HRM 751PERFORMANCE AND COMPENSATION MANAGEMENT(PERFORMANCE APPRAISAL)Nur Izyan binti Supandi

2012293352

BM7703CF

Outline

Introduction of Performance Appraisal Definition and Purpose When? Performance appraisal steps/process

Performance Interview and Feedback Definition Importance Performance Interview

Performance Appraisal Methods Appraisal Form Traditional Methods vs Modern Methods Type of appraisal Methods

Type of Appraiser Supervisors, Peers, Subordinates, Self, Customers, Clients and Group

Appraiser Error Judgmental Errors Rater Training Program Poor Appraisal Forms Ineffective Organizational Policies and Practices

INTRODUCTION

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)

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 and 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)

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 .

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.

Milliman, Nason, Zhu, and Cieri (2002)

When Performance Appraisal?

• 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.

Annually

•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

Semiannually

• 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.

Others

Six Formal Meetings

System Inauguration

Self-appraisal

Classical performance

review

Merit/salary review

Development plan

Objective setting

(Aguinis, 2009)

Example Performance Appraisal Step1. 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.

4. Have raters (and employees in some systems) evaluate

employees’ performance.

5. Discuss the evaluation with the employees.

6. Make decisions and file evaluation.

(Kumari, 2012)

Example Performance Appraisal Step

Step l: The Initial (Performance) Planning Session

• Meeting individually to described expectation

Step II: The Mid-Point Review

• provide feedback to the employee during the primary performance period

(West Virginia Division of Personnel Handbook, 2005)

PERFORMANCE INTERVIEW AND FEEDBACK

Definition of Performance Interview

Recurrent strategic interviews between a superior in an organization and an employee that focus on employee performance and development (Asmuß, 2008)

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)

Function of Performance Interview

Two main purpose: Counseling and

development Evaluation and

discussion About employees’

performance

(Cederblom, 1982)

Allow employees to improve their performance by identifying performance problem and solution for overcoming them.

Helps to build good relationship

(Aguinis, 2009)

Importance of Performance Interview

Feedbacks in Pepsi- Cola

International

Instant feedback(Asmuß,

2008)

Coaching(Cederblom, 1982)

Accountability based

performance

appraisals

Development

feedback (Cederblom, 1982)

Human resource

plan

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).

PERFORMANCE APPRAISAL METHODS

Traditional vs New Approach

Traditional Approach This method is based on

studying the personal qualities of the employees. It may include knowledge, initiative, loyalty, leadership and judgment (Aggarwal & Thakur, 2013).

New Approach Performance appraisal is

used for developmental and motivational purposes in the organizations (Gürbüz & Dikmenli, 2007).

Traditional Approach New Approach

(Nili, Ardakani & Shekarchizadeh, 2012)

Methods and Form

SHRM Curriculum Guidebook (2010)

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.

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.

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.

Rating Scale

Behaviorally Anchored

Rating Scale (BARS)

•BARS combines elements from critical incident and graphic rating scale approaches. The supervisor rates employees’ according to items on a numerical scale.

Graphic Rating 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.

Comparative Methods

Comparative methods of performance appraisal seek to identify one worker’s standing to others.

Ranking, paired comparison, and forced distribution

Comparative Methods

Ranking MethodRanking

- employees from best to worst on a

particular trait, choosing highest, then lowest, until all ranked (Aggarwal & Thakur,

2013)

Paired Comparison- Each person is

directly compared with every other

person being rated.

Forced Distribution- This method forces a set percentage of all

person being evaluated into pre-

determined performance categories.

Appraisal Form

Information on performance is collected by using forms, which can be filled out in paper or electronically (Aguinis, 2009)

Example appraisal form

Components in Appraisal Form 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)

360 Degree

is known by a variety of names, including multisource assessment, 360-degree feedback, multirater assessment, and three-dimensional 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.

TYPE OF APPRAISER

•Supervisor:•Best position to evaluate performance in relation to strategic organization goals

Supervisors

•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

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

Subordinates

•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.

Self• Customers• Useful for jobs that require a high degree

of interaction with public or with particular job-related individuals.

Customers

•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

APPRAISER ERROR

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)

Component of Appraisal Error(Kumari, 2012)

•People commit mistake due to biasness and inadequate training while evaluating people and their performance.•These errors are also called as Rater Errors.

Judgment Error

•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.

Poor Appraisal

Forms

•Very often the sincere appraisal report put in by a rater is not suitably rewarded

Ineffective Organizational

Policies and Practices

Ratings Error

Similar to me Contrast Halo Primacy Recency Negatively First impression Spillover Stereotype Attribution

Leniency Severity Central tendency

Unintentionally Intentional

(Aguinis, 2009)

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 Self-Leadership Training.

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

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.

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 long-term 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 are inferior. (p. 102)

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.

THANK YOU..