MGTO 231Human Resources

Management

Performance appraisal I

Dr. Kin Fai Ellick WONG

Prologue

• Performance appraisal for employees = academic report for students

• Normally, firms perform 1 to 2 appraisal per year

• Performance appraisal could be more “terrible” than academic report, because ….

• Normally, there are appraisal interviews

Questions for you

• What objectives does an HR manager want to achieve from performance appraisal?

• Why and how these objectives are important?

• What will the consequences be if the HR manager fails to achieve these objectives?

Outline

• Some basic concepts of performance appraisal

• Identifying performance dimensions

• Measuring performance (next lesson)

• Managing performance (next lesson)

Outline

• Some basic concept of performance appraisal

• Identifying performance dimensions

• Measuring performance (next lesson)

• Managing performance (next lesson)

What is performance appraisal?

• Evaluation for improvement, not just for criticism

• Future-oriented activity (useful feedback) based on past performance– Training and development

• The basic three-stage model– Identification measurement

management

A Model of Performance Appraisal

Identification

Measurement

Management

Source: Managing Human Resources, 4th Edition, p.223

• Identification– What areas should be examined?– Examining the relevance instead of

irrelevance (e.g., sex, gender, religion)

• Measurement– The development of standard and

measure– Again, the issues of reliability and validity

• Management– Providing feedback– Coaching the ways to achieve higher

level of performance

The uses of PA 1

• Administrative purpose– Used as the basis for determining

employees’ work conditions, promotions, termination, and rewards

– It helps manager “justify” his/her HR decisions

– A clear-cut criterion is usually mentioned

• “但為何一畢業才知 一世我也要考試” – 小星星（唱：楊千嬅；詞：林夕）

• But why don’t I• Not Realize• There are examinations in my whole

life

”Small stars (Singer: Miriam Yeung; Lyrics: Lam Jik)

The uses of PA 2

• Developmental purpose– Used as the basis for improving

employees’ performance– Providing feedback for improvement

• Do you remember goal-setting theory?

Benefits of PA (Employer)

• Assessing individual differences after selection• Documentation of employees’ performance

(legal defense)• Rational basis for bonus and merit system• Set appraisal dimensions that fit the strategic

goals• Create appropriate expectation to employees• Management process• Validation of selection tools

Benefits of PA (employees)

• Performance feedback and assessment for improving performance

• Fairness, effects (rewards and punishments) based on relatively standardized measures

• Goal-setting

• Increasing motivation

Questions for you

• What objectives does an HR manager want to achieve from performance appraisal?

• Why and how these objectives are important?

• What will the consequences be if the HR manager fails to achieve these objectives?

Outline

• Some basic concept of performance appraisal

• Identifying performance dimensions

• Measuring performance (next lesson)

• Managing performance (next lesson)

A Model of Performance Appraisal

Identification

Measurement

Management

Source: Managing Human Resources, 4th Edition, p.223

What are to be measured?

• Dimension– An aspect of performance that

determines effective job performance

• The very first step– The development of dimension can be

quite complicated

• What constitute a good computer programmer?– Quality of programs– Quantity of programs– Interpersonal effectiveness– Hardworking– Good writing skills– Being familiar with updated computer

knowledge– Good typing skills– Etc.

What are the “REAL” dimensions

• Job analysis– The dimensions can be defined through

job analysis– Critical incident technique, task inventory

analysis, position analysis questionnaire, etc.

Outline

• Some basic concept of performance appraisal

• Identifying performance dimensions

• Measuring performance (next lesson)

• Managing performance (next lesson)

A Model of Performance Appraisal

Identification

Measurement

Management

Source: Managing Human Resources, 4th Edition, p.223

What are to be measured?

• The dimensions derived in the first step• Through the measurement tools (analogous

to selection tools), the employee’s performance on a specific dimension is usually quantified

• Thus, similar to selection tools, the reliability and validity of the measures should be well established before conducting performance appraisal.

Appraisal formats

• Type of judgment– Relative or absolute

• Scale format– Nominal, ordinal, interval, or ratio

• Focus of the measure– Trait, behavior, outcome

Relative vs. absolute judgment

• Relative judgment– Rating based on comparing an employee’s

performance to the performance of other employees doing the same job

– “Your performance is 1.2 SDs below mean”– Emphasis on individual differences, but

somehow may be artificial (e.g., when all are excellent or poor employees)

– Used mainly for administrative need– E.g., attention ranking scale, paired comparison

method

Alternation Ranking Scale

Source: Human Resource Management, 10th Edition, p.321

Ranking Employees by the Paired Comparison Method

Note: + means “better than.” – means “worse than.” For each chart, add up the number of +’s in each

column to get the highest-ranked employee.

Source: Human Resource Management, 10th Edition, p.321

• Absolute judgment– Rating based on performance standards– A score of 70 out of 100 reveals that the

performance is acceptable, but it does not reveal how well this rating is when being compared with others’

– Different raters may have different standards

Relative performance assessment of your grade

For Required Core Courses:

Grades Senate Guidelines

A-, A, A+ 15.0%B-, B and B+ 32.5%C-, C and C+ 40.0%D 7.5%F 0-5%

Scale formats

• Nominal scales– Name or category

• Country (e.g. China, U.S.A., Japan)• Department (MGTO, ECON, ACCT, etc.)• Categorical• Not so popular in PA

• Ordinal scales– Order– Distances between levels may not be equal

• Rank (e.g., 1st , 2nd, 5th)

– Useful for relative or absolute judgment?

• Interval scales– Equal distances– Did not have absolute zero

• Degree Celsius (20ºC double of 10 ºC)

• Ratio scales– Equal distances– Have absolute zero

• Length (1000m = double of 500m)

To be continued…