Strategy for Human Resource

Management
Lecture 21

HRM 765
 Last Lecture
• Performance Management System
• The performance management systems need to include:
– decisions about who should evaluate performance
– what format should be used
– how the results should be utilized
• The Appraisal Process
• Difficulties in Performance Management Systems

Three approaches:
• Absolute standards
• Relative standards
• Objectives

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
 Topic

Establishing the Performance Management

System

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Factors that can Distort Appraisals

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Factors that can Distort Appraisals
• Leniency error
– Each evaluator has his/her own value system.
– Some evaluate high (positive leniency) and
others, low (negative leniency).
• Halo error: Evaluator lets an assessment
of an individual on one trait influence
evaluation on all traits.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Factors that can Distort Appraisals
• Similarity error: Evaluator rates others in
the same way that the evaluator perceives
him or herself.
• Low appraiser motivation: Evaluators
may be reluctant to be accurate if
important rewards for the employee
depend on the results.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Factors that can Distort Appraisals
• Central tendency: The reluctance to use the
extremes of a rating scale and to adequately
distinguish among employees being rated.
• Inflationary pressures: Pressures for equality
and fear of retribution for low ratings leads to
less differentiation among rated employees.
• Inappropriate substitutes for performance:
Effort, enthusiasm, appearance, etc. are less
relevant for some jobs than others.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Factors that can Distort Appraisals
Attribution Theory
• Evaluations are affected based on
whether someone’s performance is due to
– internal factors they can control
– external factors which they cannot
• If poor performance is attributed to
internal control, the judgment is harsher
than when it is attributed to external
control.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Factors that can Distort Appraisals
• Impression management:
• If employee positively influences the
relationship with the supervisor, he/she is
likely to receive a higher rating.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Creating More Effective Performance
Management Systems
Use Behavior-Based Measures:
• Measures based on specific descriptions
of behavior are more job-related and elicit
more inter-rater agreement than traits,
such as “loyalty” or “friendliness”.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Creating More Effective Performance
Management Systems
Combine Absolute and Relative
Standards:
• Absolute standards tend to be positively
lenient; relative standards suffer when
there is little variability.
• Combining the standards tends to offset
the weaknesses of each.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Creating More Effective Performance
Management Systems
Provide Ongoing Feedback:
• Expectations and disappointments should
be shared with employees on a frequent
basis.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Creating More Effective Performance
Management Systems
Use Multiple Raters:
• Increasing the number of raters leads to more
reliable and valid ratings.
– Use peer evaluations: Coworkers offer constructive
insights and more specific evaluations.
– Upward appraisals allow employees to give their
managers feedback.
– 360-Degree appraisals: Supervisors, peers,
employees, team members, customers and others
with relevant information evaluate the employee.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Creating More Effective Performance
Management Systems
Rate Selectively
– Appraisers only evaluate in those areas about
which they have sufficient knowledge.
– Appraisers should be organizationally as
close as possible to the individual being
evaluated.
– More effective raters are asked to do the
appraisals.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Creating More Effective Performance
Management Systems
Train Appraisers:
• Untrained appraisers who do poor
appraisals can demoralize employees and
increase legal liabilities.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
Creating More Effective Performance
Management Systems

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
 International Performance
Appraisal
• Who performs the evaluation?

– Different cultural perspectives and

expectations between the parent and local
country may make evaluation difficult.
– Evaluation forms may not be translated
accurately.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
 International Performance
Appraisal
• Evaluation Formats
– May make sense to use different forms for
parent-country nationals and host-country
nationals.
– Performance criteria for a particular position
should be modified to fit the overseas position
and site.
– Include a current expatriate’s insights as part
of the evaluation.

Fundamentals of Human Resource

Management 8e, DeCenzo and Robbins
 Summary
• Factors that can Distort Appraisals
– Leniency error
– Halo error
– Similarity error
– Low appraiser motivation
– Central tendency
– Inflationary pressures
– Inappropriate substitutes for performance
– Attribution Theory
– Impression management

Fundamentals of Human Resource Man

agement 8e, DeCenzo and Robbins
 Summary
• Creating More Effective Performance Management
Systems
– Use Behavior-Based Measures
– Combine Absolute and Relative Standards
– Provide Ongoing Feedback
– Use Multiple Raters
– Rate Selectively
– Train Appraisers

International Performance Appraisal

Fundamentals of Human Resource
Management 8e, DeCenzo and Robbins