Performance Appraisal

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Business 4320

• Performance Appraisal

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E I G H T
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Chapter Objectives

• Identify the issues that influence the selection
  of a performance appraisal system.
• Explain the uses of performance appraisals.
• Discuss rater biases in performance appraisals.
• Describe the commonly used appraisal methods.
• Explain how the results of performance appraisal
  affect human resource management.

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Performance Management

• Performance appraisal involves
• Setting work standards
• Assessing actual performance
• Providing feedback
• Provides data to assess the current skill,
  experience, and performance level of every
  employee
• Impacts human resource planning, training
  development, career development compensation
  forecasts
• Requires effective performance appraisal system
  (i.e. valid)

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Performance Appraisal Uses
Performance improvement Compensation
adjustments Placement decisions Training
Development needs Career planning development
Identify deficiencies in staffing process Detect
informational inaccuracies Diagnose job design
errors Avoidance of discrimination External
challenges
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Key Elements
Performance Appraisal Interview
Employee Feedback
Human Performance
Performance Measures Criteria
Employee Records HR Decisions
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Appraisal Systems

• Job-related
• System evaluates critical behaviours that
  constitute job success
• Practical
• Understood and relatively simple
• Performance standards
• Related to the desired results of each job
• Performance measures
• Reports on critical behaviours

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Performance Measures
Direct

• Rater actually sees the employees performance

Indirect
Rater must evaluate substitutes for performance
(constructs)
Objective

• Verifiable by others
• Usually quantitative

Subjective

• Not verifiable by others
• Usually raters personal opinions

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Subjective Measures Problems
Halo effect
Rater Biases
Error of central tendency
Recency effect
Leniency strictness bias
Personal prejudice
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Characteristics for Effectiveness
Validity Reliability Input into system
development Acceptable standards Acceptable
goals Control of standards
Effective Performance Appraisal System
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Characteristics for Effectiveness
Frequency of feedback Rater training Ratee
training Input into interview process Appraisal
consequences Different sources (raters)
Effective Performance Appraisal System
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Past-Oriented Noncomparative
Rating scale

• Oldest and most widely used method
• Subjective i.e. based on the raters opinion
• Responses may be given numerical values

Critical incident

• Rater records performance statements
• Describes very effective/ineffective behaviour

Behaviourally anchored

• Behaviours are placed along a scale
• Looks at specific job-related factors

• Appraisal based on a test
• Test may be pen pencil or demonstration

Tests observations
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Past-Oriented Comparative
Ranking

• Employees ranked from best to worst

Forced distributions

• Categories are developed
• Employees assigned to categories

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Future-Oriented Methods
Self-Appraisals

• Useful to further self-development
• Can be used with any evaluation approach

Management-by-objectives

• Employee supervisor jointly establish goals
• Employee is later evaluated on the objectives

Assessment centre

• Usually used to evaluate future potential
• Multiple types of evaluation
• Usually used for managers

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Recent Developments

• 360-degree appraisal
• In line with the trend toward flatter
  organizations
• Combination of perspectives
• Balanced scorecard
• Integrates organizational performance measures
  such as financial, customer satisfaction,
  internal processes, learning

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Evaluation Interviews

• Performance review sessions that give employees
  feedback about their past performance or future
  potential
• Interview should be a positive,
  performance-improving dialogue

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Effective Evaluation Interviews

• Emphasize positive aspects of employee
  performance
• Tell each employee the evaluation session is to
  improve performance not to discipline
• Conduct the performance review session in private
  without interruptions
• Review performance formally at least annually
• Make criticisms specific, not general and vague

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Effective Evaluation Interviews

• Focus criticisms on performance, not on
  personality
• Stay calm and do not argue with the person being
  evaluated
• Identify specific actions to improve performance
• Emphasize willingness to assist the employees
  efforts to improve performance
• End the evaluation by stressing positive aspects
  and reviewing improvement plans