hrm performance & potential appraisal

PERFORMANCE & POTENTIAL APPRAISAL

“Nurturing turns potential

into performance”

What is performance appraisal?

Employee Assessment – the assessment of an employee's effectiveness, usually as undertaken at regular intervals

Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor in which the work performance of the subordinate is examined and discussed with a view to identifying weaknesses and strengths as

well as opportunities for improvement and skills’ development

Performance Management

Performance appraisal: the measurement and assessment of an employee’s job performance

Performance management: the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employees’ work behaviors and results with the organization’s goals Example: link an employee’s pay increase to the employee’s job

performance To do this, we have to measure the employee’s job performance

Goal: Improve the organization by improving the employees’ work behaviors and results

4

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Performance Performance Management Management

LinkageLinkage


Difference Between Performance Management and Performance Appraisals

Performance Management Processes used to identify,

encourage, measure, evaluate, improve, and reward employee performance.

Performance Appraisal The process of evaluating

how well employees perform their jobs and then communicating that information to the employees.

Why Have Performance Appraisal ? Performance Appraisal offers several

advantages at the level of the: Individual

Recognition of past effort Developmental requirements can be uncovered

Team Alignment of effort with objectives Motivation of team members

Organization Development of staff Achievement of key objectives Best and focused utilization of human resources

Objectives

Compensation decisions Promotion decisions Training and development programmes Feedback to the employee Personal growth and development

Performance Management Cycle

Source of figure: Adapted from Fisher, Schoenfeldt, & Shaw (2006), Figure 10.1, p. 421

9

Development Tool

Administrative Tool

The Performance Appraisal Process

Establish performance standardsCommunicate the standardsMeasure actual performanceCompare actual performance with standards and

discuss the appraisalTake corrective action, if necessary

Types of Performance to Measure

What aspects of an employee’s job performance can we measure? We have 3 basic choices:

Results produced by the employee Example for a salesperson: Amount of sales ($) in the past

month Behaviors of the employee

Example for a salesperson: Number of sales calls in the past month

Traits of the employee Example for a salesperson: Friendliness


Types of Performance InformationTypes of Performance Information


Results-based (results-oriented): measure the results produced by the employee Examples for a retail store manager (examples of some

results for which the store manager has responsibility and so should be held accountable): Sales of the store Profit per square foot Inventory shrinkage Customer satisfaction

Makes sense for most jobs Results matter (usually)


Results-based (more) Challenges:

Which results are relevant may not be obvious for all jobs Some results are not under the employee’s control May foster a “results at all costs” mentality May interfere with teamwork May be difficult to provide effective feedback


Behavior-based (behavior-oriented): measure the employee’s behaviors Examples for a retail store manager:

Good attendance Completes management reports correctly & on time Monitors customers and employees for theft Coaches employees to welcome customers to the store & offer

assistance within 3 minutes, and to thank customers as they leave

Conducts regular sessions with employees to develop teamwork Makes sense for many jobs

Use it where how the employee produces results matters


Behavior-based (more) Advantage: Makes it easier to provide effective performance

feedback to employees Examples for a retail store manager:

Feedback with results-oriented performance appraisal: “You didn’t achieve your sales goal.” (Measured by sales reports)

Feedback with behavior-oriented performance appraisal: “You are allowing your employees to wait too long before offering help to customers.” (Measured by observations of a secret shopper)

Challenges: Difficult to capture the full range of relevant behaviors Different behaviors can lead to the same results

We may not always care which behaviors were used


Trait-based (trait-oriented): measure the employee’s personal characteristics Examples for a retail store manager:

Ability to make decisions Loyalty to the company Communication skills Level of initiative

This is usually a bad idea for several reasons: Poor reliability & validity of measures of traits Weak relationship between traits and job effectiveness Measurements of traits are more likely to be subject to biases

(sexism, racism, ageism, etc.) Hard to use traits to provide effective feedback


So, in most cases, we want to measure the job performance of an employee in terms of the results and behaviors of the employee Make a list of results & behaviors that are relevant to the job

Starting point: Use the job description to identify the essential tasks of the job

Example task statement on job description for a Retail Store Manager: “Manage inventory shrinkage.”

Translate the tasks into results & behaviors Example (continued): Measure the amount of inventory

shrinkage in the store (a result)

Characteristics of an Effective Appraisal System

Job-related criteria Performance expectations Standardization Trained appraisers Continuous open communication Performance reviews

360-Degree Feedback

Performance information is collected from supervisors, subordinates, peers, and internal/external customers

Generally done for development rather than for pay raises

360-degree Feedback Many organizations now use some form of

360-degree feedback program Upward and peer feedback can have positive

effects on behavior These effects are sustainable over time Introducing a 360-degree system into a culture not

prepared for it can have disastrous effects

360-degree Feedback Positive features of a 360-degree system:

Multiple perspectives of a person’s performance Raters base evaluations on contact and observation Feedback is provided from multiple directions…

above, below, peer Anonymous upward feedback, which results in full

participation Learning about weaknesses and strengths is

motivational

360-degree Feedback Negative features of a 360-degree system:

Feedback from all sources can be overwhelming Rater can hide in a group of raters and provide

harsh evaluations Conflicting ratings can be confusing and frustrating Providing feedback that is constructive requires a

plan and well-trained raters

Selected Evaluation Techniques Ways of evaluating employees can generally

be divided into two categories: Methods that evaluate employees individually Multiple-person evaluations

In a multiple-person evaluation, the supervisor directly and intentionally compares the performance of one employee to that of others

Individual Evaluation Methods Graphic rating scale

The rater is presented with a set of traits The employee is rated on the traits Ratings are assigned points, which are then

computed Raters are often asked to explain each rating with a

sentence or two

Individual Evaluation Methods Forced choice:

Was developed because graphic rating scales allowed supervisors to rate everyone high

The rater must choose from a set of descriptive statements about employee

Supervisors check the statements that describe the employee, or they rank the statements from most to least descriptive

Forced choice can be used by superiors, peers, subordinates, or a combination of these

Individual Evaluation Methods Essay Evaluation

The rater is asked to describe the strong and weak aspects of the employee’s behavior

It can be used by superiors, peers, or subordinates Essay evaluations are flexible; an evaluator can

specifically address the ratee’s skill in any area Comparing essays is difficult

Skilled writers can paint a better picture

Individual Evaluation Methods Critical Incident Technique

Raters maintain a log of behavioral incidents that represent effective and ineffective performance for each employee

Two factors determine the success of this technique: The supervisor must have enough time to observe

subordinates during the evaluation period The supervisor must record incidents as they are

seen Logs can help avoid common rating errors and

facilitate discussions about performance improvement

Individual Evaluation Methods Checklists

In its simplest form, the checklist is a set of objectives or descriptive statements If the rater believes that the employee possesses a

listed trait, the item is checked A rating score equals the number of checks

Individual Evaluation Methods A variation is the weighted checklist

Supervisors and HR specialists prepare a list of descriptive statements about behavior

Judges who have observed behavior on the job sort the statements into piles rated from excellent to poor

When there is agreement on an item, it is included in the weighted checklist The employee’s evaluation is the sum of the scores

(weights) on the items checked

Checklists and weighted checklists can be used by superiors, peers, or subordinates

Individual Evaluation Methods Behaviorally Anchored Rating Scales

Smith and Kendall developed the behaviorally anchored rating scale (BARS), or the behavioral expectation scale (BES)

The BARS approach uses critical incidents to anchor statements on a scale

The rater reads the anchors and places an X at some point on the scale for the ratee

Individual Evaluation Methods A BARS usually contains these features:

Six to 10 performance dimensions identified and defined by raters and ratees

The dimensions are anchored with positive and negative critical incidents

Each ratee is then rated on the dimensions Ratings are fed back using the terms on the form

It takes two to four days to construct a BARS that is jargon free and closely related to the requirements of the job

Behaviorally Anchored Rating Scale

Uses specific descriptions of actual behaviors to rate various levels of actual performance


Behaviorally-Anchored Rating Scale Behaviorally-Anchored Rating Scale for Customer Service Skillsfor Customer Service Skills

Multiple-Person Evaluation Methods Ranking

A supervisor is asked to rank subordinates in order on some overall criterion It is easier to rank the best and worst employees

than average ones

Alternative rankings can help with this difficulty Pick the top employee first, then the bottom one The second best is chosen, then the second worst Follow this process until everyone has been ranked

Multiple-Person Evaluation Methods Paired Comparison

The supervisor reviews a series of cards; each contains two subordinates names

The higher performer in each pair is chosen Final ranking is made by counting how many times

a given employee was chosen as the better performer

A major limitation is the number of paired comparisons that must be made With only 10 subordinates, a supervisor would have

45 pairs of names

Paired Comparison Method

Multiple-Person Evaluation Methods Forced Distribution

Employees are rated on a pre-existing distribution of pre-determined categories

The predetermined distribution must be followed, regardless of how well the employees performed

A supervisor with all exceptional subordinates will be forced to rate some poorly A supervisor with mediocre subordinates must rate

some highly

This technique is similar to grading on a curve

Forced Distribution Method

At Sun Microsystems managers appraise employees in groups of about 30.

There is a top 10%, a middle 70%, and a bottom 10%.

The bottom 10% can either take a quick exit package or embark on a 90-day performance improvement action plan.


Forced Distribution on a Bell-Shaped CurveForced Distribution on a Bell-Shaped Curve

Multiple-Person Evaluation Methods An MBO program follows a systematic process:

Superior/subordinates define tasks and set objectives The superior, consulting with subordinates, sets criteria

for assessing objective accomplishment Dates to review progress are agreed upon and used Superior and subordinates make any required

modifications in the original objectives A final evaluation by the superior is made The superior meets with the subordinate in a

counseling, encouraging session Objectives for the next cycle are set

Performance Evaluation Problems

No technique is perfect;they all have limitations

Opposition to Evaluation Most employees are wary of performance evaluation

Subjective bias and favoritism are real problems

Opponents of formal evaluation argue that: They focus too much symptoms of poor performance

rather than finding the underlying causes Managers and employees dislike the process Raters have trouble deciding performance levels Employees who are not placed in the top performance

category experience a reverse motivation effect

System Design and Operating Problems Performance evaluation systems break down

because they are poorly designed If the criteria focus solely on results, or on

personality traits rather than performance, the evaluation may not be well received

Some techniques take a long time to carry out or require extensive written analysis, both of which managers resist

Some systems are not fully online

Rater Problems Even if a system is well designed, problems can arise if

raters are not cooperative and well trained Supervisors may not be comfortable “playing God”

Inadequate training can lead to: Problems with standards of evaluation Halo effect Leniency or harshness Central tendency error “Recency of events” error Contracts effects Personal bias (stereotyping, similar to me)

Standards of Evaluation Problems with evaluation standards arise

because of perceptual differences in the meaning of words Good, adequate, satisfactory, and excellent mean

different things to different evaluators

If only one rater is used, evaluations can be distorted This arises most often in graphic rating scales It may also appear with essays, critical incidents,

and checklists

Potential appraisal

The objective of potential appraisal is to identify the potential of a given employee to occupy higher positions in the organizational hierarchy and undertake higher responsibilities. It is required to:

Inform employees about their future prospectsHelp the organization chalk out a suitable succession planUpdate training efforts from time to timeAdvise employees about what they must do to improve their

career prospects.

Problem Children

Stars

Planned separation Solid citizens

PERFORMANCE

POTENTIAL

hrm performance & potential appraisal

Documents