Human Resource Management

Performance Appraisal and Performance Management

Performance appraisal Evaluating an employee’s current and/or

past performance relative to his or her performance standards.

Performance management The process employers use to make sure

employees are working toward organizational goals.

Difference between PM and PA

Processes used to identify,encourage,

measure,evaluate, improve, and reward employee performance.

The process of evaluating howwell employees perform their jobs and then communicating that information to the employees.

Performance appraisal

DefinitionsAccording to Newstrom, “It is the process of

evaluating the performance of employees, sharing that information with them and searching for ways to improve their performance’’.

MeaningPerformance appraisal is the step where the

management finds out how effective it has been at hiring and placing employees.

A “Performance appraisal” is a process of evaluating an employee’s performance of a job in terms of its requirements.

WHY THE PERFORMANCE Appraising Appraisals play an integral role in the

employer’s performance management process. Appraisals help in planning for correcting

deficiencies and reinforce things done correctly. Appraisals, in identifying employee strengths

and weaknesses, are useful for career planning Appraisals affect the employer’s salary raise

decisions.

Benefits of Performance Appraisal

Continuous improvement A management philosophy that requires

employers to continuously set and relentlessly meet ever-higher quality, cost, delivery, and availability goals by: Eradicating the seven wastes:

overproduction, defective products, and unnecessary downtime, transportation, processing costs, motion, and inventory.

Requiring each employee to continuously improve his or her own personal performance, from one appraisal period to the next.

Performance Appraisal Roles

Supervisors Usually do the actual appraising. Must be familiar with basic appraisal

techniques. Must understand and avoid problems that

can cripple appraisals. Must know how to conduct appraisals

fairly.

Performance Appraisal Roles (cont’d) HR department

Serves a policy-making and advisory role. Provides advice and assistance regarding

the appraisal tool to use. Prepares forms and procedures and insists

that all departments use them. Responsible for training supervisors to

improve their appraisal skills. Responsible for monitoring the system to

ensure that appraisal formats and criteria comply with EEO laws and are up to date.

Steps in Appraising Performance1.Defining the job

Making sure that you and your subordinate agree on his or her duties and job standards.

2.Appraising performance Comparing your subordinate’s actual performance

to the standards that have been set; this usually involves some type of rating form.

3.Providing feedback Discussing the subordinate’s performance and

progress, and making plans for any development required.

Designing the Appraisal Tool

What to measure? Work output (quality and quantity) Personal competencies Goal (objective) achievement

How to measure? Graphic rating scales Alternation ranking method MBO

Performance Appraisal Methods

Performance Appraisal Methods

Graphic rating scale A scale that lists a number of traits

and a range of performance for each that is used to identify the score that best describes an employee’s level of performance for each trait.

Graphic Rating

Scale with Space for Comment

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9–16

Figure 9–3

Comparative methodsRanking

A listing of all employees from highest to lowest in performance.

Drawbacks Does not show size of differences in

performance between employees Implies that lowest-ranked employees

are unsatisfactory performers. Becomes difficult process if the group to

be ranked is large.

Forced-Choice Method A trait approach to performance appraisal that requires the

rater to choose from statements designed to distinguish between successful and unsuccessful performance. Similar to grading on a curve; predetermined

percentages of rates are placed in various performance categories.

Example: 15% high performers 20% high-average performers 30% average performers 20% low-average performers 15% low p

Behavioral /Objective methods

Behavioral Rating Approach Assesses employees’ behaviors instead of other

characteristicsConsists of a series of scales created by:

Identifying important job dimensions Creating statements describing a range of

desired and undesirable behaviors (anchors)Type of behavioral scale

Behaviorally anchored rating scales (BARS)BARS is an appraisal tool that anchors numerical

rating scale with specific examples of good or poor performance.

Behavioral /Objective methodsManagement by Objectives

Specifying the performance goals that an individual and his or her manager agree that employee will try to attain within an appropriate length of time.

Key MBO Ideas Employee involvement creates higher levels of

commitment and performance. Encourages employees to work effectively toward

achieving desired results. Performance measures should be measurable and

should define results.

Narrative MethodsCritical Incident

Manager keeps a written record of highly favorable and unfavorable employee actions.

Drawbacks Variations in how managers define a

“critical incident” Time involved in documenting employee

actions Most employee actions are not observed

and may become different if observed

Narrative Methods(contd..)

Essay Manager writes a short essay describing an

employee’s performance.Drawback

Depends on the managers’ writing skills and their ability to express themselves.

360 Feed Back SystemA system of collecting performance information from multiple parties.

Multiple parties include one’s subordinates peers, supervisors and customers

It is also used to design promotion and reward.

360 degree performance appraisal

Potential Rating Scale Appraisal Problems

Unclear standards An appraisal that is too open to interpretation.

Halo effect Occurs when a supervisor’s rating of a subordinate

on one trait biases the rating of that person on other traits.

For example, supervisors often rate unfriendly employees lower than the others, on all traits.

Central tendency A tendency to rate all employees the same way,

such as rating them all average.

Potential Rating Scale Appraisal Problems (cont’d)

Strictness/leniency The problem that occurs when a supervisor

has a tendency to rate all subordinates either high or low.

Bias The tendency to allow individual differences

such as age, race, and sex to affect the appraisal ratings employees receive.

How to Avoid Appraisal Problems

Learn and understand the potential problems, and the solutions for each.

Use the right appraisal tool. Each tool has its own pros and cons.

Train supervisors to reduce rating errors such as halo, leniency, and central tendency.

Have raters compile positive and negative critical incidents as they occur.

Who Should Do the Appraising?

The immediate supervisor Peers Rating committees Self-ratings Subordinates 360-Degree feedback

Performance MANAGEMENT

Main Purposes of Performance Management

Individual Rewards (Base and Incentive) Feedback for Sub-Ordinate (Plus and Minus) Recognition of Superior Performance Documentation of Weak Performance Personnel Decision-Making Future Goal Commitments (Planned

Achievements)

Why Performance Management? Increasing use by employers of performance

management reflects:

The popularity of the total quality management (TQM) concepts.

The belief that traditional performance appraisals are often not just useless but counterproductive.

The necessity in today’s globally competitive industrial environment for every employee’s efforts to focus on helping the company to achieve its strategic goals.

Sources Of Performance Management

Managers Have the ability to rate employees  Feedback from MANAGERS is strongly related to

performance Peers

Co-worker Expert knowledge of job requirement Observe employee daily! Bring a different perspective in the evaluation

process - provide extremely valid assessment of performance

Useful esp. if supervisor does not always observe employee (e.g. law enforcement)

Sources Of Performance Management

Subordinates Evaluation of managers UPWARD FEEDBACK

Self Not often used Observe own behaviour

Customers Often the only best person to observe employee

performance BEST source of information Customer evaluation sheet Random mail surveys Telephone survey

Performance Management: A four step process

Step 1: Performance Planning and Communication

Step 2: Coaching/Feedback

Step 3: Performance Review

Step 4: Staff Development

The Components of an Effective Performance Management Process

Direction sharing Role clarification Goal alignment Developmental goal setting Ongoing performance monitoring Ongoing feedback Coaching and support Performance assessment (appraisal) Rewards, recognition, and compensation Workflow and process control and return

Objective setting: Be sure it’s S.M.A.R.T. Specific Measurable Achievable Results Oriented Time bound