MGTO 231 Human Resources Management

MGTO 231Human Resources Management Performance appraisal I Dr. Kin Fai Ellick WONG

Prologue • Performance appraisal for employees = academic report for students • Normally, firms perform 1 to 2 appraisal per year • Performance appraisal could be more “terrible” than academic report, because …. • Normally, there are appraisal interviews

Questions for you • What objectives does an HR manager want to achieve from performance appraisal? • Why and how these objectives are important? • What will the consequences be if the HR manager fails to achieve these objectives?

Outline • Some basic concepts of performance appraisal • Identifying performance dimensions • Measuring performance (next lesson) • Managing performance (next lesson)

Outline • Some basic concept of performance appraisal • Identifying performance dimensions • Measuring performance (next lesson) • Managing performance (next lesson)

What is performance appraisal? • Evaluation for improvement, not just for criticism • Future-oriented activity (useful feedback) based on past performance • Training and development

The basic three-stage model • Identification  measurement  management

A Model of Performance Appraisal Identification Measurement Management Source: Managing Human Resources, 4th Edition, p.223

Identification • What areas should be examined? • Examining the relevance instead of irrelevance (e.g., sex, gender, religion) • Measurement • The development of standard and measure • Again, the issues of reliability and validity

Management • Providing feedback • Coaching the ways to achieve higher level of performance

The uses of PA 1 • Administrative purpose • Used as the basis for determining employees’ work conditions, promotions, termination, and rewards • It helps manager “justify” his/her HR decisions • A clear-cut criterion is usually mentioned

“但為何一畢業才知一世我也要考試” • 小星星（唱：楊千嬅；詞：林夕） • But why don’t I • Not Realize • There are examinations in my whole life ”Small stars (Singer: Miriam Yeung; Lyrics: Lam Jik)

The uses of PA 2 • Developmental purpose • Used as the basis for improving employees’ performance • Providing feedback for improvement • Do you remember goal-setting theory?

Benefits of PA (Employer) • Assessing individual differences after selection • Documentation of employees’ performance (legal defense) • Rational basis for bonus and merit system • Set appraisal dimensions that fit the strategic goals • Create appropriate expectation to employees • Management process • Validation of selection tools

Benefits of PA (employees) • Performance feedback and assessment for improving performance • Fairness, effects (rewards and punishments) based on relatively standardized measures • Goal-setting • Increasing motivation

Questions for you • What objectives does an HR manager want to achieve from performance appraisal? • Why and how these objectives are important? • What will the consequences be if the HR manager fails to achieve these objectives?

What are to be measured? • Dimension • An aspect of performance that determines effective job performance • The very first step • The development of dimension can be quite complicated

What constitute a good computer programmer? • Quality of programs • Quantity of programs • Interpersonal effectiveness • Hardworking • Good writing skills • Being familiar with updated computer knowledge • Good typing skills • Etc.

What are the “REAL” dimensions • Job analysis • The dimensions can be defined through job analysis • Critical incident technique, task inventory analysis, position analysis questionnaire, etc.

What are to be measured? • The dimensions derived in the first step • Through the measurement tools (analogous to selection tools), the employee’s performance on a specific dimension is usually quantified • Thus, similar to selection tools, the reliability and validity of the measures should be well established before conducting performance appraisal.

Appraisal formats • Type of judgment • Relative or absolute • Scale format • Nominal, ordinal, interval, or ratio • Focus of the measure • Trait, behavior, outcome

Relative vs. absolute judgment • Relative judgment • Rating based on comparing an employee’s performance to the performance of other employees doing the same job • “Your performance is 1.2 SDs below mean” • Emphasis on individual differences, but somehow may be artificial (e.g., when all are excellent or poor employees) • Used mainly for administrative need • E.g., attention ranking scale, paired comparison method

Alternation Ranking Scale Source: Human Resource Management, 10th Edition, p.321

Ranking Employees by the Paired Comparison Method Note: + means “better than.” – means “worse than.” For each chart, add up the number of +’s in each column to get the highest-ranked employee. Source: Human Resource Management, 10th Edition, p.321

Absolute judgment • Rating based on performance standards • A score of 70 out of 100 reveals that the performance is acceptable, but it does not reveal how well this rating is when being compared with others’ • Different raters may have different standards

Relative performance assessment of your grade For Required Core Courses: GradesSenate Guidelines A-, A, A+ 15.0% B-, B and B+ 32.5% C-, C and C+ 40.0% D 7.5% F 0-5%

Scale formats • Nominal scales • Name or category • Country (e.g. China, U.S.A., Japan) • Department (MGTO, ECON, ACCT, etc.) • Categorical • Not so popular in PA

Ordinal scales • Order • Distances between levels may not be equal • Rank (e.g., 1st , 2nd, 5th) • Useful for relative or absolute judgment?

Interval scales • Equal distances • Did not have absolute zero • Degree Celsius (20ºC  double of 10 ºC)

Ratio scales • Equal distances • Have absolute zero • Length (1000m = double of 500m) To be continued…

MGTO 231 Human Resources Management