Performance Appraisal

1. Performance Appraisals Chapter 11

2. Nature of Performance Appraisals • You can’t manage what you don’t understand • You don’t understand what you don’t measure • What gets measured is what gets done • What gets measured is what gets rewarded • What gets rewarded is what gets repeated

3. The Role of Performance Appraisalsin Compensation Decisions • Employees often frustrated about the appraisal process • Appraisals are too subjective • Possibility of unfair treatment by a supervisor • Experts argue that rather than throwing out the entire performance appraisal process, total-quality-management principles should be applied to improving it • Recognize part of performance influenced more by work environment and systems than by ee behaviors

4. Exhibit 11.1: Common Errorsin the Appraisal Process

5. Exhibit 11.2: Ratings of Managers

6. Strategies to Better Understand and Measure Job Performance • Clearly define job performance • Recognize definition of performance and its components is expanding • Improve appraisal formats • Select the right raters • Understand way raters process information and mistakes that may be made • Train raters to improve rating skills

7. Categories of Appraisal Formats Ranking - Rater compares employees against each other Categories Rating - Rater evaluates employees on some absolute standard (measured on a continuum scale) Essay - Rater answers open-ended questions in essay form describing employee performance

8. Ranking Formats • Straight ranking • Alternation ranking • Paired-comparison ranking • See Ex. 11.3

9. Rating Formats • Two common elements • Raters evaluate employees on some absolute standard • Each standard is measured on a scale -performance variation is described along a continuum

10. Rating Formats (cont.) • Types of descriptors • Adjectives • Standard rating scale (Ex. 11.4) • Behaviors • Behaviorally anchored rating scales (Ex. 11.5) • Outcomes • Management by objectives (Ex. 11.7, 11.8)

11. Exhibit 11.9: Usage of PerformanceEvaluation Formats

12. Exhibit 11.10: An Evaluation of Performance Appraisal Formats

13. Training Raters to Rate More Accurately • Rater-error training • Goal is to reduce psychometric errors by familiarizing raters with their existence • Performance-dimension training • Exposes supervisors toperformance dimensions used • Performance-standard training • Provides raters with a standard orframe of reference for making appraisal

14. Ways to Improve Rater Training • Straightforward lecturing to ratees is ineffective • Individualized or small group discussions more effective • When sessions are combined with extensive practice and feedback, rating accuracy improves • Longer training programs are generally more successful than shorter programs • Performance-dimension and performance-standard training more effective than rater-error training • Success results from efforts to reduce halo errors and improve accuracy

15. Putting it All Together: The Performance Appraisal Process • Need a sound basis for establishing performance appraisal dimensions and scales associated with each dimension • Need to involve employees in every stage of developing performance dimensions and building scales • Need to ensure raters are trained in use of appraisal system and that all employees understand how system operates

16. Putting it All Together: The Performance Appraisal Process (cont.) • Need to ensure raters are motivated to rate accurately • Raters should maintain a diary of employee performance • Raters should attempt a performance diagnosis to determine if performance problems exist

17. Exhibit 11.11: Tips on Appraising Employee Performance

18. Exhibit 11.11: Tips on Appraising Employee Performance (con’t)

19. 1 Provide specific written instructions on how to complete appraisal 2 Incorporate clear criteria for evaluating performance - Performance dimensions should be written, objective, and clear 3 Provide a rational foundation for personnel decisions via adequately developed job descriptions 4 Require supervisors to provide feedback about appraisal results to employees 5 Incorporate a review of performance ratings by higher level supervisors 6 Consistent treatment across raters, regardless of race, color, religion, sex, and national origin should be evident EEO and Performance Evaluation Key Issues: Establishing a Performance Appraisal System

20. How do we get employees to view raises as a reward for performance? Tying Pay to Subjectively Appraised Performance Central issue involving merit pay

21. Pay Increase Guidelines with Low Motivational Impact • Provide equal increases to all employees regardless of performance • General increase • Cost-of-living adjustments • Pay increases based on a preset progression pattern based on seniority

22. Requirements to Link Pay to Performance • Define performance • Behaviors • Competencies • Traits • Specify a continuum describing different levels from low to high on performance measure • Decide how much of a merit increase is given for different levels of performance

23. Exhibit 11.12: Performance-based Guidelines

24. Designing Merit Guidelines Four Questions . . . 1 What should the poorest performer be paid as an increase? 2 How much should average performers be paid as an increase? 3 How much should top performers be paid? 4 What should be the size of the percentage increase differential between different levels of performance?

25. Exhibit 11.14: Merit Pay Grid

26. Promotional Increases as a Pay-for-Performance Tool • Promotion should be accompanied by a salary increase - 8 to 12% • Characteristics of promotional pay increases • Size of increment is approximately double a normal merit increase • Represent a reward to employees for commitment and exemplary performance