Performance Management Performance Management and and

Appraisal Appraisal

9–1

9–2

Basic Concepts in Basic Concepts in PerformancePerformance

Management and AppraisalManagement and AppraisalPerformance

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.

9–3

Defining the Employee’s Defining the Employee’s Goals and Work StandardsGoals and Work Standards

Set SMART goals

Assign challenging

/ doable goals

Assign specific

goals

Guidelines for Effective

Goal Setting

Assign measurable

goals

Encourage participatio

n

9–4

Setting SMART GoalsSetting 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.

9–5

An Introduction to Appraising An Introduction to Appraising PerformancePerformance

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

9–6

(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 discharged Employee loses the chance to improve before being discharged

or forced to change jobs.or forced to change jobs.

Lawsuits arising from dismissals involving inaccurate Lawsuits arising from dismissals involving inaccurate performance appraisals.performance appraisals.

9–7

Performance Appraisal RolesPerformance Appraisal Roles• The Supervisor’s RoleThe Supervisor’s Role

Usually do the actual appraisingUsually do the actual appraising

Must be familiar with basic Must be familiar with basic appraisal techniquesappraisal techniques

Must understand and avoid Must understand and avoid problems that can cripple problems that can cripple appraisalsappraisals

Must know how to conduct Must know how to conduct appraisals fairlyappraisals fairly

9–8

Performance Appraisal Roles Performance Appraisal Roles (cont’d)(cont’d)• The HR Department’s Role The HR Department’s Role

Serves a policy-making and advisory role.Serves a policy-making and advisory role.

Provides advice and assistance regarding the appraisal Provides advice and assistance regarding the appraisal tool to use.tool to use.

Trains supervisors to improve their appraisal skills.Trains supervisors to improve their appraisal skills.

9–9

Effectively Appraising PerformanceEffectively Appraising Performance

1

Appraising performance

Steps in Appraising Performance

Defining the job and performance criteria

Providing feedback session

2

3

9–10

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

•How to MeasureHow to Measure??

9–11

Performance Appraisal MethodsPerformance Appraisal Methods

1

2

3

4

5

Alternation ranking

Graphic rating scale

Paired comparison

Forced distribution

Critical incident

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

9–12

FIGURE 9–2Sample Graphic Rating Performance Rating Form

9–13

FIGURE 9–4 Appraisal Form for Assessing Both Competencies and Specific Objectives (cont’d)

9–14

FIGURE 9–5 Scale for Alternate Ranking of Appraisee

9–15

FIGURE 9–6 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.

9–16

TABLE 9–1 Examples of Critical Incidents for Assistant Plant Manager

Continuing Duties Targets Critical Incidents

Schedule productionfor 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 on inventory control

Minimize inventory costs while keeping adequate supplies on hand

Let inventory storage costs rise 15% last month; over-ordered parts “A” and “B” by 20%; under-ordered 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

9–17

FIGURE 9–7Appraisal-Coaching Worksheet

9–18

Behaviorally Anchored Rating Scale Behaviorally Anchored Rating Scale (BARS)(BARS)Developing a BARSDeveloping a BARS

1.1. Write critical incidentsWrite critical incidents

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 gaugeA more accurate gauge

Clearer standardsClearer standards

FeedbackFeedback

Independent dimensionsIndependent dimensions

ConsistencyConsistency

9–19

FIGURE 9–8Example of a Behaviorally Anchored Rating Scale for the Dimension Salesmanship Skills

9–20

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 goalsSetting of organization’s goals

2.2. Setting of departmental goalsSetting of departmental goals

3.3. Discussion of departmental goalsDiscussion of departmental goals

4.4. Defining expected results (setting individual goals)Defining expected results (setting individual goals)

5.5. Conducting periodic performance reviewsConducting periodic performance reviews

6.6. Providing performance feedbackProviding performance feedback

9–21

Using MBOUsing MBO

Setting unclear objective

Conflict with subordinates

over objectives

Potential Problems with MBO

Time-consuming appraisal process

9–22

Computerized and Web-Based Computerized and Web-Based Performance Appraisal SystemsPerformance Appraisal Systems

• Allow managers to keep notes on subordinates.Allow managers to keep notes on subordinates.• Notes can be merged with employee ratings.Notes can be merged with employee ratings.• Software generates written text to support appraisals.Software generates written text to support appraisals.• Allows for employee self-monitoring and self-evaluation.Allows for employee self-monitoring and self-evaluation.

• Electronic Performance Monitoring (EPM) SystemsElectronic Performance Monitoring (EPM) Systems Use computer network technology to allow managers access to Use computer network technology to allow managers access to

their employees’ computers and telephones.their employees’ computers and telephones. Managers can monitor the employees’ rate, accuracy, and time Managers can monitor the employees’ rate, accuracy, and time

spent working online.spent working online.

9–23

FIGURE 9–9Online Performance Appraisal Tool

9–24

Dealing with Dealing with Performance Appraisal Performance Appraisal

ProblemsProblems

Unclear standards

Leniency or strictness

Halo effect

Potential Rating Scale Appraisal

Problems

Central tendency

Bias

9–25

TABLE 9–2 A Graphic Rating Scale with Unclear Standards

9–26

Guidelines for Effective AppraisalsGuidelines for Effective Appraisals

Know the problems

Get agreement on a plan

Use the right tool

How to Avoid Appraisal Problems

Keep a diary

Be fair

9–27

TABLE 9–3 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.

9–28

Choosing the Right Appraisal ToolChoosing the Right Appraisal Tool

Accessibility AccuracyEase-of-useEmployee

acceptance

Criteria for Choosing an Appraisal Tool

9–29

FIGURE 9–10 Selected Best Practices for Administering Fair Performance Appraisals

• Base the performance review on duties and standards from a job analysis.

• Try to base the performance review on observable job behaviors or objective performance data.

• Make it clear ahead of time what your performance expectations are.

• Use a standardized performance review procedure for all employees.

• Make sure whoever conducts the reviews has frequent opportunities to observe the employee’s job performance.

• Either use multiple raters or have the rater’s supervisor evaluate the appraisal results.

• Include an appeals mechanism.

• Document the appraisal review process and results.

• Discuss the appraisal results with the employee.

• Let the employees know ahead of time how you’re going to conduct the review and use the results.

• Let the employee provide input regarding your assessment of him or her.

• Indicate what the employee needs to do to improve.

• Thoroughly train the supervisors who will be doing the appraisals.

9–30

FIGURE 9–11 Guidelines for a Legally Defensible Appraisal

1. Preferably, conduct a job analysis to establish performance criteria and standards.

2. Communicate performance standards to employees and to those rating them, in writing.

3. When using graphic rating scales, avoid undefined abstract trait names (such as “loyalty” or “honesty”).

4. Use subjective narratives as only one component of the appraisal.

5. Train supervisors to use the rating instrument properly.

6. Allow appraisers substantial daily contact with the employees they’re evaluating.

7. Using a single overall rating of performance is usually not acceptable to the courts.

8. When possible, have more than one appraiser, and conduct all such appraisals independently.

9. One appraiser should never have absolute authority to determine a personnel action.

10. Give employees the opportunity to review and make comments, and have a formal appeals process.

11. Document everything: Without exception, courts condemn informal performance evaluation practices that eschew documentation.

12. Where appropriate, provide corrective guidance to assist poor performers in improving.

9–31

Who Should Do the Appraising?Who Should Do the Appraising?

Self-rating

Subordinates

360-degree feedback

Potential Appraisers

Immediate supervisor

Peers

Rating committee

9–32

The Appraisal InterviewThe Appraisal Interview

Satisfactory—Promotable

Satisfactory—Not Promotable

Unsatisfactory—Correctable

Unsatisfactory—Uncorrectable

Types of Appraisal Interviews

9–33

FIGURE 9–12 Sample Employee Development Plan

9–34

Appraisal Interview GuidelinesAppraisal Interview Guidelines

Talk in terms of objective work data

Get agreement

Don’t get personal

Encourage the person to

talk

Guidelines for Conducting an Interview

9–35

FIGURE 9–13Checklist During Appraisal Interview

• How to Handle Defensive How to Handle Defensive Responses???Responses???

• Criticizing-Publically/Privately???Criticizing-Publically/Privately???

• Warnings Written/Verbal???Warnings Written/Verbal???

9–36

9–37

Handling Defensive ResponsesHandling Defensive Responses

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

9–38

How to Deliver CriticismHow to Deliver Criticism

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.

9–39

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 boss and (if To help you defend your rating, both to your own boss and (if needed) to the courts.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 standard.Make clear that employee was aware of the 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.

9–40

Performance ManagementPerformance Management• Performance ManagementPerformance Management

Is the continuous process of identifying, measuring, and Is the continuous process of identifying, measuring, and developing the performance of individuals and teams and developing the performance of individuals and teams and aligning their performance with the organization’s goals.aligning their performance with the organization’s goals.

• How Performance Management How Performance Management DiffersDiffers FromFrom PerformancePerformance Appraisal Appraisal

A continuous process for continuous improvementA continuous process for continuous improvement

A strong linkage of individual and team goals to strategic goalsA strong linkage of individual and team goals to strategic goals

A constant reevaluation and modification of work processesA constant reevaluation and modification of work processes

9–41

Basic Building Blocks of Basic Building Blocks of Performance ManagementPerformance Management

Direction sharing

Goal alignment

Ongoing performance monitoring

Rewards, recognition,

and compensation

Coaching and development

support

Ongoingfeedback

9–42

Why Performance Management?Why Performance Management?

Total Quality Management

Resolution of Appraisal Issues

Strategic Goal Alignment

The Performance Management

Approach

9–43

Using Information Technology toUsing Information Technology toSupport Performance ManagementSupport Performance Management

• Assign financial and nonfinancial goals to each team’s Assign financial and nonfinancial goals to each team’s activities along the strategy map chain of activities activities along the strategy map chain of activities leading up to the company’s overall strategic goals.leading up to the company’s overall strategic goals.

• Inform all employees of their goals.Inform all employees of their goals.

• Use IT-supported tools like scorecard software and Use IT-supported tools like scorecard software and digital dashboards to continuously monitor and assess digital dashboards to continuously monitor and assess each team’s and employee’s performance.each team’s and employee’s performance.

• Take corrective action at once.Take corrective action at once.

9–44

FIGURE 9–14 Performance Management Report