Performance

9 Management and
Appraisal
Human Resource
Management

4-
9

Gary Dessler

9-1
Copyright © 2015 Pearson Education Ltd.
WHERE WE ARE NOW…

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LEARNING OUTCOMES
1. Define performance management and discuss how it
differs from performance appraisal.
2. Set effective performance appraisal standards.
3. Describe the appraisal process.
4. Develop, and evaluate different performance appraisal
tools.
5. Explain and illustrate the problems to avoid in
appraising performance.
6. Discuss the pros and cons of using different raters to
appraise a person’s performance.
7. Understand how to perform an effective appraisal
interview.

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WHAT REALLY HAPPENS IN
APPRAISALS

9–4
To appraise - what does this mean?

Appraise: to estimate the value of, to set a price for, or to

judge the quality, importance or worth

Macmillan Dictionary, 1989

5
Can we afford not to Appraise?

Appraise Review

to estimate the to study, to

value of, to set a go over or
price for, or to
judge the quality,
to examine
importance or again, to
worth look back
on

6
 The Performance Model

Performance Monitoring
Planning Performance
Are we on
track?
NO
YES

Analyze
Maintain Improve Performance
Performance Performance Gaps

Performance Management Model

Source: Managing Human Resources, 4th edition, Randall S. Schuler, New York University, Chapter 8, p.
258
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Organization’s business needs
vs. the Employee’s needs

Business needs Individual needs

• Strategic business plan • Career planning

• Annual business plan • Expected performance
• Functional • Agreed IKO’s
business/action plans • Responsibility
• Review of the result • Evaluation of performance
• Growth: • Development, develop skills,
Market, profits, etc extended responsibilities
9
The system in a nutshell (actual case example)

• The performance management system is developed as a

process in order to evaluate, develop our staff and make
sure that we stay in the lead of the market
To plan

• The Process has 3 phases

To evaluate
To coach

• The information from the system is used for the

professional development of the workforce as well as for
succession planning
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Performance Appraisal Vs. Performance
Management
PAST RECENT

Appraisal Plan, Coach and Review

Manager Driven Employee Initiated and
Backward looking Managed

Once per year Forward Looking

Tasks (Job Description) 1-2 Times, ongoing process

Minimal Personal Results linked to

Development Organization’s objectives
Development and
competencies driven. 11
Performance Appraisal Vs. Performance Management

Performance Management System

Salary Increases
Proper Objectives Breakdown
Promotions

Performance Appraisal Training Requirements and

Calendar

Training Needs Assessment Succession Planning

Performance Appraisal is Career Development Plans

considered a tool inside the
Performance Management
System.

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 Defining the Employee’s Goals
and Work Standards

Guidelines for Effective

Goal Setting

Set Assign Assign Assign

Encourage
SMART specific measurable challenging/
participation
goals goals goals doable goals

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Why some managers conduct (Un)Realistic
(lenient) Appraisals
• Motivations for Soft Appraisals
 The fear of having to hire and train someone new.
 The unpleasant reaction of the appraisee.
 An appraisal process that’s not conducive to candor.

• Hazards of Soft Appraisals

 Employee loses the chance to improve before being discharged
or forced to change jobs.
 Lawsuits arising from dismissals involving inaccurate
performance appraisals.

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THE DIFFERENT ROLES

9–18
Designing the Appraisal Tool – What to
measure and How to measure?
• What to Measure?
 Work output (quality and quantity)
 Personal competencies
 Goal (objective) achievement

• How to Measure?
 Generic dimensions
 Actual job duties
 Behavioral competencies

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Sample Graphic
Rating Performance
Rating Form

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One Item from an Appraisal Form Assessing Employee
Performance on Specific Job-Related Duties

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Appraisal Form for Assessing Both Competencies and Specific Objectives

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Appraisal Form for Assessing Both Competencies and Specific Objectives (cont’d)

9–28
Scale for Alternate Ranking of Appraisee

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 Examples of Critical Incidents for Assistant Plant Manager

Continuing Duties Targets Critical Incidents

Schedule production 90% utilization of
for plant personnel and machinery
in plant; orders delivered
on time
Instituted new production
scheduling system; decreased
late orders by 10% last month;
increased machine utilization in
plant by 20% last month

Supervise procurement Minimize inventory costs Let inventory storage costs rise
of raw materials and while keeping adequate 15% last month; over-ordered
on inventory control supplies on hand parts “A” and “B” by 20%; under-
ordered part “C” by 30%

Supervise machinery No shutdowns due Instituted new preventative

maintenance to faulty machinery maintenance system for plant;
prevented a machine breakdown
by discovering faulty part

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Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship Skills

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 Problems with MBO

Potential Problems with MBO

Conflict with
Setting unclear Time-consuming
subordinates over
objective appraisal process
objectives

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APPRAISAL PITFALLS

9–39
 Dealing with Performance
Appraisal Problems

Potential Rating Scale

Appraisal Problems

Unclear Halo Central Leniency or

Bias
standards effect tendency strictness

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How to Choose the Right Appraisal Tool

Criteria for Choosing an

Appraisal Tool

Employee
Accessibility Ease-of-use Accuracy
acceptance

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 Selected Best Practices for Administering Fair Performance Appraisals

• Base the performance review on duties and standards from a job analysis.
• Try to base the performance review on observable job behaviors or objective
performance data.
• Make it clear ahead of time what your performance expectations are.
• Use a standardized performance review procedure for all employees.
• Make sure whoever conducts the reviews has frequent opportunities to observe
the employee’s job performance.
• Either use multiple raters or have the rater’s supervisor evaluate the appraisal
results.
• Include an appeal mechanism.
• Document the appraisal review process and results.
• Discuss the appraisal results with the employee.
• Let the employees know ahead of time how you’re going to conduct the review and
use the results.
• Let the employee provide input regarding your assessment of him or her.
• Indicate what the employee needs to do to improve.
• Thoroughly train the supervisors who will be doing the appraisals.

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 Guidelines for a Legally Defensible Appraisal

1. Preferably, conduct a job analysis to establish performance criteria and standards.

2. Communicate performance standards to employees and to those rating them, in writing.
3. When using graphic rating scales, avoid undefined abstract trait names (such as “loyalty” or
“honesty”).
4. Use subjective narratives as only one component of the appraisal.
5. Train supervisors to use the rating instrument properly.
6. Allow appraisers substantial daily contact with the employees they’re evaluating.
7. Using a single overall rating of performance is usually not acceptable to the courts.
8. When possible, have more than one appraiser, and conduct all such appraisals
independently.
9. One appraiser should never have absolute authority to determine a personnel action.
10. Give employees the opportunity to review and make comments, and have a formal appeals
process.
11. Document everything: Without exception, courts condemn informal performance evaluation
practices that eschew documentation.
12. Where appropriate, provide corrective guidance to assist poor performers in improving.

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 Who Should Do the Appraising?

Immediate
Self-rating
supervisor

Potential
Peers Subordinates
Appraisers

Rating 360-degree
committee feedback

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 Appraisal Interview Guidelines

Guidelines for Conducting

an Interview

Talk in terms of
Don’t get Encourage the Get
objective work
personal person to talk agreement
data

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 Handling Defensive Responses

How to Handle a Defensive Subordinate

1 Recognize that defensive behavior is normal.

2 Never attack a person’s defenses.

3 Postpone action.

4 Recognize your own limitations.

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 How to Deliver Criticism

How to Criticize a Subordinate

1
Do it in a manner that lets the person maintain
his or her dignity and sense of worth.

2 Criticize in private, and do it constructively.

Give daily feedback so that the review has no
3
surprises.
4 Never say the person is “always” wrong.

5 Criticism should be objective and free of biases.

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Using Information Technology to
Support Performance Management
• Assign financial and nonfinancial goals to each team’s
activities along the strategy map chain of activities
leading up to the company’s overall strategic goals.
• Inform all employees of their goals.
• Use IT-supported tools like scorecard software and
digital dashboards to continuously monitor and assess
each team’s and employee’s performance.
• Take corrective action at once.

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Performance Management Report

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 9

FINAL PROJECT

9–60
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stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission of the publisher.
Printed in the United States of America.

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