Chapter 8

Performance Appraisals

Performance Management
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

Uses of Performance Appraisal

Performance improvement Identify deficiencies in staffing process

Compensation adjustments
Placement decisions Training & Development needs Career planning & development

Detect informational inaccuracies

Diagnose job design errors Avoidance of discrimination

External challenges

Key Elements
Performance Appraisal Interview

Human Performance

Performance Measures & Criteria

Employee Records & HR Decisions

Employee Feedback

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

Performance Measures
Direct Rater actually sees the employees performance Rater must evaluate substitutes for performance (constructs) Verifiable by others Usually quantitative Not verifiable by others Usually raters personal opinions

Indirect

Objective

Subjective

Problems with Subjective Measures

Halo effect
Error of central tendency

Recency effect

Rater Biases

Personal prejudice

Leniency & strictness bias

Characteristics for Effectiveness

Validity
Reliability Effective Performance Appraisal System Input into system development Acceptable standards Acceptable goals Control of standards
more

Characteristics for Effectiveness

Frequency of feedback
Rater training Effective Performance Appraisal System Ratee training Input into interview process Appraisal consequences Different sources (raters)

Past-Oriented: Noncomparative
Rating scale Critical incident Behaviourally anchored Tests & observations
Oldest and most widely used method Subjective i.e. based on the raters opinion Responses may be given numerical values Rater records performance statements Describes very effective/ineffective behaviour Behaviours are placed along a scale Looks at specific job-related factors Appraisal based on a test Test may be pen & pencil or demonstration

Past-Oriented: Comparative
Ranking Forced distributions
Employees ranked from best to worst

Categories are developed Employees assigned to categories

Future-Oriented Methods
SelfAppraisals
Useful to further self-development Can be used with any evaluation approach

Management- Employee & supervisor jointly establish goals by-objectives Employee is later evaluated on the objectives

Assessment centre

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

Recent Developments
360-degree appraisal
In line with the trend toward flatter organizations Combination of perspectives e.g. peer, self, supervisor, client

Balanced scorecard
Integrates organizational performance measures such as financial, customer satisfaction, internal processes, learning

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

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

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