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Performance Appraisal


A management system designed to achieve organizational effectiveness by steering ... Companies avoid more frequent appraisals because they are considered too ... – PowerPoint PPT presentation

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Title: Performance Appraisal

Performance Appraisal
Performance Appraisals
  • Improve job performance
  • By directing employee behavior toward
    organizational goals
  • By monitoring that behavior to ensure that goals
    are met
  • Make the correct employment decisions
  • Ensure legal compliance
  • Minimize job dissatisfaction and turnover

Standards for Effective Performance Appraisal
  • The quality of the rating form
  • Accuracy of the ratings
  • Legal standards

Quality of Rating Form
  • Relevance
  • The degree to which the rating form includes
    necessary information
  • To be relevant, the form must
  • Include all the pertinent criteria for evaluating
  • Exclude criteria that are irrelevant to job
  • Criterion deficiency Omission of pertinent
    performance criteria
  • Criterion contamination Occurs when irrelevant
    criteria are included on the rating form

Accuracy of the Ratings
  • Leniency and severity errors
  • Leniency error
  • Occurs when raters provide ratings that are
    unduly high
  • Severity error
  • Occurs when ratings are unduly low
  • Causes of leniency and severity errors
  • Political reasons
  • Raters lack of conscientiousness
  • Personal bias

Accuracy of Ratings (cont.)
  • Central tendency error
  • Occurs when appraisers purposely avoid giving
    extreme ratings even when such ratings are
  • Causes of central tendency error
  • Result of administrative procedures
  • When the end points of the rating scale are
    unrealistically defined

Accuracy of Ratings (cont.)
  • Halo effect
  • Occurs when an appraisers overall impression of
    an employee is based on a particular
  • Causes of the halo effect
  • Vague rating standards
  • Failure to conscientiously complete the rating

Accuracy of Ratings (cont.)
  • Implicit personality theory
  • When the raters estimation is based on a
    personal theory of how different types of
    people behave in certain situations
  • Rater cannot observe all aspects of a workers
  • Rater classifies employee by type of person.
  • Using this theory, organizations are unable to
    identify employees specific strengths and

Legal Standards
  • Appraisal systems must meet all the criteria
    imposed by EEO laws.
  • Specifically a court would examine
  • The nature of the appraisal instrument
  • The fairness and accuracy of the ratings

Types of Rating Instruments
  • Employee comparison systems
  • Management-by-objectives (MBO)

Employee Comparison Systems
  • Employee performance is evaluated relative to
    other employees performances.
  • Ranking formats
  • Simple rankings
  • Require raters to rank-order their employees from
    best to worst, according to their job performance
  • Paired comparison
  • A rater compares each possible pair of employees.
  • Forced distribution
  • Requires a rater to assign a certain percentage
    of employees to each category of excellence, such
    as best, average, or worst.

Management-by-Objectives (MBO)
  • A management system designed to achieve
    organizational effectiveness by steering each
    employees behavior toward organizations
  • MBO process includes
  • Goal setting
  • Planning
  • Evaluation

MBO Goal Setting
  • Goal setting Starts at the top of the
    organization with the establishment of the
    organizations mission statement and strategic
  • It then cascades down through the organizational
    hierarchy to the level of the individual

MBO Planning and Evaluation
  • Planning Employees and supervisors work together
    to identify potential obstacles to reaching goals
    and devise strategies to overcome these
  • Evaluation In the final phase, the employees
    success at meeting goals is evaluated against the
    agreed-on performance standards.

Designing an Appraisal System
  • Step 1 Gaining support for the system
  • To gain the support of managers
  • Get managers input in developing the system
  • Train managers
  • Hold managers accountable for providing accurate
    ratings on a timely basis
  • To gain the support of employees
  • Encourage users (both managers and workers) to
    participate in the planning and development of
    the system to enhance support for it.

Step 2 Choosing Appropriate Rating Instrument
  • Practicality
  • Cost
  • Development costs
  • Constructing an appraisal system
  • Implementation costs
  • Training appraisers
  • Developing written guidelines
  • Utilization costs
  • Appraisers time observing, rating, and giving
    performance feedback
  • Nature of job

Step 3 Choose Raters
  • Supervisory ratings
  • Appraisals are typically responsibility of the
    immediate supervisor.
  • Peer ratings
  • Supplement supervisory ratings
  • May also help eliminate biases
  • Competitive nature of the organizations reward
    system and friendships are potential problems if
    used in lieu of supervisory ratings.

Step 3 Choose Raters (cont.)
  • Self-ratings
  • May not be effective as an evaluative tool
  • May be used for employee development
  • Using multiple raters 360-degree
  • Evaluating managers performance using several
  • Ratings are made by a circle of people who
    frequently interact with the manager
  • Primarily used as feedback devices

Step 4 Determining Timing
  • Mostly conducted annually
  • Difficulty remembering events
  • Appraisers should maintain records of employee
    performance to minimize this problem.
  • Record keeping also serves as documentation for
    EEO suits.
  • Companies avoid more frequent appraisals because
    they are considered too time-consuming.

Step 5 Ensuring Fairness
  • Upper-level management review
  • May serve to keep appraisers honest
  • Appeals system
  • Means for employees to obtain a fair hearing if
    dissatisfied with their appraisals
  • Considered beneficial because it
  • Allows employees to voice their concerns
  • Fosters more accurate ratings
  • Prevents the involvement of outside third parties
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