3. What is performance appraisal?
Employee Assessment – the assessment of an
employee's effectiveness, usually as undertaken at
regular intervals
Performance appraisal may be defined as a
structured formal interaction between a subordinate
and supervisor in which the work performance of
the subordinate is examined and discussed
with a view to identifying weaknesses and strengths as
well as opportunities for improvement and skills’
development
4. Performance Management
Performance appraisal: the measurement and
assessment of an employee’s job performance
Performance management: the integration of
performance appraisal systems with other HRM
systems for the purpose of aligning the employees’
work behaviors and results with the organization’s
goals
Example: link an employee’s pay increase to the employee’s job
performance
To do this, we have to measure the employee’s job performance
Goal: Improve the organization by improving the employees’
work behaviors and results
4
7. Why Have Performance Appraisal ?
Performance Appraisal offers several
advantages at the level of the:
Individual
Recognition of past effort
Developmental requirements can be uncovered
Team
Alignment of effort with objectives
Motivation of team members
Organization
Development of staff
Achievement of key objectives
Best and focused utilization of human resources
8. Objectives
Compensation decisions
Promotion decisions
Training and development programmes
Feedback to the employee
Personal growth and development
9. Performance Management Cycle
Source of figure: Adapted from Fisher, Schoenfeldt, & Shaw (2006), Figure 10.1, p. 421
9
Development Tool
Administrative
Tool
10. The Performance Appraisal Process
Establish performance standards
Communicate the standards
Measure actual performance
Compare actual performance with standards and
discuss the appraisal
Take corrective action, if necessary
11. Types of Performance to Measure
What aspects of an employee’s job performance
can we measure?
We have 3 basic choices:
Results produced by the employee
Example for a salesperson: Amount of sales ($) in the past
month
Behaviors of the employee
Example for a salesperson: Number of sales calls in the past
month
Traits of the employee
Example for a salesperson: Friendliness
13. Types of Performance to Measure
Results-based (results-oriented): measure the
results produced by the employee
Examples for a retail store manager (examples of some
results for which the store manager has responsibility and
so should be held accountable):
Sales of the store
Profit per square foot
Inventory shrinkage
Customer satisfaction
Makes sense for most jobs
Results matter (usually)
14. Types of Performance to Measure
Results-based (more)
Challenges:
Which results are relevant may not be obvious for all jobs
Some results are not under the employee’s control
May foster a “results at all costs” mentality
May interfere with teamwork
May be difficult to provide effective feedback
15. Types of Performance to Measure
Behavior-based (behavior-oriented): measure the
employee’s behaviors
Examples for a retail store manager:
Good attendance
Completes management reports correctly & on time
Monitors customers and employees for theft
Coaches employees to welcome customers to the store & offer
assistance within 3 minutes, and to thank customers as they
leave
Conducts regular sessions with employees to develop teamwork
Makes sense for many jobs
Use it where how the employee produces results matters
16. Types of Performance to Measure
Behavior-based (more)
Advantage: Makes it easier to provide effective performance
feedback to employees
Examples for a retail store manager:
Feedback with results-oriented performance appraisal: “You
didn’t achieve your sales goal.” (Measured by sales reports)
Feedback with behavior-oriented performance appraisal: “You
are allowing your employees to wait too long before offering help
to customers.” (Measured by observations of a secret shopper)
Challenges:
Difficult to capture the full range of relevant behaviors
Different behaviors can lead to the same results
We may not always care which behaviors were used
17. Types of Performance to Measure
Trait-based (trait-oriented): measure the employee’s
personal characteristics
Examples for a retail store manager:
Ability to make decisions
Loyalty to the company
Communication skills
Level of initiative
This is usually a bad idea for several reasons:
Poor reliability & validity of measures of traits
Weak relationship between traits and job effectiveness
Measurements of traits are more likely to be subject to biases
(sexism, racism, ageism, etc.)
Hard to use traits to provide effective feedback
18. Types of Performance to Measure
So, in most cases, we want to measure the job
performance of an employee in terms of the results
and behaviors of the employee
Make a list of results & behaviors that are relevant to the job
Starting point: Use the job description to identify the essential
tasks of the job
Example task statement on job description for a Retail Store
Manager: “Manage inventory shrinkage.”
Translate the tasks into results & behaviors
Example (continued): Measure the amount of inventory
shrinkage in the store (a result)
19. Characteristics of an Effective
Appraisal System
Job-related criteria
Performance expectations
Standardization
Trained appraisers
Continuous open communication
Performance reviews
20. 360-Degree Feedback
Performance information is collected from
supervisors, subordinates, peers, and
internal/external customers
Generally done for development rather than
for pay raises
21. 360-degree Feedback
Many organizations now use some form of
360-degree feedback program
Upward and peer feedback can have positive
effects on behavior
These effects are sustainable over time
Introducing a 360-degree system into a culture not
prepared for it can have disastrous effects
22. 360-degree Feedback
Positive features of a 360-degree system:
Multiple perspectives of a person’s performance
Raters base evaluations on contact and observation
Feedback is provided from multiple directions…
above, below, peer
Anonymous upward feedback, which results in full
participation
Learning about weaknesses and strengths is
motivational
23. 360-degree Feedback
Negative features of a 360-degree system:
Feedback from all sources can be overwhelming
Rater can hide in a group of raters and provide
harsh evaluations
Conflicting ratings can be confusing and frustrating
Providing feedback that is constructive requires a
plan and well-trained raters
24. Selected Evaluation Techniques
Ways of evaluating employees can generally
be divided into two categories:
Methods that evaluate employees individually
Multiple-person evaluations
In a multiple-person evaluation, the supervisor
directly and intentionally compares the
performance of one employee to that of others
25. Individual Evaluation Methods
Graphic rating scale
The rater is presented with a set of traits
The employee is rated on the traits
Ratings are assigned points, which are then
computed
Raters are often asked to explain each rating with a
sentence or two
26. Individual Evaluation Methods
Forced choice:
Was developed because graphic rating scales
allowed supervisors to rate everyone high
The rater must choose from a set of descriptive
statements about employee
Supervisors check the statements that describe the
employee, or they rank the statements from most to
least descriptive
Forced choice can be used by superiors, peers,
subordinates, or a combination of these
27. Individual Evaluation Methods
Essay Evaluation
The rater is asked to describe the strong and weak
aspects of the employee’s behavior
It can be used by superiors, peers, or subordinates
Essay evaluations are flexible; an evaluator can
specifically address the ratee’s skill in any area
Comparing essays is difficult
Skilled writers can paint a better picture
28. Individual Evaluation Methods
Critical Incident Technique
Raters maintain a log of behavioral incidents that
represent effective and ineffective performance for
each employee
Two factors determine the success of this technique:
The supervisor must have enough time to observe
subordinates during the evaluation period
The supervisor must record incidents as they are
seen
Logs can help avoid common rating errors and
facilitate discussions about performance improvement
29. Individual Evaluation Methods
Checklists
In its simplest form, the checklist is a set of
objectives or descriptive statements
If the rater believes that the employee possesses a
listed trait, the item is checked
A rating score equals the number of checks
30. Individual Evaluation Methods
A variation is the weighted checklist
Supervisors and HR specialists prepare a list of
descriptive statements about behavior
Judges who have observed behavior on the job sort
the statements into piles rated from excellent to
poor
When there is agreement on an item, it is included
in the weighted checklist
The employee’s evaluation is the sum of the scores
(weights) on the items checked
Checklists and weighted checklists can be used
by superiors, peers, or subordinates
31. Individual Evaluation Methods
Behaviorally Anchored Rating Scales
Smith and Kendall developed the behaviorally
anchored rating scale (BARS), or the behavioral
expectation scale (BES)
The BARS approach uses critical incidents to
anchor statements on a scale
The rater reads the anchors and places an X at some
point on the scale for the ratee
32. Individual Evaluation Methods
A BARS usually contains these features:
Six to 10 performance dimensions identified and
defined by raters and ratees
The dimensions are anchored with positive and
negative critical incidents
Each ratee is then rated on the dimensions
Ratings are fed back using the terms on the form
It takes two to four days to construct a BARS that is
jargon free and closely related to the requirements of the job
33. Behaviorally Anchored Rating Scale
Uses specific descriptions of actual behaviors to rate various levels of actual
performance
35. Multiple-Person Evaluation Methods
Ranking
A supervisor is asked to rank subordinates in order
on some overall criterion
It is easier to rank the best and worst employees
than average ones
Alternative rankings can help with this difficulty
Pick the top employee first, then the bottom one
The second best is chosen, then the second worst
Follow this process until everyone has been ranked
36. Multiple-Person Evaluation Methods
Paired Comparison
The supervisor reviews a series of cards; each
contains two subordinates names
The higher performer in each pair is chosen
Final ranking is made by counting how many times
a given employee was chosen as the better
performer
A major limitation is the number of paired
comparisons that must be made
With only 10 subordinates, a supervisor would have
45 pairs of names
38. Multiple-Person Evaluation Methods
Forced Distribution
Employees are rated on a pre-existing distribution
of pre-determined categories
The predetermined distribution must be followed,
regardless of how well the employees performed
A supervisor with all exceptional subordinates will
be forced to rate some poorly
A supervisor with mediocre subordinates must rate
some highly
This technique is similar to grading on a curve
39. Forced Distribution Method
At Sun Microsystems managers appraise
employees in groups of about 30.
There is a top 10%, a middle 70%, and a
bottom 10%.
The bottom 10% can either take a quick exit
package or embark on a 90-day performance
improvement action plan.
41. Multiple-Person Evaluation Methods
An MBO program follows a systematic process:
Superior/subordinates define tasks and set objectives
The superior, consulting with subordinates, sets criteria
for assessing objective accomplishment
Dates to review progress are agreed upon and used
Superior and subordinates make any required
modifications in the original objectives
A final evaluation by the superior is made
The superior meets with the subordinate in a
counseling, encouraging session
Objectives for the next cycle are set
43. Opposition to Evaluation
Most employees are wary of performance evaluation
Subjective bias and favoritism are real problems
Opponents of formal evaluation argue that:
They focus too much symptoms of poor performance
rather than finding the underlying causes
Managers and employees dislike the process
Raters have trouble deciding performance levels
Employees who are not placed in the top performance
category experience a reverse motivation effect
44. System Design and Operating Problems
Performance evaluation systems break down
because they are poorly designed
If the criteria focus solely on results, or on
personality traits rather than performance, the
evaluation may not be well received
Some techniques take a long time to carry out or
require extensive written analysis, both of which
managers resist
Some systems are not fully online
45. Rater Problems
Even if a system is well designed, problems can arise if
raters are not cooperative and well trained
Supervisors may not be comfortable “playing God”
Inadequate training can lead to:
Problems with standards of evaluation
Halo effect
Leniency or harshness
Central tendency error
“Recency of events” error
Contracts effects
Personal bias (stereotyping, similar to me)
46. Standards of Evaluation
Problems with evaluation standards arise
because of perceptual differences in the
meaning of words
Good, adequate, satisfactory, and excellent mean
different things to different evaluators
If only one rater is used, evaluations can be
distorted
This arises most often in graphic rating scales
It may also appear with essays, critical incidents,
and checklists
47. Potential appraisal
The objective of potential appraisal is to identify the
potential of a given employee to occupy higher positions in
the organizational hierarchy and undertake higher
responsibilities. It is required to:
Inform employees about their future prospects
Help the organization chalk out a suitable succession plan
Update training efforts from time to time
Advise employees about what they must do to improve their
career prospects.