1. HRM 751
PERFORMANCE AND
COMPENSATION MANAGEMENT
(PERFORMANCE APPRAISAL)
Nur Izyan binti Supandi
2012293352
BM7703CF

2. Outline

Introduction of Performance Appraisal
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

Performance Interview and Feedback

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
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
Appraisal Form
Traditional Methods vs Modern Methods
Type of appraisal Methods
Type of Appraiser


Definition
Importance Performance Interview
Performance Appraisal Methods


Definition and Purpose
When?
Performance appraisal steps/process
Supervisors, Peers, Subordinates, Self, Customers, Clients and Group
Appraiser Error




Judgmental Errors
Rater Training Program
Poor Appraisal Forms
Ineffective Organizational Policies and Practices

3. INTRODUCTION

5. Other Terms
Performance appraisal has been synonymous with
 performance review,
 performance evaluation,
 performance assessment,
 performance measurement,
 employee evaluation,
 personnel review,
 staff assessment, and
 service rating
(Aggarwal & Thakur, 2013)

6. Definition of Performance Appraisal
The observation and assessment of the employee performance against
job-related standards determined by the organization over a certain
period (Eichel & Bender, 1984).
The process of evaluating on employee’s job performance that helpful
to, and often even essential to, accomplishing important goals of all
organization (Kondrasuk, 2012)
Performance appraisals involves the similar idea of developing social
and performance norms, monitoring the actions of employees in relation
to the norms, assigning responsibility for the actions, and then ultimately
providing rewards or punishment based on performance towards those
norms (Milliman, Nason, Zhu, & Cieri, 2002)

7. Definition of Performance Appraisal
Performance appraisal provides an annual review and
evaluation of an individual's job performance (Eastern Illinois
University, 2009)
Performance appraisal is the process of determining how well
employees do their jobs compared with a set of standards and
communicating that information to those employees
(Chukwuba, 2011)
Performance appraisal is the evaluation of employee’s
performance based on the standard and give feedback about
the assessment .

8. Purpose of Performance
Appraisal
Walsh and Fisher (2005); Faseeh (2013):
(1) To provide feedback about strengths and weaknesses;
(2)To distinguish between individuals to allocate rewards;
(3)To evaluate and maintain the human resource systems of the
organization; and
(4)To create a paper trail of documentation (Murphy
& Cleveland, 1995)
Chattopadhayay and Ghosh (2012),
•It provides a justification for human resource decision such as
rewards, career planning, transfers, training, counseling, mentoring
, termination, etc.

9. Milliman, Nason, Zhu, and Cieri
(2002)

10. When Performance Appraisal?
Annually
• Many organization usually make an evaluation of the
employees’ performance in the end of the year.
• annual employee performance reviews appear to be the
standard in most American organizations.
Semiannually
• A semi-annual one for the employee to discuss with his manager
any needed remedial steps for his performance on an unofficial
basis. While the second one, would be an official one held at the
end of the year for the employee to receive his appraisal results
and know about the salary increase or promotion. E.g: Japan
Others
• According to the Chartered Institute of Personnel and
Development (CIPD), UK, 87% of employers use some
form of individual annual appraisals, 27% do them twice
a year and 10% more often than that. Some use them
when projects come to an end.

11. Six Formal Meetings
System
Inauguration
Selfappraisal
Classical
performance
review
Objective
setting
Development
plan
Merit/salary
review
(Aguinis, 2009)

12. Example Performance Appraisal
Step
1. Establish performance
standards for each
position and criteria for
evaluation.
2. Establish performance
evaluation policies on
when to rate, how often to
rate, and who should rate.
3. Have raters gather data
on employees’
performance.
6. Make decisions and file
evaluation.
5. Discuss the evaluation
with the employees.
4. Have raters (and
employees in some
systems) evaluate
employees’ performance.
(Kumari, 2012)

13. Example Performance Appraisal
Step
Step l: The
Initial
(Performance)
Planning
Session
• Meeting
individually to
described
expectation
Step II: The MidPoint Review
Step III: The Final
Review Session
• provide
feedback to
the employee
during the
primary
performance
period
• to review and
rate the
performance of
each
employee
during the
entire
performance
rating period.
(West Virginia Division of
Personnel Handbook, 2005)

14. PERFORMANCE
INTERVIEW AND
FEEDBACK

15. Definition of Performance
Interviewinterviews between a
Recurrent strategic
superior in an organization and an employee that
focus on employee performance and
development (Asmuß, 2008)
The interview constitutes a discussion session between an employee and his
or her supervisor with respect to the employee’s results during the period of
evaluation, focusing especially on employee progress, aims, and needs at
work (Anne Linnaa, Elovainio, Bos, Kivimäki, & Penttia, 2012)
The performance appraisal interview is defined as
the formal process of evaluating employee
performance (Keeping and Levy 2000)
A potentially important part of any organization’s
performance appraisal system that function in
several ways such as providing feedback
(Cederblom, 1982)
A formal meetings for the specific purpose of
discussing the various aspect of performance
and the performance management system
(Aguinis, 2009)

16. Function of Performance
Interview

Two main purpose:

Counseling and
development
 Evaluation and
discussion


About employees’
performance

Allow employees to
improve their
performance by
identifying
performance problem
and solution for
overcoming them.
Helps to build good
relationship
(Cederblom, 1982)
(Aguinis, 2009)

17. Importance of Performance
Interview
Instant
feedback
(Asmuß,
2008)
Human
resource
plan
Feedbacks in
Pepsi- Cola
International
Development
feedback
(Cederblom,
1982)
Coaching
(Cederblom
, 1982)
Accountability
based
performance
appraisals

18. Explanation of Feedback
Staff members should not receive any surprise
feedback because informal, continuous
discussion and feedback between staff and
manager throughout the year prevents surprises
(Boice & Kleiner, 1997).

19. PERFORMANCE APPRAISAL
METHODS

20. Traditional vs New Approach
Traditional Approach
New Approach
Traditional Approach
 This method is based on
studying the personal
qualities of the employees.
It may include
knowledge, initiative, loyalt
y, leadership and judgment
(Aggarwal &
Thakur, 2013).
New Approach
 Performance appraisal is
used for developmental
and motivational
purposes in the
organizations (Gürbüz &
Dikmenli, 2007).

21. (Nili, Ardakani &
Shekarchizadeh, 2012)

22. Methods and Form
SHRM Curriculum Guidebook (2010)

23. Critical Incident Method

Keeping a record of uncommonly good or
undesirable examples of an employee's work
related behavior and reviewing it with the
employee at predetermined times.

24. Management by Objectives
(MBO)

Employees are evaluated how well they
accomplished a specific set of objectives that
have been determined to critical in the
successful completion of the job.

25. Narrative Essay

Evaluator writes an explanation about
employee’s strength and weakness
points, previous performance, positional and
suggestion for his (her) improvement at the
end of evaluation time.

26. Rating Scale
Behaviorally
Anchored
Rating Scale
(BARS)
Graphic
Rating Scale
• BARS combines elements from critical
incident and graphic rating scale
approaches. The supervisor rates
employees’ according to items on a
numerical scale.
• A 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
performance for each trait.

28. Comparative Methods


Comparative
methods of
performance
appraisal seek to
identify one worker’s
standing to others.
Ranking, paired
comparison, and
forced distribution

29. Comparative Methods
Ranking Method
Forced
Distribution
Ranking
Paired
- This method
Comparison
- employees from
forces a set
best to worst on a - Each person is
percentage of all
particular
directly compared
person being
trait, choosing
with every other
evaluated into
highest, then
person being
pre-determined
lowest, until all
rated.
performance
ranked (Aggarwal
categories.
& Thakur, 2013)

30. Appraisal Form

Information on performance is collected by
using forms, which can be filled out in paper or
electronically (Aguinis, 2009)

Example appraisal form

31. Components in Appraisal Form







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Basic employee information
Accountabilities, objectives and standard
Competencies and indicators
Major achievements and contributions
Developmental achievements
Developmental needs, plans, and goals
Stakeholder input
Employees comments
Signature
(Aguinis, 2009)

32. 360 Degree



is known by a variety of names, including
multisource assessment, 360-degree
feedback, multirater assessment, and threedimensional or full-circle appraisal.
It relies on the input of an employee's
superior, colleagues, subordinates, sometimes
customers, suppliers and/or spouses.
The information collected and feedback is
provided in full circular fashion top down and
back to top.

33. TYPE OF APPRAISER

34. Supervisors
Peers
Subordinates
• Supervisor:
• Best position to evaluate performance in relation to
strategic organization goals
• Peer:
• Must know the level of performance of the employee
being evaluated.
• May be useful when the task of the work unit require
frequent working contact among peers
• For developmental aspects of performance evaluation
• Subordinates are a valuable source of information
regarding particular aspects of a supervisor or leader’s
performance such as communication, team building or
delegation.
• For example Exxon and universities

35. Self
Customers
• Self appraisal
• To be used for developmental aspects.
• Self evaluation have often been met with skepticism by
organizations because the self interest of the
employee.
• Customers
• Useful for jobs that require a high degree of
interaction with public or with particular jobrelated individuals.
• Clients may also offer a different perspective on a employee’s
performance, particularly for jobs that require a high degree of
interaction with people. For example, client appraisals can be a
valuable source of feedback regarding the quality of service
provision (e.g. the quality of interaction, degree of professionalism).
• Group

36. APPRAISER ERROR

37. Appraiser Error


Appraisal error affect the objectivity of the
appraisal negatively (Boachie-Mensah &
Seidu, 2012).
The problems that affect the validity and
dependability of the Performance appraisal
systems (Kumari, 2012)

38. Component of Appraisal Error
(Kumari, 2012)
Judgment Error
• People commit mistake due to biasness and
inadequate training while evaluating people and their
performance.
• These errors are also called as Rater Errors.
Poor Appraisal
Forms
• The rating scale may be quite vague and unclear.
• Problems with evaluation standards
• The rating form may ignore important aspects of job
performance.
• The forms may be too long and complex.
Ineffective
Organizational
Policies and
Practices
• Very often the sincere appraisal report put in by a rater
is not suitably rewarded

39. Ratings Error
Unintentionally



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

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


Similar to me
Contrast
Halo
Primacy
Recency
Negatively
First impression
Spillover
Stereotype
Attribution
Intentional



Leniency
Severity
Central tendency
(Aguinis, 2009)

40. Rater Training Programs



The overall objective of providing raters with tools
that will allow them to implement the performance
management system effectively and effectively
(Aguinis, 2009).
To improve managers’ ability to conduct effective
performance appraisals with dealing errors to
eliminate it from ratings (Inancevich &
Konopaske, 2013).
The example of training such as Rater Error
Training, Frame of Reference Training
(FOR), Behavioral Observation Training, and SelfLeadership Training.

41. A Study in polytechnic in Takoradi, Ghana
(Boachie-Mensah & Seidu, 2012)
Effect from
Appraisal Error
The most
common errors:
similarity and the
halo effect biases
Irregular and
inadequate
feedback
A negative
perception that the
employees
Recommendation
Precise definitions of the
job-related behaviours
being rated are required.
The superior to routinely document employee
accomplishments and failures throughout the whole
appraisal period.
Performance standards must be
clearly defined
Formal training programmes

42. Support from Previous Study


In a study of Telecom Industry in Navi Mumbai
Region
the most common appraisal errors in the
system are the similarity (similar-to-me)
effect and the halo effect.

43. Deming (1982/2000)
Deming was a recognized guru in
the quality movement and famous
for his critique of performance
ratings, identifying them as one of
management’s deadly diseases in
the
PA:
 It nourishes short-term
performance, annihilates longterm planning, builds fear,
demolishes team-work, nourishes
rivalry and politics. It leaves
people bitter, crushed, bruised,
battered, desolate, despondent,
dejected, feeling inferior, some
even depressed, unfit for work for
weeks after receipt of rating,
unable to comprehend why they

44. Conclusion



Organizations can benefit a lot from
performance appraisal by seeing it as crucial
part of management responsibility.
Employee will be motivated and inspired with
positive and constructive feedback from
performance appraisal.
Effective performance appraisal should
eliminate appraisal error.

45. THANK YOU..