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Performance Appraisal
Performance Appraisals <ul><li>Improve job performance </li></ul><ul><ul><ul><li>By directing employee behavior toward org...
Standards for Effective Performance Appraisal Systems <ul><li>The quality of the rating form </li></ul><ul><li>Accuracy of...
Quality of Rating Form <ul><li>Relevance </li></ul><ul><ul><ul><li>The degree to which the rating form includes necessary ...
Accuracy of the Ratings <ul><li>Leniency and severity errors </li></ul><ul><ul><li>Leniency error </li></ul></ul><ul><ul><...
Accuracy of Ratings (cont.) <ul><li>Central tendency error </li></ul><ul><ul><li>Occurs when appraisers purposely avoid gi...
Accuracy of Ratings (cont.) <ul><li>Halo effect </li></ul><ul><ul><li>Occurs when an appraiser’s overall impression of an ...
Accuracy of Ratings (cont.) <ul><li>Implicit personality theory </li></ul><ul><ul><li>When the rater’s estimation is based...
Legal Standards <ul><li>Appraisal systems must meet all the criteria imposed by EEO laws. </li></ul><ul><li>Specifically a...
Types of Rating Instruments <ul><li>Employee comparison systems </li></ul><ul><li>Management-by-objectives (MBO) </li></ul>
Employee Comparison Systems <ul><ul><li>Employee performance is evaluated relative to other employees’ performances. </li>...
Management-by-Objectives (MBO) <ul><li>A management system designed to achieve organizational effectiveness by steering ea...
MBO – Goal Setting  <ul><ul><li>Goal setting: Starts at the top of the organization with the establishment of the organiza...
MBO – Planning and Evaluation  <ul><ul><li>Planning: Employees and supervisors work together to identify potential obstacl...
Designing an Appraisal System <ul><li>Step 1: Gaining support for the system </li></ul><ul><ul><li>To gain the support of ...
Step 2: Choosing Appropriate Rating Instrument <ul><ul><li>Practicality </li></ul></ul><ul><ul><li>Cost </li></ul></ul><ul...
Step 3: Choose Raters <ul><ul><li>Supervisory ratings </li></ul></ul><ul><ul><ul><li>Appraisals are typically responsibili...
Step 3: Choose Raters (cont.) <ul><ul><li>Self-ratings </li></ul></ul><ul><ul><ul><li>May not be effective as an evaluativ...
Step 4: Determining Timing <ul><ul><li>Mostly conducted annually </li></ul></ul><ul><ul><li>Difficulty remembering events ...
Step 5: Ensuring Fairness <ul><ul><li>Upper-level management review </li></ul></ul><ul><ul><ul><li>May serve to keep appra...
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Chapter 8 - Performance Appraisal

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Transcript of "Chapter 8 - Performance Appraisal"

  1. 1. Performance Appraisal
  2. 2. Performance Appraisals <ul><li>Improve job performance </li></ul><ul><ul><ul><li>By directing employee behavior toward organizational goals </li></ul></ul></ul><ul><ul><ul><li>By monitoring that behavior to ensure that goals are met </li></ul></ul></ul><ul><li>Make the correct employment decisions </li></ul><ul><li>Ensure legal compliance </li></ul><ul><li>Minimize job dissatisfaction and turnover </li></ul>
  3. 3. Standards for Effective Performance Appraisal Systems <ul><li>The quality of the rating form </li></ul><ul><li>Accuracy of the ratings </li></ul><ul><li>Legal standards </li></ul>
  4. 4. Quality of Rating Form <ul><li>Relevance </li></ul><ul><ul><ul><li>The degree to which the rating form includes necessary information </li></ul></ul></ul><ul><ul><ul><li>To be relevant, the form must: </li></ul></ul></ul><ul><ul><ul><ul><li>Include all the pertinent criteria for evaluating performance </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Exclude criteria that are irrelevant to job performance </li></ul></ul></ul></ul><ul><ul><ul><li>Criterion deficiency: Omission of pertinent performance criteria </li></ul></ul></ul><ul><ul><ul><li>Criterion contamination: Occurs when irrelevant criteria are included on the rating form </li></ul></ul></ul>
  5. 5. Accuracy of the Ratings <ul><li>Leniency and severity errors </li></ul><ul><ul><li>Leniency error </li></ul></ul><ul><ul><ul><li>Occurs when raters provide ratings that are unduly high </li></ul></ul></ul><ul><ul><li>Severity error </li></ul></ul><ul><ul><ul><li>Occurs when ratings are unduly low </li></ul></ul></ul><ul><ul><li>Causes of leniency and severity errors: </li></ul></ul><ul><ul><ul><li>Political reasons </li></ul></ul></ul><ul><ul><ul><li>Raters’ lack of conscientiousness </li></ul></ul></ul><ul><ul><ul><li>Personal bias </li></ul></ul></ul>
  6. 6. Accuracy of Ratings (cont.) <ul><li>Central tendency error </li></ul><ul><ul><li>Occurs when appraisers purposely avoid giving extreme ratings even when such ratings are warranted </li></ul></ul><ul><ul><li>Causes of central tendency error: </li></ul></ul><ul><ul><ul><li>Result of administrative procedures </li></ul></ul></ul><ul><ul><ul><li>When the end points of the rating scale are unrealistically defined </li></ul></ul></ul>
  7. 7. Accuracy of Ratings (cont.) <ul><li>Halo effect </li></ul><ul><ul><li>Occurs when an appraiser’s overall impression of an employee is based on a particular characteristic </li></ul></ul><ul><ul><li>Causes of the halo effect: </li></ul></ul><ul><ul><ul><li>Vague rating standards </li></ul></ul></ul><ul><ul><ul><li>Failure to conscientiously complete the rating form </li></ul></ul></ul>
  8. 8. Accuracy of Ratings (cont.) <ul><li>Implicit personality theory </li></ul><ul><ul><li>When the rater’s estimation is based on a personal “theory” of how different types of people behave in certain situations </li></ul></ul><ul><ul><li>Rater cannot observe all aspects of a worker’s performance. </li></ul></ul><ul><ul><li>Rater classifies employee by “type of person.” </li></ul></ul><ul><ul><li>Using this theory, organizations are unable to identify employees’ specific strengths and weaknesses. </li></ul></ul>
  9. 9. Legal Standards <ul><li>Appraisal systems must meet all the criteria imposed by EEO laws. </li></ul><ul><li>Specifically a court would examine: </li></ul><ul><ul><ul><li>The nature of the appraisal instrument </li></ul></ul></ul><ul><ul><ul><li>The fairness and accuracy of the ratings </li></ul></ul></ul>
  10. 10. Types of Rating Instruments <ul><li>Employee comparison systems </li></ul><ul><li>Management-by-objectives (MBO) </li></ul>
  11. 11. Employee Comparison Systems <ul><ul><li>Employee performance is evaluated relative to other employees’ performances. </li></ul></ul><ul><ul><li>Ranking formats: </li></ul></ul><ul><ul><ul><li>Simple rankings </li></ul></ul></ul><ul><ul><ul><ul><li>Require raters to rank-order their employees from best to worst, according to their job performance </li></ul></ul></ul></ul><ul><ul><ul><li>Paired comparison </li></ul></ul></ul><ul><ul><ul><ul><li>A rater compares each possible pair of employees. </li></ul></ul></ul></ul><ul><ul><ul><li>Forced distribution </li></ul></ul></ul><ul><ul><ul><ul><li>Requires a rater to assign a certain percentage of employees to each category of excellence, such as “best,” “average,” or “worst.” </li></ul></ul></ul></ul>
  12. 12. Management-by-Objectives (MBO) <ul><li>A management system designed to achieve organizational effectiveness by steering each employee’s behavior toward organization’s mission. </li></ul><ul><ul><li>MBO process includes: </li></ul></ul><ul><ul><ul><li>Goal setting </li></ul></ul></ul><ul><ul><ul><li>Planning </li></ul></ul></ul><ul><ul><ul><li>Evaluation </li></ul></ul></ul>
  13. 13. MBO – Goal Setting <ul><ul><li>Goal setting: Starts at the top of the organization with the establishment of the organization’s mission statement and strategic goals </li></ul></ul><ul><ul><ul><li>It then cascades down through the organizational hierarchy to the level of the individual employee. </li></ul></ul></ul>
  14. 14. MBO – Planning and Evaluation <ul><ul><li>Planning: Employees and supervisors work together to identify potential obstacles to reaching goals and devise strategies to overcome these obstacles. </li></ul></ul><ul><ul><li>Evaluation: In the final phase, the employee’s success at meeting goals is evaluated against the agreed-on performance standards. </li></ul></ul>
  15. 15. Designing an Appraisal System <ul><li>Step 1: Gaining support for the system </li></ul><ul><ul><li>To gain the support of managers: </li></ul></ul><ul><ul><ul><li>Get managers’ input in developing the system </li></ul></ul></ul><ul><ul><ul><li>Train managers </li></ul></ul></ul><ul><ul><ul><li>Hold managers accountable for providing accurate ratings on a timely basis </li></ul></ul></ul><ul><ul><li>To gain the support of employees: </li></ul></ul><ul><ul><ul><li>Encourage users (both managers and workers) to participate in the planning and development of the system to enhance support for it. </li></ul></ul></ul>
  16. 16. Step 2: Choosing Appropriate Rating Instrument <ul><ul><li>Practicality </li></ul></ul><ul><ul><li>Cost </li></ul></ul><ul><ul><ul><li>Development costs </li></ul></ul></ul><ul><ul><ul><ul><li>Constructing an appraisal system </li></ul></ul></ul></ul><ul><ul><ul><li>Implementation costs </li></ul></ul></ul><ul><ul><ul><ul><li>Training appraisers </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Developing written guidelines </li></ul></ul></ul></ul><ul><ul><ul><li>Utilization costs </li></ul></ul></ul><ul><ul><ul><ul><li>Appraiser’s time observing, rating, and giving performance feedback </li></ul></ul></ul></ul><ul><ul><li>Nature of job </li></ul></ul>
  17. 17. Step 3: Choose Raters <ul><ul><li>Supervisory ratings </li></ul></ul><ul><ul><ul><li>Appraisals are typically responsibility of the immediate supervisor. </li></ul></ul></ul><ul><ul><li>Peer ratings </li></ul></ul><ul><ul><ul><li>Supplement supervisory ratings </li></ul></ul></ul><ul><ul><ul><ul><li>May also help eliminate biases </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Competitive nature of the organization’s reward system and friendships are potential problems if used in lieu of supervisory ratings. </li></ul></ul></ul></ul>
  18. 18. Step 3: Choose Raters (cont.) <ul><ul><li>Self-ratings </li></ul></ul><ul><ul><ul><li>May not be effective as an evaluative tool </li></ul></ul></ul><ul><ul><ul><li>May be used for employee development </li></ul></ul></ul><ul><ul><li>Using multiple raters: 360-degree </li></ul></ul><ul><ul><ul><li>Evaluating managers’ performance using several raters </li></ul></ul></ul><ul><ul><ul><li>Ratings are made by a “circle” of people who frequently interact with the manager </li></ul></ul></ul><ul><ul><ul><li>Primarily used as feedback devices </li></ul></ul></ul>
  19. 19. Step 4: Determining Timing <ul><ul><li>Mostly conducted annually </li></ul></ul><ul><ul><li>Difficulty remembering events </li></ul></ul><ul><ul><ul><li>Appraisers should maintain records of employee performance to minimize this problem. </li></ul></ul></ul><ul><ul><ul><li>Record keeping also serves as documentation for EEO suits. </li></ul></ul></ul><ul><ul><li>Companies avoid more frequent appraisals because they are considered too time-consuming. </li></ul></ul>
  20. 20. Step 5: Ensuring Fairness <ul><ul><li>Upper-level management review </li></ul></ul><ul><ul><ul><li>May serve to keep appraisers “honest” </li></ul></ul></ul><ul><ul><li>Appeals system </li></ul></ul><ul><ul><ul><li>Means for employees to obtain a fair hearing if dissatisfied with their appraisals </li></ul></ul></ul><ul><ul><ul><li>Considered beneficial because it: </li></ul></ul></ul><ul><ul><ul><ul><li>Allows employees to voice their concerns </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Fosters more accurate ratings </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Prevents the involvement of outside third parties </li></ul></ul></ul></ul>
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