2. 11-11-22
Nature of Performance AppraisalsNature of Performance Appraisals
You can’t manage what you don’t understandYou can’t manage what you don’t understand
You don’t understand what you don’t measureYou don’t understand what you don’t measure
What gets measured is what gets doneWhat gets measured is what gets done
What gets measured is what gets rewardedWhat gets measured is what gets rewarded
What gets rewarded is what gets repeatedWhat gets rewarded is what gets repeated
3. 11-11-33
The Role of Performance AppraisalsThe Role of Performance Appraisals
in Compensation Decisionsin Compensation Decisions
Employees often frustrated about the appraisalEmployees often frustrated about the appraisal
processprocess
– Appraisals are too subjectiveAppraisals are too subjective
– Possibility of unfair treatment by a supervisorPossibility of unfair treatment by a supervisor
Experts argue that rather than throwing out theExperts argue that rather than throwing out the
entire performance appraisal process, total-entire performance appraisal process, total-
quality-management principles should bequality-management principles should be
applied to improving itapplied to improving it
– Recognize part of performance influenced more byRecognize part of performance influenced more by
work environment and systems than by ee behaviorswork environment and systems than by ee behaviors
6. 11-11-66
Strategies to Better Understand andStrategies to Better Understand and
Measure Job PerformanceMeasure Job Performance
Clearly define job performanceClearly define job performance
Recognize definition of performance and itsRecognize definition of performance and its
components is expandingcomponents is expanding
Improve appraisal formatsImprove appraisal formats
Select the right ratersSelect the right raters
Understand way raters process information andUnderstand way raters process information and
mistakes that may be mademistakes that may be made
Train raters to improve rating skillsTrain raters to improve rating skills
7. 11-11-77
Categories of Appraisal FormatsCategories of Appraisal Formats
Ranking - Rater compares
employees against each other
Rating - Rater evaluates
employees on some absolute
standard (measured on a
continuum scale)
Essay - Rater answers open-
ended questions in essay form
describing employee
performance
Categories
9. 11-11-99
Rating FormatsRating Formats
Two common elementsTwo common elements
– Raters evaluate employees on some absoluteRaters evaluate employees on some absolute
standardstandard
– Each standard is measured on a scaleEach standard is measured on a scale
-performance variation is described along a-performance variation is described along a
continuumcontinuum
12. 11-11-1212
Exhibit 11.10: An Evaluation of PerformanceExhibit 11.10: An Evaluation of Performance
Appraisal FormatsAppraisal Formats
13. 11-11-1313
Training Raters to Rate MoreTraining Raters to Rate More
AccuratelyAccurately
Rater-error trainingRater-error training
– Goal is to reduce psychometric errors byGoal is to reduce psychometric errors by
familiarizing raters with their existencefamiliarizing raters with their existence
Performance-dimension trainingPerformance-dimension training
– Exposes supervisors toExposes supervisors to
performance dimensions usedperformance dimensions used
Performance-standard trainingPerformance-standard training
– Provides raters with a standard orProvides raters with a standard or
frame of reference for making appraisalframe of reference for making appraisal
14. 11-11-1414
Ways to Improve Rater TrainingWays to Improve Rater Training
Straightforward lecturing to ratees is ineffectiveStraightforward lecturing to ratees is ineffective
Individualized or small group discussions moreIndividualized or small group discussions more
effectiveeffective
When sessions are combined with extensiveWhen sessions are combined with extensive
practice and feedback, rating accuracy improvespractice and feedback, rating accuracy improves
Longer training programs are generally moreLonger training programs are generally more
successful than shorter programssuccessful than shorter programs
Performance-dimension and performance-Performance-dimension and performance-
standard training more effective than rater-errorstandard training more effective than rater-error
trainingtraining
Success results from efforts to reduce halo errorsSuccess results from efforts to reduce halo errors
and improve accuracyand improve accuracy
15. 11-11-1515
Putting it All Together: ThePutting it All Together: The
Performance Appraisal ProcessPerformance Appraisal Process
Need a sound basis for establishing performanceNeed a sound basis for establishing performance
appraisal dimensions and scales associated withappraisal dimensions and scales associated with
each dimensioneach dimension
Need to involve employees in every stage ofNeed to involve employees in every stage of
developing performance dimensions anddeveloping performance dimensions and
building scalesbuilding scales
Need to ensure raters are trained in use ofNeed to ensure raters are trained in use of
appraisal system and that all employeesappraisal system and that all employees
understand how system operatesunderstand how system operates
16. 11-11-1616
Putting it All Together: ThePutting it All Together: The
Performance Appraisal Process (cont.)Performance Appraisal Process (cont.)
Need to ensure raters are motivated to rateNeed to ensure raters are motivated to rate
accuratelyaccurately
Raters should maintain a diary of employeeRaters should maintain a diary of employee
performanceperformance
Raters should attempt a performance diagnosisRaters should attempt a performance diagnosis
to determine if performance problems existto determine if performance problems exist
18. 11-11-1818
Exhibit 11.11: Tips on Appraising EmployeeExhibit 11.11: Tips on Appraising Employee
Performance (con’t)Performance (con’t)
19. 11-11-1919
EEO and Performance EvaluationEEO and Performance Evaluation
11 Provide specific written instructions on how to complete
appraisal
Provide specific written instructions on how to complete
appraisal
22
Incorporate clear criteria for evaluating performance -
Performance dimensions should be written, objective, and clear
Incorporate clear criteria for evaluating performance -
Performance dimensions should be written, objective, and clear
33 Provide a rational foundation for personnel decisions via
adequately developed job descriptions
Provide a rational foundation for personnel decisions via
adequately developed job descriptions
44 Require supervisors to provide feedback about appraisal results
to employees
Require supervisors to provide feedback about appraisal results
to employees
55 Incorporate a review of performance ratings by higher level
supervisors
Incorporate a review of performance ratings by higher level
supervisors
66 Consistent treatment across raters, regardless of race, color,
religion, sex, and national origin should be evident
Consistent treatment across raters, regardless of race, color,
religion, sex, and national origin should be evident
Key Issues: Establishing a Performance Appraisal System
20. 11-11-2020
Tying Pay to Subjectively AppraisedTying Pay to Subjectively Appraised
PerformancePerformance
How do we get
employees to
view raises as a
reward for
performance?
Central issue
involving
merit pay
21. 11-11-2121
Provide equal increases to all employeesProvide equal increases to all employees
regardless of performanceregardless of performance
– General increaseGeneral increase
– Cost-of-living adjustmentsCost-of-living adjustments
Pay increases based on a preset progressionPay increases based on a preset progression
pattern based on senioritypattern based on seniority
Pay Increase Guidelines with LowPay Increase Guidelines with Low
Motivational ImpactMotivational Impact
22. 11-11-2222
Requirements to Link Pay toRequirements to Link Pay to
PerformancePerformance
Define performanceDefine performance
– BehaviorsBehaviors
– CompetenciesCompetencies
– TraitsTraits
Specify a continuum describing different levelsSpecify a continuum describing different levels
from low to high on performance measurefrom low to high on performance measure
Decide how much of a merit increase is given forDecide how much of a merit increase is given for
different levels of performancedifferent levels of performance
24. 11-11-2424
Designing Merit GuidelinesDesigning Merit Guidelines
11 What should the poorest performer be paid as an
increase?
What should the poorest performer be paid as an
increase?
22 How much should average performers be paid as an
increase?
How much should average performers be paid as an
increase?
33 How much should top performers be paid?How much should top performers be paid?
44
What should be the size of the percentage increase
differential between different levels of performance?
What should be the size of the percentage increase
differential between different levels of performance?
Four Questions . . .
26. 11-11-2626
Promotional Increases as a Pay-for-Promotional Increases as a Pay-for-
Performance ToolPerformance Tool
Promotion should be accompanied by a salaryPromotion should be accompanied by a salary
increase - 8 to 12%increase - 8 to 12%
Characteristics of promotional pay increasesCharacteristics of promotional pay increases
– Size of increment is approximately double a normalSize of increment is approximately double a normal
merit increasemerit increase
– Represent a reward to employees for commitmentRepresent a reward to employees for commitment
and exemplary performanceand exemplary performance