HRM 101MBM-I

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A system that comprises the identification, measurement, and management of human performance in an organization.

- Gomez-Mejia, L. R., Balkin, D. B., & Cardy, R. L.,”Managing Human Resources”

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Performance Appraisal A process, typically performed annually by a

supervisor for a subordinate, designed to help employees understand their roles, objectives, expectations, and performance success.

Performance Management The process of creating a work environment

in which people can perform to the best of their abilities.

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1. The dimension of the job which includes the requirements, duties, and responsibilities and their standards of satisfactory performance.

2. The dimension of the man and his performance

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Performance appraisal validates selection function

Performance appraisal validates selection function SelectionSelection

Selection should produce workers best able to meet job requirements

Selection should produce workers best able to meet job requirements

Performance appraisal determines training needs

Performance appraisal determines training needs

Training and Development

Training and Development

Training and development aids achievement of performance standards

Training and development aids achievement of performance standards

Performance appraisal is a factor in determining pay

Performance appraisal is a factor in determining pay

Compensation Management

Compensation Management

Compensation can affect appraisal of performance

Compensation can affect appraisal of performance

Performance appraisal judges effectiveness of recruitment efforts

Performance appraisal judges effectiveness of recruitment efforts

RecruitmentRecruitmentQuality of applicants determines feasible performance standards

Quality of applicants determines feasible performance standards

Performance appraisal justifies personnel actions

Performance appraisal justifies personnel actions Labor RelationsLabor Relations

Appraisal standards and methods may be subject to negotiation

Appraisal standards and methods may be subject to negotiation

HR department is the ordinarily has the primary responsibility for overseeing and coordinating the appraisal program.

Research has shown that employee acceptance of the performance-appraisal system is increased and there is greater satisfaction with the appraisal system when employees have the opportunity to participate in the development of the rating instrument

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Performance Standards Must be based on job-related requirements

derived from job analysis and reflected in job description and job specifications.

Help translate an organization’s goals and objectives into job requirements that define acceptable and unacceptable performance levels.

Calibration A process whereby managers meet to discuss the

performance of individual employees to ensure their employee appraisals are in line with one another

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Objectives of an Appraisal Program:

1. Opportunity to observe.The appraiser must be in a position to collect relevant information about the person being evaluated, through personal observation, reviewing records, or talking with others who have direct knowledge of the person.2. Understanding of job requirements.A clear understanding of job requirements and standards of satisfactory performance is required.3. Having an appropriate point of viewOne’s point of view influences which observed performance is considered desirable or undesirable.

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Sources of Appraisal

Manager and/or Supervisor Appraisal done by an employee’s manager

and reviewed by a manager one level higher. Self-Appraisal

Appraisal done by the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview.

Subordinate Appraisal Appraisal of a superior by an employee, which

is more appropriate for developmental than for administrative purposes.

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Peer Appraisal Appraisal of individuals of equal rank who work

together, Peers can readily identify leadership and interpersonal skills along with other strengths or weaknesses of their co-workers. Confidentiality must be exercise to prevent interpersonal rivalries or hurt feelings ,encourage hostility towards fellow employees.

Why peer appraisals are not used more often:1. Peer ratings are simply a popularity contest.2. Managers are reluctant to give up control over the

appraisal process.3. Those receiving low ratings might retaliate against

their peers.4. Peers rely on stereotypes in ratings.

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Team Appraisal Based on Total Quality Management (TQM)

concepts; recognizes team accomplishment rather than individual performance

Customer Appraisal A performance appraisal that, like team

appraisal, is based on TQM concepts and seeks evaluation from both external and internal customers

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is feedback that comes from members of an employee's immediate work circle.

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Pros and Cons of 360-Degree Appraisal

PROS

• The system is more comprehensive in that responses are gathered from multiple perspectives.

• Quality of information is better. (Quality of respondents is more important than quantity.)

• It complements TQM initiatives by emphasizing internal/external customers and teams.

• It may lessen bias/prejudice since feedback comes from more people, not one individual.

• Feedback from peers and others may increase employee self-development.

CONS

• The system is complex in combining all the responses.

• Feedback can be intimidating and cause resentment if employee feels the respondents have “ganged up.”

• There may be conflicting opinions, though they may all be accurate from the respective standpoints.

• The system requires training to work effectively.

• Employees may collude or “game” the system by giving invalid evaluations to one another.

• Appraisers may not be accountable if their evaluations are anonymous.

Assure anonymity Make respondents accountable Prevent “gaming” of the system Use statistical procedures Identify and quantify biases

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Establishing an Appraisal Plan Provide an explanation of the performance

appraisal system’s objectives so that raters will understand the compensation and development purposes for which the appraisal is to be used.

Explain the mechanics of the rating system How frequently the appraisals are to be conducted Who will conduct them What are the standards of performance.

Alert raters to the weaknesses and problems of appraisal systems so that they can be avoided.

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Eliminating Rater Error

Distributional errors (e.g., central tendency, leniency, and strictness errors) involve the arrangement of a group of ratings across several employees. Forced distribution and peer rankings are techniques that some organizations use to eliminate these types of errors. However, not all corporate cultures are conducive to forced rankings systems. Firms that place a high-priority on teamwork would probably find forced ranking to be counterproductive. In addition, these ranking systems can sometimes adversely affect employee morale and lead to lawsuits.

Stress the development of interviewing skills.Video taped role-playing appraisal sessions designed to increased their skills as constructive evaluators. Also this permits managers and supervisors to view and critique their own performance and progress and to experiment with different interview techniques.

Provide some general points to consider before the appraisal interview begins.

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Scheduling

1. Schedule the review and notify the employee ten days to two weeks in advance.

2. Ask the employee to prepare for the session by reviewing his or her performance, job objectives, and development goals.

3. Clearly state that this will be the formal annual performance appraisal.

Preparing for the Review

1. Review the performance documentation collected throughout the year. Concentrate on work patterns that have developed.

2. Be prepared to give specific examples of above- or below-average performance.

3. When performance falls short of expectations, determine what changes need to be made. If performance meets or exceeds expectations, discuss this and plan how to reinforce it.

4. After the appraisal is written, set it aside for a few days and then review it again.

5. Follow whatever steps are required by your organization’s performance appraisal system.

Conducting the Review

1. Select a location that is comfortable and free of distractions. The location should encourage a frank and candid conversation.

2. Discuss each topic in the appraisal one at a time, considering both strengths and shortcomings.

3. Be specific and descriptive, not general and judgmental. Report occurrences rather than evaluating them.

4. Discuss your differences and resolve them. Solicit agreement with the evaluation.

5. Jointly discuss and design plans for taking corrective action for growth and development.

6. Maintain a professional and supportive approach to the appraisal discussion.

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Strategic RelevanceStrategic Relevance

Individual standards directly relate to strategic goals.Individual standards directly relate to strategic goals.

Criterion DeficiencyCriterion Deficiency

Standards capture all of an individual’s contributions.Standards capture all of an individual’s contributions.

Criterion ContaminationCriterion Contamination

Performance capability is not reduced by external factors.Performance capability is not reduced by external factors.

Reliability(Consistency)Reliability(Consistency)

Standards are quantifiable, measurable, and stable.Standards are quantifiable, measurable, and stable.

Performance ratings must be job-related. Employees must be given a written copy of their job

standards in advance of appraisals. Managers who conduct the appraisal must be able to

observe the behavior they are rating. Supervisors must be trained to use the appraisal form

correctly. Appraisals should be discussed openly with employees

and counseling or corrective guidance offered. An appeals procedure should be established to enable

employees to express disagreement with the appraisal.

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Multiple uses of the program.

Lack of top-management support

Lack of job-relatedness standards

Rater bias Too many appraisal forms to

complete on each individual. Lack of support from the top

management.

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1. There is little face-to-face discussion between the manager and the employee being appraised.

2. The relationship between the employee’s job description and the criteria on the appraisal form isn’t clear.

3. Managers feel that little or no benefit will be derived from the time and energy spent in the process, or they are concerned only with bad performances.

4. Managers dislike the face-to-face confrontation of appraisal interviews.

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5. Managers are not sufficiently adept at rating employees or providing them with appraisal feedback.

6. The judgmental role of appraisal conflicts with the helping role of developing employees.

7. The appraisal is just a once-a-year event, and there is little follow-up afterward.

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Cost of establishing and maintaining a performance-appraisal program

Having a sound basis for improving performances

To recognize that the success of the entire HR program depends upon knowing how the performance of employee compares with the goals established for them

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Trait Trait MethodsMethods

Trait Trait MethodsMethods

Graphic Rating Scale

Graphic Rating Scale

Mixed Standard Scale

Mixed Standard Scale

Forced-ChoiceForced-Choice

EssayEssay

Graphic Rating-Scale Method

A trait approach to performance appraisal whereby each employee is rated according to a scale of individual characteristics.

Global Rating: single rating of overall performance.

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Graphic Rating Scale with

Provision for Comments

Mixed-Standard Scale Method

An approach to performance appraisal similar to other scale methods but based on comparison with (better than, equal to, or worse than) a standard.

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Example of a Mixed-Standard Scale

Forced-Choice Method Requires the rater to choose from

statements designed to distinguish between successful and unsuccessful performance.

1. ______ a) Works hard _____ b) Works quickly 2. ______ a) Shows initiative _____ b) Is responsive to

customers 3. ______ a) Produces poor quality _____ b) Lacks good work habits

Essay Method Requires the rater to compose a statement

describing employee behavior.

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Behavioral Methods

Behavioral Methods

Critical IncidentCritical Incident

Behavioral ChecklistBehavioral Checklist

Behaviorally Anchored Rating Scale (BARS)

Behaviorally Anchored Rating Scale (BARS)

Behavior Observation Scale (BOS)

Behavior Observation Scale (BOS)

Critical Incident Method Critical incident

An unusual event that denotes superior or inferior employee performance in some part of the job

The manager keeps a log or diary for each employee throughout the appraisal period and notes specific critical incidents related to how well they perform.

Behavioral Checklist Method The rater checks statements on a list that the

rater believes are characteristic of the employee’s performance or behavior.

Behaviorally Anchored Rating Scale (BARS) Consists of a series of vertical scales, one for

each dimension of job performance; typically developed by a committee that includes both subordinates and managers.

Behavior Observation Scale (BOS) A performance appraisal that measures the

frequency of observed behavior (critical incidents).

Preferred over BARS for maintaining objectivity, distinguishing good performers from poor performers, providing feedback, and identifying training needs.

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BARS Example

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BOS Example

Productivity Measures Appraisals based on quantitative measures (e.g.,

sales volume) that directly link what employees accomplish to results beneficial to the organization. Criterion contamination Focus on short-term results

Management by Objectives (MBO) A philosophy of management that rates

performance on the basis of employee achievement of goals set by mutual agreement of employee and manager.

© 2010 South-Western, a part of Cengage Learning. All rights reserved.

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Performance Appraisal under an MBO Program

1. Managers and employees must be willing to establish goals and objectives together.

2. Objectives should be quantifiable and measurable for the long and short terms.

3. Expected results must be under the employee’s control and free from criterion contamination.

4. Goals and objectives must be consistent for each employee level (top executive, manager, and employee).

5. Managers and employees must establish specific times when the goals are to be reviewed and evaluated.

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The appraisal focuses on four related categories Financial, customer, processes, and learning

Ensuring the method’s success: Translate strategy into a scorecard of clear

objectives. Attach measures to each objective. Cascade scorecards to the front line. Provide performance feedback based on measures. Empower employees to make performance

improvements. Reassess strategy.

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Personal Scorecard

Trait Methods Advantages

Are inexpensive to develop Use meaningful dimensions Are easy to use

Disadvantages Have high potential for rating errors Are not useful for employee counseling Are not useful for allocating rewards Are not useful for promotion decisions

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Behavioral Methods Advantages

Use specific performance dimensions Are acceptable to employees and superiors Are useful for providing feedback Are fair for reward and promotion decisions

Disadvantages Can be time-consuming to develop/use Can be costly to develop Have some potential for rating error

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Results Methods Advantages

Have less subjectivity bias Are acceptable to employees and superiors Link individual to organizational performance Encourage mutual goal setting Are good for reward and promotion decisions

Disadvantages Are time-consuming to develop/use May encourage short-term perspective May use contaminated criteria May use deficient criteria

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The choice of method should be based largely on the purpose of the appraisal.

The cost and benefit of the method should also be considered.

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Which Performance Appraisal Method to Use?

Having appraisals reviewed by a supervisor’s superior reduces the chance of superficial or biased appraisals. Reviews by the superiors generally are more objective and provide a broader perspective of employee performance by immediate supervisors.

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The reviewer who is typically required to make comments that will be meaningful to both the rater and the rate has a more difficult role than the rater. It involves communicating with the two individuals rather than one. In the process, the reviewer should become aware of the types of errors and biases that can enter the process.

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Recency errorsRecency errors

Leniency or strictness errorsLeniency or strictness errors

Error of central tendencyError of central tendency

Similar-to-me errorsSimilar-to-me errors

Contrast and halo errorsContrast and halo errors

Common rater-related errorsCommon rater-related errors

Error of Central Tendency A rating error in which all employees are rated

about average. Leniency or Strictness Error

A rating error in which the appraiser tends to give all employees either unusually high or unusually low ratings.

Recency Error A rating error in which appraisal is based

largely on an employee’s most recent behavior rather than on behavior throughout the appraisal period.

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Contrast Error A rating error in which an employee’s

evaluation is biased either upward or downward because of comparison with another employee just previously evaluated.

Similar-to-Me Error An error in which an appraiser inflates the

evaluation of an employee because of a mutual personal connection.

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Rating Error Training Observe other managers making errors Actively participate in discovering their own errors Practice job-related tasks to reduce the errors

they tend to make Feedback Skills Training

Communicating effectively Diagnosing the root causes of performance

problems Setting goals and objectives

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The success of a performance appraisal program is ultimately dependent upon the effective utilization of the information that results from the appraisal process.

Such information may be used as the basis for various types of HRM actions.

The information should also be communicated by a supervisor to an individual employee during a well-planned appraisal interview.

The appraisal interview gives a manager the op portunity to discuss a subordinate’s performance record and to explore areas of possible improvement and growth.

It also provides an opportunity to identify the subordinate’s attitudes and feelings more thoroughly and thus to improve communication.

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the interview may be divided in to two sessions one on the employee’s past performance and the other on future develop ment goals.

The format for the appraisal interview will be determined in large part by the purpose of the interview, the type of appraisal system used, and the organiza tion of the interview form.

Emphasize strength on which the interviewee can build rather than stress weaknesses to be overcome.

Avoid suggestions involving the changing of traits, but rather suggest more acceptable ways of performing.

Concentrate on opportunities for growth that exist with the framework of the individual’s present position.

Limit plans for growth to a few important items that can be accomplished within a reasonable period of time.

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Tell and Listen - nondirectiveTell and Listen - nondirective

Tell and Sell - persuasionTell and Sell - persuasion

Problem Solving - focusing the interview on problem resolution and employee development

Problem Solving - focusing the interview on problem resolution and employee development

Types of Appraisal InterviewsTypes of Appraisal Interviews

Tell-and-sell interview.

The skills required in the tell-and-sell interview include the ability to persuade an employee to change in a prescribed manner. This may require the development of new behaviors on the part of the employee and skillful use of motivational incentives on the part of the appraiser/supervisor.

Tell-and-listen interview.

communicate the strong and weak points of an employee's job performance during the first part of the interview.

the employee's feelings about the appraisal are thoroughly explored. The supervisor is still in the role of appraiser, but the method requires listening to disagreement and coping with defensive behavior without attempting to refute any statements.

assumes that the opportunity to release frustrated feelings will help to reduce or remove those feelings.

Problem-solving Interview: Consistent with the nondirective procedures

of the tell-and-listen method in that listening, accepting, and responding to feelings are essential

It seeks to stimulate growth and development in the employee by discussing the problems, needs, innovations, satisfactions, and dissatisfactions the employee has encountered on the job since the last appraisal interview

Listen More Than You Talk As the proportion of words spoken by the supervisor

increases, the effectiveness of the interview is correspondingly reduced.

Vary the Questions: Use a variety of types of questions, particularly those of

an open-ended nature. Follow-up Questions:

Recommended if the employee is nervous, seems critical, or provides only short answers.

Reflect Feelings: Lets the subordinate know that his or her feelings are

important and that the supervisor is listening carefully and with understanding.

Avoid the Sandwich Technique: Positive statements are followed by negative

ones, which are then followed by positive statements.

This approach may not work for the following reasons: Praise often alerts the employee that criticisms

will be forthcoming. Employee cab absorb only a certain amount of

criticisms before defensive tendencies begin to appear.

Employees cannot improve their performance unless they know exactly what is expected of them.

Supervisors have the responsibility to inform employees of their job standards at the start of the review period.

By doing this, employees can adjust their behavior to conform to performance criteria, and surprises can be avoided at the appraisal interview.

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The unique pattern of strengths and weaknesses of an individual

Work environment e.g. company policies and practices such as ineffective job placement, insufficient job training,

External environmentIndustry decline or extreme competition, union management conflict, home, community and personal problems

Identify the source of poor performance.

Develop a course of action to improve.

Motivate the employee to correct undesirable job behavior.

Factors That Influence Performance:

Performance Diagnosis

Possible Courses of Action Provide training to increase skills and abilities Transfer employee to another job or

department Attention of actions to motivate employee Take disciplinary action Discharge the employee

Cautions All actions taken must be objective and fair. Do not treat underperformer differently, setting

the employee up to fail.

“What’s important is not the (appraisal) form or (measuring) scale. What’s important is that managers can objectively observe people’s performance and give them objective feedback on that performance.”

- Bohlander, G., & Snell, H. (2012). Managing Human Resources

Bohlander, G. W., Sherman, A. W., & Chruden, H. (1988). Managing Human Resources. Cincinnati, Ohio, United States of America: Southwestern Publication Co.

Bohlander, G., & Snell, H. (2012). Managing Human Resources (16th ed.). Cincinnati, Ohio: South-Western Publishing Company.

Gomez-Mejia, L. R., Balkin, D. B., & Cardy, R. L. (2012). Managing Human Resources. New Jersey: Prentice Hall.

Sison, P. (1991). Personnel and Human Resources Management. Manila: Rex Bookstore.