Evaluating and Enhancing Employee Performance

© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Evaluating and EnhancingEmployee Performance

Principles of Human Resource Management

16 e

Bohlander | Snell

© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 of 36© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 of 50

Chapter ObjectivesAfter studying this chapter, you should be able to

Explain what performance management is and how the establishment of goals, ongoing performance feedback, and the appraisal process are part of it.

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

Describe the different sources of appraisal information.

Explain the various methods used to evaluate the performance of employees.

Outline the characteristics of an effective performance appraisal interview.

LEARNING OUTCOME 1

LEARNING OUTCOME 2

LEARNING OUTCOME 3

LEARNING OUTCOME 4

LEARNING OUTCOME 5


Performance Appraisal and Other HRM Functions

Training may permit hiring less-qualified applicants Selection Effective selection may

reduce training needs

Training aids in the achievement of performance

Performance Appraisal

A basis for assessing training needs and results

Training and development may lead to higher pay

Compensation Management

A basis for determining employee’s rate of pay

Availability of training can aid in recruitment Recruitment Provide an additional

source of trainees

Training may include a role for the union Labor Relations Union cooperation can

facilitate training efforts


Performance Appraisal Programs

• Performance Appraisal A process, typically performed annually by a

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

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

people can perform to the best of their abilities.


Ongoing Performance Feedback


Performance Appraisal Programs

Appraisal Programs

Administrative Developmental

Compensation Ind. Evaluation

Job Evaluation

EEO/AA Support

Training

Career Planning


Purposes of a Performance Appraisal


Reasons Appraisal Programs Sometimes Fail

• Lack of top-management information and support

• Unclear performance standards

• Rater bias

• Too many forms to complete

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


Let Me Count the Ways


Managerial Issues Concerning Appraisals

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

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

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

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


Managerial Issues Concerning Appraisals (cont.)

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

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

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


Developing an Effective Appraisal Program

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

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

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

• Calibration A process whereby managers meet to discuss the

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


Establishing Performance Standards


What Are the Performance Standards?Performance Standards Characteristics

Strategic Relevance

Individual standards directly relate to strategic goals.

Criterion Deficiency

Standards capture all of an individual’s contributions.

Criterion Contamination

Performance capability is not reduced by external factors.

Reliability(Consistency)

Standards are quantifiable, measurable, and stable.


Are You Complying with the Law?

• Brito v Zia The Supreme Court ruled that performance appraisals

were subject to the same validity criteria as selection procedures.

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

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


Legal Guidelines for Appraisals

• Performance ratings must be job-related.• Employees must be given a written copy of their job

standards in advance of appraisals.• Managers who conduct the appraisal must be able to observe

the behavior they are rating.• Supervisors must be trained to use the appraisal form

correctly. • Appraisals should be discussed openly with employees and

counseling or corrective guidance offered. • An appeals procedure should be established to enable

employees to express disagreement with the appraisal.


Alternative Sources of Appraisal


Sources of Performance Appraisal

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

reviewed by a manager one level higher.

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

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

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

more appropriate for developmental than for administrative purposes.


Sources of Performance Appraisal (cont.)

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

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

Why peer appraisals are not used more often:1. Peer ratings are simply a popularity contest.2. Managers are reluctant to give up control over the

appraisal process.3. Those receiving low ratings might retaliate against

their peers.4. Peers rely on stereotypes in ratings.


Sources of Performance Appraisal (cont.)

• Team Appraisal Based on TQM concepts; recognizes team

accomplishment rather than individual performance

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

based on TQM concepts and seeks evaluation from both external and internal customers


Pros and Cons of 360-Degree Appraisal


360-Degree Performance Appraisal System Integrity Safeguards

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


Training Appraisers

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

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

Explain the mechanics of the rating system– How frequently the appraisals are to be conducted– Who will conduct them– What are the standards of performance.

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


Training Performance Appraisers

Recency errors

Leniency or strictness errors

Error of central tendency

Similar-to-me errors

Contrast and halo errors

Common rater-related errors


Rater Errors

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

average.• Leniency or Strictness Error

A rating error in which the appraiser tends to give all employees either unusually high or unusually low ratings.

• Recency Error A rating error in which appraisal is based largely on an

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


Rater Errors (cont.)

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

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

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

of an employee because of a mutual personal connection.


Rater Errors: Training and Feedback

• Rating Error Training Observe other managers making errors Actively participate in discovering their own errors Practice job-related tasks to reduce the errors they

tend to make

• Feedback Skills Training Communicating effectively Diagnosing the root causes of performance problems Setting goals and objectives


Performance Appraisal Methods

Trait Methods

Graphic Rating Scale

Mixed Standard Scale

Forced-Choice

Essay


Trait Methods

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

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

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

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


Trait Methods (cont.)

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

designed to distinguish between successful and unsuccessful performance.1. ______ a) Works hard _____ b) Works quickly2. ______ a) Shows initiative _____ b) Is responsive to

customers3. ______ a) Produces poor quality _____ b) Lacks good work

habits

• Essay Method Requires the rater to compose a statement describing

employee behavior.




Trait Methods

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

designed to distinguish between successful and unsuccessful performance.

1. ______ a) Works hard _____ b) Works quickly2. ______ a) Shows initiative _____ b) Is responsive to

customers3. ______ a) Produces poor quality _____ b) Lacks good work

habits

• Essay Method Requires the rater to compose a statement describing

employee behavior.


Behavioral Methods

Behavioral Methods

Critical Incident

Behavioral Checklist

Behaviorally Anchored Rating Scale (BARS)

Behavior Observation Scale (BOS)


Behavioral Methods (cont.)

• Critical Incident Method Critical incident

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

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

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

are characteristic of the employee’s performance or behavior.


Behavioral Methods (cont.)

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

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

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

observed behavior (critical incidents). Preferred over BARS for maintaining objectivity,

distinguishing good performers from poor performers, providing feedback, and identifying training needs.



Results Methods

• Productivity Measures Appraisals based on quantitative measures

(e.g., sales volume) that directly link what employees accomplish to results beneficial to the organization.– Criterion contamination– Focus on short-term results

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

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


Performance Appraisal Under an MBO Program


Creating an Effective MBO Program

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

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

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

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

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


The Balanced Scorecard

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

• Ensuring the method’s success: Translate strategy into a scorecard of clear objectives. Attach measures to each objective. Cascade scorecards to the front line. Provide performance feedback based on measures. Empower employees to make performance

improvements. Reassess strategy.



Summary of Appraisal Methods


Appraisal Interviews

Tell and Listen - nondirective

Tell and Sell - persuasion

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

Types of Appraisal Interviews


Appraisal Interview Guidelines

Ask for a Self-Assessment

Express Appreciation

Be Supportive

Follow Up Day by Day

Establish Goals

Problem Solving Focus

Minimize Criticism

Invite Participation

Change Behavior


Factors That Affect an Employee’s Performance


Performance Diagnosis


Managing Ineffective Performance

• Possible Courses of Action Provide training to increase skills and abilities Transfer employee to another job or department Attention of actions to motivate employee Take disciplinary action Discharge the employee

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

employee up to fail.


Key Terms

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


Chapter 8 - Learning Outcomes

Learning Outcome Statements Related Outcomes from Body of the Text

1 Explain what performance management is and how the establishment of goals, ongoing performance feedback, and the appraisal process are part of it.

Does your school have a performance management system in place to help students succeed? If so, how do you think the system might be similar or different to performance management systems in the workplace?

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

Have ever been given a formal performance appraisal? If you have not, what do you think your employer’s rationale was for not appraising you or other employees?

3 Describe the different sources of appraisal information. Do you think as an employee you would be in a good position to appraise your boss? What aspects of his or her performance might you be in a good position to appraise?

4 Explain the various methods used to evaluate the performance of employees.

As an employee, would you rather be evaluated on your personal traits or characteristics, your on-the-job behaviors, or the results you get? Would it depend upon the job you were doing?

5 Outline the characteristics of an effective performance appraisal interview.

As a manager, how might you get an employee who is reluctant to talk during an appraisal to share his or her thoughts?

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Evaluating and Enhancing Employee Performance