pms management
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Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–1
After studying this session, you should be able to:
1.1. Evaluate and improve the appraisal form.Evaluate and improve the appraisal form.
2.2. Describe the appraisal process.Describe the appraisal process.
3.3. Develop, evaluate, and administer at least four Develop, evaluate, and administer at least four performance appraisal tools.performance appraisal tools.
4.4. Explain and illustrate the problems to avoid in Explain and illustrate the problems to avoid in appraising performance.appraising performance.
5.5. List and discuss the pros and cons of six appraisal List and discuss the pros and cons of six appraisal methods.methods.
6.6. Perform an effective appraisal interview.Perform an effective appraisal interview.
7.7. Discuss the pros and cons of using different raters to Discuss the pros and cons of using different raters to appraise a person’s performance.appraise a person’s performance.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–2
Basic Concepts in PerformanceBasic Concepts in PerformanceManagement and AppraisalManagement and Appraisal
Performance Appraisal:Setting work standards, assessing
performance, and providing feedback to employees to motivate,
correct, and continue their performance.
Performance Management:An integrated approach to
ensuring that an employee’s performance supports and
contributes to the organization’s strategic aims.
ComparingPerformance Appraisal
and Performance Management
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Definition of PMDefinition of PM
1.1. Continuous Process ofContinuous Process of IdentifyingIdentifying MeasuringMeasuring DevelopingDeveloping
The performance of individuals and The performance of individuals and teamsteams
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Definition of PM (continued)Definition of PM (continued)
andand
2.2. AligningAligning performance performance
with with
Strategic Goals of the Strategic Goals of the organizationorganization
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Performance Management Performance Management is NOT is NOT performance performance appraisalappraisal
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
PM is NOT performance PM is NOT performance appraisalappraisal
• Performance ManagementPerformance ManagementStrategic business considerationsStrategic business considerationsDriven by line managerDriven by line managerOngoingOngoing feedback feedback
So employee can improve performanceSo employee can improve performance
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
PM is NOT performance PM is NOT performance appraisalappraisal
• Performance AppraisalPerformance Appraisal
Driven by HRDriven by HR Assesses employeeAssesses employee
Strengths & Strengths & WeaknessesWeaknesses
Once a yearOnce a year Lacks ongoing feedbackLacks ongoing feedback
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Disadvantages/Dangers of Disadvantages/Dangers of Poorly-implemented Poorly-implemented PM Systems PM Systems
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Disadvantages/Dangers of Poorly-implemented Disadvantages/Dangers of Poorly-implemented PM SystemsPM Systems
For EmployeesFor Employees
• Lowered self-esteemLowered self-esteem• Employee burnout and job dissatisfactionEmployee burnout and job dissatisfaction• Damaged relationshipsDamaged relationships• Use of false or misleading informationUse of false or misleading information
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Disadvantages/Dangers of Poorly-implemented Disadvantages/Dangers of Poorly-implemented PM SystemsPM Systems
For ManagersFor Managers
• Increased turnoverIncreased turnover• Decreased motivation to performDecreased motivation to perform• Unjustified demands on managers’ resourcesUnjustified demands on managers’ resources• Varying and unfair standards and ratingsVarying and unfair standards and ratings
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Disadvantages/Dangers of Poorly-implemented Disadvantages/Dangers of Poorly-implemented PM SystemsPM Systems
For OrganizationFor Organization
• Wasted time and moneyWasted time and money• Unclear ratings systemUnclear ratings system• Emerging biasesEmerging biases• Increased risk of litigationIncreased risk of litigation
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–12
Classroom TeachingAppraisal byStudents
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Defining Performance Defining Performance
Performance is:Performance is:• BehaviorBehavior• What employees doWhat employees do
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Defining PerformanceDefining Performance
Performance is NOT:Performance is NOT:• Results or OutcomesResults or Outcomes• What employees produceWhat employees produce
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Determinants of PerformanceDeterminants of Performance
Performance =
Declarative Knowledge X
Procedural Knowledge X
Motivation
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Differences Between Differences Between Task and Contextual PerformanceTask and Contextual Performance
• Task PerformanceTask Performance Varies across jobsVaries across jobs
Likely to be role Likely to be role prescribedprescribed
Influenced byInfluenced byAbilitiesAbilitiesSkillsSkills
• Contextual PerformanceContextual Performance Fairly similar across jobsFairly similar across jobs
Not likely to be role Not likely to be role prescribedprescribed
Influenced byInfluenced byPersonalityPersonality
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Job Performance in ContextJob Performance in Context
A performer(individual or
team)
In a given situation
Engages in certain
behaviors
That produce various results
TRAIT BEHAVIOR RESULTS
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
Approaches to Measuring PerformanceApproaches to Measuring Performance
• Trait ApproachTrait Approach Emphasizes individual traits of employeesEmphasizes individual traits of employees
• Behavior ApproachBehavior Approach Emphasizes how employees do the jobEmphasizes how employees do the job
• Results ApproachResults Approach Emphasizes what employees produceEmphasizes what employees produce
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–19
(Continued)
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–20
Why Performance Management?Why Performance Management?
Total Quality
Appraisal Issues
Strategic Focus
The Performance Management
Approach
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–21
The Building Blocks of an Effective Performance Management Process
Direction sharing Role clarification Goal setting and planning
Goal alignment Developmental goal setting
Ongoing performance monitoring
Ongoing feedback Coaching and support
Performance assessment (appraisal)
Rewards, recognition, and compensation
Workflow, process control, and return on investment management
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–22
Defining the Employee’s Goals Defining the Employee’s Goals and Work Standardsand Work Standards
Assign Specific Goals
Encourage Participation
Assign Measurable
Goals
Assign Challenging but Doable
Goals
Guidelines for Effective Goal Setting
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–23
Setting GoalsSetting Goals• SMART Goals:SMART Goals:
SSpecific, and clearly state the desired results.pecific, and clearly state the desired results.
MMeasurable in answering “how much.”easurable in answering “how much.”
AAttainable, and not too tough or too easy.ttainable, and not too tough or too easy.
RRelevant to what’s to be achieved.elevant to what’s to be achieved.
TTimely in reflecting deadlines and milestones.imely in reflecting deadlines and milestones.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–24
Performance Appraisal RolesPerformance Appraisal Roles• SupervisorsSupervisors
Usually do the actual Usually do the actual appraising.appraising.
Must be familiar with Must be familiar with basic appraisal basic appraisal techniques.techniques.
Must understand and Must understand and avoid problems that can avoid problems that can cripple appraisals.cripple appraisals.
Must know how to Must know how to conduct appraisals fairly.conduct appraisals fairly.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–25
Performance Appraisal Roles (continued)Performance Appraisal Roles (continued)• The HR DepartmentThe HR Department
Serves a policy-making and advisory role.Serves a policy-making and advisory role.
Provides advice and assistance regarding the Provides advice and assistance regarding the appraisal tool to use.appraisal tool to use.
Trains supervisors to improve their appraisal skills.Trains supervisors to improve their appraisal skills.
Monitors the appraisal system effectiveness and Monitors the appraisal system effectiveness and compliance with relevant laws and guidelines. compliance with relevant laws and guidelines.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–26
An Introduction to Appraising PerformanceAn Introduction to Appraising Performance
1
Is useful in career planning.
Plays an integral role in performance management.
Why Appraise Performance?
Is basis for pay and promotion decisions.
Helps in correcting deficiencies and reinforcing good performance.
2
3
4
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–27
(Un)Realistic Appraisals(Un)Realistic Appraisals• Motivations for Soft AppraisalsMotivations for Soft Appraisals
The fear of having to hire and train someone new.The fear of having to hire and train someone new. The unpleasant reaction of the appraisee.The unpleasant reaction of the appraisee. An appraisal process that’s not conducive to candor.An appraisal process that’s not conducive to candor.
• Hazards of Soft AppraisalsHazards of Soft Appraisals Employee loses the chance to improve before being Employee loses the chance to improve before being
forced to change jobs.forced to change jobs. Lawsuits arising from actions involving inaccurate Lawsuits arising from actions involving inaccurate
performance appraisals.performance appraisals.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–28
An Introduction to Appraising PerformanceAn Introduction to Appraising Performance
1
Appraising performance
Steps in Appraising Performance
Defining the job
Providing feedback
2
3
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–29
Designing the Appraisal ToolDesigning the Appraisal Tool• What to Measure?What to Measure?
Work output (quality and quantity)Work output (quality and quantity) Personal competenciesPersonal competencies Goal (objective) achievementGoal (objective) achievement
• How to Measure?How to Measure? Generic dimensionsGeneric dimensions Actual job dutiesActual job duties Behavioral competenciesBehavioral competencies
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–30
Sample Performance Rating Form
Source: Elaine Pulakos, Performance Management (SHRM Foundation, 2004) p. 16–17.
Reprinted by permission of Society for Human ResourceManagement via Copyright Clearance Center.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–31
Sample Performance Rating Form (continued)
Source: Elaine Pulakos, Performance Management (SHRM Foundation, 2004) p. 16–17.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–32
One Item from an Appraisal Form Assessing Employee Performance on Specific Job-Related Duties
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–33
Performance Appraisal MethodsPerformance Appraisal Methods
1
2
3
4
5
Alternation Ranking Method
Graphic Rating Scale Method
Paired Comparison Method
Forced Distribution Method
Critical Incident Method
6
7
8
9
10
Behaviorally Anchored Rating Scales (BARS)
Narrative Forms
Management by Objectives (MBO)
Computerized and Web-Based Performance Appraisal
Merged Methods
Appraisal Methodologies
11 Annual Confidential Report (ACR)
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–34
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.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–35
Examples of Critical Incidents for Assistant Plant Manager
Continuing Duties Targets Critical Incidents
Schedule production for plant
90% utilization of personnel and machinery in plant; orders delivered on time
Instituted new production scheduling system; decreased late orders by 10% last month; increased machine utilization in plant by 20% last month
Supervise procurement of raw materials and inventory control
Minimize inventory costs while keeping adequate supplies on hand
Let inventory storage costs rise 15% last month; overordered parts “A” and “B” by 20%; underordered part “C” by 30%
Supervise machinery maintenance
No shutdowns due to faulty machinery
Instituted new preventative maintenance system for plant; prevented a machine breakdown by discovering faulty part
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–36
Appraisal-CoachingWorksheet
Source: Reprinted from www.HR.BLR.com with permission of the publisher Business and Legal Reports, Inc. 141 Mill Rock Road East, Old Saybrook, CT © 2004.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–37
Behaviorally Anchored Rating Scale (BARS)Behaviorally Anchored Rating Scale (BARS)
Developing a BARSDeveloping a BARS1.1. Generate critical Generate critical
incidentsincidents
2.2. Develop performance Develop performance dimensionsdimensions
3.3. Reallocate incidentsReallocate incidents
4.4. Scale the incidentsScale the incidents
5.5. Develop a final Develop a final instrumentinstrument
Advantages of BARSAdvantages of BARS A more accurate A more accurate
gaugegauge Clearer standardsClearer standards FeedbackFeedback Independent Independent
dimensionsdimensions ConsistencyConsistency
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–38
Example of aBehaviorallyAnchored RatingScale for theDimensionSalesmanship Skills
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–39
Management by Objectives (MBO)Management by Objectives (MBO)• A comprehensive and formal organizationwide A comprehensive and formal organizationwide
goal-setting and appraisal program requiring:goal-setting and appraisal program requiring:
1.1. Setting of organization’s goals.Setting of organization’s goals.
2.2. Setting of departmental goals.Setting of departmental goals.
3.3. Discussion of departmental goals.Discussion of departmental goals.
4.4. Defining expected results (setting individual Defining expected results (setting individual goals).goals).
5.5. Conducting periodic performance reviews.Conducting periodic performance reviews.
6.6. Providing performance feedback.Providing performance feedback.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–40
Using MBOUsing MBO
Problems with MBO
Setting unclear objectives
Conflict with subordinates over
objectives
Time-consuming appraisal process
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–41
Appraising Performance: Appraising Performance: Problems and SolutionsProblems and Solutions
Unclear Standards
Leniency or Strictness
Halo Effect
Potential Rating Scale Appraisal
Problems
Central Tendency Bias
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–42
A Graphic Rating Scale with Unclear Standards
Note: For example, what exactly is meant by “good,” “quantity of work,” and so forth?
Excellent Good Fair Poor Quality of work Quantity of work Creativity Integrity
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–43
Appraising Performance: Appraising Performance: Problems and Solutions (continued)Problems and Solutions (continued)
Know Problems
Control Outside
Influences
Use the Right Tool
How to Avoid Appraisal Problems
Train Supervisors
Keep a Diary
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–44
Important Advantages and Disadvantages of Appraisal Tools
Tool Advantages Disadvantages
Graphic rating scale
Simple to use; provides a quantitative rating for each employee.
Standards may be unclear; halo effect, central tendency, leniency, bias can also be problems.
BARS Provides behavioral “anchors.”BARS is very accurate.
Difficult to develop.
Alternation ranking Simple to use (but not as simple as graphic rating scales). Avoids central tendency and other problems of rating scales.
Can cause disagreements among employees and may be unfair if all employees are, in fact, excellent.
Forced distribution method
End up with a predetermined number or % of people in each group.
Employees’ appraisal results depend on your choice of cutoff points.
Critical incident method
Helps specify what is “right” and “wrong” about the employee’s performance; forces supervisor to evaluate subordinates on an ongoing basis.
Difficult to rate or rank employees relative to one another.
MBO Tied to jointly agreed-upon performance objectives.
Time-consuming.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–45
Who Should Do the Appraising?Who Should Do the Appraising?
Self-Rating
Subordinates
360-Degree Feedback
Potential Appraisers
Immediate Supervisor
Peers
Rating Committee
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–46
The Appraisal InterviewThe Appraisal Interview
Satisfactory—Promotable
Satisfactory—Not Promotable
Unsatisfactory—Correctable
Unsatisfactory—Uncorrectable
Types of Appraisal Interviews
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–47
The Appraisal Interview (continued)The Appraisal Interview (continued)
Talk in terms of objective work data.
Don’t tiptoe around.
Don’t get personal.
Encourage the person to
talk.
Guidelines for Conducting an Interview
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–48
The Appraisal Interview (continued)The Appraisal Interview (continued)
1
Recognize your own limitations.
Never attack a person’s defenses.
How to Handle a Defensive Subordinate
Recognize that defensive behavior is normal.
Postpone action.
2
3
4
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–49
The Appraisal Interview (continued)The Appraisal Interview (continued)
1
2
3
4
5
How to Criticize a Subordinate
Criticize in private, and do it constructively.
Do it in a manner that lets the person maintain his or her dignity and sense of worth.
Give daily feedback so that the review has no surprises.
Never say the person is “always” wrong.
Criticism should be objective and free of biases.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–50
Checklist During theAppraisal Interview
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–51
Formal Written WarningsFormal Written Warnings• Purposes of a Written WarningPurposes of a Written Warning
To shake your employee out of bad habits.To shake your employee out of bad habits. To help you defend your rating, both to your own To help you defend your rating, both to your own
boss and (if needed) to the courts.boss and (if needed) to the courts.
• A Written Warning Should:A Written Warning Should: Identify standards by which employee is judged.Identify standards by which employee is judged. Make clear that employee was aware of the Make clear that employee was aware of the
standard.standard. Specify deficiencies relative to the standard.Specify deficiencies relative to the standard. Indicate employee’s prior opportunity for correction.Indicate employee’s prior opportunity for correction.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–52
Creating the Total PerformanceCreating the Total PerformanceManagement ProcessManagement Process
• ““What is our strategy and what are our goals?”What is our strategy and what are our goals?”
• ““What does this mean for the goals we set for What does this mean for the goals we set for our employees, and for how we train, appraise, our employees, and for how we train, appraise, promote, and reward them?”promote, and reward them?”
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–53
PMS in India
Performance evaluation has reached high maturity levels in Indian Performance evaluation has reached high maturity levels in Indian organizations.organizations.
Successful practices like goal setting, balanced scorecard, Successful practices like goal setting, balanced scorecard, development orientation etc., are being introduced and it mostly development orientation etc., are being introduced and it mostly covers managerial employees and employees who are not part of covers managerial employees and employees who are not part of any union.any union.
ACR system of government is being changed to PMS.ACR system of government is being changed to PMS.Online appraisal systems are also used.Online appraisal systems are also used.
Initiatives like training, appraisals, multiple levels appraisers, Initiatives like training, appraisals, multiple levels appraisers, reviews, etc. are undertaken to improve the quality of PMS.reviews, etc. are undertaken to improve the quality of PMS.
Copyright © 2011 Dorling Kindersley (India) Pvt. LtdAuthorized adaptation from the United States edition of Human Resource Management, 12/e
9–54
K E Y T E R M S
performance appraisalperformance appraisalperformance managementperformance managementgraphic rating scalegraphic rating scalealternation ranking methodalternation ranking methodpaired comparison methodpaired comparison methodforced distribution methodforced distribution methodcritical incident methodcritical incident methodbehaviorally anchored rating behaviorally anchored rating
scale (BARS)scale (BARS)
management by objectives (MBO)management by objectives (MBO)electronic performance monitoring electronic performance monitoring
(EPM)(EPM)unclear standardsunclear standardshalo effecthalo effectcentral tendencycentral tendencystrictness/leniencystrictness/leniencybiasbiasappraisal interviewappraisal interview
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