6) Performance: Evaluating and Enhancing Employee Performance

Evaluating and Enhancing
Employee Performance
6) PERFORMANCE
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Performance Appraisal and Other
HRM Functions
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Labor
LaborRelations
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role for theunion
for the union facilitate training efforts
facilitate training efforts
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All Rights May not
Reserved. Maybe copied,
not be scanned, or duplicated,
copied, scanned, in whole or ininpart,
or duplicated, wholeexcept
or inforpart,
use except
as permitted
for use as
in a licensein
permitted distributed
a licensewith a certain product
distributed or service
with a certain or otherwise
product on a password-protected
or service or otherwise on a website for classroom use.
password-protected website for classroom use.
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Performance Appraisal Programs
• Performance Appraisal
 A process, typically performed annually by a
supervisor for a subordinate, designed to help
employees understand their roles, objectives,
expectations, and performance success.
• Performance Management
 The process of creating a work environment in which
people can perform to the best of their abilities.
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Ongoing Performance Feedback
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Performance Appraisal Programs
Programs
Appraisal Programs
Appraisal
Administrative
Administrative Developmental
Developmental
Compensation
Compensation Ind.
Ind.Evaluation
Evaluation
Job
JobEvaluation
Evaluation Training
Training
EEO/AA
EEO/AASupport
Support Career
CareerPlanning
Planning
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Purposes of a Performance Appraisal
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Reasons Appraisal Programs
Sometimes Fail
• Lack of top-management information and support

• Unclear performance standards
• Rater bias
• Too many forms to complete
• Use of the appraisal program for conflicting
(political) purposes.
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Managerial Issues Concerning Appraisals
1. There is little face-to-face discussion between the

manager and the employee being appraised.
2. The relationship between the employee’s job description
and the criteria on the appraisal form isn’t clear.
3. Managers feel that little or no benefit will be derived from
the time and energy spent in the process, or they are
concerned only with bad performances.
4. Managers dislike the face-to-face confrontation of
appraisal interviews.
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Managerial Issues Concerning Appraisals (cont.)
5. Managers are not sufficiently adept at rating employees

or providing them with appraisal feedback.
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.
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Developing an Effective Appraisal Program
• Performance Standards
 Must be based on job-related requirements derived
from job analysis and reflected in job description and
job specifications.
 Help translate an organization’s goals and objectives
into job requirements that define acceptable and
unacceptable performance levels.
• Calibration
 A process whereby managers meet to discuss the
performance of individual employees to ensure their
employee appraisals are in line with one another
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Establishing Performance Standards
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What Are the Performance Standards?
Performance Standards Characteristics
Strategic
Strategic Individual
Individualstandards
standardsdirectly
directly
Relevance
Relevance relate
relateto
tostrategic
strategicgoals.
goals.
Criterion
Criterion Standards
Standardscapture
captureall
allof
of an
an
Deficiency
Deficiency individual’s
individual’scontributions.
contributions.
Criterion
Criterion Performance
Performancecapability
capabilityis
isnot
not
Contamination
Contamination reduced
reducedby
byexternal
externalfactors.
factors.
Reliability
Reliability Standards
Standardsare
arequantifiable,
quantifiable,
(Consistency)
(Consistency) measurable,
measurable,and
andstable.
stable.
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Legal Guidelines for Appraisals
• Performance ratings must be job-related.

• Employees must be given a written copy of their job
standards in advance of appraisals.
• Managers who conduct the appraisal must be able to observe
the behavior they are rating.
• Supervisors must be trained to use the appraisal form
correctly.
• Appraisals should be discussed openly with employees and
counseling or corrective guidance offered.
• An appeals procedure should be established to enable
employees to express disagreement with the appraisal.
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Alternative Sources of Appraisal
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Sources of Performance Appraisal
• Manager and/or Supervisor

 Appraisal done by an employee’s manager and
reviewed by a manager one level higher.
• Self-Appraisal
 Appraisal done by the employee being evaluated,
generally on an appraisal form completed by the
employee prior to the performance interview.
• Subordinate Appraisal
 Appraisal of a superior by an employee, which is
more appropriate for developmental than for
administrative purposes.
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Sources of Performance Appraisal (cont.)
• Peer Appraisal
 Appraisal by fellow employees, compiled into a single
profile for use in an interview conducted by the
employee’s manager.
 Why peer appraisals are not used more often:
1. Peer ratings are simply a popularity contest.
2. Managers are reluctant to give up control over the
appraisal process.
3. Those receiving low ratings might retaliate against
their peers.
4. Peers rely on stereotypes in ratings.
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Sources of Performance Appraisal (cont.)
• Team Appraisal
 Based on TQM concepts; recognizes team
accomplishment rather than individual performance
• Customer Appraisal
 A performance appraisal that, like team appraisal, is
based on TQM concepts and seeks evaluation from
both external and internal customers
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Pros and Cons of 360-Degree Appraisal
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360-Degree Performance Appraisal System
Integrity Safeguards
• Assure anonymity
• Make respondents accountable
• Prevent “gaming” of the system
• Use statistical procedures
• Identify and quantify biases
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Training Appraisers
• Establishing an Appraisal Plan

 Provide an explanation of the performance appraisal
system’s objectives so that raters will understand the
compensation and development purposes for which the
appraisal is to be used.
 Explain the mechanics of the rating system
– How frequently the appraisals are to be conducted
– Who will conduct them
– What are the standards of performance.
 Alert raters to the weaknesses and problems of appraisal
systems so that they can be avoided.
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Training Performance Appraisers
Common
Common rater-related
rater-related errors
errors
Error
Errorof
ofcentral
central tendency
tendency
Leniency
Leniencyor
or strictness
strictnesserrors
errors
Similar-to-me
Similar-to-meerrors
errors
Recency
Recencyerrors
errors
Contrast
Contrast and
and halo
halo errors
errors
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Rater Errors
• Error of Central Tendency

 A rating error in which all employees are rated about
average.
• Leniency or Strictness Error
 A rating error in which the appraiser tends to give all
employees either unusually high or unusually low
ratings.
• Recency Error
 A rating error in which appraisal is based largely on an
employee’s most recent behavior rather than on
behavior throughout the appraisal period.
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Rater Errors (cont.)
• Contrast Error
 A 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
 An error in which an appraiser inflates the evaluation
of an employee because of a mutual personal
connection.
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Rater Errors: Training and Feedback
• Rating Error Training

 Observe other managers making errors
 Actively participate in discovering their own errors
 Practice job-related tasks to reduce the errors they
tend to make
• Feedback Skills Training
 Communicating effectively
 Diagnosing the root causes of performance problems
 Setting goals and objectives
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Performance Appraisal Methods
Graphic
GraphicRating
Rating
Scale
Scale
Mixed
MixedStandard
Standard
Scale
Scale
Trait
Trait
Methods
Methods
Forced-Choice
Forced-Choice
Essay
Essay
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Trait Methods
• Graphic Rating-Scale Method

 A trait approach to performance appraisal whereby
each employee is rated according to a scale of
individual characteristics.
• Mixed-Standard Scale Method
 An approach to performance appraisal similar to other
scale methods but based on comparison with (better
than, equal to, or worse than) a standard.
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Trait Methods (cont.)
• Forced-Choice Method
 Requires the rater to choose from statements
designed to distinguish between successful and
unsuccessful performance.
1. ______ a) Works hard _____ b) Works quickly
2. ______ a) Shows initiative _____ b) Is responsive to customers
3. ______ a) Produces poor quality _____ b) Lacks good work habits
• Essay Method
 Requires the rater to compose a statement describing
employee behavior.
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Trait Methods
• Forced-Choice Method
 Requires the rater to choose from statements
designed to distinguish between successful and
unsuccessful performance.
1. ______ a) Works hard _____ b) Works quickly
2. ______ a) Shows initiative _____ b) Is responsive to customers
3. ______ a) Produces poor quality _____ b) Lacks good work habits
• Essay Method
 Requires the rater to compose a statement describing
employee behavior.
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Behavioral Methods
Critical
CriticalIncident
Incident
Behavioral
BehavioralChecklist
Checklist
Behavioral
Behavioral
Methods
Methods Behaviorally
BehaviorallyAnchored
Anchored
Rating
RatingScale
Scale(BARS)
(BARS)
Behavior
BehaviorObservation
Observation
Scale
Scale(BOS)
(BOS)
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Behavioral Methods (cont.)
• Critical Incident Method

 Critical incident
– An unusual event that denotes superior or inferior employee
performance in some part of the job
– The manager keeps a log or diary for each employee
throughout the appraisal period and notes specific critical
incidents related to how well they perform.
• Behavioral Checklist Method

 The rater checks statements on a list that the rater believes
are characteristic of the employee’s performance or
behavior.
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Behavioral Methods (cont.)
• Behaviorally Anchored Rating Scale (BARS)

 Consists of a series of vertical scales, one for each
dimension of job performance; typically developed by a
committee that includes both subordinates and managers.
• Behavior Observation Scale (BOS)

 A performance appraisal that measures the frequency of
observed behavior (critical incidents).
 Preferred over BARS for maintaining objectivity,
distinguishing good performers from poor performers,
providing feedback, and identifying training needs.
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Results Methods
• Productivity Measures
 Appraisals based on quantitative measures
(e.g., sales volume) that directly link what employees
accomplish to results beneficial to the organization.
– Criterion contamination
– Focus on short-term results
• 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 manager.
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Performance Appraisal Under an MBO Program
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Creating an Effective MBO Program
1. Managers and employees must be willing to establish

goals and objectives together.
2. Objectives should be quantifiable and measurable for
the long and short terms.
3. Expected results must be under the employee’s control
and free from criterion contamination.
4. Goals and objectives must be consistent for each
employee level (top executive, manager, and employee).
5. Managers and employees must establish specific times
when the goals are to be reviewed and evaluated.
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The Balanced Scorecard
• The appraisal focuses on four related categories

 Financial, customer, processes, and learning
• Ensuring the method’s success:
 Translate strategy into a scorecard of clear objectives.
 Attach measures to each objective.
 Cascade scorecards to the front line.
 Provide performance feedback based on measures.
 Empower employees to make performance
improvements.
 Reassess strategy.
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Summary of Appraisal Methods
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Appraisal Interviews
Types
Types of
ofAppraisal
Appraisal Interviews
Interviews
Tell
Tell and
and Sell
Sell -- persuasion
persuasion
Tell
Tell and
and Listen
Listen --nondirective
nondirective
Problem
Problem Solving
Solving -- focusing
focusing the
the
interview
interview on
onproblem
problem resolution
resolution
and
and employee
employeedevelopment
development
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Appraisal Interview Guidelines
Invite
Invite Participation
Participation Ask
Ask for
for aa Self-Assessment
Self-Assessment
Change
Change Behavior
Behavior Problem
Problem Solving
Solving Focus
Focus
Minimize
Minimize Criticism
Criticism Express
Express Appreciation
Appreciation
Establish
Establish Goals
Goals Be
Be Supportive
Supportive
Follow Up Day by Day
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Factors That Affect an Employee’s Performance
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Performance Diagnosis
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Managing Ineffective Performance
• Possible Courses of Action

 Provide training to increase skills and abilities
 Transfer employee to another job or department
 Attention of actions to motivate employee
 Take disciplinary action
 Discharge the employee
• Cautions
 All actions taken must be objective and fair.
 Do not treat underperformer differently, setting the
employee up to fail.
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Learning Outcomes
Learning Outcome Statements Related Outcomes from Body of the Text
1 Explain what performance management is and how the Does your school have a performance management system in place to help
establishment of goals, ongoing performance feedback, students succeed? If so, how do you think the system might be similar or
and the appraisal process are part of it. different to performance management systems in the workplace?
2 Explain the purposes of performance appraisals and the Have ever been given a formal performance appraisal? If you have not, what do
reasons they sometimes fail. you think your employer’s rationale was for not appraising you or other
employees?
3 Describe the different sources of appraisal information. Do you think as an employee you would be in a good position to
appraise your boss? What aspects of his or her performance might you
be in a good position to appraise?
4 Explain the various methods used to evaluate the As an employee, would you rather be evaluated on your personal traits
performance of employees. or characteristics, your on-the-job behaviors, or the results you get?
Would it depend upon the job you were doing?
5 Outline the characteristics of an effective performance As a manager, how might you get an employee who is reluctant to talk
appraisal interview. during an appraisal to share his or her thoughts?
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Evaluating and Enhancing

• Lack of top-management information and support

1. There is little face-to-face discussion between the

5. Managers are not sufficiently adept at rating employees

• Performance ratings must be job-related.

• Manager and/or Supervisor

• Establishing an Appraisal Plan

• Error of Central Tendency

• Rating Error Training

• Graphic Rating-Scale Method

• Critical Incident Method

• Behavioral Checklist Method

• Behaviorally Anchored Rating Scale (BARS)

• Behavior Observation Scale (BOS)

• Management by Objectives (MBO)

1. Managers and employees must be willing to establish

• The appraisal focuses on four related categories

Follow Up Day by Day

• Possible Courses of Action

Learning Outcome Statements Related Outcomes from Body of the Text

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