Week 9 - Performance Management and Appraisal

Chapter 9
Performance
Management
and Appraisal
Part Three | Training and Development
Copyright
Copyright ©© 2011
2011 Pearson
Pearson Education,
Education, Inc.
Inc. PowerPoint
PowerPoint Presentation
Presentation by
by Charlie
Charlie Cook
Cook
publishing
publishing as
as Prentice
Prentice Hall
Hall The
The University
University of
of West
West Alabama
Alabama
WHERE WE ARE NOW…
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–2

LEARNING OUTCOMES
1. Define performance management and discuss how it
differs from performance appraisal.
2. Set effective performance appraisal standards.
3. Describe the appraisal process.
4. Develop, evaluate, and administer at least four
performance appraisal tools.
5. Explain and illustrate the problems to avoid in
appraising performance.
6. Discuss the pros and cons of using different raters to
appraise a person’s performance.
7. Perform an effective appraisal interview.

Basic Concepts in Performance
Management and Appraisal
Performance Appraisal Performance

Management
Setting work An integrated

standards, assessing approach to ensuring
performance, and that an employee’s
providing feedback to performance supports
employees to and contributes to the
motivate, correct, and organization’s
continue their strategic aims.
performance.

FIGURE 9–1
Online Faculty
Evaluation Form

Defining the Employee’s Goals
and Work Standards
Guidelines for Effective

Goal Setting
Set Assign Assign Assign

Encourage
SMART specific measurable challenging/
participation
goals goals goals doable goals

Setting SMART Goals
• Specific, and clearly state the desired results.
• Measurable in answering “how much.”
• Attainable, and not too tough or too easy.
• Relevant to what’s to be achieved.
• Timely in reflecting deadlines and milestones.

An Introduction to Appraising Performance
Why Appraise Performance?
1 Is basis for pay and promotion decisions.
2 Plays an integral role in performance management.
Helps in correcting deficiencies and reinforcing good

3
performance.
4 Is useful in career planning.

(Un)Realistic Appraisals
• Motivations for Soft Appraisals
 The fear of having to hire and train someone new.
 The unpleasant reaction of the appraisee.
 An appraisal process that’s not conducive to candor.
• Hazards of Soft Appraisals

 Employee loses the chance to improve before being discharged
or forced to change jobs.
 Lawsuits arising from dismissals involving inaccurate
performance appraisals.

Performance Appraisal Roles
• The Supervisor’s Role
 Usually do the actual appraising
 Must be familiar with basic

appraisal techniques
 Must understand and avoid
problems that can cripple
appraisals
 Must know how to conduct
appraisals fairly

Performance Appraisal Roles (cont’d)
• The HR Department’s Role
 Serves a policy-making and advisory role.
 Provides advice and assistance regarding the appraisal

tool to use.
 Trains supervisors to improve their appraisal skills.
 Monitors the appraisal system effectiveness and

compliance with EEO laws.

Effectively Appraising Performance
Steps in Appraising Performance
1 Defining the job and performance criteria
2 Appraising performance
3 Providing feedback session

Designing the Appraisal Tool
• What to Measure?
 Work output (quality and quantity)
 Personal competencies
 Goal (objective) achievement
• How to Measure?
 Generic dimensions
 Actual job duties
 Behavioral competencies

Performance Appraisal Methods
Appraisal Methodologies
1 Graphic rating scale 6 Narrative forms
Behaviorally anchored rating

2 Alternation ranking 7
scales (BARS)
3 Paired comparison 8 Management by objectives (MBO)
Computerized and Web-based

4 Forced distribution 9
performance appraisal
5 Critical incident 10 Merged methods

FIGURE 9–2
Sample Graphic
Rating Performance
Rating Form

FIGURE 9–3 One Item from an Appraisal Form Assessing Employee
Performance on Specific Job-Related Duties

FIGURE 9–4 Appraisal Form for Assessing Both Competencies and Specific Objectives

FIGURE 9–4 Appraisal Form for Assessing Both Competencies and Specific Objectives (cont’d)

FIGURE 9–5 Scale for Alternate Ranking of Appraisee

FIGURE 9–6 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.

TABLE 9–1 Examples of Critical Incidents for Assistant Plant Manager
Continuing Duties Targets Critical Incidents

Schedule production 90% utilization of Instituted new production
for plant personnel and machinery scheduling system; decreased
in plant; orders delivered late orders by 10% last month;
on time increased machine utilization in
plant by 20% last month
Supervise procurement Minimize inventory costs Let inventory storage costs rise
of raw materials and while keeping adequate 15% last month; over-ordered
on inventory control supplies on hand parts “A” and “B” by 20%; under-
ordered part “C” by 30%
Supervise machinery No shutdowns due Instituted new preventative

maintenance to faulty machinery maintenance system for plant;
prevented a machine breakdown
by discovering faulty part

FIGURE 9–7
Appraisal-Coaching
Worksheet

Behaviorally Anchored Rating Scale
(BARS)
Developing a BARS Advantages of BARS
1. Write critical incidents  A more accurate gauge
2. Develop performance  Clearer standards
dimensions  Feedback
3. Reallocate incidents  Independent dimensions
4. Scale the incidents  Consistency
5. Develop a final
instrument

FIGURE 9–8
Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship Skills

Management by Objectives (MBO)
• A comprehensive and formal organizationwide
goal-setting and appraisal program requiring:
1. Setting of organization’s goals
2. Setting of departmental goals
3. Discussion of departmental goals
4. Defining expected results (setting individual goals)
5. Conducting periodic performance reviews
6. Providing performance feedback

Using MBO
Potential Problems with MBO
Conflict with
Setting unclear Time-consuming
subordinates over
objective appraisal process
objectives

Computerized and Web-Based
Performance Appraisal Systems
• Allow managers to keep notes on subordinates.
• Notes can be merged with employee ratings.
• Software generates written text to support appraisals.
• Allows for employee self-monitoring and self-evaluation.
• Electronic Performance Monitoring (EPM) Systems

 Use computer network technology to allow managers access to
their employees’ computers and telephones.
 Managers can monitor the employees’ rate, accuracy, and time
spent working online.

FIGURE 9–9
Online Performance
Appraisal Tool

Dealing with Performance
Appraisal Problems
Potential Rating Scale

Appraisal Problems
Unclear Halo Central Leniency or

Bias
standards effect tendency strictness

TABLE 9–2 A Graphic Rating Scale with Unclear Standards

Guidelines for Effective Appraisals
How to Avoid
Appraisal Problems
Get
Know the Use the Keep a Be
agreement on
problems right tool diary fair
a plan

TABLE 9–3 Important Advantages and Disadvantages of Appraisal Tools
Tool Advantages Disadvantages

Graphic rating scale Simple to use; provides a quantitative Standards may be unclear; halo
rating for each employee. effect, central tendency, leniency,
bias can also be problems.
BARS Provides behavioral “anchors.” BARS Difficult to develop.
is very accurate.
Alternation ranking Simple to use (but not as simple as Can cause disagreements among
graphic rating scales). Avoids central employees and may be unfair if all
tendency and other problems of rating employees are, in fact, excellent.
scales.
Forced distribution End up with a predetermined number Employees’ appraisal results
method or % of people in each group. depend on your choice of cutoff
points.
Critical incident Helps specify what is “right” and Difficult to rate or rank employees
method “wrong” about the employee’s relative to one another.
performance; forces supervisor to
evaluate subordinates on an ongoing
basis.
MBO Tied to jointly agreed-upon Time-consuming.
performance objectives.

Choosing the Right Appraisal Tool
Criteria for Choosing an

Appraisal Tool
Employee
Accessibility Ease-of-use Accuracy
acceptance

FIGURE 9–10 Selected Best Practices for Administering Fair Performance Appraisals
• Base the performance review on duties and standards from a job analysis.
• Try to base the performance review on observable job behaviors or objective
performance data.
• Make it clear ahead of time what your performance expectations are.
• Use a standardized performance review procedure for all employees.
• Make sure whoever conducts the reviews has frequent opportunities to observe
the employee’s job performance.
• Either use multiple raters or have the rater’s supervisor evaluate the appraisal
results.
• Include an appeals mechanism.
• Document the appraisal review process and results.
• Discuss the appraisal results with the employee.
• Let the employees know ahead of time how you’re going to conduct the review and
use the results.
• Let the employee provide input regarding your assessment of him or her.
• Indicate what the employee needs to do to improve.
• Thoroughly train the supervisors who will be doing the appraisals.
FIGURE 9–11 Guidelines for a Legally Defensible Appraisal
1. Preferably, conduct a job analysis to establish performance criteria and standards.

2. Communicate performance standards to employees and to those rating them, in writing.
3. When using graphic rating scales, avoid undefined abstract trait names (such as “loyalty” or
“honesty”).
4. Use subjective narratives as only one component of the appraisal.
5. Train supervisors to use the rating instrument properly.
6. Allow appraisers substantial daily contact with the employees they’re evaluating.
7. Using a single overall rating of performance is usually not acceptable to the courts.
8. When possible, have more than one appraiser, and conduct all such appraisals
independently.
9. One appraiser should never have absolute authority to determine a personnel action.
10. Give employees the opportunity to review and make comments, and have a formal appeals
process.
11. Document everything: Without exception, courts condemn informal performance evaluation
practices that eschew documentation.
12. Where appropriate, provide corrective guidance to assist poor performers in improving.

Who Should Do the Appraising?
Immediate
Self-rating
supervisor
Peers
Potential Subordinates
Appraisers
Rating 360-degree
committee feedback

The Appraisal Interview
Satisfactory—Promotable
Satisfactory—Not Promotable
Types of Appraisal
Interviews Unsatisfactory—Correctable
Unsatisfactory—Uncorrectable

FIGURE 9–12 Sample Employee Development Plan

Appraisal Interview Guidelines
Guidelines for Conducting

an Interview
Talk in terms of
Don’t get Encourage the Get
objective work
personal person to talk agreement
data

FIGURE 9–13
Checklist During
Appraisal Interview

Handling Defensive Responses
How to Handle a Defensive Subordinate
1 Recognize that defensive behavior is normal.
2 Never attack a person’s defenses.
3 Postpone action.
4 Recognize your own limitations.

How to Deliver Criticism
How to Criticize a Subordinate
1
Do it in a manner that lets the person maintain
his or her dignity and sense of worth.
2 Criticize in private, and do it constructively.

Give daily feedback so that the review has no
3
surprises.
4 Never say the person is “always” wrong.
5 Criticism should be objective and free of biases.

Formal Written Warnings
• Purposes of a Written Warning
 To shake your employee out of bad habits.
 To help you defend your rating, both to your own boss and (if
needed) to the courts.
• A Written Warning Should:

 Identify standards by which employee is judged.
 Make clear that employee was aware of the standard.
 Specify deficiencies relative to the standard.
 Indicate employee’s prior opportunity for correction.

Performance Management
• Performance Management
 Is the continuous process of identifying, measuring, and
developing the performance of individuals and teams and
aligning their performance with the organization’s goals.
• How Performance Management Differs From

Performance Appraisal
 A continuous process for continuous improvement
 A strong linkage of individual and team goals to strategic goals
 A constant reevaluation and modification of work processes

Basic Building Blocks of
Performance Management
Ongoing
Goal
Direction sharing performance
alignment
monitoring
Coaching and Rewards,

Ongoing
development recognition, and
feedback
support compensation

Why Performance Management?
Total Quality Management

The
Performance
Resolution of Appraisal Issues
Management
Approach
Strategic Goal Alignment

Using Information Technology to
Support Performance Management
• Assign financial and nonfinancial goals to each team’s
activities along the strategy map chain of activities
leading up to the company’s overall strategic goals.
• Inform all employees of their goals.
• Use IT-supported tools like scorecard software and
digital dashboards to continuously monitor and assess
each team’s and employee’s performance.
• Take corrective action at once.

FIGURE 9–14 Performance Management Report

KEY TERMS
performance appraisal
graphic rating scale
alternation ranking method
paired comparison method
forced distribution method
critical incident method
behaviorally anchored rating scale (BARS)
electronic performance monitoring (EPM)
unclear standards
halo effect
central tendency
strictness/leniency
bias
appraisal interview
performance management
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission of the publisher.
Printed in the United States of America.

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Chapter 9

Part Three | Training and Development

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–2

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–3

Performance Appraisal Performance

Setting work An integrated

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–4

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–5

Guidelines for Effective

Set Assign Assign Assign

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–6

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–7

Why Appraise Performance?

1 Is basis for pay and promotion decisions.

2 Plays an integral role in performance management.

Helps in correcting deficiencies and reinforcing good

4 Is useful in career planning.

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–8

• Hazards of Soft Appraisals

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–9

 Must be familiar with basic

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–10

 Provides advice and assistance regarding the appraisal

 Monitors the appraisal system effectiveness and

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–11

Steps in Appraising Performance

1 Defining the job and performance criteria

3 Providing feedback session

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–12

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–13

1 Graphic rating scale 6 Narrative forms

Behaviorally anchored rating

3 Paired comparison 8 Management by objectives (MBO)

Computerized and Web-based

5 Critical incident 10 Merged methods

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–14

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–15

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–16

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–17

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–18

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–19

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Continuing Duties Targets Critical Incidents

Supervise machinery No shutdowns due Instituted new preventative

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–21

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–22

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–23

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–24

2. Setting of departmental goals

3. Discussion of departmental goals

4. Defining expected results (setting individual goals)

5. Conducting periodic performance reviews

6. Providing performance feedback

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–25

Potential Problems with MBO

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• Electronic Performance Monitoring (EPM) Systems

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Potential Rating Scale

Unclear Halo Central Leniency or

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–29

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–30