Performance Management Systems Chapter 11
Chapter Overview <ul><li>Understanding Performance </li></ul><ul><li>Performance Appraisal: Definition and Uses </li></ul>...
Performance Management Systems <ul><li>Performance management systems that are directly tied to an organization’s reward s...
Understanding Performance <ul><li>Degree of accomplishment of the tasks that make up an employee’s job </li></ul><ul><ul><...
Determinants of Performance <ul><li>Job performance is net effect of an employee’s effort as modified by abilities and rol...
Determinants of Performance <ul><li>To attain an acceptable level of performance, a minimum level of proficiency must exis...
Determinants of Performance <ul><li>An employee who puts forth a high degree of effort and understands the job but lacks a...
Environmental Factors as Performance Obstacles <ul><li>Other factors beyond the control of the employee can also stifle pe...
Environmental Factors as Performance Obstacles <ul><li>Environmental factors should be viewed not as direct determinants o...
Responsibilities of the Human Resource Department in Performance Management <ul><li>Responsibilities of the human resource...
Performance Appraisal:  Definition And Uses <ul><li>Process of evaluating and communicating to an employee how he or she i...
Performance Appraisal:  Definition And Uses <ul><li>Performance appraisal information can </li></ul><ul><ul><li>Provide ne...
Performance Appraisal:  Definition And Uses <ul><li>Feedback clarifies for employees manager’s job expectations </li></ul>...
Performance Appraisal Methods <ul><li>Whatever method of performance appraisal an organization uses, it must be job relate...
Management by Objectives (MBO) <ul><li>More commonly used with professional and managerial employees </li></ul><ul><li>Con...
Management by Objectives (MBO) <ul><li>For this system to be successful, several requirements must be met </li></ul><ul><u...
Examples of How to Improve Work Objects 11-
Typical Areas of Supervisory Objectives 11-
Multi-Rater Assessment (or 360-Degree Feedback) <ul><li>Managers, peers, customers, suppliers, or colleagues are asked to ...
Graphic Rating Scale <ul><li>Requires rater to indicate on a scale where the employee rates on factors such as </li></ul><...
Sample Items on a Graphic Rating Scale 11-
Behaviorally Anchored  Rating Scale (BARS) <ul><li>Determines an employee’s level of performance based on whether or not c...
Behaviorally Anchored  Rating Scale (BARS) <ul><li>Rating performance using a BARS requires </li></ul><ul><ul><li>Rater to...
Behaviorally Anchored  Rating Scale (BARS) <ul><li>Advantages </li></ul><ul><ul><li>BARSs are developed through active par...
Example of a Behaviorally  Anchored Rating Scale 11-
Critical-Incident Appraisal <ul><li>Rater keeps a written record of incidents that illustrate both positive and negative e...
Essay Appraisal <ul><li>Rater prepares a written statement describing an individual’s strengths, weaknesses, and past perf...
Checklist <ul><li>Rater answers with a yes-or-no a series of questions about the behavior of the employee </li></ul><ul><l...
Sample Checklist Questions 11-
Forced-Choice Rating <ul><li>Requires rater to rank a set of statements describing how an employee carries out the duties ...
Sample Set of Forced-Choice Statements 11-
Ranking Methods <ul><li>Performance of an employee is ranked relative to the performance of others </li></ul><ul><li>Three...
Alternation Ranking <ul><li>Lists names of employees to be rated on the left side of a sheet of paper </li></ul><ul><li>Ra...
Paired Comparison Ranking <ul><li>Best illustrated with an example </li></ul><ul><ul><li>Suppose a rater is to evaluate si...
Paired Comparison Ranking <ul><li>Process is repeated until each employee has been compared to every other employee on all...
Force Distribution <ul><li>Requires rater to compare performance of employees and place a certain percentage of employees ...
Forced-Distribution Curve 11-
Work Standards <ul><li>Involves setting a standard or an expected level of output and then comparing each employee’s level...
Frequently Used Methods for  Setting Work Standards 11-
Potential Errors In Performance Appraisals <ul><li>Leniency </li></ul><ul><ul><li>Occurs when a manager’s ratings are grou...
Potential Errors In Performance Appraisals <ul><li>Halo effect </li></ul><ul><ul><li>Occurs when a rater allows a single p...
Overcoming Errors In Performance Appraisals <ul><li>One approach to overcoming errors is to make refinements in the design...
Overcoming Errors In Performance Appraisals <ul><li>Another approach to overcoming errors is to improve the skills of rate...
Providing Feedback Through the Appraisal Interview <ul><li>Unless feedback interview is properly conducted, it can and doe...
Providing Feedback Through the Appraisal Interview <ul><li>In addition, the manager should remember several basic guidelin...
Factors Influencing Success or Failure of Appraisal Interviews <ul><li>More the employees are allowed to participate in th...
Factors Influencing Success or Failure of Appraisal Interviews <ul><li>Discussing and solving problems hampering employee’...
Developing Performance Improvement Plans <ul><li>Step of including a performance improvement plan in a completed performan...
Developing Performance Improvement Plans <ul><li>Performance improvement plan consists of the following components: </li><...
Performance Appraisal and the Law <ul><li>Title VII of the Civil Rights Act permits use of a bona fide performance apprais...
Performance Appraisal and the Law <ul><li>Some suggestions that have been offered for making performance appraisal systems...
Summary of Learning Objectives <ul><li>Define performance </li></ul><ul><li>Define performance appraisal </li></ul><ul><li...
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  1. 2. Performance Management Systems Chapter 11
  2. 3. Chapter Overview <ul><li>Understanding Performance </li></ul><ul><li>Performance Appraisal: Definition and Uses </li></ul><ul><li>Performance Appraisal Methods </li></ul><ul><li>Potential Errors in Performance Appraisals </li></ul><ul><li>Overcoming Errors in Performance Appraisals </li></ul><ul><li>Providing Feedback through the Appraisal Interview </li></ul><ul><li>Developing Performance Improvement Plans </li></ul><ul><li>Performance Appraisal and the Law </li></ul><ul><li>Summary of Learning Objectives </li></ul>11-
  3. 4. Performance Management Systems <ul><li>Performance management systems that are directly tied to an organization’s reward system </li></ul><ul><ul><li>Provide a powerful incentive for employees to work diligently and creatively toward achieving organizational objectives </li></ul></ul><ul><li>When properly designed and implemented, performance management systems let employees </li></ul><ul><ul><li>Know how well they are presently performing </li></ul></ul><ul><ul><li>Clarify what needs to be done to improve performance </li></ul></ul>11-
  4. 5. Understanding Performance <ul><li>Degree of accomplishment of the tasks that make up an employee’s job </li></ul><ul><ul><li>Reflects how well an employee is fulfilling requirements of a job </li></ul></ul><ul><ul><li>Often confused with effort, which refers to energy expended, performance is measured in terms of results </li></ul></ul>11-
  5. 6. Determinants of Performance <ul><li>Job performance is net effect of an employee’s effort as modified by abilities and role (or task) perceptions </li></ul><ul><ul><li>Performance in a given situation can be viewed as resulting from interrelationships among effort, abilities, and role perceptions </li></ul></ul><ul><li>Effort – Results from being motivated </li></ul><ul><ul><li>Refers to amount of energy (physical and/or mental) an individual uses in performing a task </li></ul></ul><ul><li>Abilities – Are personal characteristics used in performing a job </li></ul><ul><ul><li>Usually do not fluctuate widely over short periods of time </li></ul></ul><ul><li>Role (task) perceptions – Refer to direction(s) in which individuals believe they should channel their effort on their jobs </li></ul><ul><ul><li>Activities and behaviors people believe are necessary in the performance of their jobs define their role perceptions </li></ul></ul>11-
  6. 7. Determinants of Performance <ul><li>To attain an acceptable level of performance, a minimum level of proficiency must exist in each of the performance components </li></ul><ul><ul><li>Level of proficiency in any one performance component can place an upper boundary on performance </li></ul></ul><ul><li>If employees put forth tremendous effort and have excellent abilities, but lack a clear understanding of their roles, performance will probably not be good in the eyes of their managers </li></ul><ul><ul><li>Much work will be produced, but it will be misdirected </li></ul></ul>11-
  7. 8. Determinants of Performance <ul><li>An employee who puts forth a high degree of effort and understands the job but lacks ability probably will rate low on performance </li></ul><ul><li>An employee who has a good ability and understanding of the role but is lazy and expends little effort </li></ul><ul><ul><li>Employee’s performance will likely be low </li></ul></ul><ul><li>An employee can compensate up to a point for a weakness in one area by being above average in one or both of the other areas </li></ul>11-
  8. 9. Environmental Factors as Performance Obstacles <ul><li>Other factors beyond the control of the employee can also stifle performance </li></ul><ul><ul><li>Such obstacles are sometimes used merely as excuses, they are very real and should be recognized </li></ul></ul><ul><li>Common potential performance obstacles include </li></ul><ul><ul><li>Employee’s lack of time or conflicting demands upon it </li></ul></ul><ul><ul><li>Inadequate work facilities and equipment </li></ul></ul><ul><ul><li>Restrictive policies that affect the job </li></ul></ul><ul><ul><li>Lack of cooperation from others </li></ul></ul><ul><ul><li>Type of supervision </li></ul></ul><ul><ul><li>Temperature, lighting, noise, machine or equipment pacing </li></ul></ul><ul><ul><li>Shifts </li></ul></ul><ul><ul><li>Even luck </li></ul></ul>11-
  9. 10. Environmental Factors as Performance Obstacles <ul><li>Environmental factors should be viewed not as direct determinants of individual performance but as modifying the effects of effort, ability, and direction </li></ul><ul><ul><li>Poor ventilation or worn-out equipment may well affect the effort an individual expends </li></ul></ul><ul><ul><li>Unclear policies or poor supervision can also produce misdirected effort </li></ul></ul><ul><ul><li>A lack of training can result in underutilized abilities </li></ul></ul><ul><li>One of management’s greatest responsibilities is to provide </li></ul><ul><ul><li>Employees with adequate working conditions </li></ul></ul><ul><ul><li>A supportive environment to eliminate or minimize performance obstacles </li></ul></ul>11-
  10. 11. Responsibilities of the Human Resource Department in Performance Management <ul><li>Responsibilities of the human resource department are </li></ul><ul><ul><li>Design the performance management system and select the methods and forms to be used for appraising employees </li></ul></ul><ul><ul><li>Train managers in conducting performance appraisals </li></ul></ul><ul><ul><li>Maintain a reporting system to ensure that appraisals are conducted on a timely basis </li></ul></ul><ul><ul><li>Maintain performance appraisal records for individual employees </li></ul></ul><ul><li>Responsibilities of managers in performance appraisals are to </li></ul><ul><ul><li>Evaluate the performance of employees </li></ul></ul><ul><ul><li>Complete the forms used in appraising employees and return them to the human resource department </li></ul></ul><ul><ul><li>Review appraisals with employees </li></ul></ul><ul><ul><li>Establish a plan for improvement with employees </li></ul></ul>11-
  11. 12. Performance Appraisal: Definition And Uses <ul><li>Process of evaluating and communicating to an employee how he or she is performing the job and establishing a plan for improvement </li></ul><ul><li>When properly conducted </li></ul><ul><ul><li>They let employees know how well they are performing </li></ul></ul><ul><ul><li>Influence their future level of effort and task direction </li></ul></ul><ul><li>Effort should be enhanced if good performance is positively reinforced </li></ul><ul><li>Task perception of the employee should be clarified through establishing a plan for improvement </li></ul><ul><li>Common uses of performance appraisals is for making administrative decisions relating to promotions, firings, layoffs, and merit pay increases </li></ul><ul><ul><li>An employee’s present job performance is often the most significant consideration for determining whether to promote the person </li></ul></ul>11-
  12. 13. Performance Appraisal: Definition And Uses <ul><li>Performance appraisal information can </li></ul><ul><ul><li>Provide needed input for determining both individual and organizational training and development needs </li></ul></ul><ul><li>These data can then be used to help determine the organization’s overall training and development needs </li></ul><ul><ul><li>For individual employees, completed performance appraisal should include a plan outlining specific training and development needs </li></ul></ul><ul><li>Performance appraisals can also be used to encourage performance improvement </li></ul><ul><ul><li>Used as a means of communicating to employees how they are doing </li></ul></ul><ul><ul><li>Suggesting needed changes in behavior, attitude, skills, or knowledge </li></ul></ul>11-
  13. 14. Performance Appraisal: Definition And Uses <ul><li>Feedback clarifies for employees manager’s job expectations </li></ul><ul><ul><li>Feedback must be followed by coaching and training </li></ul></ul><ul><li>Information from performance appraisals can be used as </li></ul><ul><ul><li>Input to validation of selection procedures </li></ul></ul><ul><ul><li>Input to human resource planning </li></ul></ul><ul><li>How often to conduct performance appraisals </li></ul><ul><ul><li>No real consensus on how frequently performance appraisals should be done </li></ul></ul><ul><ul><li>In general, as often as necessary to let employees know </li></ul></ul><ul><ul><ul><li>What kind of job they are doing </li></ul></ul></ul><ul><ul><ul><li>If performance is not satisfactory, measures that must be taken for improvement </li></ul></ul></ul><ul><ul><li>It is recommended that informal performance appraisals be conducted two or three times a year in addition to an annual formal performance appraisal </li></ul></ul>11-
  14. 15. Performance Appraisal Methods <ul><li>Whatever method of performance appraisal an organization uses, it must be job related </li></ul><ul><ul><li>Prior to selecting a performance appraisal method, an organization must conduct job analyses and develop job descriptions </li></ul></ul><ul><li>Methods of performance appraisals include </li></ul><ul><ul><li>Management by objectives (MBO) </li></ul></ul><ul><ul><li>Multi-rater assessment (or 360-degree feedback) </li></ul></ul><ul><ul><li>Graphic rating scale </li></ul></ul><ul><ul><li>Behaviorally anchored rating scale (BARS) </li></ul></ul><ul><ul><li>Critical-incident appraisal </li></ul></ul><ul><ul><li>Essay appraisal </li></ul></ul><ul><ul><li>Checklist </li></ul></ul><ul><ul><li>Forced-choice rating </li></ul></ul><ul><ul><li>Ranking methods </li></ul></ul><ul><ul><li>Work standards approach </li></ul></ul>11-
  15. 16. Management by Objectives (MBO) <ul><li>More commonly used with professional and managerial employees </li></ul><ul><li>Consists of </li></ul><ul><ul><li>Establishing clear and precisely defined statements of objectives for the work to be done by an employee </li></ul></ul><ul><ul><li>Establishing an action plan indicating how these objectives are to be achieved </li></ul></ul><ul><ul><li>Allowing employee to implement the action plan </li></ul></ul><ul><ul><li>Measuring objective achievement </li></ul></ul><ul><ul><li>Taking corrective action when necessary </li></ul></ul><ul><ul><li>Establishing new objectives for the future </li></ul></ul><ul><li>Other names for MBO include management by results, performance management, results management, and work planning and review program </li></ul>11-
  16. 17. Management by Objectives (MBO) <ul><li>For this system to be successful, several requirements must be met </li></ul><ul><ul><li>Objectives should be quantifiable and measurable </li></ul></ul><ul><ul><ul><li>Objectives whose attainment cannot be measured or at least verified should be avoided where possible </li></ul></ul></ul><ul><ul><li>Objectives should also be challenging yet achievable, and they should be expressed in writing and in clear, concise, unambiguous language </li></ul></ul><ul><ul><li>Employees participate in objective-setting process </li></ul></ul><ul><ul><ul><li>Employee’s active participation is also essential in developing the action plan </li></ul></ul></ul><ul><ul><li>Objectives and action plan must serve as a basis for regular discussions between manager and employee concerning employee’s performance </li></ul></ul><ul><ul><ul><li>Provide an opportunity for manager and employee to discuss progress and modify objectives when necessary </li></ul></ul></ul>11-
  17. 18. Examples of How to Improve Work Objects 11-
  18. 19. Typical Areas of Supervisory Objectives 11-
  19. 20. Multi-Rater Assessment (or 360-Degree Feedback) <ul><li>Managers, peers, customers, suppliers, or colleagues are asked to complete questionnaires on the employee being assessed </li></ul><ul><li>Person assessed also completes a questionnaire </li></ul><ul><li>Questionnaires are generally lengthy. Typical questions are: </li></ul><ul><ul><li>“Are you crisp, clear, and articulate? Abrasive? Spreading yourself too thin?” </li></ul></ul><ul><li>Human resources department provides results to the employee, who in turn gets to see how his or her opinion differs from those of the group doing the assessment </li></ul>11-
  20. 21. Graphic Rating Scale <ul><li>Requires rater to indicate on a scale where the employee rates on factors such as </li></ul><ul><ul><li>Quantity of work </li></ul></ul><ul><ul><li>Dependability </li></ul></ul><ul><ul><li>Job knowledge </li></ul></ul><ul><ul><li>Cooperativeness </li></ul></ul><ul><li>Rating scales include both numerical ranges and written descriptions </li></ul><ul><li>Potential weakness </li></ul><ul><ul><li>Evaluators are unlikely to interpret written descriptions in the same manner due to differences in background, experience, and personality </li></ul></ul><ul><ul><li>Choice of rating categories </li></ul></ul><ul><ul><ul><li>It is possible to choose categories that have little relationship to job performance </li></ul></ul></ul><ul><ul><ul><li>Omit categories that have a significant influence on job performance </li></ul></ul></ul>11-
  21. 22. Sample Items on a Graphic Rating Scale 11-
  22. 23. Behaviorally Anchored Rating Scale (BARS) <ul><li>Determines an employee’s level of performance based on whether or not certain specifically described job behaviors are present </li></ul><ul><ul><li>Focus of BARS is not on performance outcomes but on functional behaviors demonstrated on the job </li></ul></ul><ul><ul><li>Assumption is that these functional behaviors will result in effective job performance </li></ul></ul><ul><li>Job dimensions – Means broad categories of duties and responsibilities that make up a job </li></ul><ul><ul><li>Each job is likely to have several job dimensions, and separate scales must be developed for each </li></ul></ul><ul><li>Scale values – Define specific categories of performance </li></ul><ul><li>Anchors – Specific written statements of actual behaviors that, when exhibited on the job, indicate the level of performance on the scale opposite that particular anchor </li></ul>11-
  23. 24. Behaviorally Anchored Rating Scale (BARS) <ul><li>Rating performance using a BARS requires </li></ul><ul><ul><li>Rater to read list of anchors on each scale to find the group of anchors that best describe the employee’s job behavior during the period being reviewed </li></ul></ul><ul><ul><li>Scale value opposite the group of anchors is then checked. Process is followed for all the identified dimensions of the job </li></ul></ul><ul><ul><li>Total evaluation combines the scale values checked for all job dimensions </li></ul></ul><ul><li>BARSs are normally developed following these steps: </li></ul><ul><ul><li>Managers and job incumbents identify relevant job dimensions for the job </li></ul></ul><ul><ul><li>Managers and job incumbents write behavioral anchors for each job dimension </li></ul></ul><ul><ul><ul><li>As many anchors as possible should be written for each dimension </li></ul></ul></ul><ul><ul><li>Managers and job incumbents reach consensus concerning scale values to be used and grouping of anchor statements for each scale value </li></ul></ul>11-
  24. 25. Behaviorally Anchored Rating Scale (BARS) <ul><li>Advantages </li></ul><ul><ul><li>BARSs are developed through active participation of both managers and job incumbents </li></ul></ul><ul><ul><li>Anchors are developed from observations and experiences of employees who actually perform the job </li></ul></ul><ul><ul><ul><li>Increases the likelihood that the method will be accepted </li></ul></ul></ul><ul><ul><li>BARSs can be used to provide specific feedback concerning an employee’s job performance </li></ul></ul><ul><li>Drawbacks </li></ul><ul><ul><li>Takes considerable time and commitment to develop </li></ul></ul><ul><ul><li>Separate forms must be developed for different jobs </li></ul></ul><ul><li>From a technical point of view, BARS is a graphic rating scale that was developed to help overcome errors in performance appraisals </li></ul>11-
  25. 26. Example of a Behaviorally Anchored Rating Scale 11-
  26. 27. Critical-Incident Appraisal <ul><li>Rater keeps a written record of incidents that illustrate both positive and negative employee behaviors </li></ul><ul><ul><li>Rater then uses these incidents as a basis for evaluating the employee’s performance </li></ul></ul><ul><ul><li>Incidents recorded should involve job behaviors illustrating both satisfactory and unsatisfactory performance of employee being rated </li></ul></ul><ul><li>Drawback </li></ul><ul><ul><li>Rater is required to jot down incidents regularly, which can be burdensome and time-consuming </li></ul></ul><ul><ul><li>Definition of a critical incident is unclear and may be interpreted differently by different people </li></ul></ul><ul><ul><li>Method may lead to friction between manager and employees when employees believe manager is keeping a “book” on them </li></ul></ul>11-
  27. 28. Essay Appraisal <ul><li>Rater prepares a written statement describing an individual’s strengths, weaknesses, and past performance </li></ul><ul><ul><li>Requires that evaluation describe an employee’s performance in written narrative form </li></ul></ul><ul><ul><li>Instructions are often provided as to the topics to be covered </li></ul></ul><ul><li>Typical essay appraisal question might be </li></ul><ul><ul><li>“ Describe, in your own words, this employee’s performance, including quantity and quality of work, job knowledge, and ability to get along with other employees.” </li></ul></ul><ul><ul><li>“ What are the employee’s strengths and weaknesses?” </li></ul></ul><ul><li>Drawback </li></ul><ul><ul><li>Their length and content can vary considerably, depending on rater </li></ul></ul><ul><ul><li>Essay appraisals are difficult to compare </li></ul></ul><ul><ul><li>Writing skill of appraiser can also affect appraisal </li></ul></ul><ul><li>It is possible to use a critical incident method to support essay methods however </li></ul>11-
  28. 29. Checklist <ul><li>Rater answers with a yes-or-no a series of questions about the behavior of the employee </li></ul><ul><li>Checklist can also assign varying weights to each question </li></ul><ul><li>Normally, human resource department keeps the scoring key for the checklist method </li></ul><ul><ul><li>Evaluator is generally not aware of weights associated with each question </li></ul></ul><ul><li>Drawbacks </li></ul><ul><ul><li>Raters can see positive or negative connotation of each question, which introduces bias </li></ul></ul><ul><ul><li>It is time-consuming to assemble questions for each job category </li></ul></ul><ul><ul><li>Separate listing of questions must be developed for each job category </li></ul></ul><ul><ul><li>Checklist questions can have different meanings for different raters </li></ul></ul>11-
  29. 30. Sample Checklist Questions 11-
  30. 31. Forced-Choice Rating <ul><li>Requires rater to rank a set of statements describing how an employee carries out the duties and responsibilities of the job </li></ul><ul><ul><li>Statements are normally weighted </li></ul></ul><ul><ul><li>Rater generally does not know the weights </li></ul></ul><ul><li>After rater ranks all the forced-choice statements, human resource department applies weights and computes a score </li></ul><ul><li>Attempts to eliminate evaluator bias by forcing rater to rank statements that are seemingly indistinguishable or unrelated </li></ul><ul><li>Drawbacks </li></ul><ul><ul><li>Been reported to irritate raters, who feel they are not being trusted </li></ul></ul><ul><ul><li>Results of forced-choice appraisal can be difficult to communicate to employees </li></ul></ul>11-
  31. 32. Sample Set of Forced-Choice Statements 11-
  32. 33. Ranking Methods <ul><li>Performance of an employee is ranked relative to the performance of others </li></ul><ul><li>Three of the more commonly used ranking methods are </li></ul><ul><ul><li>Alternation </li></ul></ul><ul><ul><li>Paired comparison </li></ul></ul><ul><ul><li>Forced distribution </li></ul></ul>11-
  33. 34. Alternation Ranking <ul><li>Lists names of employees to be rated on the left side of a sheet of paper </li></ul><ul><li>Rater chooses most valuable employee on the list, crosses that name off the left-hand list, and puts it at the top of the column on the right-hand side of the paper </li></ul><ul><li>Appraiser then selects and crosses off name of least valuable employee from left-hand column and moves it to bottom of right-hand column </li></ul><ul><li>Rater repeats this process for all names on the left-hand side of the paper </li></ul><ul><li>Resulting list of names in right-hand column gives a ranking of employees from most to least valuable </li></ul>11-
  34. 35. Paired Comparison Ranking <ul><li>Best illustrated with an example </li></ul><ul><ul><li>Suppose a rater is to evaluate six employees; their names are listed on the left side of a sheet of paper </li></ul></ul><ul><ul><li>Evaluator then compares first employee with second employee on a chosen performance criterion, such as quantity of work </li></ul></ul><ul><ul><li>If he or she believes the first employee has produced more work than second employee, a check mark is placed by the first employee’s name </li></ul></ul><ul><ul><li>Rater then compares the first employee to the third, fourth, fifth, and sixth employee on the same performance criterion, placing a check mark by the name of employee who produced most work in each paired comparison </li></ul></ul>11-
  35. 36. Paired Comparison Ranking <ul><li>Process is repeated until each employee has been compared to every other employee on all of the chosen performance criteria </li></ul><ul><ul><li>Employee with most check marks is considered to be best performer </li></ul></ul><ul><ul><li>Employee with fewest check marks is lowest performer </li></ul></ul><ul><li>Drawback </li></ul><ul><ul><li>It becomes unwieldy when comparing more than five or six employees </li></ul></ul>11-
  36. 37. Force Distribution <ul><li>Requires rater to compare performance of employees and place a certain percentage of employees at various performance levels </li></ul><ul><ul><li>Assumes performance level in a group of employees will be distributed according to a bell-shaped, or “normal,” curve </li></ul></ul><ul><li>Drawback </li></ul><ul><ul><li>In small groups of employees, a bell-shaped distribution of performance may not be applicable </li></ul></ul><ul><ul><ul><li>Even where distribution may approximate a normal curve, it is probably not a perfect curve </li></ul></ul></ul><ul><ul><ul><li>This means some employees probably will not be rated accurately </li></ul></ul></ul><ul><li>Ranking methods differ dramatically from other methods in that one employee’s performance evaluation is a function of performance of other employees in the job </li></ul><ul><li>Civil Service Reform Act does not permit use of ranking methods for federal employees </li></ul>11-
  37. 38. Forced-Distribution Curve 11-
  38. 39. Work Standards <ul><li>Involves setting a standard or an expected level of output and then comparing each employee’s level to the standard </li></ul><ul><ul><li>Most frequently used for production employees and is a form of goal setting for these employees </li></ul></ul><ul><li>Work standards should reflect average output of a typical employee </li></ul><ul><ul><li>Attempt to define a fair day’s output </li></ul></ul><ul><li>Advantage </li></ul><ul><ul><li>Performance review is based on highly objective factors </li></ul></ul><ul><ul><li>To be effective, affected employees must view standards as being fair </li></ul></ul><ul><li>Drawback </li></ul><ul><ul><li>Lack of comparability of standards for different job categories </li></ul></ul>11-
  39. 40. Frequently Used Methods for Setting Work Standards 11-
  40. 41. Potential Errors In Performance Appraisals <ul><li>Leniency </li></ul><ul><ul><li>Occurs when a manager’s ratings are grouped at the positive end instead of being spread throughout the performance scale </li></ul></ul><ul><li>Central tendency </li></ul><ul><ul><li>Tendency of a manager to rate most employees’ performance near the middle of the performance scale </li></ul></ul><ul><li>Recency </li></ul><ul><ul><li>Tendency of a manager to evaluate employees on work performed most recently, usually one or two months prior to evaluation </li></ul></ul><ul><li>These errors make it difficult to compare ratings from different raters </li></ul>11-
  41. 42. Potential Errors In Performance Appraisals <ul><li>Halo effect </li></ul><ul><ul><li>Occurs when a rater allows a single prominent characteristic of an employee to influence his or her judgment on each separate item in the performance appraisal </li></ul></ul><ul><ul><li>Results in employee receiving approximately same rating on every item </li></ul></ul><ul><li>Personal preferences, prejudices, and biases can also cause errors in performance appraisals </li></ul><ul><ul><li>Managers with biases or prejudices tend to look for employee behaviors that conform to their biases </li></ul></ul><ul><ul><li>Appearance, social status, dress, race, and sex have influenced many performance appraisals </li></ul></ul><ul><li>Managers have also allowed first impressions to influence later judgments of an employee </li></ul><ul><ul><li>People tend to retain these impressions even when faced with contradictory evidence </li></ul></ul>11-
  42. 43. Overcoming Errors In Performance Appraisals <ul><li>One approach to overcoming errors is to make refinements in the design of appraisal methods </li></ul><ul><ul><li>One could say that forced-distribution method of performance appraisal attempts to overcome errors of leniency and central tendency </li></ul></ul><ul><ul><li>Behaviorally anchored rating scales are designed to reduce halo, leniency, and central tendency errors as they provide managers with specific examples of performance against which to evaluate </li></ul></ul><ul><li>It does not appear likely that refining appraisal instruments will totally overcome errors in performance appraisals </li></ul><ul><ul><li>Since refined instruments frequently do not overcome all the obstacles </li></ul></ul>11-
  43. 44. Overcoming Errors In Performance Appraisals <ul><li>Another approach to overcoming errors is to improve the skills of raters </li></ul><ul><ul><li>Suggestions on specific training to be given to evaluators, although vague, normally emphasize that evaluators should be trained to observe behavior more accurately and judge it more fairly </li></ul></ul><ul><li>More research is needed before a definitive set of topics for rater training can be established </li></ul><ul><li>At a minimum, raters should receive training in </li></ul><ul><ul><li>Performance appraisal method(s) used by company </li></ul></ul><ul><ul><li>Importance of rater’s role in total appraisal process </li></ul></ul><ul><ul><li>Use of performance appraisal information </li></ul></ul><ul><ul><li>Communication skills necessary to provide feedback to employee </li></ul></ul>11-
  44. 45. Providing Feedback Through the Appraisal Interview <ul><li>Unless feedback interview is properly conducted, it can and does result in an unpleasant experience for both manager and employee </li></ul><ul><li>To prepare for it, the manager should answer the following questions: </li></ul><ul><ul><li>What results should the interview achieve? </li></ul></ul><ul><ul><li>What good contributions is the employee making? </li></ul></ul><ul><ul><li>Is the employee working up to his or her potential? </li></ul></ul><ul><ul><li>Is the employee clear about the manager’s performance expectations? </li></ul></ul><ul><ul><li>What training does the employee need to improve? </li></ul></ul><ul><ul><li>What strengths does the employee have that can be built on or improved? </li></ul></ul>11-
  45. 46. Providing Feedback Through the Appraisal Interview <ul><li>In addition, the manager should remember several basic guidelines in conducting the interview: </li></ul><ul><ul><li>Manager must know the employee’s job description </li></ul></ul><ul><ul><li>Evaluation must be based on employee’s performance and not on his or her personality </li></ul></ul><ul><ul><li>Manager must be positive and build on the employee’s strengths </li></ul></ul><ul><ul><li>Manager must be candid and specific </li></ul></ul><ul><ul><li>Manager must listen to the employee as well as presenting her or his own views </li></ul></ul><ul><ul><li>Manager must elicit employee feedback on how to improve performance </li></ul></ul>11-
  46. 47. Factors Influencing Success or Failure of Appraisal Interviews <ul><li>More the employees are allowed to participate in the appraisal process, the more </li></ul><ul><ul><li>Satisfied they will be with the appraisal interview </li></ul></ul><ul><ul><li>Satisfied they will be with the manager </li></ul></ul><ul><ul><li>Likely they will be to accept and meet performance improvement objectives </li></ul></ul><ul><li>More a manager uses positive motivational techniques, the more satisfied the employee is likely to be with appraisal interview and with manager </li></ul><ul><li>Manager and employee mutually setting specific performance improvement objectives results in better performance than when managers use a general discussion or criticism </li></ul>11-
  47. 48. Factors Influencing Success or Failure of Appraisal Interviews <ul><li>Discussing and solving problems hampering employee’s current job performance improve employee’s performance </li></ul><ul><li>More the thought and preparation that both manager and employee devote before the appraisal interview, greater the benefits of the interview </li></ul><ul><li>More the employee perceives that performance appraisal results are tied to organizational rewards, the more beneficial the interview will be </li></ul>11-
  48. 49. Developing Performance Improvement Plans <ul><li>Step of including a performance improvement plan in a completed performance appraisal is often ignored </li></ul><ul><li>Managers must recognize that an employee’s development is a continuous cycle of </li></ul><ul><ul><li>Setting performance goals </li></ul></ul><ul><ul><li>Providing training necessary to achieve goals </li></ul></ul><ul><ul><li>Assessing performance related to accomplishing goals </li></ul></ul><ul><ul><li>Setting new, higher goals </li></ul></ul>11-
  49. 50. Developing Performance Improvement Plans <ul><li>Performance improvement plan consists of the following components: </li></ul><ul><ul><li>Where are we now? </li></ul></ul><ul><ul><ul><li>Answered in the performance appraisal process </li></ul></ul></ul><ul><ul><li>Where do we want to be? </li></ul></ul><ul><ul><ul><li>Requires evaluator and person being evaluated to mutually agree on areas that can and should be improved </li></ul></ul></ul><ul><ul><li>How does the employee get from where he or she is now to where he or she wants to be? </li></ul></ul><ul><ul><ul><li>Critical to performance improvement plan </li></ul></ul></ul><ul><ul><ul><li>Manager and employee must agree upon specific steps to be taken </li></ul></ul></ul><ul><ul><ul><li>May include training employee to improve his or her performance </li></ul></ul></ul><ul><ul><ul><li>May include how evaluator will help employee achieve performance goals </li></ul></ul></ul>11-
  50. 51. Performance Appraisal and the Law <ul><li>Title VII of the Civil Rights Act permits use of a bona fide performance appraisal system </li></ul><ul><li>Generally not considered to be bona fide when their application results in adverse effects on minorities, women, or older employees </li></ul><ul><li>Number of court cases have ruled that performance appraisal systems used by organizations were discriminatory and not job related </li></ul><ul><ul><li>Brito et al. v. Zia Company </li></ul></ul><ul><ul><li>Mistretta v. Sandia Corporation </li></ul></ul><ul><ul><li>Chamberlain v. Bissel, Inc. </li></ul></ul><ul><ul><li>Price Waterhouse v. Hopkins </li></ul></ul>11-
  51. 52. Performance Appraisal and the Law <ul><li>Some suggestions that have been offered for making performance appraisal systems more legally acceptable include </li></ul><ul><ul><li>Deriving the content of the appraisal system from job analyses </li></ul></ul><ul><ul><li>Emphasizing work behaviors rather than personal traits </li></ul></ul><ul><ul><li>Ensuring that the results of appraisals are communicated to employees </li></ul></ul><ul><ul><li>Ensuring that employees are allowed to give feedback during the appraisal interview </li></ul></ul><ul><ul><li>Training managers in how to conduct proper evaluations </li></ul></ul><ul><ul><li>Ensuring that appraisals are written, documented, and retained </li></ul></ul><ul><ul><li>Ensuring that personnel decisions are consistent with the performance appraisals </li></ul></ul>11-
  52. 53. Summary of Learning Objectives <ul><li>Define performance </li></ul><ul><li>Define performance appraisal </li></ul><ul><li>Explain management by objectives </li></ul><ul><li>Describe multi-rater assessment </li></ul><ul><li>Describe the graphic rating scale </li></ul><ul><li>Explain critical-incident appraisal </li></ul><ul><li>Describe essay appraisal </li></ul><ul><li>Describe the checklist method of performance appraisal </li></ul><ul><li>Explain the forced-choice method of performance appraisal </li></ul><ul><li>Describe the work standards approach to performance appraisal </li></ul><ul><li>Define leniency, central tendency, recency, and the halo effect </li></ul>11-
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