Fundamentals of Human

Resource Management
Eighth Edition

DeCenzo and Robbins

Chapter 10
Establishing the Performance Management System

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Introduction
Employees generally see performance
evaluations as having a direct effect on
their work lives.
The performance management
systems need to include:
decisions about who should evaluate
performance
what format should be used
how the results should be utilized
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Performance Management
Systems
Purposes of a Performance
Management System
Feedback - let employees know how well
they have done and allow for employee
input.
Development identify areas in which
employees have deficiencies or
weaknesses.
Documentation - to meet legal
requirements.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Performance Management
Systems
Difficulties in Performance
Management Systems
Focus on the individual: Discussions of
performance may elicit strong emotions
and may generate conflicts when
subordinates and supervisors do not
agree.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Performance Management
Systems
Difficulties in Performance
Management Systems
Focus on the process: Company policies
and procedures may present barriers to a
properly functioning appraisal process.
Additionally, appraisers may be poorly
trained.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Performance Management and

EEO
HRM practices must be bias free,
objective and job-related.
Valid performance appraisals are
conducted at established intervals and
are done by trained appraisers.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

The Appraisal Process

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

The Appraisal Process

Establishment of performance
standards
Derived from companys strategic goals.
Based on job analysis and job description.

Communication of performance
standards to employee.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

The Appraisal Process

Measurement of performance using
information from:
personal observation
statistical reports
oral reports
written reports

Comparison of actual performance with

standards.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

The Appraisal Process

Discussion of appraisal with employee.
Identification of corrective action where
necessary.
Immediate action deals with symptoms.
Basic corrective action deals with causes.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Three approaches:
Absolute standards
Relative standards
Objectives

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Evaluating absolute standards:
An employees performance is
measured against established
standards.
Evaluation is independent of any other
employee.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Evaluating absolute standards:
Essay Appraisal: Appraiser writes
narrative describing employee
performance & suggestions.
Critical Incident Appraisal: Based on key
behavior anecdotes illustrating effective or
ineffective job performance.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Evaluating absolute standards:
Checklist Appraisal: Appraiser checks off
behaviors that apply to the employee.
Adjective Rating Scale Appraisal:
Appraiser rates employee on a number of
job-related factors.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Relative standards:
Employees are evaluated by comparing
their performance to the performance of
other employees.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Relative standards:
Group Order Ranking: Employees are
placed in a classification reflecting their
relative performance, such as top onefifth.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Relative standards:
Individual Ranking: Employees
are ranked from highest to
lowest.
Paired Comparison:
Each individual is compared to
every other.
Final ranking is based on number
of times the individual is preferred
member in a pair.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Factors that can Distort

Appraisals

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance

Management Systems
Provide Ongoing Feedback:
Expectations and disappointments
should be shared with employees on a
frequent basis.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance

Management Systems
Use Multiple Raters:
Increasing the number of raters leads to more
reliable and valid ratings.
Use peer evaluations: Coworkers offer
constructive insights and more specific
evaluations.
Upward appraisals allow employees to give their
managers feedback.
360-Degree appraisals: Supervisors, peers,
employees, team members, customers and others
with relevant information evaluate the employee.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance

Management Systems
Rate Selectively
Appraisers only evaluate in those areas
about which they have sufficient
knowledge.
Appraisers should be organizationally as
close as possible to the individual being
evaluated.
More effective raters are asked to do the
appraisals.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance

Management Systems
Train Appraisers:
Untrained appraisers who do poor
appraisals can demoralize employees
and increase legal liabilities.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance

Management Systems

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

International Performance
Appraisal
Who performs the evaluation?
Different cultural perspectives and
expectations between the parent and local
country may make evaluation difficult.
Evaluation forms may not be translated
accurately.
Quantitative measures may be misleading.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

International Performance
Appraisal
Evaluation Formats
May make sense to use different forms for
parent-country nationals and host-country
nationals.
Performance criteria for a particular
position should be modified to fit the
overseas position and site.
Include a current expatriates insights as
part of the evaluation.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins