Team 9

Performance Appraisal

June, 2002

Director: Marko Sarstedt

Manager: Chong Sun Tan

Miia Montonen

Agenda

• General

• Implementation Specifications

• Sources of Appraisal

• Rating Methods

• Bottom line

Agenda

• General

• Definition

• Purposes & Principles

• Problems

• A formal approach

• Cultural & Legal Considerations

Performance Appraisal

• Mutual, ongoing evaluation of employees in order to meet the strategic goals of the organization.

• A sound basis for improving, reviewing and evaluating organizational performance.

• 3 steps of appraisal process:– Gathering the information.

– Evaluating information in context of organizational needs.

– Communicating information between employees and supervisors.

Purposes

Administrative purposes

• Compensation decisions • Promotion, layoff, transfer

decisions• HR planning • “Paper trail”

Developmental purposes

• Performance feedback • Possibility to improve job

performance• Eliminate problems• Set new goals

Key principles

Performance appraisal has a capability of influencing employee behavior

and therefore improve organizational performance.

Encourage continuous feedback and employee coaching.

Enhance and improve individual’s capabilities at all levels of organization:• Identifying strengths and weaknesses• Eliminating external performance obstacles• Establishing training needs

Problems

• Lack of top-management support.

• Appraisal can become a source of friction for managers and employers.

• Unclear performance standards by which to evaluate.

• Rater bias.

Problems (cont.)

• Too many forms to complete becomes time and energy

consuming, and frustrating.

• Employees questioning fairness of system.

• Traditionally just quantitative aspects considered,

qualitative more difficult to measure.

A formal approach

To determine the contributions of each individual it is necessary to havea formal appraisal program with clearly stated objectives.

Performance standards that are• Reliable.• Strategically relevant.• Free from contamination and criterion deficiency.

are essential foundations for evaluation.

Mutuality: Employees and supervisors participate equally and actively in the process (e.g. mutual establishment of performance

expectations)

Cultural considerations

• Finnish people tend to avoid negative feedback.

• Most of them also do not like to discuss their personal characteristics with others.

• Russian and Baltic are slightly different from Finns??

Legal considerations

Appraisal systems must comply with national laws:

• Appraisals subject to same validity criteria as selection procedures.

• Important to have clearly defined and measurable performance standards.

• Performance ratings job-related.

• Appraisal should be discussed openly with employees.

• Finland has strong labor unions.

Agenda

• General

• Implementation Specifications

• Sources of Appraisal

• Rating Methods

• Bottom line

Agenda

• Implementation Specifications

• Who is involved?

• What is the frequency?

Who is involved?

• CEO BP-Centro

• Area-specific officers

• Country and Regional Managers

• Facility Managers

What is the frequency?

CEO:

• Annually

MBO

Area-specific Officers:

• Annually

Self-Appraisal

MBO

Country and Regional Managers:

• Annually

Self-Appraisal

360° Appraisal

MBOFacility Managers:

• Annually

360° Appraisal

• Semi-Annually

Self-Appraisal

Agenda

• General

• Implementation Specifications

• Sources of Appraisal

• Rating Methods

• Bottom line

Agenda

• Sources of Appraisal

• Self-Appraisal

• 360° Appraisal

Self-Appraisal

• Employees evaluate themselves on a self-appraisal form.

• Performance interview to discuss job performance and agree on a

final appraisal.

Sample questions:

What were your most important accomplishments during the appraisal period?

What are you job-related goals for the next period?

How can the supervisor help you in meeting future goals?

Source: Self-Appraisal form University of Houston / Victoria

360° Appraisal

EvaluatedEmployee

PePeeerr

CustomerCustomer

SubordinateSubordinate

ProjectProjectleaderleader

SupervisorSupervisor

PeerPeer

SubordinateSubordinateSubordinateSubordinate

Performance feedback is received from a full circle of people

around the employee:

SIDELINE

Pros / Cons of 360° Appraisal

• More Comprehensive.

• Higher quality of information.

• Lessened bias / prejudice.

• Increased self-development.

• Administratively complex.

• Conflicting opinions, which may be accurate

from specific standpoints.

• Possible collusion.

• Appraisers may not be

accountable if evaluation

anonymous.-

+

-

Favorable Characteristics of 360° Appraisal

• Assure Anonymity

• Make respondents accountable

• Prevent collusion

• Use statistical procedures

• Identify biases

Agenda

• General

• Implementation Specifications

• Sources of Appraisal

• Rating Methods

• Bottom line

Agenda

• Rating Methods

• Trait Approaches

• Behavioral Approaches

• MBO

Trait Approaches

• Trait Approaches:

• Mixed-Standard Scale Method / Forced-Choice Method

• Not conform with Finnish culture

• Essay Method

• Time-consuming to use

• Costly

• Quality influenced by writing-skills of appraiser

• Subjective

• Graphic Rating Scale

• Less subjective bias

• Degree of performance dimension is less offensive

Example Graphic Rating Scale

C- Critically important

I – Important

N – Not appliable

E – Exceeds requirements

M – Meets requirements

O – Opportunity for development

Decision Making:

• Makes timely and effective decisions

• Considers broader impact of alternatives

• Delegates appropriately

C I N E M O

Communication:

• Listens well

• Communicates effectively

• Gives clear and concrete oral instructions

C I N E M O

Behavioral Methods

• Critical Incident Methods

• Only considers unusual success & failure (”Black Book-Approach”)

• Behaviorally Anchored Rating Scale (BARS) / Behavior Observation

Scales (BOS)

• Time-consuming

• Costly to develop

• Potential for rating errors

MBO

Definition:

Philosphy of management on the basis of employee

achievement or goals set by mutual agreement of employees

and managers.

Pros / Cons of MBO

• Less subjective bias

• Link individual performance to organizational

performance

• Mutual goal setting

• Basis for reward and promotion decisions

+

-• Time consuming

• Costly

• May encourage short-term perspective

• Goals not always easy to measure

MBO

Formulationof goals

Formulationof an

action planImplementation

InterimReview

FinalReview

Collectively formulate job objectives compatible with overall departmental objectives.

Formulationof goals

Formulationof an

action planImplementation

InterimReview

FinalReview

Collectively formulate an action plan, evaluating technique and schedule.

MBO (cont.)

Formulationof goals

Formulationof an

action planImplementation

InterimReview

FinalReview

MBO (cont.)

Formulationof goals

Formulationof an

action planImplementation

InterimReview

FinalReview

As objective data becomes available, evaluate the progress that the employee is making toward the goals – goals may be changed.

Corrective measures may be taken.

MBO (cont.)

Formulationof goals

Formulationof an

action planImplementation

InterimReview

FinalReview

Evaluate performance and design corrective action if needed.

MBO (cont.)

Definition of goals

• Employee and supervisor decide mutually on expectations for the employee’s

performance:

• Define roles and accountabilities, including whether they are individual,

joint or team.

• Develop objectives that are closely tied to department goals

• Clarify performance dimensions

• Set interim review dates

• Agree on who will provide supplemental input

Questions to consider:

How can I improve my contribution to department goals?

What objectives will maximize my contribution?

Who can help me achieve my objectives? Whom do I interact with?

Definition of goals (cont.)

SpecificSpecific

Results-orientedResults-oriented

ChallengingChallenging

CommitmentCommitment

ParticipationParticipation

TaskTaskEffortEffort

TaskTaskPerformancePerformance

Characteristics of Effective Goal Setting:

Adapted from: Mcshane; Canadian Organizational

Behavior; 4th ed.; p # 79

Effective goal setting

High

Tas

k P

erfo

rman

ce

Low Moderate Challenging Impossible

Area ofOptimal

GoalDifficulty

Goal DifficultyAdapted from: Mcshane; Canadian Organizational

Behavior; 4th ed.; p # 80

Example

Goal:

To deliver high standards of excellence in all services.

Objectives:

• To obtain a minimum score of 3.5 (out of 5) on all

Customer Service Evaluation forms.

Agenda

• General

• Implementation Specifications

• Sources of Appraisal

• Rating Methods

• Bottom line

Bottom Line

Sources:

• Self-Appraisal

• 360° Appraisal

Methods:

• Graphic Rating Scale

• MBO

Note: Trait methods are not useful for allocating rewards & promotion

decisions due to high potential of rating errors

The End

Thank you for your attention!

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