Performance Management and Appraisal

Introduction

• Performance appraisal means evaluating an employee’s current and/ or past performance relative to his or her performance standards.

• Managers generally take the integrated nature of that process—of setting goals, training employees, and then appraising and rewarding them. This whole integrated approach is called performance management

Performance Management

• This is the process through which companies ensure that employees are working toward organizational goals.

• This process includes practices through which the manager defines the employee’s goals and work, develops the employee’s skills and capabilities, appraises the person’s goal-directed behavior, and then rewards him or her in a fashion that hopefully makes sense in terms of both company’s needs and the person’s career aspirations.

Defining Employee’s Goals and Work Efforts

• At the heart of performance management is the idea that the employee’s efforts should be goal directed.

• Manager should appraise the employee based on how the person did with respect to achieving specific standards by which he or she expected to be measured.

• Managers should also make sure that employee’s goals and performance standards make sense in terms of the company’s long term goals.

• Clarifying what you expect from your employee is trickier than it may appear.

• Employers usually write job descriptions, but the descriptions rarely include specific goals.

• You therefore have to quantify your expectations.

• The most straightforward way to do this is to set measurable standards for each expectation.

• The point is that employees should always know ahead of time how and on what basis you’re going to appraise them.

• You can’t expect them to manage their own performance if they don’t know quantitatively how you expect them to perform.

• Goals you set should be “SMART.”

Why Appraising Performance?

• Appraisals provide important input on which the supervisor can make promotion and salary raise decisions.

• Appraisals lets the boss and subordinate develop a plan for correcting any deficiencies the appraisal might have unearthed, and to reinforce the things the subordinate does correctly.

• Appraisal can serve a useful career-planning purpose, by providing the opportunity to review employee’s career plans in light of his or her exhibited strengths and weaknesses.

Who Should Do the Appraising?

• Peer Appraisals• Rating Committees• Self-Rating• Appraisal by Subordinates• 360-Degree Feedback

Basic Appraisal Methods

• Graphic Rating Scales• Alternation Ranking Method• Paired Comparison Method• Forced Distribution Method• Critical Incident Method• Behaviorally Anchored Rating Scales (BARS)• The Management by Objectives Method (MBO)• Computerized and Web-Based Performance Appraisal• Electronic Performance Monitoring

Graphic Rating Scales

• It lists a number of traits and a range of performance for each.

• The supervisor rates each subordinate by circling or checking the score that best describes the subordinate’s performance for each trait, then totals the score for all traits.

Alternation Ranking Method

• Ranking employees from best to worst on a trait or traits.

• This method is used to indicate the employee who is highest on the trait being measured and also the one who is lowest, alternating between highest and lowest until all employees to be rated have been addressed.

Paired Comparison Method

• Every subordinate to be rated is paired with and compared to every other subordinate on each trait.

• Then for each trait, the supervisor indicates (with plus or minus) who is better employee of the pair.

• Next, the number of times an employee is rated better is added up.

Forced Distribution Method

• The manager places predetermined percentages of subordinates in performance categories, as when a professor “grades on a curve.”

• The biggest complaints: 44% said it damages morale, and 47% said interdepartmental inequities.

Critical Incident Method

• This method entails keeping a record of uncommonly good or undesirable examples of an employee’s work-related behavior and reviewing it with the employee at predetermined times.

• Employers often use the critical incident method to supplement a rating or ranking method.

• This helps ensure that the supervisor thinks about the subordinate’s all during the year, because the incidents must be accumulated; therefore, the rating does not just reflect the employee’s most recent performance.

Behaviorally Anchored Rating Scales (BARS)

• This method combines the benefits of both narrative critical incidents and quantitative ratings, by anchoring a quantified scale with specific narrative examples of good and poor performance.

The Management by Objectives Method

• This method requires the manager to set specific goals with each employee and then periodically discuss the later progress toward these goals.

• The term MBO usually refers to an organization-wide goal-setting and appraisal program.

Computerized and Web-Based Performance Appraisal

• Several relatively inexpensive performance appraisal software programs are available.

• These generally enable managers to log notes on their subordinates during the year, and then rate these subordinates on a series of computerized performance traits.

• The program then generate written text to support each part of the appraisal.

Electronic Performance Monitoring (EPM)

• EPM systems use computer network technology to provide managers with access to their employees’ computers and telephones.

• They thus allow “ managers to determine at any moment throughout the day the pace at which employees are working, their degree of accuracy, log-in and log-off times, and even the amount of time spent on bathroom breaks.”

• Empirical studies provide strong evidence linking EPM with increased stress.

The Appraisal Feedback Interview

• This takes place in an appraisal interview.• Here the supervisor and subordinates come

together and review the appraisal.• They make plans to remove deficiencies and

improve on strengths.• Some people may not feel comfortable

because they do not like to receive or give negative feedback.

Preparing for the Appraisal Interview

• Here three things need to be taken care of:1. Subordinates must be given at least a week’s

notice to review their work, job description and analyze problems.

2. They need to study their job description, compare it with the employee’s performance standard and review the employees previous appraisals.

3. Choose the right place and schedule appropriate time.

Conducting the interview

• The main objective of the interview is to reinforce satisfactory performance and improve on unsatisfactory ones.

• This can be done by being direct and specific and talk in terms of objective work data like absences, inspection reports etc.

• Another important thing is to get agreement from the employees on how things are to be done and by when.

• The employees also should be made clear about the expected standard and specify any violation of the standard.

• Supervisors also needs to deal with defensiveness of the person being accused for poor performance.

• Finally, the managers must make sure that subordinates are not trying to impress them in order to influence their ratings.

Toward More Effective Appraisals

• Managers have to deal with quite a number of problems during appraisal.

• Some common appraisal problems are:1. Unclear Standards.2. Halo Effect3. Central Tendency4. Leniency or Strictness5. Bias

Legal issues in performance appraisal:

• Performance appraisal affects raises, promotions and other career opportunities.

• If the manager is bias in the appraisals he does, it will not be fair for the employees.

• Therefore, the employee’s appraisal process must be legally defensible.