CHAPTER 9: PERFORMANCE MANAGEMENT AND APPRAISAL
Comparing Performance Appraisal and Performance Management:
�Performance appraisal
�Evaluating an employee�s current and/or past performance relative to his or her performance standards.
�Performance management
�The process employers use to make sure employees are working toward organizational goals.
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.
�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.
Realistic Appraisals
�Motivations for soft (less-than-candid) appraisals
�The fear of having to hire and train someone new
�The unpleasant reaction of the appraisee
�A company appraisal process that�s not conducive to candor
�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.
Continuous improvement
�A management philosophy that requires employers to continuously set and relentlessly meet ever-higher quality, cost, delivery, and availability goals by:
�Eradicating the seven wastes:
�overproduction, defective products, and unnecessary downtime, transportation, processing costs, motion, and inventory.
�Requiring each employee to continuously improve his or her own personal performance, from one appraisal period to the next.
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
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.
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.
�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.
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.
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
Performance Appraisal Methods:
�Graphic rating scale
�A scale that lists a number of traits and a range of performance for each that is used to identify the score that best describes an employee�s level of performance for each trait.
�Alternation ranking method
�Ranking 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.
�Forced distribution method
�Similar to grading on a curve; predetermined percentages of ratees are placed in various performance categories.
�Example:
�15% high performers
�20% high-average performers
�30% average performers
�20% low-average performers
�15% low performers
�Narrative Forms
�Behaviorally anchored rating scale (BARS)
�An appraisal method that uses quantified scale with specific narrative examples of good and poor performance.
�Developing a BARS:
�Generate critical incidents
�Develop performance dimensions
�Reallocate incidents
�Scale the incidents
�Develop a final instrument
�Advantages of using a BARS
�A more accurate gauge
�Clearer standards
�Feedback
�Independent dimensions
�Consistency
Management by Objectives (MBO)
�Involves setting specific measurable goals with each employee and then periodically reviewing the progress made.
�Set the organization�s goals.
�Set departmental goals.
�Discuss departmental goals.
�Define expected results (set individual goals).
�Performance reviews.
�Provide feedback.
Computerized and Web-Based Performance Appraisal
�Performance appraisal software programs
�Keep notes on subordinates during the year.
�Electronically rate employees on a series of performance traits.
�Generate written text to support each part of the appraisal.
�Electronic performance monitoring (EPM)
�Having supervisors electronically monitor the amount of computerized data an employee is processing per day, and thereby his or her performance.
Potential Rating Scale Appraisal Problems:
�Unclear standards
�An appraisal that is too open to interpretation.
�Halo effect
�Occurs when a supervisor�s rating of a subordinate on one trait biases the rating of that person on other traits.
�Central tendency
�A tendency to rate all employees the same way, such as rating them all average.
�Strictness/leniency
�The 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.
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.
Who Should Do the Appraising?
�The immediate supervisor
�Peers
�Rating committees
�Self-ratings
�Subordinates
�360-Degree feedback
The Appraisal Interview
�Types of appraisal interviews
�Satisfactory�Promotable
�Satisfactory�Not promotable
�Unsatisfactory�Correctable
�Unsatisfactory�Uncorrectable
�How to� conduct the appraisal interview
�Talk in terms of objective work data.
�Don�t get personal.
�Encourage the person to talk.
�Don�t tiptoe around.
�How to handle a defensive subordinate
�Recognize that defensive behavior is normal.
�Never attack a person�s defenses.
�Postpone action.
�Recognize your own limitations.
�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.
�How to ensure the interview leads to improved performance
�Don�t make the subordinate feel threatened during the interview.
�Give the subordinate the opportunity to present his or her ideas and feelings and to influence the course of the interview.
�Have a helpful and constructive supervisor conduct the interview.
�Offer the subordinate the necessary support for development and change.
�How to handle a formal written warning
�Purposes of the written warning
�To shake your employee out of bad habits.
�Help you defend your rating, both to your own boss and (if needed) to the courts.
�Written warnings should:
�Identify standards by which employee is judged.
�Make clear that employee was aware of the standard.
�Specify deficiencies relative to the standard.
�Indicates employee�s prior opportunity for correction.
Management Process
��What is our strategy and what are our goals?�
��What does this mean for the goals we set for our employees, and for how we train, appraise, promote, and reward them?�
�What will be the technological support requirements?