Objective

1. Objective Chapter 8 (Chapter 10) Establishing the performance Management System Presenter: Sayed Moammer Mazhary BBA (Marketing & Finance) MBA (HRM) HR Manager KIHE

2. Outline • Introduction • Performance Management System • Performance Appraisal Process • Appraisal Methods • Factors That Can Distort Appraisals • Creating More Effective Performance Management System

3. Introduction • Employees generally see performance evaluations as having a direct effect on their work lives. • The performance management systems need to include: • decisions about who should evaluate performance • what format should be used • how the results should be utilized

4. Performance Management Systems Purposes of a Performance Management System • Feedback - let employees know how well they have done and allow for employee input. • Development – identify areas in which employees have deficiencies or weaknesses. • Documentation - to meet legal requirements.

5. Performance Management Systems Difficulties in Performance Management Systems • Focus on the individual: Discussions of performance may elicit strong emotions and may generate conflicts when subordinates and supervisors do not agree.

6. Performance Management Systems Difficulties in Performance Management Systems • Focus on the process: Company policies and procedures may present barriers to a properly functioning appraisal process. • Additionally, appraisers may be poorly trained.

7. Performance Management and EEO • HRM practices must be bias free, objective and job-related. • Valid performance appraisals are conducted at established intervals and are done by trained appraisers.

8. The Appraisal Process

9. The Appraisal Process • Establishment of performance standards • Derived from company’s strategic goals. • Based on job analysis and job description. • Communication of performance standards to employee.

10. The Appraisal Process • Measurement of performance using information from: • personal observation • statistical reports • oral reports • written reports • Comparison of actual performance with standards.

11. The Appraisal Process • Discussion of appraisal with employee. • Identification of corrective action where necessary. • Immediate action deals with symptoms. • Basic corrective action deals with causes.

12. Appraisal Methods Three approaches: • Absolute standards • Relative standards • Objectives

13. Appraisal Methods Evaluating absolute standards: • An employee’s performance is measured against established standards. • Evaluation is independent of any other employee.

14. Appraisal Methods Evaluating absolute standards: • Essay Appraisal: Appraiser writes narrative describing employee performance & suggestions. • Critical Incident Appraisal: Based on key behavior anecdotes illustrating effective or ineffective job performance.

15. Appraisal Methods Evaluating absolute standards: • Checklist Appraisal: Appraiser checks off behaviors that apply to the employee by selecting yes/no. • Adjective Rating Scale Appraisal: Appraiser rates employee on a number of job-related factors scaling from low to high.

16. Appraisal Methods Evaluating absolute standards: • Forced-Choice Appraisal:Appraisers choose from sets of statements which appear to be equally favorable, the statement which best describes the employee.

17. Appraisal Methods Evaluating absolute standards: • Behaviorally Anchored Rating Scales (BARS):Appraiser rates employee on factors which are defined by behavioral descriptions illustrating various dimensions along each rating scale.

18. Appraisal Methods Relative standards: • Employees are evaluated by comparing their performance to the performance of other employees.

19. Appraisal Methods Relative standards: • Group Order Ranking: Employees are placed in a classification reflecting their relative performance, such as “top one-fifth.”

20. Appraisal Methods Relative standards: • Individual Ranking: Employees are ranked from highest to lowest. • Paired Comparison: • Each individual is compared to every other. • Final ranking is based on number of times the individual is preferred member in a pair.

21. Appraisal Methods Using Achieved Outcomes to Evaluate Employees Management by Objectives (MBO) • includes mutual objective setting and evaluation based on the attainment of the specific objectives

22. Appraisal Methods Using Achieved Outcomes to Evaluate Employees • Common elements in an MBO program are: • goal specificity • participative decision making • an explicit time period • performance feedback • Effectively increases employee performance and organizational productivity.

23. Factors that can Distort Appraisals

24. Factors that can Distort Appraisals • Leniency error • Each evaluator has his/her own value system. • Some evaluate high (positive leniency) and others, low (negative leniency). • Halo error: Evaluator lets an assessment of an individual on one trait influence evaluation on all traits.

25. Factors that can Distort Appraisals • Similarity error: Evaluator rates others in the same way that the evaluator perceives him or herself. • Low appraiser motivation:Evaluators may be reluctant to be accurate if important rewards for the employee depend on the results.

26. Factors that can Distort Appraisals • Central tendency: The reluctance to use the extremes of a rating scale and to adequately distinguish among employees being rated. • Inflationary pressures: Pressures for equality and fear of retribution for low ratings leads to less differentiation among rated employees. • Inappropriate substitutes for performance: Effort, enthusiasm, appearance, etc. are less relevant for some jobs than others.

27. Factors that can Distort Appraisals Attribution Theory • Evaluations are affected based on whether someone’s performance is due to • internal factors they can control • external factors which they cannot • If poor performance is attributed to internal control, the judgment is harsher than when it is attributed to external control.

28. Factors that can Distort Appraisals • Impression management: • If employee positively influences the relationship with the supervisor, he/she is likely to receive a higher rating.

29. Creating More Effective Performance Management Systems Use Behavior-Based Measures: • Measures based on specific descriptions of behavior are more job-related and elicit more inter-rater agreement than traits, such as “loyalty” or “friendliness”.

30. Creating More Effective Performance Management Systems Combine Absolute and Relative Standards: • Absolute standards tend to be positively lenient; relative standards suffer when there is little variability. • Combining the standards tends to offset the weaknesses of each.

31. Creating More Effective Performance Management Systems Provide Ongoing Feedback: • Expectations and disappointments should be shared with employees on a frequent basis.

32. Creating More Effective Performance Management Systems Use Multiple Raters: • Increasing the number of raters leads to more reliable and valid ratings. • Use peer evaluations: Coworkers offer constructive insights and more specific evaluations. • Upward appraisals allow employees to give their managers feedback. • 360-Degree appraisals: Supervisors, peers, employees, team members, customers and others with relevant information evaluate the employee.

33. Creating More Effective Performance Management Systems Rate Selectively • Appraisers only evaluate in those areas about which they have sufficient knowledge. • Appraisers should be organizationally as close as possible to the individual being evaluated. • More effective raters are asked to do the appraisals.

34. Creating More Effective Performance Management Systems Train Appraisers: • Untrained appraisers who do poor appraisals can demoralize employees and increase legal liabilities.

35. Creating More Effective Performance Management Systems

36. International Performance Appraisal • Who performs the evaluation? • Different cultural perspectives and expectations between the parent and local country may make evaluation difficult. • Evaluation forms may not be translated accurately. • Quantitative measures may be misleading.

37. International Performance Appraisal • Evaluation Formats • May make sense to use different forms for parent-country nationals and host-country nationals. • Performance criteria for a particular position should be modified to fit the overseas position and site. • Include a current expatriate’s insights as part of the evaluation.