hrm performance & potential appraisal
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What is performance appraisal?
Employee Assessment – the assessment of an employee's effectiveness, usually as undertaken at regular intervals
Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor in which the work performance of the subordinate is examined and discussed with a view to identifying weaknesses and strengths as
well as opportunities for improvement and skills’ development
Performance Management
Performance appraisal: the measurement and assessment of an employee’s job performance
Performance management: the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employees’ work behaviors and results with the organization’s goals Example: link an employee’s pay increase to the employee’s job
performance To do this, we have to measure the employee’s job performance
Goal: Improve the organization by improving the employees’ work behaviors and results
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Performance Performance Management Management
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Difference Between Performance Management and Performance Appraisals
Performance Management Processes used to identify,
encourage, measure, evaluate, improve, and reward employee performance.
Performance Appraisal The process of evaluating
how well employees perform their jobs and then communicating that information to the employees.
Why Have Performance Appraisal ? Performance Appraisal offers several
advantages at the level of the: Individual
Recognition of past effort Developmental requirements can be uncovered
Team Alignment of effort with objectives Motivation of team members
Organization Development of staff Achievement of key objectives Best and focused utilization of human resources
Objectives
Compensation decisions Promotion decisions Training and development programmes Feedback to the employee Personal growth and development
Performance Management Cycle
Source of figure: Adapted from Fisher, Schoenfeldt, & Shaw (2006), Figure 10.1, p. 421
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Development Tool
Administrative Tool
The Performance Appraisal Process
Establish performance standardsCommunicate the standardsMeasure actual performanceCompare actual performance with standards and
discuss the appraisalTake corrective action, if necessary
Types of Performance to Measure
What aspects of an employee’s job performance can we measure? We have 3 basic choices:
Results produced by the employee Example for a salesperson: Amount of sales ($) in the past
month Behaviors of the employee
Example for a salesperson: Number of sales calls in the past month
Traits of the employee Example for a salesperson: Friendliness
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Types of Performance InformationTypes of Performance Information
Types of Performance to Measure
Results-based (results-oriented): measure the results produced by the employee Examples for a retail store manager (examples of some
results for which the store manager has responsibility and so should be held accountable): Sales of the store Profit per square foot Inventory shrinkage Customer satisfaction
Makes sense for most jobs Results matter (usually)
Types of Performance to Measure
Results-based (more) Challenges:
Which results are relevant may not be obvious for all jobs Some results are not under the employee’s control May foster a “results at all costs” mentality May interfere with teamwork May be difficult to provide effective feedback
Types of Performance to Measure
Behavior-based (behavior-oriented): measure the employee’s behaviors Examples for a retail store manager:
Good attendance Completes management reports correctly & on time Monitors customers and employees for theft Coaches employees to welcome customers to the store & offer
assistance within 3 minutes, and to thank customers as they leave
Conducts regular sessions with employees to develop teamwork Makes sense for many jobs
Use it where how the employee produces results matters
Types of Performance to Measure
Behavior-based (more) Advantage: Makes it easier to provide effective performance
feedback to employees Examples for a retail store manager:
Feedback with results-oriented performance appraisal: “You didn’t achieve your sales goal.” (Measured by sales reports)
Feedback with behavior-oriented performance appraisal: “You are allowing your employees to wait too long before offering help to customers.” (Measured by observations of a secret shopper)
Challenges: Difficult to capture the full range of relevant behaviors Different behaviors can lead to the same results
We may not always care which behaviors were used
Types of Performance to Measure
Trait-based (trait-oriented): measure the employee’s personal characteristics Examples for a retail store manager:
Ability to make decisions Loyalty to the company Communication skills Level of initiative
This is usually a bad idea for several reasons: Poor reliability & validity of measures of traits Weak relationship between traits and job effectiveness Measurements of traits are more likely to be subject to biases
(sexism, racism, ageism, etc.) Hard to use traits to provide effective feedback
Types of Performance to Measure
So, in most cases, we want to measure the job performance of an employee in terms of the results and behaviors of the employee Make a list of results & behaviors that are relevant to the job
Starting point: Use the job description to identify the essential tasks of the job
Example task statement on job description for a Retail Store Manager: “Manage inventory shrinkage.”
Translate the tasks into results & behaviors Example (continued): Measure the amount of inventory
shrinkage in the store (a result)
Characteristics of an Effective Appraisal System
Job-related criteria Performance expectations Standardization Trained appraisers Continuous open communication Performance reviews
360-Degree Feedback
Performance information is collected from supervisors, subordinates, peers, and internal/external customers
Generally done for development rather than for pay raises
360-degree Feedback Many organizations now use some form of
360-degree feedback program Upward and peer feedback can have positive
effects on behavior These effects are sustainable over time Introducing a 360-degree system into a culture not
prepared for it can have disastrous effects
360-degree Feedback Positive features of a 360-degree system:
Multiple perspectives of a person’s performance Raters base evaluations on contact and observation Feedback is provided from multiple directions…
above, below, peer Anonymous upward feedback, which results in full
participation Learning about weaknesses and strengths is
motivational
360-degree Feedback Negative features of a 360-degree system:
Feedback from all sources can be overwhelming Rater can hide in a group of raters and provide
harsh evaluations Conflicting ratings can be confusing and frustrating Providing feedback that is constructive requires a
plan and well-trained raters
Selected Evaluation Techniques Ways of evaluating employees can generally
be divided into two categories: Methods that evaluate employees individually Multiple-person evaluations
In a multiple-person evaluation, the supervisor directly and intentionally compares the performance of one employee to that of others
Individual Evaluation Methods Graphic rating scale
The rater is presented with a set of traits The employee is rated on the traits Ratings are assigned points, which are then
computed Raters are often asked to explain each rating with a
sentence or two
Individual Evaluation Methods Forced choice:
Was developed because graphic rating scales allowed supervisors to rate everyone high
The rater must choose from a set of descriptive statements about employee
Supervisors check the statements that describe the employee, or they rank the statements from most to least descriptive
Forced choice can be used by superiors, peers, subordinates, or a combination of these
Individual Evaluation Methods Essay Evaluation
The rater is asked to describe the strong and weak aspects of the employee’s behavior
It can be used by superiors, peers, or subordinates Essay evaluations are flexible; an evaluator can
specifically address the ratee’s skill in any area Comparing essays is difficult
Skilled writers can paint a better picture
Individual Evaluation Methods Critical Incident Technique
Raters maintain a log of behavioral incidents that represent effective and ineffective performance for each employee
Two factors determine the success of this technique: The supervisor must have enough time to observe
subordinates during the evaluation period The supervisor must record incidents as they are
seen Logs can help avoid common rating errors and
facilitate discussions about performance improvement
Individual Evaluation Methods Checklists
In its simplest form, the checklist is a set of objectives or descriptive statements If the rater believes that the employee possesses a
listed trait, the item is checked A rating score equals the number of checks
Individual Evaluation Methods A variation is the weighted checklist
Supervisors and HR specialists prepare a list of descriptive statements about behavior
Judges who have observed behavior on the job sort the statements into piles rated from excellent to poor
When there is agreement on an item, it is included in the weighted checklist The employee’s evaluation is the sum of the scores
(weights) on the items checked
Checklists and weighted checklists can be used by superiors, peers, or subordinates
Individual Evaluation Methods Behaviorally Anchored Rating Scales
Smith and Kendall developed the behaviorally anchored rating scale (BARS), or the behavioral expectation scale (BES)
The BARS approach uses critical incidents to anchor statements on a scale
The rater reads the anchors and places an X at some point on the scale for the ratee
Individual Evaluation Methods A BARS usually contains these features:
Six to 10 performance dimensions identified and defined by raters and ratees
The dimensions are anchored with positive and negative critical incidents
Each ratee is then rated on the dimensions Ratings are fed back using the terms on the form
It takes two to four days to construct a BARS that is jargon free and closely related to the requirements of the job
Behaviorally Anchored Rating Scale
Uses specific descriptions of actual behaviors to rate various levels of actual performance
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Behaviorally-Anchored Rating Scale Behaviorally-Anchored Rating Scale for Customer Service Skillsfor Customer Service Skills
Multiple-Person Evaluation Methods Ranking
A supervisor is asked to rank subordinates in order on some overall criterion It is easier to rank the best and worst employees
than average ones
Alternative rankings can help with this difficulty Pick the top employee first, then the bottom one The second best is chosen, then the second worst Follow this process until everyone has been ranked
Multiple-Person Evaluation Methods Paired Comparison
The supervisor reviews a series of cards; each contains two subordinates names
The higher performer in each pair is chosen Final ranking is made by counting how many times
a given employee was chosen as the better performer
A major limitation is the number of paired comparisons that must be made With only 10 subordinates, a supervisor would have
45 pairs of names
Multiple-Person Evaluation Methods Forced Distribution
Employees are rated on a pre-existing distribution of pre-determined categories
The predetermined distribution must be followed, regardless of how well the employees performed
A supervisor with all exceptional subordinates will be forced to rate some poorly A supervisor with mediocre subordinates must rate
some highly
This technique is similar to grading on a curve
Forced Distribution Method
At Sun Microsystems managers appraise employees in groups of about 30.
There is a top 10%, a middle 70%, and a bottom 10%.
The bottom 10% can either take a quick exit package or embark on a 90-day performance improvement action plan.
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Forced Distribution on a Bell-Shaped CurveForced Distribution on a Bell-Shaped Curve
Multiple-Person Evaluation Methods An MBO program follows a systematic process:
Superior/subordinates define tasks and set objectives The superior, consulting with subordinates, sets criteria
for assessing objective accomplishment Dates to review progress are agreed upon and used Superior and subordinates make any required
modifications in the original objectives A final evaluation by the superior is made The superior meets with the subordinate in a
counseling, encouraging session Objectives for the next cycle are set
Opposition to Evaluation Most employees are wary of performance evaluation
Subjective bias and favoritism are real problems
Opponents of formal evaluation argue that: They focus too much symptoms of poor performance
rather than finding the underlying causes Managers and employees dislike the process Raters have trouble deciding performance levels Employees who are not placed in the top performance
category experience a reverse motivation effect
System Design and Operating Problems Performance evaluation systems break down
because they are poorly designed If the criteria focus solely on results, or on
personality traits rather than performance, the evaluation may not be well received
Some techniques take a long time to carry out or require extensive written analysis, both of which managers resist
Some systems are not fully online
Rater Problems Even if a system is well designed, problems can arise if
raters are not cooperative and well trained Supervisors may not be comfortable “playing God”
Inadequate training can lead to: Problems with standards of evaluation Halo effect Leniency or harshness Central tendency error “Recency of events” error Contracts effects Personal bias (stereotyping, similar to me)
Standards of Evaluation Problems with evaluation standards arise
because of perceptual differences in the meaning of words Good, adequate, satisfactory, and excellent mean
different things to different evaluators
If only one rater is used, evaluations can be distorted This arises most often in graphic rating scales It may also appear with essays, critical incidents,
and checklists
Potential appraisal
The objective of potential appraisal is to identify the potential of a given employee to occupy higher positions in the organizational hierarchy and undertake higher responsibilities. It is required to:
Inform employees about their future prospectsHelp the organization chalk out a suitable succession planUpdate training efforts from time to timeAdvise employees about what they must do to improve their
career prospects.
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