HFT 2220

Chapter 8Performance Appraisals and

Retention

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

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

Relationship to Performance

Performance defined in company standards

Defines accountability Evaluate effectiveness of training

programs

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

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

Relationship to Training

Helps management evaluate training programs

Allows managers to discuss good and/or bad points of training programs with employees

Relationship to Compensation

Long used as basis for increases in compensation.

Make sure criteria are based on measurable outcomes based on the current job

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

Performance Appraisals Should be based on previously

established goals which should always be Logical Specific Realistic Measurable Time Sensitive Results Oriented Mutually Acceptable

Appraisal Document

Basic information Name Date Job position Date of the interview Who is conducting the interview

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

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

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

Mistakes to Avoid in Performance Appraisals Halo Errors

Positive Negative – Horn error

Bias Recency Bias Past anchoring errorsCourts have held the appraisals are free from

bias if they meet the requirements of Title VII

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

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

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

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

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

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