Performance Appraisal Systems

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Performance AppraisalSystems
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Chapter 12 Overview

• Performance Appraisal Definition and Uses
• Understanding Performance
• Performance Appraisal Methods
• Potential Errors in Performance Appraisals
• Overcoming Errors in Performance Appraisals
• Providing Feedback through the Appraisal
  Interview
• Developing Performance Improvement Plans
• Team Appraisal and Feedback
• Performance Appraisal and the Law

3
Terminology

• Performance Management System
• Formal, structured process
• Used to
• Measure
• Evaluate
• Influence
• An employees job-related attributes, behaviors,
  and performance results

Source Susan Jackson Randall Schuler Managing
Human Resources
4
Terminology

• Performance appraisal
• Evaluating performance based on the judgments and
  opinions of subordinates, peers, supervisors,
  other managers and even the employees themselves

Source Susan Jackson Randall Schuler Managing
Human Resources
5
Performance Management System
Designing the system
Performance measurement and feedback
Employee development
Provide rewards for improvement
If no improvement, make adjustments
Source Susan Jackson Randall Schuler Managing
Human Resources
6
Performance Management within an Integrated HR
System
Performance Management Systems

• Other HRActivities
• Fairness
• Alignment
• Job Analysis

• Objectives of Performance Measurement and
  Feedback
• Motivation and Productivity
• Strategic Planning and Change
• Legal Compliance

• Design
• What/when to Measure
• Who to Involve
• Formats
• Accountability

Using performance-based pay to reward performance
External Environment
Individual and Team Performance
Internal Environment
Feedback and Follow-Up
If no improvement, make adjustments
Source Susan Jackson Randall Schuler Managing
Human Resources
7
The Strategic Importance of Measuring Performance
and Providing Feedback

• Enhancing motivation and productivity
• Monitoring performance and providing feedback to
  individuals, teams and the organization
• Strategic planning and change
• Detecting Problems
• Evaluating Change

Source Susan Jackson Randall Schuler Managing
Human Resources
8
The Strategic Importance of Measuring Performance
and Providing Feedback

• Ensuring legal compliance
• Measures must be
• Nondiscriminatory
• Job-related
• Fair

Source Susan Jackson Randall Schuler Managing
Human Resources
9
Enhancing Motivation Productivity

• Expectancy Theory
• People chose their behaviors and effort levels.
• Choices are based on workers beliefs that
  behaviors and efforts will lead to desired
  consequences.

Source Susan Jackson Randall Schuler Managing
Human Resources
10
Expectancy Theory

• Expectancy
• If I make an effort, will I be able to perform?
• Instrumentality
• What consequences will follow from my
  performance?
• Valence
• How much do I value the consequences?

Source Susan Jackson Randall Schuler Managing
Human Resources
11
Employee Motivation Performance
Instrumentality
Expectancy

• Motivation
• Which behaviors
• How much effort

• Consequences for Employee
• Positive
• Negative

Actual Performance
Measured Performance
Perceived Fairness
Satisfaction
Source Susan Jackson Randall Schuler Managing
Human Resources
12
Factors that Influence Motivation Translate
Motivation into Performance

• Performance expectations and goals
• Performance of interdependent others
• Employee confidence and competencies
• Access to required resources
• Ongoing feedback

Source Susan Jackson Randall Schuler Managing
Human Resources
13
Factors that Influence Whether Performance Will
Be Sustained

• Valid performancemeasurement
• Value of rewardand negative consequence(Valence)
  
• Ongoing feedback

Job Performance
Source Susan Jackson Randall Schuler Managing
Human Resources
14
Performance Appraisal Methods

• Goal Setting, or Management by Objectives (MBO)
• Multi-Rater Assessment (or 360-Degree Feedback)
• Work Standards
• Essay Appraisal
• Critical-Incident Appraisal
• Graphic Rating Scale

15
Performance Appraisal Methods

• Checklist
• Behaviorally Anchored Rating Scale (BARS)
• Forced-Choice Rating
• Ranking Methods
• Alteration Ranking
• Paired Comparison Ranking
• Forced Distribution

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Management by Objectives

• Job Graphic Artist
• Project Logo Development for County Park System
• Goals and sub-goals
• Meet all agreed-on deadlines
• Bill final hours within plus or minus 10 of
  agreed-on budget
• Achieve supervisors criteria for logo
  development
• Reproduces well in various sizes and 3 dimensions
• Has strong identity
• Uses type in a unique manner
• Has high quality art

Source Susan Jackson Randall Schuler Managing
Human Resources
17
360-Degree Appraisals

• Performance information collected from colleagues
  and internal customers
• Less susceptible to gender/ethnicity biases
• Research supports
• Anonymity of raters
• Use of full circle of raters
• Possible reduced validity when
• used for anything other
• than development.

Source Susan Jackson Randall Schuler Managing
Human Resources
18
Examples of How to Improve Work Objectives

• Poor To maximize production.
• Better To increase production by 10 percent
  within the next three months.
• Poor To reduce absenteeism.
• Better To average no more than three absent days
  per employee per year.

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Examples of How to Improve Work Objectives

• Poor To waste less raw material.
• Better To waste no more than 2 percent of raw
  material.
• Poor To improve the quality of production.
• Better To produce no more than 2 rejects per 100
  units of production.

20
Typical Areas of Supervisory Objectives

• 1. Production or output
• Usually expressed as number of units per time
  period.
• Example Our objective is to average 20 units
  per hour over the next year.
• 2. Quality
• Usually expressed as number of rejects, number
  of customer complaints, amount of scrap.
• Example Our objective is to produce fewer than
  10 rejects per week for the next six months.
• 3. Cost
• Usually expressed as dollars per unit produced
  or dollars per unit of service offered.
• Example Our objective is for the cost of each
  widget produced to average less than 5 over the
  next three months.

21
Typical Areas of Supervisory Objectives

• 4. Personnel
• Usually expressed in terms of turnover,
  absenteeism, tardiness.
• Example Our objective is to average fewer than
  three days of absenteeism per employee per year.
• 5. Safety
• Usually expressed in terms of days lost due to
  injury.
• Example Our objective is to reduce the number
  of days lost due to injury this year by 10.

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Methods for Setting Work Standards

• Methods Areas of Applicability
• Average production of work groups When tasks
  performed by all employees are the same or
  approximately the same.
• Performance of specially selected When tasks
  performed by all employees are basically the same
  and it would be cumbersome and time-consuming to
  use the group average.
• Time study Jobs involving repetitive tasks.

employees
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Methods for Setting Work Standards

• Methods Areas of Applicability
• Work Sampling Noncyclical types of work where
  many different tasks are performed and there is
  no set pattern or cycle.
• Expert opinion When none of the more direct
  methods (described above) apply.

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Sample Items on a Graphic Rating Scale Evaluation
Form

• Quality of work the amount of work an employee
  does in a workday.
• ( ) ( ) ( ) ( ) ( )
• Does not meet Does just Volume of work Very
  industrious, Has a minimum enough to is
  satisfactory. does more than superior
• requirements. get by. is required. work
  record.
• Dependability the ability to do required jobs
  well with a minimum of supervision.
• ( ) ( ) ( ) ( ) ( )
• Requires close Sometimes Usually
  completes Requires little Requires
• supervision is requires necessary tasks
  supervision is absolute
• unreliable. prompting. with reasonable
  reliable. minimum of promptness. supervis
  ion.

(Continued)
25
Sample Items on a Graphic Rating Scale Evaluation
Form (Continued)

• Job knowledge information an employee should
  have on work duties for satisfactory job
  performance.
• ( ) ( ) ( ) ( ) ( )
• Is poorly informed Lacks knowledge Is
  moderately Understands Has complete
• about work duties. of some phases informed can
  all phases mastery of all
• of job. answer most of job. phases of
  job.
• questions
• about the job.
• Accuracy the correctness of work duties
  performed.
• ( ) ( ) ( ) ( ) ( )
• Makes frequent Careless, often Usually
  accurate, Requires little Requires
• errors. makes errors. makes only
  average supervision absolute
• number of mistakes. exact and minimum of
• precise most supervision is
• of the time. almost always
• accurate.

(Continued)
26
Sample Items on a Graphic Rating Scale Evaluation
Form (Continued)

• Attendance faithfulness in coming to work daily
  and conforming to work hours.
• ( ) ( ) ( ) ( ) ( )
• Is often absent Is lax in Is usually present Is
  very prompt, Is always without good excuse,
  attendance, or and on time. regular in
  regular and
• or frequently reports reporting
  for attendance. prompt
• for work late, or both. work on time,
  volunteers for or both overtime
  when needed.

27
Sample Checklist Questions

• Yes No
• 1. Does the employee lose his or her temper in
  public? _____ _____
• 2. Does the employee play favorites? _____ _____
• 3. Does the employee praise employees in public
  when
• they have done a good job? _____ _____
• 4. Does the employee volunteer to do special
  jobs? _____ _____

28
Example of a Behaviorally Anchored Rating Scale
Scale Values Anchors 7 Excellent Develops a
comprehensive project plan, documents it well,
obtains required approval, and distributes the
plan to all concerned. 6 Very good Plans,
communicates, and observes milestones states
week by week where the project stands relative to
plans. Maintains up-to-date charts of project
accomplishments and backlogs and uses these to
optimize any schedule modifications
required. Experiences occasional minor
operational problems but communicates
effectively. 5 Good Lays out all the parts
of a job and schedules each part seeks to beat
schedule and will allow for slack. Satisfies
customers time constraints time and cost
overruns occur infrequently. 4 Average Makes
a list of due dates and revises them as the
project progresses, usually adding unforeseen
events investigates frequent customer
complaints. May have a sound plan, but does not
keep track of milestones does not report
slippages in schedule or other problems as they
occur. 3 Below Plans are poorly defined,
unrealistic time schedules are common. average Ca
nnot plan more than a day or two ahead, has no
concept of a realistic project due date. 2
Very poor Has no plan or schedule of work
segments to be performed. Does little or no
planning for project assignments. 1
Unacceptable Seldom, if ever, completes
project, because of lack of planning, and does
not seem to care. Fails consistently due to
lack of planning and does not inquire about how
to improve.

• Source C. E. Schneier and R. W. Beatty,
  Developing Behaviorally Anchored Rating Scales
  (BARS), Personnel Administrator, August 1979, p.
  60.

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Example of a Behaviorally Anchored Rating Scale
Dimension Transacting Loans (Corporate Loan
Assistant)
Helps customers in a manner that draws praise
from them
7
Assists customers with loan applications
6
Develops loan documentation accurately
5
Prepares credit reports without having to be told
4
Provides information to customers, even if not
asked
3
Fails to help other banks participating in loans
2
Conducts loan interviews in a manner that draws
complaints from applicants
1
Source Susan Jackson Randall Schuler Managing
Human Resources
30
Sample Set of Forced-Choice Statements

• Instructions Rank the following statements
  according to how they describe the manner in
  which this employee carries out duties and
  responsibilities. Rank 1 should be given to the
  most descriptive, and Rank 5 to the least
  descriptive. No ties are allowed.
• Rank Description
• _____ Is easy to get acquainted with.
• _____ Places great emphasis on people.
• _____ Refuses to accept criticism.
• _____ Thinks generally in terms of money.
• _____ Makes decisions quickly.

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Forced-Distribution Curve
32
Potential Errors in Performance Appraisals

• Halo/Horn
• Leniency
• Strictness
• Central Tendency
• Primacy
• Recency
• Contrast

Source Susan Jackson Randall Schuler Managing
Human Resources
33
Overcoming Errors in Performance Appraisals

• Make refinements in the design of the appraisal
  methods.
• Improve the skills of raters.
• Methods used by the company
• Importance of the raters role in the total
  appraisal process
• Uses of performance appraisal information
• Communication skills necessary to provide feedback

34
Improving Rater Accuracy

• Rating scale format
• Each dimension addresses single job activity
• Each performance dimension rated separately
  scores summed to determine overall rating
• Ambiguous terms (for example average) should
  not to be used.

Source Susan Jackson Randall Schuler Managing
Human Resources
35
Improving Rater Accuracy

• Memory Aids
• Behavioral diaries and critical incident files
• Electronic diary-keeping software
• Rater Training
• Frame-of-reference training especially useful

Source Susan Jackson Randall Schuler Managing
Human Resources
36
Improving Rater Accuracy

• Frame-of-Reference Training
• A group of raters (with help of trainer)
• Identify criteria, using job description
• View video of employee performance
• Independently evaluate video performance
• Present rationales and challenge other raters
• Reach consensus on evaluation of job performance

Source Susan Jackson Randall Schuler Managing
Human Resources
37
Improving Rater Accuracy

• Rewards for Accurate and Timely Appraisals
• Salary increases, promotions, assignments to key
  positions can be partly based on performance as a
  rater.
• Multiple Raters
• Diffusion of responsibility leads to accuracy
• Group discussion can alleviate biases

Source Susan Jackson Randall Schuler Managing
Human Resources
38
Providing Feedback Through the Appraisal Interview
39
Providing Feedback

• Issues
• Potential sources of conflict
• Timing
• Preparation
• Content of discussion
• Follow-up
• Identifying causes of performance deficiencies

Source Susan Jackson Randall Schuler Managing
Human Resources
40
Sources of Conflict DuringPerformance Feedback

• Combining evaluative and developmental goals
• Need to be candid and protect employees
  self-esteem
• Self-serving employee attributions that interfere
  with performance improvement
• Discounting role of external forces in good
  performance over-emphasizing external effects
  in poor performance

Source Susan Jackson Randall Schuler Managing
Human Resources
41
Improving the Feedback Process

• Timing
• Providing immediate feedback is most useful.
• Giving only as much information as the receiver
  can use
• Preparation
• Scheduling feedback sessions in advance
• Clarifying purpose and content of meeting
• Giving both participants time to prepare

Source Susan Jackson Randall Schuler Managing
Human Resources
42
Improving the Feedback Process

• Why process breaks down
• Supervisor uses tell and sell approach
• Subordinates frustrated in trying to justify
  performance to supervisors
• Subordinates discount feedback

Source Susan Jackson Randall Schuler Managing
Human Resources
43
Improving the Feedback Process

• The Problem-Solving Approach
• Using diagnosis to understand the factors that
  affect performance.
• Removing roadblocks by agreeing on an action plan
  and address issues such as
• Lack of resources.
• Need for additional information and training.
• Improving ongoing communications and feedback.
• Setting goals through employee participation to
  increase acceptance of goals.

Source Susan Jackson Randall Schuler Managing
Human Resources
44
Diagnosing Causes of Performance Deficiencies

• Does employee have the competencies and the
  interest to perform as desired?
• Have specific, difficult but attainable goals
  been communicated?
• Is employee certain about desired performance,
  the consequences of performance, level of
  authority?

Source Susan Jackson Randall Schuler Managing
Human Resources
45
Diagnosing Causes of Performance Deficiencies
(continued)

• Has employee received useful, clear, immediate
  feedback?
• Does performing well matter? Are there negative
  consequences?
• Does the employee have the power and resources to
  perform as required?

Source Susan Jackson Randall Schuler Managing
Human Resources
46
Developing Performance Improvement Plans

• Where are you now?
• Where do you want to be?
• How will you get from where you are now to where
  you want (need) to be?

47
Strategies for Improving Performance
Positive Reinforcement
Employee Assistance Programs
Self- Management
Other Strategies
Punishment
Source Susan Jackson Randall Schuler Managing
Human Resources
48
Follow-Up to the Feedback Session

• Positive Reinforcement
• Use of positive rewards to increase occurrence
  of desired performance
• Principles
• People perform in ways that they find most
  rewarding
• By providing proper rewards, it is possible to
  improve performance

Source Susan Jackson Randall Schuler Managing
Human Resources
49
Follow-Up to the Feedback Session

• Punishment
• Decreases frequency of undesired behavior
• Can get immediate results and has vicarious power
• Can have undesirable side effects

Source Susan Jackson Randall Schuler Managing
Human Resources
50
Self-Management

• People exercise control over their own behavior
• Individuals
• Assess own problems
• Set specific, hard goals
• Develop strategies to eliminate blocks to
  success
• Administer own reinforcement

Source Susan Jackson Randall Schuler Managing
Human Resources
51
Last Recourses in Performance Management

• Transfer
• When employee and job are not well matched
• Neutralize
• Assign non-critical tasks to minimize the impact
  of deficiencies
• Terminate
• For dishonesty, habitual absenteeism, substance
  abuse, insubordination, and low productivity
  that cannot be corrected

Source Susan Jackson Randall Schuler Managing
Human Resources
52
Performance Criteria for Teams

• Task Completion
• Accuracy, speed
• Creativity, cost
• Team Development
• Cohesiveness
• Flexibility
• Preparedness for new tasks
• Stakeholder Satisfaction
• Customer, team and other teams satisfaction with
  procedures and outputs

Source Susan Jackson Randall Schuler Managing
Human Resources
53
Individual Performance of Team Members

• Task Performance
• Accuracy, speed, creativity, and efficiency
• Relationships with Others
• Understanding others perspectives
• Trust by others
• New friendships
• Personal Development
• Development of competencies, technical
  knowledge, and skills
• Development of networks of colleagues

Source Susan Jackson Randall Schuler Managing
Human Resources
54
Factors of Team Effectiveness
External Context
Culture
Member Selection
Team Training
Reward Systems

• Team Design
• Team Size
• Team Location

• Internal Processes
• Developmental Stages
• Feelings
• Behavioral Norms

• Effectiveness Criteria
• Team
• Individual

Source Susan Jackson Randall Schuler Managing
Human Resources
55
Roles and Responsibilities of HR Triad

• Line Managers
• With HR and employees to develop measures
• Avoid rating errors
• Keep records and measure performance
  conscientiously
• Diagnose performance deficiencies
• Develop performance improvement strategies

• HR Professionals
• Use job analysis to develop relevant, legal
  measures
• Train and assist others
• Coordinate administrative aspects
• Monitor managerial decisions
• Assist others dealing with performance
  deficiencies
• Administer appeals

• Employees
• Work with HR and managers to set expectations
• Appraise work of others
• Participate in self-appraisal
• Learn to give feedback
• Understand criteria
• Learn to diagnose,set goals, self-manage

Source Susan Jackson Randall Schuler Managing
Human Resources
56
Performance Appraisal and the Law

• Civil Rights Acts of 1964 and 1991
• Age Discrimination in Employment Act
• Suggestions for More Legally Acceptable
• Deriving content from job analysis
• Emphasizing work behaviors versus traits
• Ensure results are communicated to employee
• Allow employee to give feedback
• Train managers
• Ensure appraisals are documented and retained
• Decisions are consistent with appraisals

57
Legally Defensible Appraisal Feedback

• Based on job analysis
• Standardized and formal
• Specific standards communicated in advance
• Objective and uncontaminated data
• Ratings on traits avoided or operationalized in
  behavioral terms

• Evaluate on specific work dimensions, not global
  measures
• Evaluators have opportunity to observe work
  behaviors
• More than one independent evaluator if possible
• Behavioral documentation for extreme ratings

Source Susan Jackson Randall Schuler Managing
Human Resources
58
Legally Defensible Appraisal (continued)

• Employees given the opportunity to review
  appraisal
• Formal system of appeal is available
• Raters trained to prevent discrimination and to
  evaluate consistently
• Frequent appraisals (at least annually)

Source Susan Jackson Randall Schuler Managing
Human Resources
59
Deciding What to Measure

• Personal traits
• For example loyalty or dependability
• Not reliable and difficult to defend as
  measurable performance criteria
• Behaviors
• Focus on how work performed
• Easier to observe and defend than traits
• For example, Has not been late to work during
  past 6 months.

Source Susan Jackson Randall Schuler Managing
Human Resources
60
Deciding What to Measure (Continued)

• Objective Results
• Focus on what was accomplished or produced
• May miss critical aspects of job that are
  difficult to quantify
• For example number of traffic tickets written.
• Multiple Criteria
• Performance appraisal should capture all aspects
  of the job

Source Susan Jackson Randall Schuler Managing
Human Resources
61
Organizational Citizenship

• May want to include as part of overall
  performance
• Includes
• Volunteering for tasks not formally part of the
  job
• Helping others
• Following organizational rules and procedures
  even when inconvenient
• Endorsing, supporting, and defending
  organizational objectives

Source Susan Jackson Randall Schuler Managing
Human Resources
62
Validity of Performance Criteria

• Criteria are deficient if relevant aspects of job
  are not covered.
• Criteria are contaminated if evaluation includes
  irrelevant factors.
• When multiple criteria are used, they can be
  weighted based on
• Job Analysis
• Statistical procedures

Source Susan Jackson Randall Schuler Managing
Human Resources
63
?
Questions