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APPRAISING AND MANAGING PERFORMANCE

Chapter 8

Human Resource Management

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Performance Management

Incorporates job design, recruitment and selection, training and development, career planning, compensation and benefits, and performance appraisal.Ensures that jobs are properly designed, qualified personnel are hired, trained, rewarded and motivated to achieve the organisation’s strategic business objectives.Promotes the organisational and employee behaviour and performance required to improve bottom line results.Fixes accountability for behaviour and results; and it helps to improve performance.Performance appraisal is a key part of an organization’s performance management system

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Defining Performance Appraisal Performance appraisal, by providing a dynamic link to

employee recruitment, selection, training and development, career planning, compensation and benefits, safety and health, is a vital tool for strategy execution.

The process of determining how well employees do their jobs compared to a set of standards, and establishing a plan for performance improvement.

It can be used as a means of assessing potential for promotion, assisting people to perform better and indicating future training needs.

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Key Element of Performance Management

• the creation of a shared vision of the organisation’s strategic objectives;

• the establishment of performance objectives (derived from the organisation’s strategic business objectives) for each function, group and individual to ensure that their performance is aligned with the needs of the business;

• the use of a formal review process to evaluate functional group and individual progress towards goal achievement;

• the linking of performance evaluation and employee development and rewards to motivate and reinforce desired behaviour.

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Objectives of Performance Appraisal

DiscriminationDiscriminate between those who have higher

contribution and those who are not.

RewardReward those who have better performance

DevelopmentHelp employees to grow and develop

Feedback Improve communication between management and

employees for better understanding.

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The Appraisal Process• Establish performance standards that evolve

out of a job description and job analysis. (Clear and measurable)

• Communicate expectations (two-way).• Measure the performance.• Compare actual performance with

standards.• Discuss the appraisal.

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Most Frequent Uses• Management development• Performance measurement• Performance improvement• Training (coaching and career planning)

• Compensation• Identification of candidate for promotion• Feedback and communication• Legal compliance

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RATER OF EMPLOYEE PERFORMANCE

• Supervisor Evaluation

• Peer Evaluation

• Self-evaluation

• Subordinate Evaluation

• Multisource Evaluations

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Multi-source Evaluation

• Multisource or 360 degree evaluations are gaining increasing popularity with some companies as they strive to improve organisational and individual performance.

• The objectives of the 360 degree evaluation (from clients, supplier, vendors, and internal organization) are to identify areas of organisational and individual performance that need improvement.

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Team Appraisals Should Ensure That:

• has clearly defined group goals which are accepted by all team members.

• has group rewards which are linked to the achievement of group goals;

• is applied where the personality of the team members and the nature of the work to be performed are compatible with a team approach;

• involves team members in the design of the appraisal program, the setting of goals and the defining of performance measures;

• Be transparent, accepted and not in conflict with each other.

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Sources of Error in Performance Appraisal

• Validity• Reliability• Management Attitude• Rater errors • Halo Effect• Central Tendency• Leniency/Strictness Bias• Prejudice• Recency Effect• Relationship effect• Subjective performance criteria

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TYPES OF PERFORMANCE APPRAISAL

• Ranking• Grading• Graphic Scales• Critical Incidents• Behaviourally Anchored Rating Scales• Behaviour Observation Scales• Essay description• Management by objectives (MBO)• Assessment Centres• Workplace Surveillance

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Characteristics of a Dynamic Performance Appraisal

• Goal establishment

• Performance feedback (coaching)

• Performance improvement (evaluation)

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Importance of Goal Setting

• Goal setting leads to higher performance.

• Difficult goals tend to result in higher performance (providing the employee accepts the goals).

• Employee participation tends to lead to higher goals being set than unilateral goals.

• Frequent performance feedback results in higher performance.

• Employees will set higher goals if they are evaluated on performance rather than simply on goal attainment.

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The Performance Appraisal Record is a Valuable Tool for:

• Defining performance levels

• Facilitating job performance review discussion

• Identifying training and development needs

• Identifying low and high-potential employees

• Rewarding performance

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Performance Review Discussion

• Mutually review the employee’s responsibilities.

• Mutually examine the employee’s performance

• Mutually explore what each can do to ensure performance improvement.

• Mutually review the employee’s short-term and long-term goals.

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Preparation for the Performance Review Session

• Ensure the employee’s job description is still accurate.• Analyse the employee’s last performance report.• Check the employee’s actual performance against the

mutually agreed goals.• Consult with other managers who have knowledge of

employee’s performance.• Give employee ample time to prepare for the review.• List key points to be discussed in the interview.• Ensure that there is sufficient time for the discussion.

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Conducting the Performance Appraisal

• Problems should be discussed as problems and not as criticisms.

• Do not attack the employee’s personality.• Encourage the employee to talk.• Set specific performance improvement objectives.• Discuss only those things which can be changed.• Avoid using positional authority.

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Performance Appraisal and EEO

• Job analysis must be used to develop the system.• The performance appraisal scheme must be

behaviour-oriented rather than trait-oriented.• Managers must be given definite instructions and

training on how to make appraisals.• Results must be communicated to employees.• There must be a provision for appeal in the case of

disagreement.