Gary Dessler

tenth edition

Chapter 9 Part 3 Training and Development

Performance Management
and Appraisal
© 2005 Prentice Hall Inc. PowerPoint Presentation by Charlie Cook
All rights reserved. The University of West Alabama
After
After studying
studying this
this chapter,
chapter,
you
you should
should be
be able
able to:
to:
1. Describe the appraisal process.
2. Develop, evaluate, and administer at least four
performance appraisal tools.
3. Explain and illustrate the problems to avoid in
appraising performance.
4. List and discuss the pros and cons of six appraisal
methods.
5. Perform an effective appraisal interview.
6. Discuss the pros and cons of using different raters
to appraise a person’s performance.

©
© 2005
2005 Prentice
Prentice Hall
Hall Inc.
Inc. All
All rights
rights reserved.
reserved. 9–2
9–2
9–2
SIX STEPS of PERFORMANCE
APPRAISAL
1. Establishing expected performance level, i.e. work standards
that are understandable, measurable and reasonable

2. Communicating those standards to employees and how to

achieve them

3. Comparing employees’ actual performance against the

standards

4. Discussing the results with employees

5. Taking corrective action (if actual performance< expected

performance) or giving positive feedback/rewards (if actual
performance> expected performance)

6. Using the results to make decisions (such as promotions,

further training, pay increases or demotion/firing (if needed)
 Performance Appraisal vs. Performance
Management

Performance Appraisal
– Performance appraisal includes:
• Setting work standards
• Comparing employee’s actual performance to
those standards
• Letting the employee know about the
comparison (i.e. whether his performance is
above or below that standard) [If below,
motivate him to improve; if above, motivate him
to continue as is]
 Performance Appraisal vs. Performance
Management

Performance management
–Is the overall process of setting
organizational goals, performance
appraisal, and training and development
to achieve those goals.
–The ultimate objective is to ensure that
the employee’s performance is
supporting the company’s strategic
objectives
 Defining the Employee’s Goals and Work
Standards
 Assign specific goals which are focused
 Assign measurable goals that can be quantified
 Assign challenging but doable goals
 Include employees in formulating goals (participative goal-
setting)
 SMART goals:
– Specific, and clearly state the desired results to be achieved
– Measurable i.e. answers “how much.”; quantifiable
– Attainable, i.e. not too tough and not too easy
– Relevant, i.e. based on what the firm needs
– Timely, i.e. should mention deadlines and milestones for completion
– Ex- We aim to increase our market share by 3% this quarter, which will
enable us to gain a foothold in the luxury footwear market
Why do Companies do Performance Appraisal?
– Performance appraisal is useful in determining employee pay
levels and deciding who to promote (or demote)
– Performance appraisal is a key component of performance
management. When company strategic objectives are
translated into individual employee objectives, they have to
be measured and evaluated to ensure they are being
followed
– Performance appraisal is a means of correcting and
reinforcing employee performance (i.e. disciplinary tool), by
eliminating poor performance and encouraging productive
behaviour among employees
– Performance appraisals can identify an employees’ strengths
and weaknesses, and thus help in long term career planning
(which employee is suited for which position)
Realistic Appraisals
 Reasons for giving soft (less-than-honest)
appraisals
– Avoiding the work of having to hire and train
someone new
– The unpleasant reaction of the employee
– Company culture does not support honest,
straightforward appraisals (evaluations)
 Dangers of giving soft appraisals
– Employee will be unaware about his own
weakness, and hence cannot improve his abilities
Performance Appraisal Role: HR Department

 HR department
– Serves a policy-making and advisory role.
– Provides advice and assistance regarding the
appraisal tool to use.
– Prepares forms and procedures and insists that all
departments use them.
– Responsible for training supervisors to improve
their appraisal skills.
– Responsible for monitoring the appraisal system to
ensure that appraisal formats and regulations
comply with Equal Employment Opportunity (EEO)
laws and are up to date.
© 2005 Prentice Hall Inc. All rights reserved. 9–9
 Performance Appraisal: Role of Supervisors
 Supervisors
– Usually do the actual appraising of employees, not the HR
Dept
– HR dept provides the tools and equipment (forms, methods,
procedure etc) but the supervisor does the appraisal of an
employee under him
– So they must be familiar with appraisal techniques and
different ways to conduct appraisals
– Must understand and avoid problems that normally happen
during appraisals
– Should be fair in conducting performance appraisals,
otherwise true picture of employee performance will not be
obtained
 Designing the Appraisal Tool
 Two issues to consider:
– What to measure?
• Work output (quality, quantity etc)
• Personal competencies (Knowledge, Skills, Attitudes (KSA) etc)
• Goal achievement performance

– How to measure?
• Involves different tools of performance appraisal, such as:
– Graphic rating scales
– Alternation ranking method
– MBO
– Others etc

– They are discussed next…..

 Performance Appraisal Methods
 Graphic Rating Scale Method
– A scale that has a no. of traits or qualities listed (such as
communication skill, Teamwork, time management etc) and
shows an employees’ score on each quality
– The scores are given by supervisors who evaluate the
employee and fill out the form
– The graphic rating scale can contain:
• General Skills (such as communication, time management etc)
• Competencies (such as “builds a culture that is open and receptive to
improved medical care”)
• Actual Job Duties (such as “supervise one dozen nurses”)
– The supervisor then gives a score on each criteria, which are
totaled to give a final score for an employee
 Graphic
Rating Scale
with Space
for
Comments

Figure 9–3
© 2005 Prentice Hall Inc. All rights reserved. 9–13
 Portion of an Administrative Secretary’s Sample
Performance Appraisal Form

Source: James Buford Jr., Bettye Burkhalter, and Grover Jacobs, “Link Job
Description to Performance Appraisals,” Personnel Journal, June 1988, pp. 135–136.
Figure 9–4
© 2005 Prentice Hall Inc. All rights reserved. 9–14
 Performance
Performance
Management
ManagementOutline
Outline

Source: www.cwru.edu.
Figure 9–5a
© 2005 Prentice Hall Inc. All rights reserved. 9–15
 Performance
Performance
Management
Management
Outline
Outline
(cont’d)
(cont’d)

Figure 9–5b
Source: www.cwru.edu.
© 2005 Prentice Hall Inc. All rights reserved. 9–16
 Performance
Performance
Management
Management
Outline
Outline
(cont’d)
(cont’d)

Figure 9–5c
Source: www.cwru.edu.
© 2005 Prentice Hall Inc. All rights reserved. 9–17
 Performance Appraisal Methods
 Alternation ranking method
– Creating a list of employee names arranged from best to
worst on a particular quality (such as communication skill
etc)
– The highest-ranking employee name is put on top (No.1)
and the lowest-ranking employee name is put at the bottom
(No. 20).
– Then the second highest-ranked employee name is put at
No. 2 and the second lowest-ranked employee name is put
at No. 19
– This goes on until all employee names are filled (the list is
complete)
– Hence, the name “Alternation” ranking method (alternating
between highest-ranked and lowest-ranked)
 Alternation Ranking Scale

Figure 9–6
© 2005 Prentice Hall Inc. All rights reserved. 9–19
 Performance Appraisal Methods
 Paired comparison method
– Compares each employee with another employee in terms of a
particular trait or quality (such as creativity or ability to work
independently)
– A chart is made (for a particular quality) listing all the employees
to be considered, and they are placed side by side with one
another (on the x and y axis), so that they can be compared
– A ‘+’ is given if an employee is better than another employee,
and a ‘—’ is given if an employee is worse than another
employee
– Finally, we identify the employee who has received the highest
number of ‘+’s (pluses)
– That employee is better than all other employees in that
particular trait
 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.
Figure 9–7
© 2005 Prentice Hall Inc. All rights reserved. 9–21
 Performance Appraisal Methods (cont’d)
 Forced distribution method
– Employees are put into predetermined percentage
categories based on their performance
– Similar to students being graded on a curve
– For Example:
• 20% Excellent Performers (who will get an A and A-)
• 70% Good to Average Performers (who will get B+ to B-)
• 10% Low performers (who will get C+ to F (fail) etc)

– The separate categories have different recommendations or suggestions,

for example Top 20%- Maintain as is, Middle 70%- Maintain strengths
and work on weaknesses, Bottom 10%- Training and development
needed, maybe job rotation or job restructuring etc. If nothing works,
have to demote or finally, fire
 Performance Appraisal Methods (cont’d)
 Critical Incident Method
– Identifying and recording an employee’s best and worst performance over
a time period (for example, throughout six months)
– These examples are “critical incidents”, which are then discussed with the
employee to encourage positive critical incidents and correct negative
critical incidents
– For Example:
• Generated $25000 extra sales in a given month above the quota (positive
critical incident)
• Damaged a LCD control panel resulting in lost production for himself and for
the entire assembly line (no one could use it) (negative critical incident)
– Strengths:
• Good and bad examples are both highlighted, so employee knows what the correct course of action
is, and what he should do regularly
• The supervisor has to monitor the employee’s performance throughout the year (or six month
period), so evaluation is more consistent, fair and precise
– Weakness:
• No numerical rating, only real life examples. So hard to compare between employees. Also, since
numerical evaluation is not included, cannot be used to make salary or pay-based decisions
(Qualitative Method)
 Examples of Critical Incidents for
an Assistant Plant Manager

Table 9–1
© 2005 Prentice Hall Inc. All rights reserved. 9–24
 Performance Appraisal Methods (cont’d)
 Narrative Forms
– A form which a supervisor uses to evaluate an
employee
– Usually in the format of a mixed questionnaire
(both structured and unstructured questions)
– Asks various questions about an employee which
the supervisor answers and puts on the form (ex-
what areas does the employee need to improve in?)
– After filling it out, both the supervisor and the
employee sit down to discuss the form (sort out
problems and highlight strengths)
– In this way, performance improvement is possible
 Narrative
Form
Example

Source: Reprinted with permission of

the publisher, HRnext.com; copyright
HRnext.com, 2003.
Figure 9–8
© 2005 Prentice Hall Inc. All rights reserved. 9–26
 Classroom
Teaching
Appraisal By
Students

Source: Richard I. Miller, Evaluating Faculty

for Promotional and Tenure (San Francisco:
Jossey-Bass Publishers, 1987), pp. 164–165.
Copyright © 1987, Jossey-Bass Inc.,
Publishers. All rights reserved. Reprinted with
permission.
Figure 9–1
© 2005 Prentice Hall Inc. All rights reserved. 9–27
 Continuous improvement
 A management philosophy that requires
employers to continuously set and
relentlessly meet ever-higher quality, cost,
delivery, and availability goals by:
– Eradicating the seven wastes:
• overproduction, defective products, and unnecessary
downtime, transportation, processing costs, motion, and
inventory.
– Requiring each employee to continuously improve
his or her own personal performance, from one
appraisal period to the next.

© 2005 Prentice Hall Inc. All rights reserved. 9–28

 The Components of an Effective
Performance Management Process
 Direction sharing
 Role clarification
 Goal alignment
 Developmental goal setting
 Ongoing performance monitoring
 Ongoing feedback
 Coaching and support
 Performance assessment (appraisal)
 Rewards, recognition, and compensation
 Workflow and process control and return
Figure 9–2
© 2005 Prentice Hall Inc. All rights reserved. 9–29
 Performance Appraisal Methods (cont’d)
Behaviorally anchored rating scale
(BARS)
– An appraisal tool that uses a numerical rating
scale with specific behavioural examples of
good and poor performance
– So it combines the critical incident method
(good and bad examples) with the graphic
rating scale method (use of numerical scale)
– As a result, provides better, more detailed
appraisals
 Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship Skill

Source:Walter C. Borman, “Behavior

Based Rating,” in Ronald A. Berk (ed.),
Performance Assessment: Methods and
Applications (Baltimore, MD: Johns
Hopkins University Press, 1986), p. 103.
Figure 9–9
© 2005 Prentice Hall Inc. All rights reserved. 9–31
 Performance Appraisal Methods (cont’d)
 Developing a BARS:
– 1. Identify Critical Incidents
• By asking jobholders and supervisors to mention good and bad examples of
work
– 2. Group Incidents by Skill
• Sort similar critical incidents into groups and name the group (for example,
“related to communication skills”)
– 3. Verify with another Group
• Ask another group of knowledgeable people (jobholders, supervisors etc) to
reorganize the critical incidents according to skill/effect. If they sort it the same
way, then the classification is correct
– 4. Develop a numerical scale
• Rank the critical incidents under a particular skill heading on a numbered scale
(from 1 to 9; 1- Poor Performance, 9- Excellent Performance)
– 5. Refine and Strengthen Classification
• Pick six or seven behaviours which are strongly related to the incident (i.e. strong
examples of good or bad performance). This strengthens the scale and
measurement
 Performance Appraisal Methods (cont’d)
 Advantages of BARS
– Measures developed by people who actually do the job
(jobholders, supervisors etc. ) So, the scale is very accurate
– Since every number on the scale is represented by a critical
incident (example of behaviour), it is easy to evaluate a
particular candidate (know what to spot)
– For the same reason as above, it is easier to explain to a
candidate why his score is low (or high) etc
– Better identification of separate skills (because the incidents
are clustered in separate skill groups). One skill does not get
confused with another
– High Reliability, i.e. different evaluators give same score to
one particular candidate (because scale is not confusing)
Management by Objectives (MBO)
 Involves setting specific measurable goals
for each employee and then periodically
checking progress towards those goals (i.e.
Goal-Performance match)
1. Set organizational goals
2. Set departmental goals
3. Discuss departmental goals with employees
4. Define expected results for each employee
5. Performance review by Supervisor (Goal-
Performance match)
6. Discussion of results with employee

9–34
Computerized and Web-Based
Performance Appraisal
 Electronic performance monitoring (EPM)
– Having supervisors electronically monitor the
amount of work an employee is doing per day,
and thereby measure his or her performance.
– Ex- Using GPS to track deliverymen, using intranet
to monitor typist speed, using overhearing facility
to monitor the calls of customer service agents
– All are ways of measuring performance of
employees
 Common Performance Appraisal Problems
 Unclear standards
– Not having descriptions of numerical scores or keywords (for
example, what does “excellent” performance mean?)
 Halo effect
– One quality influencing other qualities. (ex- assuming that a
quiet, shy employee is an unproductive employee because
he does not talk about his achievements. In reality, he might
be very productive and efficient but just doesn’t talk as
much)
 Central tendency
– Giving all employees average ratings. This distorts true
potential identification and evaluation of employees
 A Graphic Rating Scale with Unclear Standards

Note: For example, what exactly is meant by

“good,” “quantity of work,” and so forth?

Table 9–2
© 2005 Prentice Hall Inc. All rights reserved. 9–37
Common Performance Appraisal Problems

 Strictness/leniency
– The problem that occurs when a supervisor has a
tendency to rate all employees either high or low
(extreme rating)
Advantages and Disadvantages of Appraisal Tools
 Who Should Do the Appraising?
 The immediate supervisor
 Peers (colleagues, teammates etc)
 Rating committees (groups of supervisors)
 Self-ratings by employees (can be higher
than average)
 Subordinates
 360-Degree feedback (from supervisors,
subordinates, peers, colleagues, customers
etc)

© 2005 Prentice Hall Inc. All rights reserved. 9–40

 The Appraisal Interview
 Types of appraisal interview outcomes
– Satisfactory—Promotable (easiest to conduct, tell
him about new opportunity)
– Satisfactory—Not promotable (No opportunities in
company etc; provide incentives to maintain current
performance)
– Unsatisfactory—Correctable (lay out action plan to
correct performance (performance contract)
– Unsatisfactory—Not correctable (hardest to conduct
if required, but you might not need to conduct at all
if it is pointless. Just dismiss or tolerate)
 Performance
Contract

Source: David Antonion, “Improving the

Performance Management Process Before
Discontinuing Performance Appraisals,”
Compensation and Benefits Review May–
June 1994, p. 33, 34.
Figure 9–10
© 2005 Prentice Hall Inc. All rights reserved. 9–42
Guidelines for Conducting the
Appraisal Interview
– Talk in terms of objective work data (work
standards, performance levels etc)
– Don’t get personal (don’t compare to
someone else)
– Encourage the person to talk.
– Don’t tiptoe around (get to the point,
mention problems, and get improvement (or
maintenance) commitment
 The Appraisal Interview (cont’d)
 How to handle a defensive subordinate
– Recognize that defensive behavior is normal.
– Never attack a person’s defenses.
– Delay taking action
– Recognize your own limitations (don’t try to be a
psychologist)

© 2005 Prentice Hall Inc. All rights reserved. 9–44

 The Appraisal Interview (cont’d)
 How to criticize a subordinate
– Do it in a manner that lets the person maintain his
or her dignity and sense of worth.
– Criticize in private, and do it constructively.
– Avoid once-a-year “critical broadsides” by giving
feedback on a daily basis, so that the formal
review contains no surprises.
– Never say the person is “always” wrong (no one
ever is)
– Criticism should be objective and free of any
personal biases
© 2005 Prentice Hall Inc. All rights reserved. 9–45
 Written Warnings
– Purpose of the written warning
• To shake the employee out of bad habits.
• Help you defend your rating, both to your own boss and (if needed) to
the courts. (by demonstrating that communication was clear and
explicit)
– Written warnings should:
• Mention standards by which employee is judged (expected
performance level)
• Make sure that employee was aware of the standard (proper
communication done)
• Specify deficiencies relative to the standard (actual performance level
lower)
• Indicate employee’s prior opportunity for correction (mention previous
warnings, verbal etc. Written warning is the last level of warning)
• Concept of “Straw that broke the camel’s back” (soft warning<hard
warning<punishment<written warning<termination)
 Checklist
During the
Appraisal
Interview

Source: Reprinted with permission of

the publisher, HRnext.com. Copyright
HRnext.com, 2003.
Figure 9–11
© 2005 Prentice Hall Inc. All rights reserved. 9–47
 Steps Involved in Appraising Performance
 Step 1: Defining the job
– Making sure that you and your subordinate agree on his or
her duties and job standards (i.e. setting expected
performance levels)
 Step 2: Comparison of Performance
– Comparing your subordinate’s actual performance to the
standards that have been set (i.e. performance matching)
– This usually involves some type of rating form
 Step 3: Providing feedback
– Discussing the subordinate’s performance and progress with
him (whether there are discrepancies or whether they have
been exceeded), and making plans for any development
required 9–48