Appraising and Appraising and Managing performanceManaging performance

HRM-5HRM-5

Performance managementPerformance management

Appraisal performance is only Appraisal performance is only one part of the broader process one part of the broader process of of perormacnemanagement,which perormacnemanagement,which is defined as the process is defined as the process through which managers ensure through which managers ensure that employees' activities and that employees' activities and outputs are congruent with the outputs are congruent with the organization’s goalsorganization’s goals

The three parts of Performance The three parts of Performance ManagementManagement

1. Defining performance: which 1. Defining performance: which aspects of perforce are relevant aspects of perforce are relevant to the organization (job analysis) to the organization (job analysis)

Measuring performance Measuring performance ( through appraisal)( through appraisal)

Feed backing performance Feed backing performance information ( Performance information ( Performance feedback sessions to adjust feedback sessions to adjust their performancetheir performance

Performance Planning and Performance Planning and Evaluation (PPE)Evaluation (PPE)

This system seeks to tie the formal This system seeks to tie the formal performance appraisal process to performance appraisal process to company’s strategies by specifying at company’s strategies by specifying at the beginning of the evaluation period the beginning of the evaluation period the types and level of performance the types and level of performance that must be accomplished to that must be accomplished to achieve the strategy. Then at the end achieve the strategy. Then at the end of the evaluation period the of the evaluation period the employees are evaluated based on employees are evaluated based on how closely their actual performance how closely their actual performance met the performance planmet the performance plan

What is an appraisal process?What is an appraisal process?

It is a process where the It is a process where the performance of an employee is being performance of an employee is being appraised (evaluated).appraised (evaluated).

It involves:It involves: Setting work standardsSetting work standards Assessing employees’ actual Assessing employees’ actual

performanceperformance relative to these relative to these standardsstandards

Providing feedback to the employeeProviding feedback to the employee with the aim of motivating that with the aim of motivating that person to eliminate deficiencies or to person to eliminate deficiencies or to continue to perform above par.continue to perform above par.

Why should we appraise Why should we appraise performance?performance?

1. It provides information upon 1. It provides information upon which to which to make promotion and make promotion and salary decisionssalary decisions..

2. provide opportunity for you and 2. provide opportunity for you and your subordinate to your subordinate to review his/her review his/her work related behaviorwork related behavior

3. it is part of the company’s 3. it is part of the company’s career career planning processplanning process

4. Appraisals help you 4. Appraisals help you better better manage and improve your manage and improve your firm’s performance.firm’s performance.

Who conducts the appraisal?Who conducts the appraisal?

It is a supervisory skill. Thus It is a supervisory skill. Thus supervisors must be familiar with supervisors must be familiar with basic appraisal techniques, basic appraisal techniques, understand and avoid problems understand and avoid problems that can cripple appraisals.that can cripple appraisals.

The Hr dept. serves as a policy –The Hr dept. serves as a policy –making and advisory role. However making and advisory role. However final decisions on procedures are final decisions on procedures are left to operating division heads.left to operating division heads.

HRs’ responsibilityHRs’ responsibility

To train supervisors to improve To train supervisors to improve their appraisal skills. Also their appraisal skills. Also monitoring the appraisal monitoring the appraisal system .system .

Steps in Appraising PerformanceSteps in Appraising Performance

First: First: define the jobdefine the job: : making sure that you and your making sure that you and your

subordinate agree on his or her duties subordinate agree on his or her duties and job standards.and job standards.

Second: Second: Appraising performance:Appraising performance: comparing your subordinate’s actual comparing your subordinate’s actual performance to the standard that has performance to the standard that has been set.been set.

Third: Third: Provide feedback;Provide feedback;the two discuss the subordinates’ the two discuss the subordinates’ performance and progress and make performance and progress and make plans for any development required.plans for any development required.

A. The Attribute ApproachA. The Attribute Approach

The attribute approach to The attribute approach to performance management focuses performance management focuses on the extent to which individuals on the extent to which individuals have certain attributescharcteristics have certain attributescharcteristics or traits) believed desirable for the or traits) believed desirable for the company’s success. This technique company’s success. This technique defines a set of traits-such as defines a set of traits-such as intiative,leadership,and intiative,leadership,and competitiveness-and evaluate competitiveness-and evaluate individuals on themindividuals on them

The Attribute approachThe Attribute approach

Graphic rating scale:Graphic rating scale: Is the simplest and most popular Is the simplest and most popular

technique.technique. It lists traits (quality, reliability) and a range It lists traits (quality, reliability) and a range

of performance (from unsatisfactory to of performance (from unsatisfactory to outstanding) for each trait. outstanding) for each trait.

The rater rates each subordinate by circling The rater rates each subordinate by circling or checking the score that best describes or checking the score that best describes his or her performance for each trait. You his or her performance for each trait. You then total the assigned values for the traits.then total the assigned values for the traits.

Problems with Rating scales Problems with Rating scales

Unclear standards problem :Unclear standards problem : Traits and Traits and degrees of merit are ambiguous because of the degrees of merit are ambiguous because of the subjectivity of each supervisor, what may seem subjectivity of each supervisor, what may seem good for one rater may seem fair for another.good for one rater may seem fair for another.

Halo effect:Halo effect: a supervisor rates an employee a supervisor rates an employee as fair in all traits because the employee is as fair in all traits because the employee is unfriendly.unfriendly.

Central tendency:Central tendency: rating most people in the rating most people in the middle ( average) middle ( average)

Leniency or strictness:Leniency or strictness: giving everyone a giving everyone a high( low) rate.high( low) rate.

Bias:Bias: (age, sex, race may affect the (age, sex, race may affect the rating)rating)

B. The Comparative e B. The Comparative e ApproachApproach

This approach to performance This approach to performance management requires the rater management requires the rater to compare an individual's to compare an individual's performance with that of others.performance with that of others.

The comparative approachThe comparative approach

1. Ranking: 1. Ranking: Requires managers to rank employees Requires managers to rank employees

within their departments from highest to within their departments from highest to poorest performers (or best to worst).poorest performers (or best to worst).

This method has received specific attention This method has received specific attention in the courts. The court actually stated that in the courts. The court actually stated that “there is no way of knowing precisely what “there is no way of knowing precisely what criteria of job performance that criteria of job performance that supervisors were considering, whether supervisors were considering, whether each supervisor was considering he same each supervisor was considering he same criteria or not.”’criteria or not.”’

The comparative approachThe comparative approach

2. Forced Distribution Method:2. Forced Distribution Method: You place predetermined You place predetermined

percentages of ratee’s into percentages of ratee’s into performance categories:performance categories:

15% high performers15% high performers 20% high-average performers20% high-average performers 30% average performers30% average performers 20% low-average performers20% low-average performers 15% low performers.15% low performers.

Cont’dCont’d

Many firms are adopting this Many firms are adopting this practice if there is( i.e.10% in practice if there is( i.e.10% in the bottom they get 90 days to the bottom they get 90 days to improve if not they get a chance improve if not they get a chance to resign.to resign.

3. The Behavioral Approach3. The Behavioral Approach

This approach to performance This approach to performance management attempts to define management attempts to define the behaviors an employee must the behaviors an employee must exhibit to be effective in this jobexhibit to be effective in this job

The Behavioral Approach The Behavioral Approach

1. Critical Incident Method:1. Critical Incident Method: The supervisor keeps a log of The supervisor keeps a log of

positive and negative examples positive and negative examples (critical incidents) of a (critical incidents) of a subordinate’s work related subordinate’s work related behavior. Every six months, the behavior. Every six months, the supervisor and subordinate supervisor and subordinate meet to discuss the latter’s meet to discuss the latter’s performance using the incidents.performance using the incidents.

Advantages of the critical incident Advantages of the critical incident methodmethod It provides It provides actual examples of good and actual examples of good and

poor performancepoor performance the supervisor can use the supervisor can use to explain the person’s rating.to explain the person’s rating.

It ensures that the manager or supervisor It ensures that the manager or supervisor thinks about the subordinate ‘s appraisal all thinks about the subordinate ‘s appraisal all during the year.during the year.

The The rating does not only reflect the rating does not only reflect the employee’s most recent performance.employee’s most recent performance.

The list provides examples of what The list provides examples of what specifically the subordinate can do to specifically the subordinate can do to eliminate deficiencieseliminate deficiencies

(This method is not useful in making (This method is not useful in making salary decisions)salary decisions)

The Behavioral ApproachThe Behavioral Approach

2. 2. Behaviorally Anchored Behaviorally Anchored Rating ScalesRating Scales

(BARS) combines between the (BARS) combines between the benefits of graphic rating scale benefits of graphic rating scale

(traits) and critical incidents (traits) and critical incidents (positive and negative behavior).(positive and negative behavior).

The Behavioral ApproachThe Behavioral Approach

3. Organizational Behavior 3. Organizational Behavior Modification:Modification:

OBM-entails managing the behavior OBM-entails managing the behavior of employees through a formal of employees through a formal system of behavioral feedback and system of behavioral feedback and reinforcement. This system builds on reinforcement. This system builds on the behaviorist view of motivation, the behaviorist view of motivation, which holds that individuals' future which holds that individuals' future behavior is determined by past behavior is determined by past behaviors that have been positively behaviors that have been positively reinforcedreinforced

It best suited to les complex jobsIt best suited to les complex jobs

4. The results approach4. The results approach

This approach relies heavily on This approach relies heavily on managing by objectives, it managing by objectives, it assumes subjectivity can be assumes subjectivity can be eliminated from the eliminated from the measurement process. There measurement process. There are two performance are two performance management stems: the MBO management stems: the MBO and the productivity and the productivity measurementmeasurement

The Results ApproachThe Results Approach

Management By ObjectivesManagement By Objectives Requires the management to Requires the management to

set specific measurable goals set specific measurable goals with each employee and then with each employee and then periodically discuss the latter’s periodically discuss the latter’s progress toward these goals.progress toward these goals.

Problems with the MBO approachProblems with the MBO approach

1. Setting unclear ,un-measurable 1. Setting unclear ,un-measurable objectives.objectives.

2. It is time consuming, setting 2. It is time consuming, setting objectives, measuring programs, objectives, measuring programs, and giving feedback can take and giving feedback can take several hours per employee per several hours per employee per year.year.

3. Setting objectives with 3. Setting objectives with subordinates sometimes turns into subordinates sometimes turns into a tug-a –war, you pushing for a tug-a –war, you pushing for higher quotas and the subordinate higher quotas and the subordinate pushing for lower ones.pushing for lower ones.

The Results ApproachThe Results Approach

Productivity Measurement and Productivity Measurement and Evaluation system (ProMES)Evaluation system (ProMES)

The main goal is to motivate employees to higher The main goal is to motivate employees to higher levels of productivity. It is a means of measuring levels of productivity. It is a means of measuring and feeding back productivity information to and feeding back productivity information to personnel.personnel.

This depends on four steps:This depends on four steps: People identify the products, or sets of activities the People identify the products, or sets of activities the

organization expects to accomplishorganization expects to accomplish Then the staff defines indicators which measure how Then the staff defines indicators which measure how

well it products are being generated by the well it products are being generated by the organization organization

3. the staff establishes contingencies between the 3. the staff establishes contingencies between the amount of the indicators and the level of evaluation amount of the indicators and the level of evaluation associated with that amountassociated with that amount

4. a feedback system is developed employees with 4. a feedback system is developed employees with specific level of performance on each indicatorspecific level of performance on each indicator

Who should do the Who should do the appraising?appraising? The immediate supervisor:The immediate supervisor: He should be in the best position to He should be in the best position to

observe and evaluate the observe and evaluate the subordinate’s.subordinate’s.

Peer appraisal:Peer appraisal: self-managing teams, it can predict self-managing teams, it can predict

future management success. future management success. except for except for logrollinglogrolling: when peers : when peers collude to rate each other highly. collude to rate each other highly.

Who should do the Who should do the appraising?appraising?

Rating committees:Rating committees: By the immediate supervisor By the immediate supervisor

and three other supervisors .and three other supervisors . This This eliminates halo effect or eliminates halo effect or

biasesbiases. If this committee can not . If this committee can not be available it is advised that the be available it is advised that the manager of the supervisor manager of the supervisor makes the appraisal.makes the appraisal.

Who should make the appraisal?Who should make the appraisal?

Appraisal by subordinates:Appraisal by subordinates: Appraising their supervisors in a Appraising their supervisors in a

process called process called :upward feedback.:upward feedback. This helps top managers diagnose:This helps top managers diagnose: Management stylesManagement styles Identify potential people problemsIdentify potential people problems Take corrective actions with individuals Take corrective actions with individuals

managers as required. managers as required. This is essential for This is essential for

developmental rather than developmental rather than evaluative purposes.evaluative purposes.

360-Degree Feedback360-Degree Feedback

An employeeAn employee SupervisorSupervisor SubordinatesSubordinates PeersPeers Internal and external customers.Internal and external customers. The survey will include skills like ”returns The survey will include skills like ”returns

phone calls promptly” listens well”. A phone calls promptly” listens well”. A computer will gather the feedback into computer will gather the feedback into individualized reports that HR presents to individualized reports that HR presents to the rate's . Then they meet with their the rate's . Then they meet with their supervisors to share information they feel is supervisors to share information they feel is pertinent (considered essential) for the pertinent (considered essential) for the purpose of developmentpurpose of development

Types of interviewsTypes of interviews

Performance is satisfactory Performance is satisfactory leading to employee promotion.leading to employee promotion.

Performance is satisfactory not Performance is satisfactory not leading to employee leading to employee promotion( because of no promotion( because of no positions available)positions available)

Unsatisfactory performance Unsatisfactory performance leading to correctable action.leading to correctable action.

Where does the problem lie?Where does the problem lie?

In the satisfactory performance with no In the satisfactory performance with no positions for promotions.positions for promotions.

Companies overcome this by giving out Companies overcome this by giving out bonuses, or incentives additional authority bonuses, or incentives additional authority to handle a slightly enlarged job. Do you to handle a slightly enlarged job. Do you think this is satisfactory for the employee think this is satisfactory for the employee psychologically?psychologically?

And in the poor performer that needs And in the poor performer that needs correctable actions. They become correctable actions. They become defensive and usually deny the fact that defensive and usually deny the fact that they are poor performers.they are poor performers.

Do appraisals really help to Do appraisals really help to improve performance?improve performance?

Shocking research results Shocking research results claims that:claims that:

32% of 300 managers rated that 32% of 300 managers rated that performance appraisals are performance appraisals are “very ineffective” while 4% “very ineffective” while 4% considered it” very effective”.considered it” very effective”.

Performance ManagementPerformance Management

Companies are changing the way people Companies are changing the way people view the HR functions they are view the HR functions they are concentrating on working backwards by concentrating on working backwards by using the term” Performance using the term” Performance management” management”

what kind of performance is requiredwhat kind of performance is required Based on this what kind of compensation Based on this what kind of compensation

is required for that job to be performed is required for that job to be performed Based on this what kind of people will be Based on this what kind of people will be

selected and hired.selected and hired.