Appraising and Managing Performance

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Appraising and Managing Performance

• Comparing Performance Appraisal and Performance Management

• Performance AppraisalEvaluating an employee’s current and/or past performance relative to his or her performance standards.

• Performance ManagementA process that consolidates goal setting, performance appraisal, & development into a single, common system, the aim of which is to ensure that employee’s performance is supporting the company’s strategic aims.

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Why Performance Management?

• Increasing use by employers of performance management reflects:– The popularity of the total quality management (TQM)

concepts.– The belief that traditional performance appraisals are

often not just useless but counterproductive.– The necessity in today’s globally competitive industrial

environment for every employee’s efforts to focus on helping the company to achieve its strategic goals.

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Why appraise performance?

• There are four reasons.

First: Appraisals play an integral role in the employer’s performance management process; it translates employer’s strategic goals into specific employee’s goals & then train the employees.

Second: They provide an opportunity for you and your subordinate to review his or her work related behavior.

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Why appraise performance? (Contd…)

Third: This is turn lets both of you develop a plan for correcting any deficiencies. The appraisal is part of the firm’s career-planning process, because it provides an opportunity to review the person’s career plans in light of his or her strengths and weaknesses.

Finally:Appraisals help you better manage and improve your firm’s performance.

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An Introduction to AppraisingPerformance

• Why appraise performance?– Appraisals play an integral role in the employer’s

performance management process.– Appraisals help in planning for correcting deficiencies

and reinforce things done correctly.– Appraisals, in identifying employee strengths and

weaknesses, are useful for career planning– Appraisals affect the employer’s salary raise

decisions.

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Realistic Appraisals

• Motivations for soft (less-than-candid) appraisals– The fear of having to hire and train someone new– The unpleasant reaction of the appraise

• Hazards of giving soft appraisals– Employee loses the chance to improve before being

forced to change jobs.– Lawsuits arising from dismissals involving inaccurate

performance appraisals.

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The Components of an Effective Performance Management Process

• Direction sharing• Role clarification• Goal alignment• Developmental goal setting• Ongoing performance monitoring• Ongoing feedback• Coaching and support• Performance assessment (appraisal)• Rewards, recognition, and compensation• Workflow and process control and return

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Defining Goals and Work Efforts

• Guidelines for effective goals– Assign specific goals– Assign measurable goals– Assign challenging but doable goals– Encourage participation

• SMART goals are:– Specific, and clearly state the desired results.– Measurable in answering “how much.”– Attainable, and not too tough or too easy.– Relevant to what’s to be achieved.– Timely in reflecting deadlines and milestones.

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Performance Appraisal Roles

• Supervisors– Usually do the actual appraising.– Must be familiar with basic appraisal techniques.– Must understand and avoid problems that can cripple

appraisals.– Must know how to conduct appraisals fairly.

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Performance Appraisal Roles …

• HR department– Serves a policy-making and advisory role.– Provides advice and assistance regarding the

appraisal tool to use.– Prepares forms and procedures and insists that all

departments use them.– Responsible for training supervisors to improve their

appraisal skills.– Responsible for monitoring the system to ensure that

appraisal formats and criteria comply with EEO laws and are up to date.

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Steps in Appraising Performance

• Defining the job– Making sure that you and your subordinate agree on his

or her duties and job standards. • Appraising performance

– Comparing your subordinate’s actual performance to the standards that have been set; this usually involves some type of rating form.

• Providing feedback– Discussing the subordinate’s performance and

progress, and making plans for any development required.

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Designing the Appraisal Tool

• What to measure?– Work output (quality and quantity)– Personal competencies– Goal (objective) achievement

• How to measure?– Graphic rating scales– Alternation ranking method– MBO

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The supervisor’s Role

The supervisor not HR usually does the actual appraising, and a supervisor who rates his or her employees too high or too low is doing a disservice to them, to the company, and to him-or herself.

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The supervisor’s Role (Contd…)

Supervisor must be familiar with basic appraisal techniques, understand and avoid problems that can cripple appraisals, and know how to conduct appraisals fairly.

The HR department serves a policy-making and advisory role.

HR prepares detailed forms and procedures and insists that all departments use them.

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Appraisal Method

• Graphic rating scaleA scale that lists a number of traits and a

range of performance for each. The employee is then rated by identifying the score that best describes his or her level of performance for each trait.

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Appraisal Method (Contd…)

• Soft Appraisals 1. There are many practical motivations for giving soft

appraisals; 2. The fear of having to hire and train someone new3. The unpleasant reaction of the appraisee; or a

company appraisal process that’s not conducive to candor,

4. Ultimately, though, it’s the person doing the appraising who must decide if the potential negative effects of less-than-candid appraisalson the appraisee’s long-term peace of mind, and on the performance of the appraiser and his or her firm outweigh the assumed benefits.

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• Alternation ranking methodRanking employees from best to worst on a

particular trait, choosing highest, then lowest until all are

ranked.• Paired comparison method

Ranking employees by making a chart of all

possible pairs of the employees for each trait and

indicating which is the better employee of the pair.

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• Forced Distribution MethodThe forced distribution method is similar to

grading on a curve. With this method, you place predetermined percentages of rates into performance categories. You may decide to distribute employees as follows:

15% high performers 20% high-average performers 30% average performers 20% low- average performers 15% low performers

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• Critical incidents methodKeeping a record of uncommonly good or

undesirable examples of an employee’s work-related behavior and reviewing it with the employee at predetermined times.

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Behaviorally Anchored Rating Scales

• A behaviorally anchored rating scale (BARS) combines the benefits of narratives, critical incidents, and quantified (graphic rating type) scales, by anchoring a rating scale with specific behavioral examples of good or poor performance. Its proponents say it provides better, more equitable appraisals than do the other tools we discussed.

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Behaviorally Anchored Rating Scales (Contd…)

• Developing a BARS typically requires five steps:1. Generate Critical Incidents.

Ask persons who know the job (job holders and/or supervisors) to describe specific illustrations (critical incidents) or effective and ineffective performance.

2. Develop Performance dimensions. Have these people cluster the incidents into a smaller set of (5 or 10) performance dimensions, and define each dimension, such as “conscientiousness”.

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3. Reallocate incidents.Another group of people who also know the job then reallocate the original critical incidents. They get the cluster definitions and the critical incidents, and must reassign each incident of the cluster they think it fits best. Retain a critical incident if some percentage (usually 50% to 80%) of this second group assigns it to the same clusters as did the first group.

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4. Scale the incidents. This second group then rates the behavior described by the incident as to how effectively or ineffectively it represents performance on the dimension ( 7-to 9-points scales are typical).

5. Develop a final instrument.Choose about six or seven of the incidents as the

dimension’s behavioral anchors.

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Advantages

• While more time consuming than other appraisal tools, BARS may also have advantages:

1. A more accurate gauge. People who know the job and its requirements better than anyone develop the BARS. This should produce a good gauge of job performance.

2.Clear Standards. The critical incidents along the scale make clear what to look for in terms of superior performance, average performance, and so forth.

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Advantages (Contd…)

3. Feedback. The critical incidents make it easier to explain the ratings to appraises.

4. Independent dimensions.Systematically clustering the critical incidents into five or six performance dimensions (such as “knowledge and judgment”) should help to make the dimensions more independent of one another. A rater should be less likely to rate an employee high on all dimensions simply because he or she was rated high in “conscientiousness”.

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Advantages (Contd…)

5. Consistency.BARS evaluations also seem to be relatively consistent and reliable, in that different raters’ appraisals of the same person tend to be similar.

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Management by Objectives (MBO)

Management by Objectives (MBO) requires the manager to set specific measurable goals with each employee and then periodically discuss the latter’s progress toward these goals. You could engage in a modest MBO program with subordinates by jointly setting goals and periodically providing feedback. However, the term MBO generally refers to a comprehensive, organization wide goal-setting and appraisal program.

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The Process Of MBO

1. Set the organization’s goals.Establish an organization wide plan for next year and set company goals.

2. Set departmental goals. Next, department heads take these company goals (like “boost profits by 20%) and, with their superiors, jointly set goals for their departments.

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The Process Of MBO (Contd…)

3. Discuss departmental goals. Department heads discuss the department’s

goals with all subordinates, often at a department wide meeting. They ask employees to set their own preliminary individual goals; in other words, how can each employee contribute to the department’s goals.

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The Process Of MBO (Contd…)

4. Define expected results ( set individual goals)Department heads and their subordinates set short-term individual performance targets.

5. Performance reviews.Department heads compare each employee’s actual and targeted performance.

6. Provide feedback.Department heads and employees discuss and evaluate the letters’ progress.

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Problems with MBO

There are three problems in using MBO. Setting unclear, un-measurable objectives is the main one. An objective such as “will do a better job of training” is useless. On the other hand, “will have four subordinates promoted during the year” is a measurable objective.

Second, MBO is time consuming. Setting objectives, measuring progress, and giving feed back can take several hours per employee per year, over and above the time you already spend doing each person’s appraisal.

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Problems with MBO (Contd…)

Third, setting objectives with the subordinate sometimes turns into a tug-of-war, with you pushing for higher quotas and the subordinate pushing for lower ones. Knowing the job and the person’s ability is important. To motivate performance, the objectives must be fair and attainable. The more you know about the job and the persons’ ability, the more confident you can be about the standards you set.

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Computerized and Web-Based Performance Appraisal

Several relatively inexpensive performance

appraisal software programs are on the market. These

generally enable managers to keep notes on

subordinates during the year, and then to electronically

rate employees on a series of performance traits. The

programs then generate written text to support each part

of the appraisal.

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Appraising performance: Problems and Solutions

• Dealing with Rating Scale Appraisal Problems

Unclear Standards:An appraisal scale that is too open to interpretation. Halo Effect :

In performance appraisal, the problem that occurs when a supervisor's rating of a Subordinate on one trait biases the rating of that person on other traits.

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Appraising performance: Problems and Solutions

Central tendencyA tendency to rate all employees the same way,

such as rating them all average.

Strictness/leniencyThe problem that occurs when a supervisor has a

tendency to rate all subordinates either high or low.Bias

The tendency to allow individual differences such as

age, race, and sex to affect the appraisal ratings

employees receive.

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How to Avoid Appraisal Problems

• Learn and understand the potential problems, and the solutions for each.

• Use the right appraisal tool. Each tool has its own pros and cons.

• Train supervisors to reduce rating errors such as halo, leniency, and central tendency.

• Have raters compile positive and negative critical incidents as they occur.

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Who Should Do the Appraising?

• The immediate supervisor• Peers• Rating committees• Self-ratings• Subordinates• 360-Degree feedback

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Who should do the appraising ?

• The immediate SupervisorSupervisors’ ratings are the heart of most

appraisals. This makes sense: The supervisor should be

and usually is in the best position to observe and

evaluate the subordinate’s performance, and is

responsible for that person’s performance.

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Who should do the appraising ? (Contd…)• Peer Appraisals

with more firms using self-managing teams, peer

or team appraisals - the appraisal of an employee by his

or her peers are becoming more popular.

An employee chooses an appraisal chairperson

each year that person then selects one supervisor and

three other peers to evaluate the employee’s work.

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Who should do the appraising ? (Contd…)

• Rating CommitteeMany employers use rating committees. These

committees usually contain the employee’s immediate supervisor and three or four other supervisors.

• Self Rating Should employees appraise themselves? The

basic problem, of course, is that employees usually rate themselves higher than they are rated by supervisors or peers.

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Who should do the appraising ? (Contd…)

• 360-Degree Feedback Many firms have expanded the idea of upward

feedback into “360-degree feedback.” Ratings are collected “all around” an employee, from supervisors, subordinates, peers, and internal or external customers.

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The Appraisal Interview

• An interview in which the supervisor and subordinate review the appraisal & make plans to remedy decencies and reinforce strengths.

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Types of Appraisal Interviews

• There are three basic types of appraisal interviews, each with its own objectives.

Appraisal Interview Type Appraisal Interview Objective

1. Performance is satisfactory employee is promotable

1. Make development plans

2. Satisfactory Not promotable 2. Maintain performance

3. Unsatisfactory Correctable 3. Plan correction

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Types of Appraisal Interviews (Contd…)

1. Satisfactory Promotable Satisfactory Promotable is the easiest of the

three appraisal interviews: the person’s performance is satisfactory and there is a promotion ahead. Your objective is to discuss the person’s career plans and to develop a specific action plan for the educational and professional development the person needs to move to the next job.

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Types of Appraisal Interviews (Contd…)

2. Satisfactory Not promotable Satisfactory Not Promotable is for employees

whose performance is satisfactory but for whom promotion is not possible.

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How to conduct the Appraisal Interview

• There are four things to keep in mind in actually conducting the interview:

i. Be direct and specific. ii. Talk in terms of objective work data

ii. Don’t get personal. Don’t say, “You’re too slow in producing those reports”.

iii. Encourage the person to talk. Stop and listen to what the person is saying.

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How to Handle a Defensive Subordinate

1. Recognize that defensive behavior is normal.2. Never attack a person’s defenses. Don’t try to “explain

someone to themselves”. 3. Postpone action. Sometimes it is best to do nothing at

all. People frequently react to sudden threats by instinctively hiding behind their “masks”.

4. Recognize your own limitation. Don’t expect to be able to solve every problem that comes up.

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How to Criticize a Subordinate

• Do it in a manner that lets the person maintain his or her dignity and sense of worth.– Criticize in private, and do it constructively. – Avoid once-a-year “critical broadsides” by giving feedback

on a daily basis, so that the formal review contains no surprises.

– Never say the person is “always” wrong – Criticism should be objective and free of any personal

biases on your part.

Documents

Appraising and Managing Performance