HRM - Chapter 7: Performance Management and Appraisal

Introduction Formal performance appraisal and multirater systems can have a great influence in the organizational performance and effectiveness (components of high performance work systems), because they are linked to business objectives, personal and organizational development and corporate strategy. On the other hand, it’s also a source of litigation, mainly because of the growing diversity of the workforce. Certain prescriptions should be followed in the PM system (Figure 7-1): Precision in the definition and measurement of the performance dimensions (as much as feasible) The content and measurement of performance must be linked to internal and external customers requirements. The PM system should investigate and correct the effects of situational constrains on performance.

Definition and why to measure performance Performance: the record of outcomes produced on specified job functions or activities during a specified period of time. The performance on the job as a whole is the average performance in the major functions or activities. The performance does NOT take into account measurement of traits, competencies and other characteristics of the person.  Uses of performance data: Performance management and compensation: identify weaknesses in the performance, set targets for improvements and use pay-forperformance system to motivate the achievement of this targets. Internal staffing: decisions about job movement (who to promote, retain or fire). If the 2 jobs are different in terms of the KASOCs needed, it’s recommended not to use performance appraisal for decisions because the performance of the employees in the jobs are not related. Training needs analysis: employees’ needs for training or development. Research and evaluation: determine whether human resource programs (selection, training, etc.) are effective.

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Legal issues Appraisal is a major target of legal disputes involving employee charges of unfairness and bias. To avoid these situations companies should audit data

units. rater and ratee. Designing an appraisal system The people involved should be managers. like perseverance and loyalty). measurement process. - The relationships among the criteria have to be also considered by the managers and. the effectiveness of a performance system is higher if the boss assess using more specific content (like the 6 categories) rather than just assess an overall performance. in general. Cost-effectiveness: maximize the gain (or minimize the loss) from each unit of resource.  Measurement content: Performance appraisal must be work-oriented (focus on record of outcomes that a person achieved in the job) instead of person-oriented (focus on personal traits. respect rules like the 80 percent*. in terms of either conformance to how the activity should be performed or fulfillment of its purpose.to test for possible adverse impact. Quantity: the amount produced (value. employees. goodwill and cooperation between colleagues. and follow recommendations (Figure 7-3). because the latter is not related with actual performance. HR professionals and both internal and external customers. making decisions about measurement content. Need for supervision: if the person can carry out an activity without supervision to prevent an adverse outcome. The outcomes can be assessed in six categories: Quality: if the result approaches perfection. and help in other activities (beyond formal role) when needed. make a ranking from the best to the worst worker . I can compared all possible pair of employees (paired comparisons). Interpersonal impact: the worker promotes feelings of self-esteem. * 80 % rule: the selection rate (number of employees selected / number of candidates) of any class can’t be lower than 80% of the class oh higher selection rate.) Timeliness: finish the activity at the earliest time desirable. regardless of the purpose. etc.  Measurement process: There are three ways to make performance assessment: 1) Comparisons of ratees’ performances I compare the ratees according to some measure of effectiveness or just overall performance.

2) Comparisons among anchors I have a set of statements (anchors) and I have to select the one (or more) that best describes the ratee’s performance level. The problem is that I can’t differentiate my employees. I can use the Computerized adaptive rating scale (CARS). that gives some specific observations and the rater has to choose a point in the scale and write its own observation. An example of this method. The last option is the mixed standard scales. it makes sense to derive the performance dimensions from the job descriptions. because that’s the way workers understand their jobs (what they are paid for). Central Tendency: the majority of ratees is in the middle of the scale. 3) Comparisons of individuals’ performance to anchors The first option is the graphic rating scale. the performance distribution assessment (PDA) takes into consideration the opportunities to perform at a level. which tries to reduce the bias because the scoring key is not known (managers don’t like to use because of this). or with bad. One method is the behaviorally anchored rating scales (BARS). - . respectively. due to situational constrains. Both are related to the characteristics of the rater. The most popular method of appraisal is the management by objectives (MBO). equal or worse than the anchor. in which anchors are adjectives and numbers and I have to choose which one matches the performance. or the forced method. Another function of the process is to control the rating errors that can arise from inaccuracies in judgment and information processing. Among all these methods the most reliable seems to be when we use the frequency that the worker achieve a performance level in the context of all the times he had the opportunity (PDA method). The kinds of errors are: Leniency/Severity: all the employees with good evaluations (most serious problem with appraisals). Another observation is that for individual level. which compares if the performance is better. Fundamental Attribution Error: tendency of observers to underestimate the effects of situational constrains and for performers to overestimate the effects on less than perfect performances.(straight ranking) or allocate the employees to some classes with fixed number of positions (forced distribution). in which the employee’s results are compared with targets set previously by him and his supervisor. that uses the frequency of achievement of a certain statement (anchor). Halo Effect: a rating on one dimension influences the rating in other different dimensions. The second option is the summated scales.

A process that can also be used is the benchmarking. so raters tend to attribute great frequency to them than was actually the case. group and organizational level. This can . Using detailed descriptions of behaviors and outcomes I can overcome this problem. There are unintentional errors and also intentional errors. but many times there is no link between this characteristic and the work performance. Just training and rating methods with hidden scoring keys are not enough to deal with this problem. and in this cases the use of just individual performances can create competition among workers. which can include self-assessment. On the other hand. being also related with corporate superior financial performance. and more than one level can be combined to create a multilevel system. and not just some of them (some aspects are exclusive to a kind of raters). comparing employees’ or firm’s performance with external reference or standards. but multirater systems. Availability: extreme performances (very good or very poor) are more memorable. Rater training can correct and avoid the first kind.  Defining the rater: Most companies still rely just in the supervisor to assess the employees. intentional errors can be caused by political reasons. (For situational constrains see Figure 7-9) Representativeness: the rater associate a characteristic of a good (or poor) performer with that level of performance and assess the others based if they have or not such characteristic. Assessment in at a higher aggregation level is desired especially when there is a sense of cooperation (individual performance is much related to group work). and consequently less often target of lawsuits.  Defining the ratee: The ratees can be defined in the individual. and the best option seems to be the assessment by more than one rater. are becoming more common.- - - creating a perception of unfairness. colleagues. subordinates and external customers assessment. and it’s thought to be more accurate and fair. One should just take care with the use of benchmarking to set targets when company’s performance level is too far from benchmarking. The biggest advantage is that the raters involved have the knowledge of all aspects of the employee’s performance. This method is also known as 360-degree appraisal system (Figure 711). Anchoring: Raters form a initial impression about workers and they resist to move from this point even with new relevant information. with the creation of a common frame of reference among raters and illustration of examples of different levels of performance. with less biases. by the wish to avoid confrontation or to fire a employee and so on. by improving raters’ observational and categorization skills.

There are many administrative characteristics that have to be considered in the performance management (Figure 7-12). The last one has both a motivational and informational purpose. telephone and computer monitoring) to monitor the employees. descriptive. . The biggest challenge is related with negative feedback. The solution is set realistic goals and gradually increase targets (known as shaping). Among them are the extension of the use of computers. job related.discourage employees and performance will decline. and can have a great link with future performance. specific. constructive. and how the feedback is provided by the rater. In sum a feedback should be clear. the use or not of electronic devices (cameras. and training may be a way to facilitate the process. frequent and timely.