Performance Appraisal

1. Performance Appraisal The identification, measurement, and management of human performance in organizations.

2. 8-5 Performance Evaluation and Management • Performance Management: efforts to align employee performance with the firm’s goals • Performance Evaluation:efforts to determine the extent to which an employee performs work effectively. Also known as: • Performance review • Personnel rating • Merit rating • Performance appraisal • Employee appraisal • Employee evaluation

3. 9-3 Potential Purposes of Evaluation Development HR and Employment Planning Motivation Legal Compliance HRM Research Communications

4. A Model of Performance Appraisal Identification Measurement Management

5. 9-5 Performance Evaluation:Criteria of Evaluation • Reliability • Relevance • Sensitivity • Practicality Combination of criteria using activities and results is desirable

6. 9-6 Who Should Evaluate the Employee? MANY POSSIBILITIES • Immediate supervisor only (typical) • Committee of several supervisors • Employees’ peers (coworkers) • Employees’ subordinates • Someone outside the immediate work situation • Self-evaluation

7. Some Potential Benefits Encourages employee participation Enables subordinates to exercise self-control and manage own performance Useful for training and career development purposes May be used as an impetus for changing organization-wide systems Some Potential Pitfalls Managers may not be adequately prepared for MBO Demands active employee and manager involvement Too much emphasis on the short run and results Failure to tie results to rewards Too much time and paperwork Too many and conflicting objectives set 9-11 Management By Objectives(MBO)

8. Problems with standards of evaluation Halo effects Leniency or harshness 9-12 Potential Evaluation Problems • Opposition to evaluation • System design and operating problems • Rater problems include: • Central tendency errors • “Recency of events” errors • Contrast effects • Personal bias/stereotyping Major problems exist more with the rater than the technique used.

9. ELIMINATING RATER ERRORS Train raters on how to evaluate others well Grant ample opportunities to observe behavior Motivate raters to use the system effectively AVOIDING PROBLEMS WITH EMPLOYEES Train employees in performance evaluation methods Simplify reporting forms Communicate how evaluation information is be used Allow employees to participate in system development Build equity into the system 9-13 Solutions to Evaluation Problem

10. The Benefits of Performance Appraisal Employer Perspective: • Despite imperfect measurement techniques, individual differences in performance can make a difference to company performance. • Documentation of performance appraisal and feedback may be needed for legal defense. • Appraisal provides a rational basis for constructing a bonus or merit system. • Appraisal dimensions and standards can help to implement strategic goals and clarify performance expectations. • Providing individual feedback is part of the performance management process. • Despite the traditional focus on the individual, appraisal criteria can include teamwork and the teams can be the focus of the appraisal.

11. Trait Appraisal, Behavioral Appraisal, and Outcome Appraisal Instruments Trait Appraisal An appraisal tool that asks a supervisor to make judgments about worker characteristics that tend to be consistent and enduring. Behavioral Appraisal An appraisal tool that asks managers to assess a worker’s behaviors. Outcome Appraisal An appraisal tool that asks managers to assess the results achieved by workers.

12. Sample Trait Scales Rate each worker using the scales below. Decisiveness: 1 2 3 4 5 6 7 Very low Moderate Very high Reliability: 1 2 3 4 5 6 7 Very low Moderate Very high Energy: 1 2 3 4 5 6 7 Very low Moderate Very high Loyalty: 1 2 3 4 5 6 7 Very low Moderate Very high

13. Evaluation of Major Appraisal Formats Legal Defensibility Developmental Use Administrative Use Appraisal Format + - - + 0 0 ++ + 0 0 0 - -- ++ + Absolute Relative Trait Behavior Outcome ++ Very good + Good -- Very Poor - Poor 0 Unclear or mixed

14. 9-7 Who Should Evaluate the Employee? 360-DEGREE FEEDBACK • Alternative to traditional supervisor-only approaches • Uses multiple appraisers • Not a panacea Supervisors Self- appraisal Peers Subordinates

15. Challenges to Effective Performance Measurement • Rater errors and bias • The influence of liking • Organizational politics • Whether to focus on the individual or the group • Legal issues

16. Legal Issues • Arecent analysis of 295 court cases involving performance appraisal found judges’ decisions to be favorably influenced by the following additional factors: • Use of job analysis • Providing written instructions • Allowing employees to review appraisal results • Agreement among multiple raters (if more than one was used) • The presence of rater training

17. Communication Skills for the Appraisal Interview Skills Benefit Description Example Rater sits with a slight forward, comfortable lean of the upper body, maintains eye contact, and speaks in a steady and soothing voice. —Open questions encourage information sharing and are most appropriate early in an interview or in complex, ambiguous situations. —Closed question evoke short responses and are useful for focusing and clarifying. Suggests interest and active listening. Appropriate use of open and closed questions can ensure an effective flow of communication during an interview. While the ratee is speaking, the rater looks at the person and gently nods head to signal interest. — Open questions start with words like “Could,” “Would,” “How,” “What,” or “Why”. — Closed questions start with words like “Did,” “Is,” or “Are.” Nonverbal Attending Open and Closed Questions

18. Communication Skills for the Appraisal Interview (Cont.) Skills Benefit Description Example Pay attention to cultural differences that may influence how another person communicates and how you might communicate with others. Communication is more effective when you are sensitive to the possible influence of cultural differences. When dealing with employees from a culture that is highly formal, avoid addressing them in the workplace by their first names. Doing so may signal disrespect. Cultural Sensitivity

19. Key Steps in Implementing 360° Appraisal • Top management communicates the goals of and need for 360° appraisal. • Employees and managers are involved in the development of the appraisal criteria and appraisal process. • Employees are trained in how to give and receive feedback. • Employees are informed of the nature of the 360° appraisal instrument and process. • The 360° system undergoes pilot testing in one part of the organization. • Management continuously reinforces the goals of the 360° appraisal and is ready to change the process when necessary.