powerpoint presentation by charlie cook the university of west alabama 8 © 2010 south-western, a...

© 2010 South-Western, a part of Cengage LearningAll rights reserved.© 2010 South-Western, a part of Cengage LearningAll rights reserved.

PowerPoint Presentation by Charlie CookThe University of West Alabama

PowerPoint Presentation by Charlie CookThe University of West Alabama

8

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 8–2

Explain the purposes of performance appraisals and the reasons they can sometimes fail.

Identify the characteristics of an effective appraisal program.

Describe the different sources of appraisal information.

Explain the various methods used for performance evaluation. Outline the characteristics of an effective performance appraisal interview.

Chapter ObjectivesAfter studying this chapter, you should be able to


Performance Appraisal and Other HRM FunctionsPerformance Appraisal and Other HRM Functions

Performance appraisal validates selection function

Performance appraisal validates selection function SelectionSelection

Selection should produce workers best able to meet job requirements

Selection should produce workers best able to meet job requirements

Performance appraisal determines training needs

Performance appraisal determines training needs

Training and Development

Training and Development

Training and development aids achievement of performance standards

Training and development aids achievement of performance standards

Performance appraisal is a factor in determining pay

Performance appraisal is a factor in determining pay

Compensation Management

Compensation Management

Compensation can affect appraisal of performance

Compensation can affect appraisal of performance

Performance appraisal judges effectiveness of recruitment efforts

Performance appraisal judges effectiveness of recruitment efforts

RecruitmentRecruitmentQuality of applicants determines feasible performance standards

Quality of applicants determines feasible performance standards

Performance appraisal justifies personnel actions

Performance appraisal justifies personnel actions Labor RelationsLabor Relations

Appraisal standards and methods may be subject to negotiation

Appraisal standards and methods may be subject to negotiation


Performance Appraisal ProgramsPerformance Appraisal Programs

•Performance AppraisalPerformance Appraisal A process, typically performed annually by a A process, typically performed annually by a

supervisor for a subordinate, designed to help supervisor for a subordinate, designed to help employees understand their roles, objectives, employees understand their roles, objectives, expectations, and performance success.expectations, and performance success.

•Performance ManagementPerformance Management The process of creating a work environment in The process of creating a work environment in

which people can perform to the best of their which people can perform to the best of their abilities.abilities.


Performance AppraisalPerformance Appraisal

Appraisal ProgramsAppraisal Programs

AdministrativeAdministrativeAdministrativeAdministrative DevelopmentalDevelopmentalDevelopmentalDevelopmental

CompensationCompensationCompensationCompensation Ind. EvaluationInd. EvaluationInd. EvaluationInd. Evaluation

Job EvaluationJob EvaluationJob EvaluationJob Evaluation

EEO/AA SupportEEO/AA SupportEEO/AA SupportEEO/AA Support

Training Training Training Training

Career PlanningCareer PlanningCareer PlanningCareer Planning


FIGURE

8.1Purposes for Performance Appraisal


Reasons Appraisal Programs Reasons Appraisal Programs Sometimes FailSometimes Fail

• Lack of top-management Lack of top-management information and supportinformation and support

• Unclear performance Unclear performance standardsstandards

• Rater biasRater bias

• Too many forms to Too many forms to completecomplete

• Use of the appraisal Use of the appraisal program for conflicting program for conflicting (political) purposes.(political) purposes.


FIGURE

8.2Let Me Count the Ways…

There are many reasons why performance appraisal systems might not be effective. Some of the most common problems include the following:

• Inadequate preparation on the part of the manager.

• Employee is not given clear objectives at the beginning of performance period.

• Manager may not be able to observe performance or have all the information.

• Performance standards may not be clear.

• Inconsistency in ratings among supervisors or other raters.

• Manager rating personality rather than performance.

• The halo effect, contrast effect, or some other perceptual bias.

• Inappropriate time span (either too short or too long).

• Overemphasis on uncharacteristic performance.


FIGURE

8.2Let Me Count the Ways…(cont’d)

There are many reasons why performance appraisal systems might not be effective. Some of the most common problems include the following:

• Inflated ratings because managers do not want to deal with “bad news.”

• Subjective or vague language in written appraisals.

• Organizational politics or personal relationships cloud judgments.

• No thorough discussion of causes of performance problems.

• Manager may not be trained at evaluation or giving feedback.

• No follow-up and coaching after the evaluation.


Managerial Issues Concerning AppraisalsManagerial Issues Concerning Appraisals

1.1. There is little face-to-face discussion between There is little face-to-face discussion between the manager and the employee being the manager and the employee being appraised.appraised.

2.2. The relationship between the employee’s job The relationship between the employee’s job description and the criteria on the appraisal description and the criteria on the appraisal form isn’t clear.form isn’t clear.

3.3. Managers feel that little or no benefit will be Managers feel that little or no benefit will be derived from the time and energy spent in the derived from the time and energy spent in the process, or they are concerned only with bad process, or they are concerned only with bad performances.performances.

4.4. Managers dislike the face-to-face confrontation Managers dislike the face-to-face confrontation of appraisal interviews.of appraisal interviews.


Managerial Issues Concerning Appraisals Managerial Issues Concerning Appraisals (cont’d)(cont’d)

5.5. Managers are not sufficiently adept at rating Managers are not sufficiently adept at rating employees or providing them with appraisal employees or providing them with appraisal feedback.feedback.

6.6. The judgmental role of appraisal conflicts with The judgmental role of appraisal conflicts with the helping role of developing employees.the helping role of developing employees.

7.7. The appraisal is just a once-a-year event, and The appraisal is just a once-a-year event, and there is little follow-up afterward.there is little follow-up afterward.


Developing an Effective Appraisal ProgramDeveloping an Effective Appraisal Program

•Performance StandardsPerformance Standards Must be based on job-related requirements Must be based on job-related requirements

derived from job analysis and reflected in job derived from job analysis and reflected in job description and job specifications.description and job specifications.

Help translate an organization’s goals and Help translate an organization’s goals and objectives into job requirements that define objectives into job requirements that define acceptable and unacceptable performance acceptable and unacceptable performance levels.levels.

•CalibrationCalibration A process whereby managers meet to discuss A process whereby managers meet to discuss

the performance of individual employees to the performance of individual employees to ensure their employee appraisals are in line ensure their employee appraisals are in line with one anotherwith one another


FIGURE

8.3Establishing Performance Standards


Strategic RelevanceStrategic Relevance

Individual standards directly relate to strategic goals.Individual standards directly relate to strategic goals.

Criterion DeficiencyCriterion Deficiency

Standards capture all of an individual’s contributions.Standards capture all of an individual’s contributions.

Criterion ContaminationCriterion Contamination

Performance capability is not reduced by external factors.Performance capability is not reduced by external factors.

Reliability(Consistency)Reliability(Consistency)

Standards are quantifiable, measurable, and stable.Standards are quantifiable, measurable, and stable.

Performance Standards CharacteristicsPerformance Standards Characteristics


Are You Complying with the Law?Are You Complying with the Law?

•Brito v ZiaBrito v Zia The Supreme Court ruled that performance The Supreme Court ruled that performance

appraisals were subject to the same validity appraisals were subject to the same validity criteria as selection procedures.criteria as selection procedures.

•Albemarle Paper Company v MoodyAlbemarle Paper Company v Moody The U.S. Supreme Court found that employees The U.S. Supreme Court found that employees

had been ranked against a vague standard, had been ranked against a vague standard, open to each supervisor’s own interpretation.open to each supervisor’s own interpretation.


Legal Guidelines for AppraisalsLegal Guidelines for Appraisals

• Performance ratings must be job-related.Performance ratings must be job-related.

• Employees must be given a written copy of their Employees must be given a written copy of their job standards in advance of appraisals.job standards in advance of appraisals.

• Managers who conduct the appraisal must be Managers who conduct the appraisal must be able to observe the behavior they are rating.able to observe the behavior they are rating.

• Supervisors must be trained to use the appraisal Supervisors must be trained to use the appraisal form correctly. form correctly.

• Appraisals should be discussed openly with Appraisals should be discussed openly with employees and counseling or corrective guidance employees and counseling or corrective guidance offered. offered.

• An appeals procedure should be established to An appeals procedure should be established to enable employees to express disagreement with enable employees to express disagreement with the appraisal.the appraisal.


FIGURE

8.4Alternative Sources of Appraisal


Sources of Performance AppraisalSources of Performance Appraisal

•Manager and/or SupervisorManager and/or Supervisor Appraisal done by an employee’s manager and Appraisal done by an employee’s manager and

reviewed by a manager one level higher.reviewed by a manager one level higher.

•Self-Appraisal Self-Appraisal Appraisal done by the employee being Appraisal done by the employee being

evaluated, generally on an appraisal form evaluated, generally on an appraisal form completed by the employee prior to the completed by the employee prior to the performance interview.performance interview.

•Subordinate AppraisalSubordinate Appraisal Appraisal of a superior by an employee, which Appraisal of a superior by an employee, which

is more appropriate for developmental than for is more appropriate for developmental than for administrative purposes.administrative purposes.



•Peer AppraisalPeer Appraisal Appraisal by fellow employees, compiled into a Appraisal by fellow employees, compiled into a

single profile for use in an interview conducted single profile for use in an interview conducted by the employee’s manager.by the employee’s manager.

Why peer appraisals are not used more often:Why peer appraisals are not used more often:1.1. Peer ratings are simply a popularity contest.Peer ratings are simply a popularity contest.

2.2. Managers are reluctant to give up control over the Managers are reluctant to give up control over the appraisal process.appraisal process.

3.3. Those receiving low ratings might retaliate against their Those receiving low ratings might retaliate against their peers.peers.

4.4. Peers rely on stereotypes in ratings.Peers rely on stereotypes in ratings.



•Team AppraisalTeam Appraisal Based on TQM concepts; recognizes team Based on TQM concepts; recognizes team

accomplishment rather than individual accomplishment rather than individual performanceperformance

•Customer AppraisalCustomer Appraisal A performance appraisal that, like team A performance appraisal that, like team

appraisal, is based on TQM concepts and seeks appraisal, is based on TQM concepts and seeks evaluation from both external and internal evaluation from both external and internal customerscustomers


FIGURE

8.5Pros and Cons of 360-Degree Appraisal

PROS

• The system is more comprehensive in that responses are gathered from multiple perspectives.

• Quality of information is better. (Quality of respondents is more important than quantity.)

• It complements TQM initiatives by emphasizing internal/external customers and teams.

• It may lessen bias/prejudice since feedback comes from more people, not one individual.

• Feedback from peers and others may increase employee self-development.

CONS

• The system is complex in combining all the responses.

• Feedback can be intimidating and cause resentment if employee feels the respondents have “ganged up.”

• There may be conflicting opinions, though they may all be accurate from the respective standpoints.

• The system requires training to work effectively.

• Employees may collude or “game” the system by giving invalid evaluations to one another.

• Appraisers may not be accountable if their evaluations are anonymous.


360-Degree Performance Appraisal System 360-Degree Performance Appraisal System Integrity SafeguardsIntegrity Safeguards

• Assure anonymity Assure anonymity • Make respondents accountableMake respondents accountable• Prevent “gaming” of the systemPrevent “gaming” of the system• Use statistical procedures Use statistical procedures • Identify and quantify biasesIdentify and quantify biases


Training AppraisersTraining Appraisers

•Establishing an Appraisal PlanEstablishing an Appraisal Plan Provide an explanation of the performance Provide an explanation of the performance

appraisal system’s objectives so that raters will appraisal system’s objectives so that raters will understand the compensation and understand the compensation and development purposes for which the appraisal development purposes for which the appraisal is to be used.is to be used.

Explain the mechanics of the rating systemExplain the mechanics of the rating system How frequently the appraisals are to be conductedHow frequently the appraisals are to be conducted

Who will conduct themWho will conduct them

What are the standards of performance.What are the standards of performance.

Alert raters to the weaknesses and problems of Alert raters to the weaknesses and problems of appraisal systems so that they can be avoided.appraisal systems so that they can be avoided.


Training Performance AppraisersTraining Performance Appraisers

Recency errorsRecency errors

Leniency or strictness errorsLeniency or strictness errors

Error of central tendencyError of central tendency

Similar-to-me errorsSimilar-to-me errors

Contrast and halo errorsContrast and halo errors

Common rater-related errorsCommon rater-related errors


Rater ErrorsRater Errors

•Error of Central TendencyError of Central Tendency A rating error in which all employees are rated A rating error in which all employees are rated

about average.about average.

•Leniency or Strictness ErrorLeniency or Strictness Error A rating error in which the appraiser tends to A rating error in which the appraiser tends to

give all employees either unusually high or give all employees either unusually high or unusually low ratings.unusually low ratings.

•Recency ErrorRecency Error A rating error in which appraisal is based A rating error in which appraisal is based

largely on an employee’s most recent behavior largely on an employee’s most recent behavior rather than on behavior throughout the rather than on behavior throughout the appraisal period.appraisal period.


Rater ErrorsRater Errors

•Contrast ErrorContrast Error A rating error in which an employee’s A rating error in which an employee’s

evaluation is biased either upward or evaluation is biased either upward or downward because of comparison with another downward because of comparison with another employee just previously evaluated.employee just previously evaluated.

•Similar-to-Me ErrorSimilar-to-Me Error An error in which an appraiser inflates the An error in which an appraiser inflates the

evaluation of an employee because of a mutual evaluation of an employee because of a mutual personal connection.personal connection.


Rater Errors: Training and FeedbackRater Errors: Training and Feedback

•Rating Error TrainingRating Error Training Observe other managers making errorsObserve other managers making errors Actively participate in discovering their own Actively participate in discovering their own

errorserrors Practice job-related tasks to reduce the errors Practice job-related tasks to reduce the errors

they tend to makethey tend to make

•Feedback Skills TrainingFeedback Skills Training Communicating effectivelyCommunicating effectively Diagnosing the root causes of performance Diagnosing the root causes of performance

problemsproblems Setting goals and objectivesSetting goals and objectives


1Supervisor’s Checklist for the Performance Appraisal

Scheduling

1. Schedule the review and notify the employee ten days to two weeks in advance.

2. Ask the employee to prepare for the session by reviewing his or her performance, job objectives, and development goals.

3. Clearly state that this will be the formal annual performance appraisal.

Preparing for the Review

1. Review the performance documentation collected throughout the year. Concentrate on work patterns that have developed.

2. Be prepared to give specific examples of above- or below-average performance.

3. When performance falls short of expectations, determine what changes need to be made. If performance meets or exceeds expectations, discuss this and plan how to reinforce it.

4. After the appraisal is written, set it aside for a few days and then review it again.

5. Follow whatever steps are required by your organization’s performance appraisal system.


1Supervisor’s Checklist…(cont’d)

Conducting the Review

1. Select a location that is comfortable and free of distractions. The location should encourage a frank and candid conversation.

2. Discuss each topic in the appraisal one at a time, considering both strengths and shortcomings.

3. Be specific and descriptive, not general and judgmental. Report occurrences rather than evaluating them.

4. Discuss your differences and resolve them. Solicit agreement with the evaluation.

5. Jointly discuss and design plans for taking corrective action for growth and development.

6. Maintain a professional and supportive approach to the appraisal discussion.


Performance Appraisal MethodsPerformance Appraisal Methods

Trait Trait MethodsMethods

Trait Trait MethodsMethods

Graphic Rating Scale

Graphic Rating Scale

Mixed Standard Scale

Mixed Standard Scale

Forced-ChoiceForced-Choice

EssayEssay


Trait MethodsTrait Methods

•Graphic Rating-Scale MethodGraphic Rating-Scale Method A trait approach to performance appraisal A trait approach to performance appraisal

whereby each employee is rated according to a whereby each employee is rated according to a scale of individual characteristics.scale of individual characteristics.

•Mixed-Standard Scale MethodMixed-Standard Scale Method An approach to performance appraisal similar An approach to performance appraisal similar

to other scale methods but based on to other scale methods but based on comparison with (better than, equal to, or comparison with (better than, equal to, or worse than) a standard.worse than) a standard.


2Graphic Rating

Scale with Provision for Comments


3Example of a Mixed-Standard Scale


Trait MethodsTrait Methods

•Forced-Choice MethodForced-Choice Method Requires the rater to choose from statements Requires the rater to choose from statements

designed to distinguish between successful designed to distinguish between successful and unsuccessful performance.and unsuccessful performance.

1. 1. ______ a) Works hard ______ a) Works hard _____ b) Works quickly_____ b) Works quickly 2. 2. ______ a) Shows initiative______ a) Shows initiative _____ b) Is responsive to _____ b) Is responsive to

customerscustomers 3. 3. ______ a) Produces poor quality______ a) Produces poor quality _____ b) Lacks good work _____ b) Lacks good work

habitshabits

•Essay MethodEssay Method Requires the rater to compose a statement Requires the rater to compose a statement

describing employee behavior.describing employee behavior.


Behavioral MethodsBehavioral Methods

Behavioral Methods

Behavioral Methods

Critical IncidentCritical Incident

Behavioral ChecklistBehavioral Checklist

Behaviorally Anchored Rating Scale (BARS)

Behaviorally Anchored Rating Scale (BARS)

Behavior Observation Scale (BOS)

Behavior Observation Scale (BOS)



•Critical Incident MethodCritical Incident Method Critical incidentCritical incident

An unusual event that denotes superior or inferior employee An unusual event that denotes superior or inferior employee performance in some part of the jobperformance in some part of the job

The manager keeps a log or diary for each employee The manager keeps a log or diary for each employee throughout the appraisal period and notes specific critical throughout the appraisal period and notes specific critical incidents related to how well they perform.incidents related to how well they perform.

•Behavioral Checklist MethodBehavioral Checklist Method The rater checks statements on a list that the The rater checks statements on a list that the

rater believes are characteristic of the rater believes are characteristic of the employee’s performance or behavior.employee’s performance or behavior.



•Behaviorally Anchored Rating Scale (BARS)Behaviorally Anchored Rating Scale (BARS) Consists of a series of vertical scales, one for Consists of a series of vertical scales, one for

each dimension of job performance; typically each dimension of job performance; typically developed by a committee that includes both developed by a committee that includes both subordinates and managers.subordinates and managers.

•Behavior Observation Scale (BOS)Behavior Observation Scale (BOS) A performance appraisal that measures the A performance appraisal that measures the

frequency of observed behavior (critical frequency of observed behavior (critical incidents).incidents).

Preferred over BARS for maintaining objectivity, Preferred over BARS for maintaining objectivity, distinguishing good performers from poor distinguishing good performers from poor performers, providing feedback, and identifying performers, providing feedback, and identifying training needs.training needs.


4BARS Example


4BOS Example


Results MethodsResults Methods

•Productivity MeasuresProductivity Measures Appraisals based on quantitative measures Appraisals based on quantitative measures

(e.g., sales volume) that directly link what (e.g., sales volume) that directly link what employees accomplish to results beneficial to employees accomplish to results beneficial to the organization.the organization. Criterion contaminationCriterion contamination

Focus on short-term resultsFocus on short-term results

•Management by Objectives (MBO)Management by Objectives (MBO) A philosophy of management that rates A philosophy of management that rates

performance on the basis of employee performance on the basis of employee achievement of goals set by mutual agreement achievement of goals set by mutual agreement of employee and manager.of employee and manager.


FIGURE

8.6Performance Appraisal under an MBO Program


Creating an Effective MBO ProgramCreating an Effective MBO Program

1.1. Managers and employees must be willing to Managers and employees must be willing to establish goals and objectives together.establish goals and objectives together.

2.2. Objectives should be quantifiable and Objectives should be quantifiable and measurable for the long and short terms.measurable for the long and short terms.

3.3. Expected results must be under the employee’s Expected results must be under the employee’s control and free from criterion contamination.control and free from criterion contamination.

4.4. Goals and objectives must be consistent for Goals and objectives must be consistent for each employee level (top executive, manager, each employee level (top executive, manager, and employee).and employee).

5.5. Managers and employees must establish Managers and employees must establish specific times when the goals are to be specific times when the goals are to be reviewed and evaluated.reviewed and evaluated.


The Balanced ScorecardThe Balanced Scorecard

•The appraisal focuses on four related The appraisal focuses on four related categoriescategories Financial, customer, processes, and learningFinancial, customer, processes, and learning

•Ensuring the method’s success:Ensuring the method’s success: Translate strategy into a scorecard of clear Translate strategy into a scorecard of clear

objectives.objectives. Attach measures to each objective.Attach measures to each objective. Cascade scorecards to the front line.Cascade scorecards to the front line. Provide performance feedback based on Provide performance feedback based on

measures.measures. Empower employees to make performance Empower employees to make performance

improvements.improvements. Reassess strategy.Reassess strategy.


5Personal Scorecard


Summary of Appraisal MethodsSummary of Appraisal Methods

•Trait MethodsTrait Methods AdvantagesAdvantages

Are inexpensive to developAre inexpensive to develop Use meaningful dimensionsUse meaningful dimensions Are easy to useAre easy to use

DisadvantagesDisadvantages Have high potential for rating errorsHave high potential for rating errors Are not useful for employee counselingAre not useful for employee counseling Are not useful for allocating rewardsAre not useful for allocating rewards Are not useful for promotion decisionsAre not useful for promotion decisions


Summary of Appraisal Methods (cont’d)Summary of Appraisal Methods (cont’d)

•Behavioral MethodsBehavioral Methods AdvantagesAdvantages

Use specific performance dimensionsUse specific performance dimensions Are acceptable to employees and superiorsAre acceptable to employees and superiors Are useful for providing feedbackAre useful for providing feedback Are fair for reward and promotion decisionsAre fair for reward and promotion decisions

DisadvantagesDisadvantages Can be time-consuming to develop/useCan be time-consuming to develop/use Can be costly to developCan be costly to develop Have some potential for rating errorHave some potential for rating error


Summary of Appraisal Methods (cont’d)Summary of Appraisal Methods (cont’d)

•Results MethodsResults Methods AdvantagesAdvantages

Have less subjectivity biasHave less subjectivity bias Are acceptable to employees and superiorsAre acceptable to employees and superiors Link individual to organizational performanceLink individual to organizational performance Encourage mutual goal settingEncourage mutual goal setting Are good for reward and promotion decisions Are good for reward and promotion decisions

DisadvantagesDisadvantages Are time-consuming to develop/useAre time-consuming to develop/use May encourage short-term perspectiveMay encourage short-term perspective May use contaminated criteriaMay use contaminated criteria May use deficient criteriaMay use deficient criteria


FIGURE

8.7Summary of Various Appraisal Methods


Appraisal InterviewsAppraisal Interviews

Tell and Listen - nondirectiveTell and Listen - nondirective

Tell and Sell - persuasionTell and Sell - persuasion

Problem Solving - focusing the interview on problem resolution and employee development

Problem Solving - focusing the interview on problem resolution and employee development

Types of Appraisal InterviewsTypes of Appraisal Interviews


Ask for a Self-AssessmentAsk for a Self-Assessment

Express AppreciationExpress Appreciation

Appraisal Interview GuidelinesAppraisal Interview Guidelines

Be SupportiveBe Supportive

Follow Up Day by DayFollow Up Day by DayFollow Up Day by DayFollow Up Day by Day

Establish GoalsEstablish Goals

Problem Solving FocusProblem Solving Focus

Minimize CriticismMinimize Criticism

Invite ParticipationInvite Participation

Change BehaviorChange Behavior


FIGURE

8.8Factors That Influence Performance


FIGURE

8.9Performance Diagnosis


Managing Ineffective PerformanceManaging Ineffective Performance

•Possible Courses of ActionPossible Courses of Action Provide training to increase skills and abilitiesProvide training to increase skills and abilities Transfer employee to another job or Transfer employee to another job or

departmentdepartment Attention of actions to motivate employeeAttention of actions to motivate employee Take disciplinary actionTake disciplinary action Discharge the employeeDischarge the employee

•CautionsCautions All actions taken must be objective and fair.All actions taken must be objective and fair. Do not treat underperformer differently, Do not treat underperformer differently,

setting the employee up to fail.setting the employee up to fail.


behavior observation scale (BOS)

behaviorally anchored

rating scale (BARS)

calibration

contrast error

critical incident

customer appraisal

error of central tendency

essay method

forced-choice method

graphic rating scale method

leniency or strictness error

management by objectives (MBO)

manager and/or supervisor appraisal

mixed-standard scale method

peer appraisal

performance appraisal

performance management

recency error

self-appraisal

similar-to-me error

subordinate appraisal

team appraisal

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