Set clear expectations for performance
▪ Set specific objectives for the system
▪ Tie performance measures to rewards
▪ Gain commitment from senior managers
EVALUATING EMPLOYEE
PERFORMANCE
 The Performance Appraisal Process
Step 1: Determine purpose of appraisal
Step 2: Identify environmental and cultural limitations
Step 3: Determine who will evaluate performance
Step 4: Select the best appraisal methods to accomplish goals
Step 5: Train raters
Step 6: Observe and document performance
Step 7: Evaluate performance
Step 8: Communicate appraisal results to employee
Step 9: Make personnel decisions: Terminate employees
Step 10: Monitor the legality and fairness of the appraisal system
 STEP 1: Determine the Purpose of Appraisal
Reasons for Performance Appraisal:
1. Providing employee training and feedback;
2. Determining salary increases;
3. Making promotion decisions;
4. Making termination decisions; and
5. Conducting personnel research.
 STEP 1: Determine the Purpose of Appraisal

Reasons for Performance Appraisal:

1. Providing employee training and feedback
• The most important use of performance evaluation is to improve
employee performance by providing feedback about what
employees are doing right and wrong.

• Performance appraisal review

• A meeting between a supervisor and a subordinate for the
purpose of discussing performance appraisal results.
• Discuss employee’s strengths and weaknesses and determine
how weaknesses can be corrected.
 STEP 1: Determine the Purpose of Appraisal

Reasons for Performance Appraisal:

2. Determining salary increases
• To provide a fair basis on which to determine an employee’s salary
increase.
• If performance appraisal results are to be used to determine salary
increases, a numerical format rather than narrative is needed.
 STEP 1: Determine the Purpose of Appraisal

Reasons for Performance Appraisal:

3. Making promotion decisions
• Even though promoting employees on the basis of performance or
tenure (seniority) is fair, it may not be smart.
• Peter Principle
• The idea that organizations tend to promote good employees
until they reach the level at which they are not competent – in
other words, their highest level of incompetence.
 STEP 1: Determine the Purpose of Appraisal

Reasons for Performance Appraisal:

3. Making promotion decisions
• If used to promote employees, you need to ensure that employee is
evaluated well on the job dimensions that are similar to those of the new
position.

• EX: Salesperson Sales Manager

Sales Communication skills
Communication skills Accuracy of paperwork
Accuracy of paperwork Motivational ability
Client rapport Employee rapport
 STEP 1: Determine the Purpose of Appraisal

Reasons for Performance Appraisal:

4. Making termination decisions
• When performance management techniques are not successful,
the results of the performance review might suggest that the best
course of action is to terminate the employee.

5. Conducting personnel research

• Research on correlating test scores with job performance.
• Although not the most important reason for evaluating
performance, personnel research is still important in organizations
where union contracts forbid performance evaluations as basis for
personnel decisions.
 STEP 2: Identify Environmental and Cultural Limitations
Look into the organization to see what is going on:
• Are supervisors highly overworked?
• An elaborate and time consuming performance appraisal system
will not be successful.
• Are there funding for salary increase?
• If there is no money for merit pay, developing a numerically
complex system will be frustrating and the results of the evaluation
may not be taken seriously.
• Are the employees cohesive?
• The use of peer ratings might affect and reduce group
cohesiveness.
 STEP 3: Determine Who Will Evaluate Performance
• Traditionally, employee performance has been evaluated by
supervisors.

• Is evaluation solely by supervisors accurate?

• Supervisors might observe only about 30% of the employee’s
behavior; the rest is observed by customers, peers, and support
staff.
• Employees might behave very differently around their supervisors
than around other people.
 STEP 3: Determine Who Will Evaluate Performance
Feedback
• providing employees with specific information about how well they are
performing as task or series of tasks.
To have an accurate view of the employee’s performance, a multiple-
source feedback can be used.

• 360-degree feedback
• a performance appraisal system in which feedback is obtained
from multiple sources such as supervisors, subordinates, peers,
customers, and self.
• Primarily used as a source for training and employee development.
• Seldom used for determining salary increase, making promotion
and termination decisions.
 STEP 3: Determine Who Will Evaluate Performance

Feedback Sources:
• Peers
• Research says that peer ratings are fairly reliable only when peers
who make the ratings are similar to and well acquainted with the
employee being rated.
• Research says high performers evaluate their peers more strictly
than do low performers.
• Research says employees tend to react worse to negative
feedback from peers than from experts.
 STEP 3: Determine Who Will Evaluate Performance

Feedback Sources:
• Subordinates
• Also called upward feedback.
• An important component of the 360-degree feedback as
subordinates can provide a very different view about a
supervisor’s behavior.
• Difficult to obtain because employees fear a backlash if they
unfavorably rate their supervisors.
 STEP 3: Determine Who Will Evaluate Performance

Feedback Sources:
• Subordinates
• Research says that feedback can be encouraged if:
• Supervisors appear open to employee comments;
• Ratings are made anonymously;
• Ratings are used for developmental purposes;
• Employee feels competent to make the rating;
• Employee feels there is no retaliation for making honest ratings; and
• Employee will somehow benefit by providing honest ratings.
• Research says that multisource feedback is most effective when:
• Employee needs to change his behavior;
• Employee perceives that the changes are feasible; and
• Employee is open to receiving constructive feedback.
 STEP 3: Determine Who Will Evaluate Performance

Feedback Sources:
• Customers
• Informally acquired by asking customers to provide feedback on
employee performance by filling complaints or when
complimenting a supervisor about one of his employees.
• Formally acquired by asking customers to provide feedback by
completing evaluation cards.
• Secret shoppers
• Current customers who have been enlisted by a company to
periodically evaluate the service they receive (in exchange of
a freebie or a free meal).
 STEP 3: Determine Who Will Evaluate Performance

Feedback Sources:
• Self
• Self-appraisal
• allowing an employee to evaluate his own behavior and
performance.
• Research says self-appraisal tends to suffer from leniency and
correlate only moderately with actual performance and
poorly with subordinate and management ratings, therefore,
is most biased thus, used by small percentage of organizations.
• Research says self-ratings of Japanese, Korean, and Taiwanese
workers suffer from modesty than leniency while the United
States, mainland China, India, Singapore and Hong Kong are
characterized by leniency.
 STEP 3: Determine Who Will Evaluate Performance

Feedback Sources:
• Self
• Research says that self-appraisals are most accurate when:
• Self-appraisals are not to be used for salary raises or promotion
purposes;

• Employees understand the performance appraisal system; and

• Employees believe that an objective record of their performance is

available with which the supervisors can compare the self-appraisal.
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
• The next step is to select the performance criteria and best
appraisal method.

• Criteria
• Ways of describing employee success.
• EX: attendance; quality of work

• Methods of measuring criteria must be chosen and created.

• Three (3) important decision to be made:

• Decision 1: Focus of the Appraisal Dimension
• Decision 2: Should Dimensions be Weighted?
• Decision 3: Use of Employee Comparison, Objective Measures, or Ratings
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 1: Focus of the Appraisal Dimension

Five (5) ways to focus performance dimension

1. Trait-focused Performance Dimension
2. Competency-focused Performance Dimension
3. Task-focused Performance Dimension
4. Goal-Focused Performance Dimension
5. Contextual Performance
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 1: Focus of the Appraisal Dimension
1. Trait-focused Performance Dimension
• Concentrates on employee attributes such as:
• Honesty
• Courtesy
• Responsibility
• Dependability
• Cooperation

• This dimension provide poor feedback thus, will not result in

employee development and growth and not specific enough to
change employee behavior.
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 1: Focus of the Appraisal Dimension
2. Competency-focused Performance Dimension
• Concentrates on the employees’ knowledge, skills, and abilities
(KSAs) such as:
• Report writing skills
• Driving skills
• Public speaking skills

• Using this dimension makes it easy to provide feedback and

suggest steps necessary to correct deficiencies.
EX: If employee has poor writing skills, the corrective
measure is to take a writing course/training.
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 1: Focus of the Appraisal Dimension
3. Task-focused Performance Dimension
• NOTE: Organized according to similarity of tasks
• A task-focused dimension includes several competencies such as:
• Court testimony • Arrest procedures
 Public speaking; • Crime prevention
 Organization; • Use of vehicle
 Knowledge of the law • Radio procedures

• Advantage: Because supervisors are concentrating on tasks that occur

together and can visualize employee’s performance, it is easier to evaluate
performance than with other dimensions.
• Disadvantage: Difficult to offer suggestions on how to correct deficiency.
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 1: Focus of the Appraisal Dimension
4. Goal-Focused Performance Dimension
• Organize the appraisal on the basis of goals to be accomplished by
employee such as:
• Prevent crimes from occurring
• Finish shift without personal injury
• Have arrests and citations stand up in court
• Ensure public safety

• Management by Objectives (MBO)

• A philosophy of management that rates performance on the basis of
employee achievement of goals set by mutual agreements between
employee and manager.
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 1: Focus of the Appraisal Dimension
5. Contextual Performance
• The first 4 ways to focus performance dimension earlier discussed
concentrated on the technical aspects of performing the job.
• It is the performance of an employee within the context of the
organization such as:
• Efforts by the employee to get along with peers;
• Efforts by the employee to improve the organization;
• Efforts to perform tasks that are needed but not in the job description

• Promotes good prosocial organizational behaviors.

 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 2: Should Dimensions be Weighted?
• Should one dimension be considered more important than the others?
• Depending on the organization (and the trade it does). The impact of
one dimension has to be weighted against the others within the context
of the organization.
EX: Student: Participation – 20% Activity – 30%
Quiz– 30% Final Exams - 20%

Nurse: Patient Care - (?)% VS Keeping a professional appearance - (?)%

• Differential weighting has its advantages, but many organizations weigh

all performance dimensions equally because it is easier to compute and
easier to explain to employees.
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 3: Use of Employee Comparison
• To reduce leniency, employees can be compared with one another instead of
being rated individually on a scale.
• Rank order
• Easiest and most common method of performance appraisal.
• Employees are ranked in order by their judged performance for each
relevant dimension.
• Paired comparison
• A group of employees to be ranked are compared one pair at a time and
choosing which employee is better one in each pair.
• Forced distribution
• Assume that employee performance is normally distributed, that is, that
there are certain percentages of employees who are poor, average, and
excellent.
Ranking Method of Evaluating Performance
Paired Comparison Method of Evaluating Performance
Forced Distribution Method of Evaluating Performance
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 3: Use of Objective Measures
Quantity of Work
• A type of objective criterion used to measure job performance by counting
the number of relevant job behavior that occur.

• EX: Salesperson – number of units sold

Assembly line worker – number of bumpers he welds
Police officer – number of arrests made
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 3: Use of Objective Measures
Quality of work
• A type of objective criterion used to measure job performance by
comparing a job behavior with a standard.
• Quality is usually measured in terms of errors.
• Errors – any deviation from a standard of quality
• To obtain a measure of quality, there must be a standard against which
to compare an employee’s work.
• EX: secretary’s work quality compared with typos
cook’s quality judged by how her food resembles the standard

Note: Error can even be work quality that is higher than the standard.
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 3: Use of Objective Measures
Attendance
Classified in 3 distinct criteria:
• Absenteeism
• Tardiness
• Tenure – as a criterion is used mostly for research
• Bonus systems can be given to reward long-tenure employees
Safety – as a criterion may also be used for research
• Any employee who follow safety rules and have no occupational
accidents do not cost an organization as much money as those who
break rules, equipment and own body.
• May be used for employment decisions such as promotions and
bonuses
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 3: Use of Ratings
Subjective Ratings
Two most common rating scales:
1. Graphic Rating Scale
• A method of performance appraisal that involves rating employee
performance on an interval or ratio scale.
• Easy to construct and use but susceptible to rating errors:
Halo error – occurs when a rater allows either a single attribute or
an overall impression of an individual to affect the ratings for other
job dimensions.
Leniency error – a type of rating error in which a rater consistently
gives all employees high ratings, regardless of their actual levels of
performance.
Graphic Rating Scale
 STEP 4: Select the Best Appraisal Methods to
Accomplish your Goals
Decision 3: Use of Ratings
Subjective Ratings
Two most common rating scales:
2. Behavioral Checklist
• Consist of a list of behaviors, expectations, or results for each
dimension.
• Are constructed by taking the task statements from a detailed job
description and converting them into behavioral performance
statements representing the level at which the behavior is expected
to be performed.
Behavioral Checklist
 STEP 5: Train Raters
• Training raters is very important to ensure sound evaluation
system.
• Trained raters reduce rating errors, increase accuracy and
increase satisfaction of employees.
• There is a lack of training for raters.
• Frame-of-reference training
• A method of training raters in which the rater is provided with:
• job related information;
• a chance to practice ratings;
• examples of ratings made by experts; and
• the rationale behind the expert ratings.
 STEP 6: Observe and Document Performance
• Critical incidents – a method of performance appraisal in which
the supervisor records employee behaviors that were observed on
the job and rates the employee on the basis of the record.

• Documentation is done by writing in a log.

• Should be communicated to employees as they occur.

• Documentations are important:

• Forces supervisors focus on behaviors rather than traits.
• Help supervisors recall behaviors when evaluating performance.
• Provide examples when reviewing performance ratings with
employees.
• Help defend organization against legal actions taken by employees
who are terminated or denied.
 STEP 7: Evaluate Performance
• Obtaining and reviewing objective data
• Sources of contamination should be considered
• Reading critical logs
• Help reduce errors
• Completing the rating form
• Aware of common rating errors: distribution errors, halo
errors, proximity errors, contrast errors.
• Aware of other challenges: low reliability across raters,
sampling problems, cognitive processing of observed
behavior.
 STEP 7: Evaluate Performance
Common Rating Errors
• Distribution Error – when rater uses only one part of a rating scale
• Leniency Error – rater tends to rate every employee at the upper
end of the scale. (Ex: rating employee a 4 or 5)
• Central Tendency Error – rater tends to rate every employee at the
middle of the scale. (Ex: rating all employees a 3)
• Strictness Error – rater tends to rate every employee at the lower
end of the scale. (Ex: rating employee a 1 or 2)
• Halo Error – when a rater allows either a single attribute or an overall
impression of an individual to affect the ratings for other job dimensions.
• Horn Error – when a rater allows either a single negative attribute or a
negative overall impression of an individual to affect the ratings for other
job dimensions.
 STEP 7: Evaluate Performance
Common Rating Errors
• Proximity Error – when a rating made on one dimension affects the
rating made on the dimension that immediately follows it on the rating
scale.
• Contrast Error – when the performance rating one employee receives
can be influenced by the performance of a previously evaluated
employee.
• Assimilation – when raters base their rating of an employee during one
rating period on the ratings given during a previous period.
 STEP 7: Evaluate Performance
Low reliability across raters
1. Raters often commit the rating errors previously discussed.
2. Raters often have very different standards and ideas about the
ideal employee.
3. Two different raters may actually see very different behaviors by
the same employee.

• Solution – Go back to STEP 5: Train Raters

 STEP 7: Evaluate Performance
Sampling problems
1. Recency Effect – recent behaviors are given more weight in the
performance evaluation than behaviors that occurred during the
first few months of the evaluation period.
2. Infrequent Observation – supervisors do not have the
opportunity to observe a representative sample of employee
behavior.
• Managers are often too busy with their own work that they have
no time to observe their employees’ behavior.
• Employees act differently around a supervisor than around other
workers.
 STEP 7: Evaluate Performance
Cognitive processing of observed behavior
1. Observation of behavior – when observed employee behavior is
not properly remembered or recalled during the performance
appraisal review.
• Raters generally recall behaviors consistent with their general
impression of an employee.
• The greater the time interval between actual behavior and the
performance rating, the greater the probability that rating errors
occur.
2. Emotional state – when raters who were placed in a stressful
situation tend to produce more ratings errors.
3. Bias – when raters tend to be lenient to employees they like.
 STEP 8: Communicate Appraisal Results to Employees
Prior to the interview
• Allocating time
• Both supervisor and employee should be allowed at least 1 hour to
prepare before an interview and at least 1 hour for the interview
itself.
• Scheduling the interview
• Location should be a neutral place that ensures privacy.
• Scheduled at least once every 6 months for most employees and
more often for new employees.
• However, “informal progress” checks should be held throughout the
year to provide feedback.
• Preparing for the interview
• Supervisor and employee should review the ratings each has given to
the employee and to himself, respectively.
 STEP 8: Communicate Appraisal Results to Employees
During the interview
• Supervisor should communicate the following:
• The role of performance appraisal -- that making decisions about
salary increases and termination is not its only purpose;
• How the performance appraisal was conducted;
• How the evaluation process was accomplished;
• The expectation that the appraisal interview will be interactive; and
• The goal of understanding and improving performance.
• Begin with the employee communicating his own rating and her
justification for them. Next, the supervisor communicates his
ratings and the reasons for them.
 STEP 8: Communicate Appraisal Results to Employees
During the interview
• Feedback sandwich – negative feedback is sandwiched between
positive feedbacks.
• Helps employees accept negative feedbacks;
• Helps supervisors reduce the chance of interpersonal conflict
• Any major differences between self-ratings and those given by the
supervisors should be discussed until both understand the
differences.
• Discuss reasons why employee’s performance is not perfect.
• Awareness and acknowledgement of external factors for
performance to avoid fundamental attribution error – the
tendency to attribute others’ failure or poor performance to
personal rather than situational factors.
 STEP 8: Communicate Appraisal Results to Employees
During the interview
• Once problems have been identified, the next and most difficult
task is to find solutions.
• Solutions to the problem result from joint effort.
• It is best to discuss strategies to improve performance on a later date
for employee to think about his performance ratings and be better
able to discuss future options.
• Once solutions are finalized, goals should be mutually set for
future performance and behavior, and both parties should
understand how these goals will be met.
 STEP 9: Terminate Employees
Private Sector:
• Employment-at-will Doctrine allows employers freedom to fire an
employee without a reason – at will.
• Employees are free to quit their jobs – at will, as well.

Exceptions to the Doctrine:

• When the employee is terminated for refusing to commit a crime.
• When employees are discharged despite employer’s promise of
job security.
• When employer has acted with a lack of good faith and fair
dealing.
 STEP 9: Terminate Employees
Terminating Meeting
• Prior to the meeting
• Ensure legal process has been followed.
• Determine how much help the organization wants to offer the employee.
• Schedule the meeting in a neutral and private location.
• During the meeting
• Supervisors should rationally state the reasons for the decision, express
gratitude for the employee’s efforts, and offer whatever assistance the
organization intends to provide.
• Employee is asked to gather his belongings and is escorted out the door.
• After the meeting
• Its natural for supervisors to feel guilty. To relieve some of this guilt, try
to review the facts -- you gave the employee every chance to improve,
but the employee chose not to.
 STEP 10: Monitor the Legality and Fairness
of the Appraisal System
• Performance appraisal systems are subject to the same legal
standards as are employment tests and other employment decisions.
• Performance ratings should be analyzed each rating period to
determine if there are gender, race/ethnicity, or age differences are
due to discrimination.
• Personnel decisions that are based on the performance appraisal
ratings should be analyzed to ensure discrimination does not occur
in the raises, bonuses, promotions, and terminations that result
from the performance ratings.