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  • 1. Chapter 10 Establishing the Performance Management System Fundamentals of Human Resource Management Eighth Edition DeCenzo and Robbins
  • 2. 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
  • 3. 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.
  • 4. 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.
  • 5. 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.
  • 6. 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.
  • 7. The Appraisal Process
  • 8. The Appraisal Process
    • Establishment of performance standards
      • Derived from company’s strategic goals.
      • Based on job analysis and job description.
    • Communication of performance standards to employee.
  • 9. The Appraisal Process
    • Measurement of performance using information from:
      • personal observation
      • statistical reports
      • oral reports
      • written reports
    • Comparison of actual performance with standards.
  • 10. 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.
  • 11. Appraisal Methods
    • Three approaches:
    • Absolute standards
    • Relative standards
    • Objectives
  • 12. Appraisal Methods
    • Evaluating absolute standards :
    • An employee’s performance is measured against established standards.
    • Evaluation is independent of any other employee.
  • 13. 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.
  • 14. 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.
  • 15. Appraisal Methods
    • Evaluating absolute standards :
      • Forced-Choice Appraisal: Appraisers choose from sets of statements which appear to be equally favorable, the statement which best describes the employee.
  • 16. Appraisal Methods
    • Evaluating absolute standards :
    • Behaviorally Anchored Rating Scales (BARS): Appraiser rates employee on factors which are defined by behavioral descriptions illustrating various dimensions along each rating scale.
  • 17. Appraisal Methods
    • Relative standards:
    • Employees are evaluated by comparing their performance to the performance of other employees.
  • 18. Appraisal Methods
    • Relative standards:
    • Group Order Ranking : Employees are placed in a classification reflecting their relative performance, such as “top one-fifth.”
  • 19. 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.
  • 20. Appraisal Methods
    • Using Achieved Outcomes to Evaluate Employees
      • Management by Objectives (MBO)
      • includes mutual objective setting and evaluation based on the attainment of the specific objectives
  • 21. Appraisal Methods
    • Using Achieved Outcomes to Evaluate Employees
      • Common elements in an MBO program are:
        • goal specificity
        • participative decision making
        • an explicit time period
        • performance feedback
      • Effectively increases employee performance and organizational productivity.
  • 22. Factors that can Distort Appraisals
  • 23. Factors that can Distort Appraisals
    • Leniency error
      • Each evaluator has his/her own value system.
      • Some evaluate high (positive leniency) and others, low (negative leniency).
    • Halo error : Evaluator lets an assessment of an individual on one trait influence evaluation on all traits.
  • 24. Factors that can Distort Appraisals
    • Similarity error : Evaluator rates others in the same way that the evaluator perceives him or herself.
    • Low appraiser motivation : Evaluators may be reluctant to be accurate if important rewards for the employee depend on the results.
  • 25. Factors that can Distort Appraisals
    • Central tendency : The reluctance to use the extremes of a rating scale and to adequately distinguish among employees being rated.
    • Inflationary pressures : Pressures for equality and fear of retribution for low ratings leads to less differentiation among rated employees.
    • Inappropriate substitutes for performance : Effort, enthusiasm, appearance, etc. are less relevant for some jobs than others.
  • 26. Factors that can Distort Appraisals
    • Attribution Theory
    • Evaluations are affected based on whether someone’s performance is due to
      • internal factors they can control
      • external factors which they cannot
    • If poor performance is attributed to internal control, the judgment is harsher than when it is attributed to external control.
  • 27. Factors that can Distort Appraisals
    • Impression management:
    • If employee positively influences the relationship with the supervisor, he/she is likely to receive a higher rating.
  • 28. Creating More Effective Performance Management Systems
    • Use Behavior-Based Measures:
    • Measures based on specific descriptions of behavior are more job-related and elicit more inter-rater agreement than traits, such as “loyalty” or “friendliness”.
  • 29. Creating More Effective Performance Management Systems
    • Combine Absolute and Relative Standards:
    • Absolute standards tend to be positively lenient; relative standards suffer when there is little variability.
    • Combining the standards tends to offset the weaknesses of each.
  • 30. Creating More Effective Performance Management Systems
    • Provide Ongoing Feedback:
    • Expectations and disappointments should be shared with employees on a frequent basis.
  • 31. 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.
  • 32. 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.
  • 33. Creating More Effective Performance Management Systems
    • Train Appraisers:
    • Untrained appraisers who do poor appraisals can demoralize employees and increase legal liabilities.
  • 34. Creating More Effective Performance Management Systems
  • 35. 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.
  • 36. 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 expatriate’s insights as part of the evaluation.