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Strategic Performance Appraisals for Employee Retention

Learn about the role of performance appraisals in evaluating employee performance, providing feedback, and enhancing retention strategies. Understand how to avoid common appraisal mistakes and ensure compliance with legal requirements.

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Strategic Performance Appraisals for Employee Retention

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  1. HFT 2220 Chapter 8 Performance Appraisals and Retention

  2. What is a Performance Appraisal? • A meeting held between a manager and employee for the purpose of evaluating the performance, behaviors, knowledge and skills of the employee

  3. Purposes for Performance Appraisals • Assess quality of job performance • Provide feedback regarding job performance • Plan future performance goals and objectives • Improve job performance through recognition and coaching • Establish a better knowledge of the employee to understand what motivates them • Document unsatisfactory performance • Serve as the basis for compensation changes

  4. Relationship to Performance • Performance defined in company standards • Defines accountability • Evaluate effectiveness of training programs

  5. Relationship to Communication • Feedback: information provided by the manager to the employee during a performance appraisal. • Helps to prevent misunderstandings when performance standards are communicated to employees who are held accountable

  6. Relationship to Development • Identify employees who need additional training or are ready to move up • Provide effective employee guidance and career counseling • Helps measure predictive validity – the extent to which management predicts future behavior

  7. Relationship to Training • Helps management evaluate training programs • Allows managers to discuss good and/or bad points of training programs with employees

  8. Relationship to Compensation • Long used as basis for increases in compensation. • Make sure criteria are based on measurable outcomes based on the current job

  9. Judge versus Coach • Development appraisal • Coaching. Manager and employee agree on training and development agenda • Performance appraisal (evaluation) • Judge. Manager provides employee with information on their success or failures in the organization

  10. Performance Appraisals • Should be based on previously established goals which should always be • Logical • Specific • Realistic • Measurable • Time Sensitive • Results Oriented • Mutually Acceptable

  11. Appraisal Document • Basic information • Name • Date • Job position • Date of the interview • Who is conducting the interview

  12. Subjectivity/Objectivity • Subjective rating systems not illegal but must be applied equally • Cannot misuse objective information • Retroactive documentation illegal • Criticism cannot be • Extreme and outrageous • Intentionally reckless • Intended to cause emotional distress • Any distress to the criticized employee is not severe

  13. Criteria for Performance Appraisals • Construct validity • Must measure what they claim to measure • Content validity • Must measure the entire issue • Inter-rater validity • More than one appraiser • Consistency • All instances, not just one or two points in time

  14. Methods of Appraising Performance • Critical incident • Capture and record incidents • Behaviorally Anchored Ratings Scales (BARS) • Rating system based on specific behaviors • Competency approach • Focuses on knowledge and sets of skills • 360 Degree appraisals • Provide feedback from multiple sources

  15. Mistakes to Avoid in Performance Appraisals • Halo Errors • Positive • Negative – Horn error • Bias • Recency Bias • Past anchoring errors Courts have held the appraisals are free from bias if they meet the requirements of Title VII

  16. Other Mistakes to Avoid • Attractiveness • Personalities • Employee backgrounds • Lacking clear standards of evaluation • Managers can’t or don’t observe employee adequately • Comparing one employee to another • Bureaucratic – more interested in regulations and legal protection than being honest

  17. Appraisals and the Law • Appraisals must not be discriminatory • Key issues must be • Job relatedness • Objectivity • Should be based on content and due process issues

  18. Content (Job Related) Issues • Performance standards must be based on analysis of job requirements • Based on specific dimensions of the job • Standards should be objective and observable • Ratings should be documented • Validity of appraisers ratings should be assessed

  19. Due Process Issues • Standards must be communicated and understood by the employee • Specific appraisal instructions should be put in writing • Use more than one appraiser if possible • Review results • Establish legitimate, formal appeal procedures

  20. Retention Programs • Aimed at decreasing turnover • The rate at which employees leave a company • Turnover costs – Tangible and intangible • Tangible – Out of pocket expenses. • Separation costs • Replacement costs • Training costs • Intangible – Do not relate to out of pocket expenses • Managerial time • Lost productivity • Morale

  21. Decreasing Turnover • Hire the right people • Make sure the job fits the employee • Meaningful new hire orientation • Effective training • Set clear expectations • Dignity and respect • Review compensation and benefit packages • Improve quality of work life • Sense of community

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