corporate performance management performance management framework identifying defining measuring...
TRANSCRIPT
Corporate Performance Management
Performance Management Framework
IdentifyingDefining
MeasuringMonitoring Reporting
Key Performance Indicators
Company strategy
VisionMissionStrategy
Strategy Map
Three critical components for effective process of performance management
Performance ManagementInfrastructure
PerformanceManagement
Culture
PerformanceManagement
Process
Performance management cycle is continuous and
consistent
Culture that is based on performance accountability
Logistic support and performance management
administration
Performance Management Component
Creating Good-to-
GREAT Company
Our responsibility to continuously develop
The good-to-great leaders began the
transformation by first getting the right
people on the bus (and the wrong people
off the bus) and then figured out where to
drive it
Moving from Good to Great
The key point of
this element is not
just the idea of
getting the right
people on the
team
Moving from Good to Great
The key point is that who questions
come before what decisionsmdashbefore
vision before strategy before
organisation structure before tactics
First who then what mdash as a rigorous
discipline consistently applied
Moving from Good to Great
STRATEGY
Plan and Execute
Monitor and Evaluate
Reward and Coach
Set Measures and Target
Performance Management Cycle
Tools for Performance Measurement
bull Financial Budgets
bull Introduced in 1992bull Robert Kaplan and David Norton bull is the most commonly used framework for ensuring that agencies
execute their strategiesbull today about 70 of the Fortune 1000 companies utilise the Balanced
Scorecard to help manage performance
bull Definition bull The Balanced Scorecard is a management tool that provides
stakeholders with a comprehensive measure of how the organistion is progressing towards the achievement of its strategic goals
The Balanced Scorecard Why
The Balanced Scorecard
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Should contain just enough data to give a complete picture of organizational performancehellip and no more
bull Quantifies the Agency Strategy in measurable terms
bull Leads to strategic focus and organizational alignment
bull Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Management Framework
IdentifyingDefining
MeasuringMonitoring Reporting
Key Performance Indicators
Company strategy
VisionMissionStrategy
Strategy Map
Three critical components for effective process of performance management
Performance ManagementInfrastructure
PerformanceManagement
Culture
PerformanceManagement
Process
Performance management cycle is continuous and
consistent
Culture that is based on performance accountability
Logistic support and performance management
administration
Performance Management Component
Creating Good-to-
GREAT Company
Our responsibility to continuously develop
The good-to-great leaders began the
transformation by first getting the right
people on the bus (and the wrong people
off the bus) and then figured out where to
drive it
Moving from Good to Great
The key point of
this element is not
just the idea of
getting the right
people on the
team
Moving from Good to Great
The key point is that who questions
come before what decisionsmdashbefore
vision before strategy before
organisation structure before tactics
First who then what mdash as a rigorous
discipline consistently applied
Moving from Good to Great
STRATEGY
Plan and Execute
Monitor and Evaluate
Reward and Coach
Set Measures and Target
Performance Management Cycle
Tools for Performance Measurement
bull Financial Budgets
bull Introduced in 1992bull Robert Kaplan and David Norton bull is the most commonly used framework for ensuring that agencies
execute their strategiesbull today about 70 of the Fortune 1000 companies utilise the Balanced
Scorecard to help manage performance
bull Definition bull The Balanced Scorecard is a management tool that provides
stakeholders with a comprehensive measure of how the organistion is progressing towards the achievement of its strategic goals
The Balanced Scorecard Why
The Balanced Scorecard
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Should contain just enough data to give a complete picture of organizational performancehellip and no more
bull Quantifies the Agency Strategy in measurable terms
bull Leads to strategic focus and organizational alignment
bull Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Three critical components for effective process of performance management
Performance ManagementInfrastructure
PerformanceManagement
Culture
PerformanceManagement
Process
Performance management cycle is continuous and
consistent
Culture that is based on performance accountability
Logistic support and performance management
administration
Performance Management Component
Creating Good-to-
GREAT Company
Our responsibility to continuously develop
The good-to-great leaders began the
transformation by first getting the right
people on the bus (and the wrong people
off the bus) and then figured out where to
drive it
Moving from Good to Great
The key point of
this element is not
just the idea of
getting the right
people on the
team
Moving from Good to Great
The key point is that who questions
come before what decisionsmdashbefore
vision before strategy before
organisation structure before tactics
First who then what mdash as a rigorous
discipline consistently applied
Moving from Good to Great
STRATEGY
Plan and Execute
Monitor and Evaluate
Reward and Coach
Set Measures and Target
Performance Management Cycle
Tools for Performance Measurement
bull Financial Budgets
bull Introduced in 1992bull Robert Kaplan and David Norton bull is the most commonly used framework for ensuring that agencies
execute their strategiesbull today about 70 of the Fortune 1000 companies utilise the Balanced
Scorecard to help manage performance
bull Definition bull The Balanced Scorecard is a management tool that provides
stakeholders with a comprehensive measure of how the organistion is progressing towards the achievement of its strategic goals
The Balanced Scorecard Why
The Balanced Scorecard
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Should contain just enough data to give a complete picture of organizational performancehellip and no more
bull Quantifies the Agency Strategy in measurable terms
bull Leads to strategic focus and organizational alignment
bull Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Creating Good-to-
GREAT Company
Our responsibility to continuously develop
The good-to-great leaders began the
transformation by first getting the right
people on the bus (and the wrong people
off the bus) and then figured out where to
drive it
Moving from Good to Great
The key point of
this element is not
just the idea of
getting the right
people on the
team
Moving from Good to Great
The key point is that who questions
come before what decisionsmdashbefore
vision before strategy before
organisation structure before tactics
First who then what mdash as a rigorous
discipline consistently applied
Moving from Good to Great
STRATEGY
Plan and Execute
Monitor and Evaluate
Reward and Coach
Set Measures and Target
Performance Management Cycle
Tools for Performance Measurement
bull Financial Budgets
bull Introduced in 1992bull Robert Kaplan and David Norton bull is the most commonly used framework for ensuring that agencies
execute their strategiesbull today about 70 of the Fortune 1000 companies utilise the Balanced
Scorecard to help manage performance
bull Definition bull The Balanced Scorecard is a management tool that provides
stakeholders with a comprehensive measure of how the organistion is progressing towards the achievement of its strategic goals
The Balanced Scorecard Why
The Balanced Scorecard
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Should contain just enough data to give a complete picture of organizational performancehellip and no more
bull Quantifies the Agency Strategy in measurable terms
bull Leads to strategic focus and organizational alignment
bull Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The good-to-great leaders began the
transformation by first getting the right
people on the bus (and the wrong people
off the bus) and then figured out where to
drive it
Moving from Good to Great
The key point of
this element is not
just the idea of
getting the right
people on the
team
Moving from Good to Great
The key point is that who questions
come before what decisionsmdashbefore
vision before strategy before
organisation structure before tactics
First who then what mdash as a rigorous
discipline consistently applied
Moving from Good to Great
STRATEGY
Plan and Execute
Monitor and Evaluate
Reward and Coach
Set Measures and Target
Performance Management Cycle
Tools for Performance Measurement
bull Financial Budgets
bull Introduced in 1992bull Robert Kaplan and David Norton bull is the most commonly used framework for ensuring that agencies
execute their strategiesbull today about 70 of the Fortune 1000 companies utilise the Balanced
Scorecard to help manage performance
bull Definition bull The Balanced Scorecard is a management tool that provides
stakeholders with a comprehensive measure of how the organistion is progressing towards the achievement of its strategic goals
The Balanced Scorecard Why
The Balanced Scorecard
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Should contain just enough data to give a complete picture of organizational performancehellip and no more
bull Quantifies the Agency Strategy in measurable terms
bull Leads to strategic focus and organizational alignment
bull Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The key point of
this element is not
just the idea of
getting the right
people on the
team
Moving from Good to Great
The key point is that who questions
come before what decisionsmdashbefore
vision before strategy before
organisation structure before tactics
First who then what mdash as a rigorous
discipline consistently applied
Moving from Good to Great
STRATEGY
Plan and Execute
Monitor and Evaluate
Reward and Coach
Set Measures and Target
Performance Management Cycle
Tools for Performance Measurement
bull Financial Budgets
bull Introduced in 1992bull Robert Kaplan and David Norton bull is the most commonly used framework for ensuring that agencies
execute their strategiesbull today about 70 of the Fortune 1000 companies utilise the Balanced
Scorecard to help manage performance
bull Definition bull The Balanced Scorecard is a management tool that provides
stakeholders with a comprehensive measure of how the organistion is progressing towards the achievement of its strategic goals
The Balanced Scorecard Why
The Balanced Scorecard
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Should contain just enough data to give a complete picture of organizational performancehellip and no more
bull Quantifies the Agency Strategy in measurable terms
bull Leads to strategic focus and organizational alignment
bull Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The key point is that who questions
come before what decisionsmdashbefore
vision before strategy before
organisation structure before tactics
First who then what mdash as a rigorous
discipline consistently applied
Moving from Good to Great
STRATEGY
Plan and Execute
Monitor and Evaluate
Reward and Coach
Set Measures and Target
Performance Management Cycle
Tools for Performance Measurement
bull Financial Budgets
bull Introduced in 1992bull Robert Kaplan and David Norton bull is the most commonly used framework for ensuring that agencies
execute their strategiesbull today about 70 of the Fortune 1000 companies utilise the Balanced
Scorecard to help manage performance
bull Definition bull The Balanced Scorecard is a management tool that provides
stakeholders with a comprehensive measure of how the organistion is progressing towards the achievement of its strategic goals
The Balanced Scorecard Why
The Balanced Scorecard
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Should contain just enough data to give a complete picture of organizational performancehellip and no more
bull Quantifies the Agency Strategy in measurable terms
bull Leads to strategic focus and organizational alignment
bull Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
STRATEGY
Plan and Execute
Monitor and Evaluate
Reward and Coach
Set Measures and Target
Performance Management Cycle
Tools for Performance Measurement
bull Financial Budgets
bull Introduced in 1992bull Robert Kaplan and David Norton bull is the most commonly used framework for ensuring that agencies
execute their strategiesbull today about 70 of the Fortune 1000 companies utilise the Balanced
Scorecard to help manage performance
bull Definition bull The Balanced Scorecard is a management tool that provides
stakeholders with a comprehensive measure of how the organistion is progressing towards the achievement of its strategic goals
The Balanced Scorecard Why
The Balanced Scorecard
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Should contain just enough data to give a complete picture of organizational performancehellip and no more
bull Quantifies the Agency Strategy in measurable terms
bull Leads to strategic focus and organizational alignment
bull Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Tools for Performance Measurement
bull Financial Budgets
bull Introduced in 1992bull Robert Kaplan and David Norton bull is the most commonly used framework for ensuring that agencies
execute their strategiesbull today about 70 of the Fortune 1000 companies utilise the Balanced
Scorecard to help manage performance
bull Definition bull The Balanced Scorecard is a management tool that provides
stakeholders with a comprehensive measure of how the organistion is progressing towards the achievement of its strategic goals
The Balanced Scorecard Why
The Balanced Scorecard
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Should contain just enough data to give a complete picture of organizational performancehellip and no more
bull Quantifies the Agency Strategy in measurable terms
bull Leads to strategic focus and organizational alignment
bull Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The Balanced Scorecard Why
The Balanced Scorecard
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Should contain just enough data to give a complete picture of organizational performancehellip and no more
bull Quantifies the Agency Strategy in measurable terms
bull Leads to strategic focus and organizational alignment
bull Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The Balanced Scorecard Why do it
bull To achieve strategic objectives bull To provide quality with fewer resourcesbull To eliminate non-value added effortsbull To align customer priorities and expectations with the customerbull To track progressbull To evaluate process changesbull To continually improvebull To increase accountability
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Managing Performance with Balanced Scorecard
Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organisation is progressing towards the achievement of its strategic goals
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Building Performance using the lsquoBalanced
Score cardrsquo as a tool
Figure 4 The Balanced Scorecard (Kaplan and Norton) Source Robert Vijay (1998) Management Control Systems Pg 465
How do we learn and Innovate to create the future
How do Customers see us
What must we Excel at internally
How do we look to stockholders
Financial Perspective Return-on-Capital Employed Cash Flow Project Profitability Profit Forecast Reliability
Customer Perspective Pricing index Tier II Customers Customer Ranking Survey Customer Satisfaction Index Market Share
Internal Business Perspective Hours with Customers Tender Success Rate Rework Safety Incident Index Project Performance Index Project Close Out Cycle
Innovation and learning Perspective Revenue from New Services Rate of Improvement Index Staff Attitude Survey of Employee Suggestions Revenue per Employee
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
14
A Sample of Users of the balanced score card
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
bull The oldest approach of performance measurement is using financial measures
bull In 1991 scholars of Harvard started to question the validity of measuring performance by means of financial measures only
bull Egan (1995) argued that financial indicators are not only liable to distort the realities of business but also tend to lag rather than lead success
bull Performance Measurement System ldquohas a series of measures that provide information about the operation of many different processesrdquo (Robert Vijay 1998)
bull Balanced Scorecard is an approach to implementing Performance Measurement System Kaplan and Norton originally developed this concept in 1992
bull Kaplan and Norton (1992) stated ldquoNo single measure can provide a clear performance target or focus attention on the critical areas of the businessrdquo
Balanced Approach
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
bull Kaplan and Norton (1992) divided the measurements in four perspectives of organisation performance namely financial management customer service internal business process efficiency and learning and development
bull According to Kaplan and Norton (1992) the Balanced Scorecard endeavours to create a blend of strategic measures outcome and driver measures financial and non-financial measures and internal and external measures
Balanced Approach
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
bull As Canadarsquos Management Accounting Guideline lsquoApplying the Balanced Scorecardrsquo states
bull ldquoManagers can use the Balanced Scorecard as a means to articulate strategy communicate its details motivate people to execute plans and enable executives to monitor results Perhaps the prime advantage is that the broad array of indicators can improve the decision-making that contributes to strategic success Non-financial measures enable managers to consider more factors critical to long-term performance In addition the Balanced Scorecard can help organisations strategically manage the alignment of cause-and-effect relationships of external market forcesrdquo (Crawford 2005)
Balanced Approach
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Mission and objectives
Vision
Mission
Goals and
objectives
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Levels of Strategy
Corporate
Business
Functional
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Conflict between objectives
Sources of goal conflictbull Between short term long term goalsbull Between different stakeholder groupsbull Meansends conflictsbull Within the stakeholder group
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Conflict between objectives
Resolving conflicting objectivesbull Satisfying (hellipthe most powerful)bull Sequential attentionbull Side paymentsbull Prioritisationbull Bargaining
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Other views on objectives
Drucker bull multiple objectives (covering 8 areas)
Cyert and Marchbull coalitions of stakeholders leading to compromise
Simon bull satisfice to combine needs of all stakeholders
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Scope of Ethical Issues
bull Support for the disadvantagedbull Dealing with unethical
companies or countries
bull Treatment of stakeholdersbull Treatment of animalsbull Green Issues
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Objective setting
Mission
Horizontal consistencyTime consistency
Corporate
Business
Operational
Individual
Vertical consistency
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Organisational Systems Analysis
Corporate Goals
Targets
Financial
Strategic Obj
Employee Strategic
Obj
Customer Strategic
Obj
Internal Processes
Strategic Obj
Departmental Objectives- Aims
Planned Objectives Targets- KPIs Management reviews tactical
actions
Mang feedback-Quarterly Reports
Implemented dept ldquocrdquo objectives
Implemented deptldquobrdquo objectives
Implemented dept ldquoardquo objectives
Indiv Appraisal
IndivAppraisal
Indiv Appraisal
Indiv Appraisal
Indiv Appraisal
IndivAppraisal
Set Objectives
Set Objectives Set Objectives
Actual KPIs Achieved
Analyses of variances
Recommended Performance Improvement Actions
Performance Optimisation
Process
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
bull Balances financial and non-financial measures
bull Balances short and long-term measures
bull Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
bull Leads to strategic focus and organisational alignment
Managing Performance with Balanced Scorecard
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
4 Perspectives in Balanced Scorecard
If we succeed how will we look to our shareholders
Financial Perspective
To achieve our vision how must we look to our
customers
Customer Perspective
To satisfy our customers which processes must we excel at
Internal Perspective
To achieve our vision how must our organization learn and
improve
Learning amp Growth Perspective
The Strategy
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Strategy and Balanced Scorecard
Mission ndash Why We
Exist
Vision ndash What We
Want to Be
Values ndash Whatrsquos
Important to Us
Strategy Our Game
Plan
Strategy Map
Translate the Strategy
Balanced Scorecard
Measure and Focus
Strategic Outcomes
Satisfied Shareholders
Delighted Customers
Excellent Processes
Motivated Workforce
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Cost Efficiency
Long-term Shareholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
Human Capital
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Organisation Capital Information Capital
Strategy Map Framework
Financial
Customer
Internal Process
Learning amp Growth
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Financial Perspective
bull In the financial perspective the strategic goal is the long-term shareholder value This goal is driven by two factors namely revenue growth and cost efficiency
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Long-term Shareholder Value
Revenue Growth
Improve Cost Structure
Increase Asset Utilisation
Cost Efficiency
Strategic Objectives in Financial
Expand Revenue Opportunities
Enhance Customer Value
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Customer Perspective
bull This perspective is very instrumental because without customers how can an organisation survive
bull Customer perspective covers the following elementsbull Customer acquisition bull Customer retentionbull Customer profitability bull Market sharebull Customer satisfaction
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Price Availability BrandServiceQuality
Customer Acquisition
Customer Satisfaction
Customer Retention Customer Profitability
Market Share
Strategic Objectives in Customer
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Internal Process Perspective
bull This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers
bull There are four main themes in this perspective namely
bull Operations Management Process
bull Customer Management Process
bull Innovation Process
bull Regulatory and Social Process
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Operations Management
Processes
CustomerManagement
Processes
Innovation Processes
Regulatory and Social Processes
Processes that produce and deliver
products and services
Processes that enhance customer
value
Processes that create new products and
services
Processes that improve communities and the environment
bull Supplybull Productionbull Distribution
bull Selectionbull Acquisitionbull Retentionbull Growth
bull New Ideasbull RampD Portfoliobull Design Developbull Launch
bull Environmentbull Safety amp Healthbull Employmentbull Community
Strategic Objectives in Internal Process
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Learning amp Growth Perspective
bull This perspective reflects the capability that an organisation should have namely
bull Human Capital
bull Organisation Capital
bull Information Capital
bull This perspective shows us that good human resource development system organisational system and information system forms a solid foundation for improving organisational performance
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Human Capital Organisation Capital Information Capital
bull Skillsbull Knowledgebull Attitude
bull Systemsbull Databasebull Networks
bull Culturebull Leadershipbull Organisation Development
Strategic Objectives in Learning amp Growth
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Improve Cost Efficiency
Enhance Long-term Shareholder Value
Increase Revenue Growth
Enhance Brand Image
Build High Performance Products
Achieve Operational Excellence
Develop Strategic Competencies
Drive Demand through Customer Relation
Management
Manage Dramatic Growth through
Innovation
Implement GoodEnvironmental Policy
Build Learning Culture
Expand Capabilities with Technology
Strategy Map Template
Financial
Customer
Internal Process
Learning amp Growth
Expand Market Share
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
VisionMission and
ValuesStrategy
Finance
Customer
Internal Business Process
HR Development
Key Performance Indicators
Key Performance Indicators
Key Performance Indicators
Strategic Objectives
KPI = Measurement or indicator that provides
information on how far we have succeeded in achieving
the strategic objectives
Key Performance Indicators (KPI)
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
bull The measure of success must show clear specific and measurable performance indicators
bull The measure of success should be declared explicitly and in detail so that it is clear what is being measured
bull Costs to identify and monitor the measure of success should not exceed the value that will be known from the measurement
Guidelines in Formulating the KPI
KPI Guidelines
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Relevant to the Strategic Objective
Does KPI have a linkage with the strategic objectives
Controllable Are the KPI achievements still under control
Actionable Can any action be taken to improve the performance
Simple Is the KPI easy to explain
Credible Is the KPI not easy to manipulate
KPI Guidelines
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission ampVision
Strategic Issues
Strategic Priorities
Objectives Initiatives and Evaluation
A Model forStrategicPlanning
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The Strategy Focused Organisation
bull The Five Principles
1 Translate the strategy to operational terms
2 Align the organisation to the strategy
Source The Strategy Focused Organization Norton amp Kaplan
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The Strategy Focused Organisation
Source The Strategy Focused Organization Norton amp Kaplan
bull The Five Principles (cont)
3 Make strategy everyonersquos job
4 Make strategy a continual process
5 Mobilise change through executive leadership
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The Balanced Scorecard and The Big Picture
bullActivity Based CostingbullEconomic Value AddedbullForecastingbullBenchmarkingbullMarket ResearchbullBest PracticesbullSix SigmabullStatistical Process ControlbullReengineeringbullISO 9000bullTotal Quality ManagementbullEmpowermentbullLearning OrganizationbullSelf-Directed Work TeamsbullChange Management
Missionand
Vision
BalancedScorecard
StrategicPlanning
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Four Views of Performance
bull Strategy can be described as a series of cause and effect relationships
bull Provides a ldquoline of sightrdquo from strategic to operational activityndash working on the ldquorightrdquo things
ldquoIf we succeed how will we look to our stakeholdersrdquo
Stakeholders
Strategic Objectives
ldquoTo satisfy our customers at which processes must we excel
Internal Processes
To execute our processes how must our organization learn and improve
Learning amp Growth
ldquoIn order to succeed what investments in people and
infrastructure must we makerdquo
Agency Investments
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Stakeholder Customer Internal Processes
Learning and Growth Investments
bull of facility assets fully funded for upgradingbull of IT infrastructure investments approvedbull of new hire positions authorized for fillingbull of required contracts awarded and in place
bull Percentage employee absenteeismbull Hours of absenteeismbull Job posting response ratebull Personnel turnover ratebull Ratio of acceptances to offersbull Time to fill vacancy
bull Number of unscheduled maintenance callsbull Production time lost because of maintenance
problemsbull Percentage of equipment maintained on schedulebull Average number of monthly unscheduled outagesbull Mean time between failures
bull Current customer satisfaction levelbull Improvement in customer satisfactionbull Customer retention ratebull Frequency of customer contact by customer
servicebull Average time to resolve a customer inquirybull Number of customer complaints
Examples of Measurements by Perspective
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Why Measure
bull To determine how effectively and efficiently the process or service satisfies the customer
bull To identify improvement opportunities
bull To make decisions based on FACT and DATA
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Measurements Should
bull Translate customer expectations into goals
bull Evaluate the quality of processes
bull Track our improvement
bull Focus our efforts on our customers
bull Support our strategies
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Selection Criteria for Performance Measurements
MEANINGFUL - related significantly and directly to organizations mission and goal
VALUABLE ndash measure the most important activities of the organization BALANCED ndash inclusive of several types of measures (ie quality
efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL ndash affordable price to retrieve andor capture data COMPARABLE ndash used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report data in a usable timeframe SIMPLE -- easy to calculate and understand
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Initiatives
bull Once measures and targets are established it is the responsibility of management to determine HOW the organisation will achieve its goals
bull Measures are used to determine the effectiveness of strategic initiatives
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The Leadership Team
bull Develops the divisionrsquos vision strategy and goals
bull Develops organisational objectives and targets
bull Provides leadership endorsement and vision for the project
bull Clears barriers to scorecard progress
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The Core Team
bull Drafts the strategy map and scorecard
bull Works with employees to develop measures supporting strategic objectives
bull Works with the Leadership Team to plan and implement the Balanced Scorecard
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Strategy
AgencyAgency
DepartmentDepartment
TeamIndividualTeamIndividual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
In order to be successful the Agencyrsquos Targets should
bull Be comprised of a balanced set of a limited vital few measures
bull Produce timely and useful reports at a reasonable cost
bull Display and make readily available information that is shared understood and used by the Agency and
bull Supports the organisationrsquos values and the relationship the organisation has with customers suppliers and stakeholders
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The Balanced Scorecard as a Management System
bull BSC reviewed regularly to enhance operational decision-making
bull Success of initiatives assessed based on DATAhellip not opinions
bull Leading indicators evaluated to confirm accuracy of assumptions
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
The Balanced Scorecard as a Management System
bull The BSC is a ldquoLiving Documentrdquo that requires regular revision of objectives measures and initiatives
bull How are we doing bull Are we measuring the right things bull What initiatives do we need to get us where
we want to go bull Have our organizational goals changed
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Optimisation in the Hospitality Industry
Performance Appraisal
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Management
Performance appraisal the measurement and assessment of an employeersquos job performance
Performance management the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employeesrsquo work behaviors and results with the organisationrsquos goalsExample link an employeersquos pay increase to the employeersquos
job performanceTo do this we have to measure the employeersquos job performance
Goal Improve the organization by improving the employeesrsquo work behaviors and results
59
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Management Frameworks
ldquoA successful performance management
framework aims to improve the
organisationrsquos performance through
the enhanced performance of
individualsrdquo
Perfo
rman
ce
Enha
ncem
ent
Performance Optimisation
Acquire Knowledge
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Management
bull ldquoPerformance management is the process of creating a work environment or setting in which people are able to perform to the best of their abilitiesrdquo (Thake 2003)
bull It is a work system that begins when a person is employed to perform a job and finishes when the worker leaves the organisation
bull ldquoIt is owned and driven by line management in different divisions or departmentsrdquo (Thake 2003) But even though it is owned and driven by line managers it concerns everyone in the business ldquoIt rejects the cultural assumption that only managers are accountable for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team memberrdquo (Armstrong 2002)
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisals
ldquoThe achievement of your goal is assured the moment you commityourself to itrdquo
Michael Douglas
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisals- Some Views
lsquoManagers are comfortable when they are in a position of playing Godrsquo Mc Gregor
lsquoThe annual performance appraisal may be the most universally hated ritual in corporate lifersquo Block
lsquoThe process of performance appraisals is of most importance in Human Resources Managementrsquo Baruch
lsquoTo abandon or abuse the performance appraisal process is a breach of business ethicsrsquo Axline
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
What is a Performance Appraisal
ABOVE ALL PERFORMANCE APPRAISALS ARE A MEANS TO MOTIVATE EMPLOYEES
The guiding principle must be How can you improve things for the appraisee How can you develop their talents to the benefit of
the organisation
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
An iterative process of goal-setting communication observation and evaluation to support retain and develop
exceptional employees for organizational success
Performance Management
Communicate
ObserveEvaluate
Set Goals
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Why Manage Employee Performance
Curb or redirect non-productive activities
Encourage and reward behaviors aligned with organizational mission and goals
To reach organizational mission and goals
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
What do Employees Expect
bull Clear expectations
bull Positiveconstructive feedback on a regular basis
bull Involvement in goal setting
bull Be treated fairly and consistently
bull Sharing of information and resources
bull Jobcareer enrichment opportunities
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Your Experience
Think about your last review
ndash What thoughts come to mind
ndash What went right what went wrong
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Management Cycle
Source of figure Adapted from Fisher Schoenfeldt amp Shaw (2006) Figure 101 p 421
69
Development Tool
Administrative Tool
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Functions of Performance Appraisal
bull Employee Development Toolndash Goal setting Set performance goals for each
employeebull Involve the employee in goal settingbull Make the goals specific concrete amp measurable
ndash Example goals (some of many) for a retail store managerraquo Sales goal for year = euro2 millionraquo Customer satisfaction goal = average rating of 45 on 5-point
customer satisfaction rating scale
bull Make the goals difficult but achievable challenging but realistic
bull Empower employees to achieve their goals
70
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Functions of Performance Appraisal
bull Employee Development Tool (more)ndash Provide feedback to reinforce amp sustain performance
bull Employees need to know how they are doing
ndash Provide help amp advice to improve performancebull Be a coach in addition to being a boss
ndash Assist employees in achieving career progression goals
ndash Determine training needsbull Do employees have job performance deficiencies for
which training would be an effective remedy
71
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Functions of Performance Appraisal
bull Administrative Toolndash Link rewards to performance
bull Examples pay increases promotions demotions terminations disciplinary actions etc
bull Goal Create incentives to motivate employees to increase their performance
ndash Evaluate HRM policies amp programmesbull Example Evaluate a training programme Measure job
performance before and after training to see if performance improved
72
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Criteria for Effective Performance Appraisal Systems
bull 1 Validity are we measuring the right thingndash Are we really measuring job performance
bull We want to measure important (ldquorelevantrdquo) aspects of job performance in a way that is free from extraneous or contaminating influences and that encompasses the whole job (ie our measures of job performance are not ldquodeficientrdquo we arenrsquot leaving out important aspects of job performance)
bull 2 Reliability consistency of measurementndash Example inter-rater reliability
bull If two people observe a particular employeersquos job performance do they agree in their rating of the employeersquos performance
73
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Criteria for Effective Performance Appraisal Systems
3 Freedom from biasIt does not illegally discriminate (race sex age etc)It is free from rating errors (intentional or unintentional)
Leniency errorsSeverity errorsCentral tendency errorsHalo errors
4 PracticalityThe benefits the organization gets from using it should outweigh the
costs of developing amp using itUtility analysis
It should be relatively easy to useIt should be accepted by managers and employees
74
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Types of Performance to Measure
bull What aspects of an employeersquos job performance can we measurendash We have 3 basic choices
bull Results produced by the employeendash Example for a salesperson Amount of sales (euro) in the past
month
bull Behaviours of the employeendash Example for a salesperson Number of sales calls in the past
month
bull Traits of the employeendash Example for a salesperson Friendliness
75
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Types of Performance to Measure
Results-based (results-oriented) measure the results produced by the employeeExamples 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 storeProfit per square footInventory shrinkageCustomer satisfaction
Makes sense for most jobsResults matter (usually)
76
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Types of Performance to Measure
bull Results-based (more)ndash Challenges
bull Which results are relevant may not be obvious for all jobs
bull Some results are not under the employeersquos controlbull May foster a ldquoresults at all costsrdquo mentalitybull May interfere with teamworkbull May be difficult to provide effective feedback
77
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Types of Performance to Measure
Behaviour-based (behaviour-oriented) measure the employeersquos behavioursExamples for a retail store manager
Good attendanceCompletes management reports correctly amp on timeMonitors customers and employees for theftCoaches employees to welcome customers to the store amp offer
assistance within 3 minutes and to thank customers as they leave
Conducts regular sessions with employees to develop teamworkMakes sense for many jobs
Use it where how the employee produces results matters
78
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Types of Performance to Measure
Behaviour-based (more)Advantage Makes it easier to provide effective
performance feedback to employeesExamples for a retail store managerFeedback with results-oriented performance appraisal ldquoYou didnrsquot achieve
your sales goalrdquo (Measured by sales reports)Feedback with behaviour-oriented performance appraisal ldquoYou are allowing
your employees to wait too long before offering help to customersrdquo (Measured by observations of a secret shopper)
ChallengesDifficult to capture the full range of relevant behavioursDifferent behaviours can lead to the same resultsWe may not always care which behaviors were used
79
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Types of Performance to MeasureTrait-based (trait-oriented) measure the employeersquos
personal characteristicsExamples for a retail store manager
Ability to make decisionsLoyalty to the companyCommunication skillsLevel of initiative
This is usually a bad idea for several reasonsPoor reliability amp validity of measures of traitsWeak relationship between traits and job effectivenessMeasurements of traits are more likely to be subject to biases (sexism
racism ageism etc)Hard to use traits to provide effective feedback
80
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
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 employeeMake a list of results amp behaviours that are relevant to
the jobStarting point Use the job description to identify the
essential tasks of the jobExample task statement on job description for a Retail Store Manager
ldquoManage inventory shrinkagerdquoTranslate the tasks into results amp behavioursExample (continued) Measure the amount of inventory shrinkage in
the store (a result)
81
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal Methods
bull Once we decide which results amp behaviours we want to measure we next need to decide how to measure those results amp behavioursndash We have 3 categories of choices
bull Objective measures of performancebull Subjective measures of performancebull Management By Objectives
82
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal Methods
Objective measures measure an employeersquos job performance in terms of things we can see and count with no (or minimal) use of opinionProduction measures count units produced by an
employeeSales measures count the sales (euro) of an employeePersonnel data count things in the employeersquos personnel
fileExamplesNumber of times late to workNumber of times absentNumber of disciplinary actions taken
83
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal Methods
Objective measures (more)Performance tests for an employee evaluate work samples
or simulations under standardized conditionsExample for an airline pilot program a flight simulator with
specific flight conditions to test if the pilot handles it correctlyBusiness unit performance measures for managers who are
responsible for a business unit measure their performance by measuring the performance of the business unit they lead
ExamplesMarket share of the business unitProfit measures for the business unit profits amp profit rates (return on sales
return on assets return on equity)Stock price
84
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal MethodsSubjective measures measure an employeersquos job
performance using human judgmentRanking subjectively rank employees from best to worst
Example1 Bob2 Carol3 Ted4 Alice
Note carefully that the ranking is in terms of subjective opinion (eg who is your best salesperson overall) not objective factors (eg which salesperson sold the most)
Note the ranking requires you to compare one employee to anotherProblem it can be hard to determine the subjective ranking position of
employees who are in the middle (it all blurs together)
85
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal Methods
bull Subjective measures (more)ndash Rating scale (graphic rating scale) subjectively rate
the employeersquos job performance on a labeled numeric measuring scale
bull Rating scales are perhaps the most commonly used method of subjectively evaluating an employeersquos job performance
bull Before we use a rating scale to subjectively rate an employeersquos job performance we need to
ndash Identify the aspects of job performance (results amp behaviors) that are to be evaluated (rated) using the rating scale
ndash Develop the rating scale itself
86
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal Methods
Rating Scale Examples Rating Scale Examplesbull Examples of a 5-point scale
ndash 5 = Excellent4 = Very satisfactory3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
ndash 5 = Greatly exceeds standards4 = Exceeds standards3 = Meets standards2 = Below standards1 = Far below standards
bull Example of a 7-point scalendash 7 = Truly exceptional
6 = Excellent5 = Very good4 = Good3 = Satisfactory2 = Unsatisfactory1 = Very unsatisfactory
87
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
The same rating scale can be used to rateOverall job performance andMultiple specific aspects of job performanceSome aspects of job performance can be measured
objectively and subjectivelyExample Quality of work
Objective measure defect rate (percentage of units produced by an employee that fail inspection)
Subjective measure subjectively rate the quality of the employeersquos work using a 5-point rating scale
88
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal Methods
Subjective measures (more)Rating scale (more)
Example MSU Course Evaluation Form
Note how the same 5-point rating scale is used to evaluate several different aspects of the professorrsquos job performanceCourse as a wholeInstructorrsquos contribution to
the courseUse of class timeEtc
89
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
More Examples of Rating Scales
DecisionsUse a graphic or just
use wordsLabel all the points on
the scale or just label some
Odd or even number of points on the scale
Fewer points on the scale or more points on the scale
Source of figure Fisher Schoenfeldt amp Shaw (2006) Figure 106 p 449
90
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal Methods
bull Management By Objectives (MBO) evaluate employee job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of timendash Goals can be both objective and subjective
ndash Example goals (some of many) for a retail store managerraquo Objective Sales goal for year = euro2 millionraquo Subjective Customer satisfaction goal = average rating of 45
on 5-point customer satisfaction rating scale
ndash Commonly used for managers and professionals
91
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal Methods
MBO (more)Process
At the beginning of the review period the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period
Review period is typically one year but could be more oftenApply the goal setting principles
Involve the employee in goal settingMake the goals specific concrete amp measurableMake the goals difficult but achievable challenging but realisticEmpower employees to achieve their goals
92
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal Methods
bull MBO (more)ndash Process (more)
bull Throughout the review period progress toward the goals is monitored
ndash Employeersquos supervisor should be providing coaching to help the employee achieve his or her goals
bull At the end of the review period the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
93
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Raters (Evaluators)
bull Who should be asked to evaluate the job performance of an employeendash Performance evaluators need to have
bull Opportunity to observe the employeersquos job performance
bull Ability to translate observations of performance into an evaluation of performance
bull Motivation to do a good job of observing amp evaluating
94
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Raters (Evaluators)
bull Options for Job Performance Evaluatorsndash Supervisorsndash Self-evaluationndash Peers (co-workers)ndash Subordinatesndash Customers
bull External customersbull Internal customers
ndash 360-Degree Appraisals
95
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Feedback
Employees need effective feedbackAllow time amp eliminate distractionsOkay to cover both administrative issues (eg pay
increase) amp developmental issues (eg future goals) in one feedback session
Provide specific feedbackExampleDonrsquot say ldquoYoursquore always laterdquoDo say ldquoYou were more than 5 minutes late on 25 occasions in the past
3 months This is unacceptable We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goalrdquo
96
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Feedback
bull Types of feedback sessionsndash Tell-and-sell the supervisor tells the employee the
results of the performance appraisal and explains the reasons why the appraisal is correct
ndash Tell-and-listen the supervisor tells the employee the results of the performance appraisal and listens to the employeersquos response
ndash Problem solving the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
97
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Feedback
Types of feedback sessions (more)Combination of tell-and-sell amp problem solving
First part of feedback session tell-and-sellFocus on the past
Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct
Supervisor tells the employee about any administrative decisions that were made (eg pay increases etc)
Second part of feedback session problem solvingFocus on the future
Supervisor acts as a coach to help the employee identify barriers to improved future job performance
98
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Common Mistakes
bull Labelingbull Recencybull Central Tendencybull Leniencybull HornsHalo Effectbull Constancybull Similarity
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Tone amp Atmosphere
A Golden Rule of a performance appraisal is to be HONEST
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Performance Appraisal
Feedback is the breakfast of success
Performance praised is performance repeated
Performance Reviews The emphasis is on lsquoPraisersquo
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Employees do need to know where they stand
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Prior To The Appraisal
Fix a mutually convenient time (1 week prior to the review date set)
Do not fill the diary for the whole day with appraisal interviews
Describe to the appraisee in advance the format and procedure to help allay fears
Review in advance targets or special projects Prepare the interview room ndash somewhere which is informal Make sure any aggravation from a previous meeting is out of
your system before starting the interview
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Prior To The Appraisal
Collect all relevant performance information Review last yearrsquos objectives set Collate employeersquos progress against Key Objectives Read and review job descriptions standards of
performance priorities personal file and performance documentation
Gather performance input from others if applicable
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Beginning the Discussion
Be relaxed and put the appraisee at ease Outline the objectives agenda and time allotted for the
discussion Use the following structure
Current performance Future objectives Development plan
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Beginning the Discussion
Begin the discussion by inviting the employee to review themselves
You and the employee exchange views on how each of you sees their performance
Keep to the facts do not let bias cloud your judgment Create a conversational atmosphere Ideally the individual should explain about the way they feel
that they have performed over the last six months
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Putting Yourself on Level with the Employee
The manager can put himherself on a level with the employee by
Positive use of language Allowing them to talk Creating the right environment
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Putting Yourself on Level with the Employee
Use of language
Avoid things like ldquoNow look hererdquo or ldquoNow just you listen to merdquo
Keep language positive when dealing with areas of development
Use open questions to invite comments and reactions from them
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Putting Yourself on Level with the Employee
Allowing them to talk
Encourage them to talk even if it means waiting in silence for them to reply This can be difficult ndash but do not be tempted to interrupt and answer your own question
Donrsquot feel you have to have all the answers If you find yourselves discussing some problem area
invite their suggestions for a solution
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Putting Yourself on Level with the Employee
Creating the right environment
Provide informal setting arrangements Ensure no interruptions Have refreshments available
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Using Interpersonal Skills
Listen more than you speak Keep the discussion positive Focus on problem-solving rather than apportioning blame Focus on behaviour rather than personality Be assertive not aggressive Use open questions eg lsquoWhat can be done to improve this
situationrsquo
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Using Interpersonal Skills
Use probing questions to investigate deeper issues
Be open to criticism Be sensitive to underlying
issues and concerns Summarise and agree
understanding regularly eg lsquoSo let me phrase that to check my understandinghelliprsquo
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Typical Types of Questioning
Obviously you need to probe some of the answers given ndash you should not accept all the answers at face value you may require more explanation Be prepared to react to statements made
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Praise amp Criticism
Praise is VITAL it gets people to relax Some praise from you could make the difference
that will keep staff committed Praise is best when it is for specific deeds In appraisal the accent is on praise
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Praise amp Criticism
In criticism pick your language carefully Treat criticism as an abstract problem not as a
character defect Leave out Judgment loaded words eg fault
mistake Avoid emotive explanations Always have examples
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Praise amp Criticism
When criticizing use the Sandwich approach
Positive
Positive
Areas of Development
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Try To Move The Emphasis
FROM TO Judgement Analysis
Past Future Personality Performance Inconsistency Consistency
Passive Active Judge Helper
Psychologist Coach
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Plan of Action
Once progress in the job has been reviewed what needs to be discussed is
How to use the personrsquos strengths in the future How to achieve any improvements required How the person sees hisher development
Agreeing on an action plan is vital for the discussion to end successfully
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Setting Targets
ldquoTargets provide the employee with both
direction and satisfactionrdquo
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Targets
ldquoIf you donrsquot know where yoursquore going yoursquore probably not going to get thererdquoForrest Gump
Targets
bull Targets need to be set for all measures
bull Should have a ldquosolid basisrdquo
bull Give personnel something for which to aim
bull If achieved will transform the organization
bull Careful not to develop measurestargets in a fragmented approach
ie Asking people to increase customer satisfaction has to be backed up with the knowledge tools and means to achieve that target
Setting Targets
By setting goals we can Achieve more Improve performance Increase our motivation to achieve Increase our pride and satisfaction in our achievements Improve our self-confidence Plan to eliminate attitudes that hold you back and cause unhappiness Allow for success to be reviewed Clarify the reasons why actions are being carried out
Setting Targets
Research (Damon Burton) has shown that people who use Effective Goal-Setting
Suffer less from stress and anxiety Concentrate better Show more self-confidence Perform better Are happier and more satisfied
Setting Targets
ldquoNobody is Lazy they simply have Goals that do not Excite
themrdquo
Anthony Robbins
Setting SMART Objectives
S Specific
M Measurable
A Agreed
R Realistic
T Timed
SMART Objectives
Specific ndash focused on specific results to be achievedMeasurable ndash outcome is clear and be measuredAgreed ndash are you committed to your objectiveRealistic ndash relevant to departmental goals and organisational objectivesTimed ndash clear date of completion assigned to each objective
Setting Targets
Summarize Action Points amp
End on a Positive Note
Development
lsquoYour employees are your resources Developing nurturing and growing them is the most
important part of the performance appraisal and
managementrsquo
Ensure High Quality Development Plans
Managers should base Individual Development Plans on 1 Further developing of the low-rated competencies 2 Achieving the Key Objectives set
Managers should consider the areas that are critical to the success of the job
Managers should look into developmental areas in line to career progression plans
A good career planning discussion
bull Open and honestbull Realistic openings
Career Planning
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Setting Targets
By setting goals we can Achieve more Improve performance Increase our motivation to achieve Increase our pride and satisfaction in our achievements Improve our self-confidence Plan to eliminate attitudes that hold you back and cause unhappiness Allow for success to be reviewed Clarify the reasons why actions are being carried out
Setting Targets
Research (Damon Burton) has shown that people who use Effective Goal-Setting
Suffer less from stress and anxiety Concentrate better Show more self-confidence Perform better Are happier and more satisfied
Setting Targets
ldquoNobody is Lazy they simply have Goals that do not Excite
themrdquo
Anthony Robbins
Setting SMART Objectives
S Specific
M Measurable
A Agreed
R Realistic
T Timed
SMART Objectives
Specific ndash focused on specific results to be achievedMeasurable ndash outcome is clear and be measuredAgreed ndash are you committed to your objectiveRealistic ndash relevant to departmental goals and organisational objectivesTimed ndash clear date of completion assigned to each objective
Setting Targets
Summarize Action Points amp
End on a Positive Note
Development
lsquoYour employees are your resources Developing nurturing and growing them is the most
important part of the performance appraisal and
managementrsquo
Ensure High Quality Development Plans
Managers should base Individual Development Plans on 1 Further developing of the low-rated competencies 2 Achieving the Key Objectives set
Managers should consider the areas that are critical to the success of the job
Managers should look into developmental areas in line to career progression plans
A good career planning discussion
bull Open and honestbull Realistic openings
Career Planning
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Setting Targets
Research (Damon Burton) has shown that people who use Effective Goal-Setting
Suffer less from stress and anxiety Concentrate better Show more self-confidence Perform better Are happier and more satisfied
Setting Targets
ldquoNobody is Lazy they simply have Goals that do not Excite
themrdquo
Anthony Robbins
Setting SMART Objectives
S Specific
M Measurable
A Agreed
R Realistic
T Timed
SMART Objectives
Specific ndash focused on specific results to be achievedMeasurable ndash outcome is clear and be measuredAgreed ndash are you committed to your objectiveRealistic ndash relevant to departmental goals and organisational objectivesTimed ndash clear date of completion assigned to each objective
Setting Targets
Summarize Action Points amp
End on a Positive Note
Development
lsquoYour employees are your resources Developing nurturing and growing them is the most
important part of the performance appraisal and
managementrsquo
Ensure High Quality Development Plans
Managers should base Individual Development Plans on 1 Further developing of the low-rated competencies 2 Achieving the Key Objectives set
Managers should consider the areas that are critical to the success of the job
Managers should look into developmental areas in line to career progression plans
A good career planning discussion
bull Open and honestbull Realistic openings
Career Planning
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Setting Targets
ldquoNobody is Lazy they simply have Goals that do not Excite
themrdquo
Anthony Robbins
Setting SMART Objectives
S Specific
M Measurable
A Agreed
R Realistic
T Timed
SMART Objectives
Specific ndash focused on specific results to be achievedMeasurable ndash outcome is clear and be measuredAgreed ndash are you committed to your objectiveRealistic ndash relevant to departmental goals and organisational objectivesTimed ndash clear date of completion assigned to each objective
Setting Targets
Summarize Action Points amp
End on a Positive Note
Development
lsquoYour employees are your resources Developing nurturing and growing them is the most
important part of the performance appraisal and
managementrsquo
Ensure High Quality Development Plans
Managers should base Individual Development Plans on 1 Further developing of the low-rated competencies 2 Achieving the Key Objectives set
Managers should consider the areas that are critical to the success of the job
Managers should look into developmental areas in line to career progression plans
A good career planning discussion
bull Open and honestbull Realistic openings
Career Planning
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Setting SMART Objectives
S Specific
M Measurable
A Agreed
R Realistic
T Timed
SMART Objectives
Specific ndash focused on specific results to be achievedMeasurable ndash outcome is clear and be measuredAgreed ndash are you committed to your objectiveRealistic ndash relevant to departmental goals and organisational objectivesTimed ndash clear date of completion assigned to each objective
Setting Targets
Summarize Action Points amp
End on a Positive Note
Development
lsquoYour employees are your resources Developing nurturing and growing them is the most
important part of the performance appraisal and
managementrsquo
Ensure High Quality Development Plans
Managers should base Individual Development Plans on 1 Further developing of the low-rated competencies 2 Achieving the Key Objectives set
Managers should consider the areas that are critical to the success of the job
Managers should look into developmental areas in line to career progression plans
A good career planning discussion
bull Open and honestbull Realistic openings
Career Planning
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
SMART Objectives
Specific ndash focused on specific results to be achievedMeasurable ndash outcome is clear and be measuredAgreed ndash are you committed to your objectiveRealistic ndash relevant to departmental goals and organisational objectivesTimed ndash clear date of completion assigned to each objective
Setting Targets
Summarize Action Points amp
End on a Positive Note
Development
lsquoYour employees are your resources Developing nurturing and growing them is the most
important part of the performance appraisal and
managementrsquo
Ensure High Quality Development Plans
Managers should base Individual Development Plans on 1 Further developing of the low-rated competencies 2 Achieving the Key Objectives set
Managers should consider the areas that are critical to the success of the job
Managers should look into developmental areas in line to career progression plans
A good career planning discussion
bull Open and honestbull Realistic openings
Career Planning
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Setting Targets
Summarize Action Points amp
End on a Positive Note
Development
lsquoYour employees are your resources Developing nurturing and growing them is the most
important part of the performance appraisal and
managementrsquo
Ensure High Quality Development Plans
Managers should base Individual Development Plans on 1 Further developing of the low-rated competencies 2 Achieving the Key Objectives set
Managers should consider the areas that are critical to the success of the job
Managers should look into developmental areas in line to career progression plans
A good career planning discussion
bull Open and honestbull Realistic openings
Career Planning
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Development
lsquoYour employees are your resources Developing nurturing and growing them is the most
important part of the performance appraisal and
managementrsquo
Ensure High Quality Development Plans
Managers should base Individual Development Plans on 1 Further developing of the low-rated competencies 2 Achieving the Key Objectives set
Managers should consider the areas that are critical to the success of the job
Managers should look into developmental areas in line to career progression plans
A good career planning discussion
bull Open and honestbull Realistic openings
Career Planning
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Ensure High Quality Development Plans
Managers should base Individual Development Plans on 1 Further developing of the low-rated competencies 2 Achieving the Key Objectives set
Managers should consider the areas that are critical to the success of the job
Managers should look into developmental areas in line to career progression plans
A good career planning discussion
bull Open and honestbull Realistic openings
Career Planning
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
A good career planning discussion
bull Open and honestbull Realistic openings
Career Planning
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Arthur Neely Vodafone Executive NZ Management Magazine May 03
ldquoPeople work for reasons other than money People donrsquot get out of bed saying lsquoIrsquom going to improve shareholder valuersquo Thatrsquos the result of what they do not the focusrdquo
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Effectiveness of Career Development
100
80
60
40
20
010080
60
40200
Importance to my development
Performance evaluation
Training Outside
Job rotation
360 degree feedback
Told strengthsweaknesses
Being mentoredInformal coachingfeedback
Job structureSpecial projects
Speed of job moves
Training Inside
Stretchdevelopment
Formal training
FeedbackMentoring
Source McKinsey amp Company August 2000
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Closing The Discussion
Re-cap the main points Check whether your impressions tally with the appraisees Check for any signs of discomfort or silent agreement Finish on a positive note reinforcing any praise offered earlierThank the appraisee again for hisher contribution
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
Key Objectives
What youDo
Performance Management Process
How youdo it
What youNeed toimprove
IndividualDevelopment Plan
CompetencyProfile
Overall JobPerformance
Job performance is evaluated both by ldquowhat you dordquo (objectives)and ldquohow you do itrdquo (competencies)
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
The Golden Rules
The Review should be a dialogueDo your homework before the reviewCreate an informal atmosphere which assists in promoting
discussionAn appraisee expects and should be given the opportunity
to discuss his workDiscuss performance not personalities
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-
The Golden Rules
Only discuss those things which can be remedied or improved
Never reach a conclusion before giving the appraisee the chance to react
Conclude on a positive note
- Slide 1
- Slide 2
- Slide 3
- Slide 4
- Slide 5
- Slide 6
- Slide 7
- Slide 8
- Tools for Performance Measurement
- The Balanced Scorecard Why
- The Balanced Scorecard Why do it
- Slide 12
- Building Performance using the lsquoBalanced Score cardrsquo as a tool
- Slide 14
- Slide 15
- Slide 16
- Slide 17
- Mission and objectives
- Levels of Strategy
- Conflict between objectives
- Conflict between objectives (2)
- Other views on objectives
- Scope of Ethical Issues
- Objective setting
- Slide 25
- Slide 26
- Slide 27
- Slide 28
- Slide 29
- Slide 30
- Slide 31
- Slide 32
- Slide 33
- Slide 34
- Slide 35
- Slide 36
- Slide 37
- Slide 38
- Slide 39
- Slide 40
- Slide 41
- Slide 42
- The Strategy Focused Organisation
- The Strategy Focused Organisation (2)
- The Balanced Scorecard and The Big Picture
- Four Views of Performance
- Slide 47
- Why Measure
- Measurements Should
- Selection Criteria for Performance Measurements
- Initiatives
- The Leadership Team
- The Core Team
- The Importance of Alignment
- In order to be successful the Agencyrsquos Targets should
- The Balanced Scorecard as a Management System
- The Balanced Scorecard as a Management System
- Performance Optimisation in the Hospitality Industry
- Performance Management
- Performance Management Frameworks
- Performance Management (2)
- Slide 62
- Performance Appraisals- Some Views
- What is a Performance Appraisal
- Performance Management (3)
- Why Manage Employee Performance
- What do Employees Expect
- Your Experience
- Performance Management Cycle
- Functions of Performance Appraisal
- Functions of Performance Appraisal (2)
- Functions of Performance Appraisal (3)
- Criteria for Effective Performance Appraisal Systems
- Criteria for Effective Performance Appraisal Systems (2)
- Types of Performance to Measure
- Types of Performance to Measure (2)
- Types of Performance to Measure (3)
- Types of Performance to Measure (4)
- Types of Performance to Measure (5)
- Types of Performance to Measure (6)
- Types of Performance to Measure (7)
- Performance Appraisal Methods
- Performance Appraisal Methods (2)
- Performance Appraisal Methods (3)
- Performance Appraisal Methods (4)
- Performance Appraisal Methods (5)
- Performance Appraisal Methods (6)
- Performance Appraisal Methods (7)
- Performance Appraisal Methods (8)
- More Examples of Rating Scales
- Performance Appraisal Methods (9)
- Performance Appraisal Methods (10)
- Performance Appraisal Methods (11)
- Performance Raters (Evaluators)
- Performance Raters (Evaluators) (2)
- Performance Feedback
- Performance Feedback (2)
- Performance Feedback (3)
- Common Mistakes
- Tone amp Atmosphere
- Performance Appraisal
- Employees do need to know where they stand
- Prior To The Appraisal
- Prior To The Appraisal (2)
- Slide 105
- Beginning the Discussion
- Putting Yourself on Level with the Employee
- Putting Yourself on Level with the Employee (2)
- Putting Yourself on Level with the Employee (3)
- Putting Yourself on Level with the Employee (4)
- Slide 111
- Slide 112
- Typical Types of Questioning
- Praise amp Criticism
- Praise amp Criticism (2)
- Praise amp Criticism (3)
- Try To Move The Emphasis
- Plan of Action
- Setting Targets
- Slide 120
- Targets
- Setting Targets (2)
- Setting Targets (3)
- Setting Targets (4)
- Setting SMART Objectives
- SMART Objectives
- Setting Targets (5)
- Development
- Ensure High Quality Development Plans
- Slide 130
- Arthur Neely Vodafone Executive NZ Management Magazine May 03
- Slide 132
- Closing The Discussion
- Slide 134
- The Golden Rules
- The Golden Rules (2)
-