1. Performance management involves setting work standards, assessing performance through appraisals, and providing feedback to motivate and improve employee performance, while performance appraisal is a specific event. 2. The appraisal process includes defining job standards and goals, observing and measuring performance, documenting performance, and providing feedback through an appraisal interview. 3. There are several methods for appraising performance such as rating scales, critical incidents, management by objectives, with each having advantages and disadvantages. Problems to avoid include unclear standards, biases, and outside influences.

1. PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook
The University of West AlabamaThe University of West Alabama
1
Human ResourceHuman Resource
ManagementManagement
ELEVENTH EDITIONELEVENTH EDITION
G A R Y D E S S L E RG A R Y D E S S L E R
© 2008 Prentice Hall, Inc.© 2008 Prentice Hall, Inc.
All rights reserved.All rights reserved.
Performance Management and AppraisalPerformance Management and Appraisal
Chapter 9Chapter 9
Part 3 | Training and DevelopmentPart 3 | Training and Development

2. © 2008 Prentice Hall, Inc. All rights reserved. 9–2
After studying this chapter, you should be able to:
1.1. Evaluate and improve the appraisal form in Figure 9–1.Evaluate and improve the appraisal form in Figure 9–1.
2.2. Describe the appraisal process.Describe the appraisal process.
3.3. Develop, evaluate, and administer at least fourDevelop, evaluate, and administer at least four
performance appraisal tools.performance appraisal tools.
4.4. Explain and illustrate the problems to avoid inExplain and illustrate the problems to avoid in
appraising performance.appraising performance.
5.5. List and discuss the pros and cons of six appraisalList and discuss the pros and cons of six appraisal
methods.methods.
6.6. Perform an effective appraisal interview.Perform an effective appraisal interview.
7.7. Discuss the pros and cons of using different raters toDiscuss the pros and cons of using different raters to
appraise a person’s performance.appraise a person’s performance.

3. © 2008 Prentice Hall, Inc. All rights reserved. 9–3
Basic Concepts in PerformanceBasic Concepts in Performance
Management and AppraisalManagement and Appraisal
Performance Appraisal:
Setting work standards, assessing
performance, and providing
feedback to employees to motivate,
correct, and continue their
performance.
Performance Management:
An integrated approach to ensuring
that an employee’s performance
supports and contributes to the
organization’s strategic aims.
Comparing
Performance Appraisal
and
Performance Management

4. © 2008 Prentice Hall, Inc. All rights reserved. 9–4
FIGURE 9–1
Classroom
Teaching
Appraisal by
Students
Source: Richard I. Miller,
Evaluating Faculty for
Promotion and Tenure (San
Francisco: Jossey-Bass
Publishers, 1987), p. 164–165.
© 1987, Jossey-Bass Inc.,
Publishers. All rights reserved.
Reprinted with permission of
John Wiley & Sons, Inc.

5. © 2008 Prentice Hall, Inc. All rights reserved. 9–5
Why Performance Management?Why Performance Management?
Total Quality
Appraisal Issues
Strategic Focus
The
Performance
Management
Approach

6. © 2008 Prentice Hall, Inc. All rights reserved. 9–6
FIGURE 9–2 The Building Blocks of an Effective Performance Management Process
Direction sharing Role clarification Goal setting and planning
Goal alignment Developmental goal setting
Ongoing performance monitoring
Ongoing feedback Coaching and support
Performance assessment (appraisal)
Rewards, recognition, and compensation
Workflow, process control, and return on investment management

7. © 2008 Prentice Hall, Inc. All rights reserved. 9–7
Defining the Employee’s GoalsDefining the Employee’s Goals
and Work Standardsand Work Standards
Assign
Specific
Goals
Encourage
Participation
Assign
Measurable
Goals
Assign
Challenging
but Doable
Goals
Guidelines for
Effective Goal Setting

8. © 2008 Prentice Hall, Inc. All rights reserved. 9–8
Setting GoalsSetting Goals
• SMART Goals:SMART Goals:
 SSpecific, and clearly state the desired results.pecific, and clearly state the desired results.
 MMeasurable in answering “how much.”easurable in answering “how much.”
 AAttainable, and not too tough or too easy.ttainable, and not too tough or too easy.
 RRelevant to what’s to be achieved.elevant to what’s to be achieved.
 TTimely in reflecting deadlines and milestones.imely in reflecting deadlines and milestones.

9. © 2008 Prentice Hall, Inc. All rights reserved. 9–9
Performance Appraisal RolesPerformance Appraisal Roles
• SupervisorsSupervisors
 Usually do the actualUsually do the actual
appraising.appraising.
 Must be familiar withMust be familiar with
basic appraisalbasic appraisal
techniques.techniques.
 Must understand andMust understand and
avoid problems that canavoid problems that can
cripple appraisals.cripple appraisals.
 Must know how toMust know how to
conduct appraisals fairly.conduct appraisals fairly.

10. © 2008 Prentice Hall, Inc. All rights reserved. 9–10
Performance Appraisal Roles (cont’d)Performance Appraisal Roles (cont’d)
• The HR DepartmentThe HR Department
 Serves a policy-making and advisory role.Serves a policy-making and advisory role.
 Provides advice and assistance regarding theProvides advice and assistance regarding the
appraisal tool to use.appraisal tool to use.
 Trains supervisors to improve their appraisal skills.Trains supervisors to improve their appraisal skills.
 Monitors the appraisal system effectiveness andMonitors the appraisal system effectiveness and
compliance with EEO laws.compliance with EEO laws.

11. © 2008 Prentice Hall, Inc. All rights reserved. 9–11
An Introduction to Appraising PerformanceAn Introduction to Appraising Performance
1
Is useful in career planning.
Plays an integral role in performance management.
Why Appraise Performance?
Is basis for pay and promotion decisions.
Helps in correcting deficiencies and reinforcing good
performance.
2
3
4

12. © 2008 Prentice Hall, Inc. All rights reserved. 9–12
(Un)Realistic Appraisals(Un)Realistic Appraisals
• Motivations for Soft AppraisalsMotivations for Soft Appraisals
 The fear of having to hire and train someone new.The fear of having to hire and train someone new.
 The unpleasant reaction of the appraisee.The unpleasant reaction of the appraisee.
 An appraisal process that’s not conducive to candor.An appraisal process that’s not conducive to candor.
• Hazards of Soft AppraisalsHazards of Soft Appraisals
 Employee loses the chance to improve before beingEmployee loses the chance to improve before being
forced to change jobs.forced to change jobs.
 Lawsuits arising from dismissals involving inaccurateLawsuits arising from dismissals involving inaccurate
performance appraisals.performance appraisals.

13. © 2008 Prentice Hall, Inc. All rights reserved. 9–13
An Introduction to Appraising PerformanceAn Introduction to Appraising Performance
1
Appraising performance
Steps in Appraising Performance
Defining the job
Providing feedback
2
3

14. © 2008 Prentice Hall, Inc. All rights reserved. 9–14
Designing the Appraisal ToolDesigning the Appraisal Tool
• What to Measure?What to Measure?
 Work output (quality and quantity)Work output (quality and quantity)
 Personal competenciesPersonal competencies
 Goal (objective) achievementGoal (objective) achievement
• How to Measure?How to Measure?
 Generic dimensionsGeneric dimensions
 Actual job dutiesActual job duties
 Behavioral competenciesBehavioral competencies

15. © 2008 Prentice Hall, Inc. All rights reserved. 9–15
FIGURE 9–3
Sample
Performance
Rating Form
Source: Elaine Pulakos,
Performance Management
(SHRM Foundation, 2004)
p. 16–17.
Reprinted by permission of
Society for Human
Resource
Management via Copyright
Clearance Center.

16. © 2008 Prentice Hall, Inc. All rights reserved. 9–16
FIGURE 9–3
Sample
Performance
Rating Form
(cont’d)
Source: Elaine Pulakos,
Performance Management
(SHRM Foundation, 2004)
p. 16–17.

17. © 2008 Prentice Hall, Inc. All rights reserved. 9–17
FIGURE 9–4 Portion of an Administrative Secretary’s Performance Appraisal
Form Showing Task(s) to Appraise

18. © 2008 Prentice Hall, Inc. All rights reserved. 9–18
FIGURE 9–5 Appraisal Form for Assessing Both Competencies and Specific Objectives
Source: http://www.case.edu/finadmin/humres/policies/perfExempt.pdf. Accessed May 17, 2007.

19. © 2008 Prentice Hall, Inc. All rights reserved. 9–19
FIGURE 9–5 (continued)
Source: http://www.case.edu/finadmin/humres/policies/perfExempt.pdf. Accessed May 17, 2007.

20. © 2008 Prentice Hall, Inc. All rights reserved. 9–20
FIGURE 9–5 (continued)
Source: http://www.case.edu/finadmin/humres/policies/perfExempt.pdf. Accessed May 17, 2007.

21. © 2008 Prentice Hall, Inc. All rights reserved. 9–21
FIGURE 9–5 (continued)
Source: http://www.case.edu/finadmin/humres/policies/perfExempt.pdf. Accessed May 17, 2007.

22. © 2008 Prentice Hall, Inc. All rights reserved. 9–22
Performance Appraisal MethodsPerformance Appraisal Methods
1
2
3
4
5
Alternation Ranking Method
Graphic Rating Scale Method
Paired Comparison Method
Forced Distribution Method
Critical Incident Method
6
7
8
9
10
Behaviorally Anchored Rating
Scales (BARS)
Narrative Forms
Management by Objectives
(MBO)
Computerized and Web-Based
Performance Appraisal
Merged Methods
Appraisal Methodologies

23. © 2008 Prentice Hall, Inc. All rights reserved. 9–23
FIGURE 9–6 Scale for Alternate Ranking of Appraisees

24. © 2008 Prentice Hall, Inc. All rights reserved. 9–24
FIGURE 9–7 Ranking Employees by the Paired Comparison Method
Note: + means “better than.” – means “worse than.” For each chart, add
up the number of +’s in each column to get the highest-ranked employee.

25. © 2008 Prentice Hall, Inc. All rights reserved. 9–25
TABLE 9–1 Examples of Critical Incidents for a Plant Manager
Continuing Duties Targets Critical Incidents
Schedule production
for plant
90% utilization of
personnel and
machinery in plant;
orders delivered on
time
Instituted new production
scheduling system; decreased late
orders by 10% last month; increased
machine utilization in plant by 20%
last month
Supervise
procurement of raw
materials and
inventory control
Minimize inventory
costs while keeping
adequate supplies on
hand
Let inventory storage costs rise 15%
last month; overordered parts “A”
and “B” by 20%; underordered part
“C” by 30%
Supervise machinery
maintenance
No shutdowns due to
faulty machinery
Instituted new preventative
maintenance system for plant;
prevented a machine breakdown by
discovering faulty part

26. © 2008 Prentice Hall, Inc. All rights reserved. 9–26
FIGURE 9–8
Appraisal-
Coaching
Worksheet
Source: Reprinted from www.HR.BLR.com
with permission of the publisher Business
and Legal Reports, Inc. 141 Mill Rock Road
East, Old Saybrook, CT © 2004.

27. © 2008 Prentice Hall, Inc. All rights reserved. 9–27
Behaviorally Anchored Rating Scale (BARS)Behaviorally Anchored Rating Scale (BARS)
Developing a BARSDeveloping a BARS
1.1. Generate criticalGenerate critical
incidentsincidents
2.2. Develop performanceDevelop performance
dimensionsdimensions
3.3. Reallocate incidentsReallocate incidents
4.4. Scale the incidentsScale the incidents
5.5. Develop a finalDevelop a final
instrumentinstrument
Advantages of BARSAdvantages of BARS
 A more accurateA more accurate
gaugegauge
 Clearer standardsClearer standards
 FeedbackFeedback
 IndependentIndependent
dimensionsdimensions
 ConsistencyConsistency

28. © 2008 Prentice Hall, Inc. All rights reserved. 9–28
FIGURE 9–9
Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship
Skills

29. © 2008 Prentice Hall, Inc. All rights reserved. 9–29
Management by Objectives (MBO)Management by Objectives (MBO)
• A comprehensive and formal organizationwideA comprehensive and formal organizationwide
goal-setting and appraisal program requiring:goal-setting and appraisal program requiring:
1.1. Setting of organization’s goals.Setting of organization’s goals.
2.2. Setting of departmental goals.Setting of departmental goals.
3.3. Discussion of departmental goals.Discussion of departmental goals.
4.4. Defining expected results (setting individualDefining expected results (setting individual
goals).goals).
5.5. Conducting periodic performance reviews.Conducting periodic performance reviews.
6.6. Providing performance feedback.Providing performance feedback.

30. © 2008 Prentice Hall, Inc. All rights reserved. 9–30
Using MBOUsing MBO
Problems with
MBO
Setting unclear
objectives
Conflict with
subordinates over
objectives
Time-consuming
appraisal process

31. © 2008 Prentice Hall, Inc. All rights reserved. 9–31
Appraising Performance:Appraising Performance:
Problems and SolutionsProblems and Solutions
Unclear
Standards
Leniency or
Strictness
Halo
Effect
Potential Rating
Scale Appraisal
Problems
Central
Tendency
Bias

32. © 2008 Prentice Hall, Inc. All rights reserved. 9–32
TABLE 9–2 A Graphic Rating Scale with Unclear Standards
Note: For example, what exactly is meant by “good,” “quantity of work,” and so forth?
Excellent Good Fair Poor
Quality of work
Quantity of work
Creativity
Integrity

33. © 2008 Prentice Hall, Inc. All rights reserved. 9–33
FIGURE 9–10 Sample Rating Errors
Focusing on one or two critical incidents
Lower rating for less challenge
Nobody can be that good (Strictness)
Similarity
Being influenced by prior performance
Rating for retention
Style differences
Emotional rating
Recent performance only
Friendships

34. © 2008 Prentice Hall, Inc. All rights reserved. 9–34
Appraising Performance:Appraising Performance:
Problems and Solutions (cont’d)Problems and Solutions (cont’d)
Know
Problems
Control
Outside
Influences
Use the
Right Tool
How to Avoid
Appraisal Problems
Train
Supervisors
Keep
a Diary

35. © 2008 Prentice Hall, Inc. All rights reserved. 9–35
TABLE 9–3 Important Advantages and Disadvantages of Appraisal Tools
Tool Advantages Disadvantages
Graphic rating
scale
Simple to use; provides a
quantitative rating for each
employee.
Standards may be unclear; halo
effect, central tendency, leniency,
bias can also be problems.
BARS Provides behavioral “anchors.”
BARS is very accurate.
Difficult to develop.
Alternation ranking Simple to use (but not as simple as
graphic rating scales). Avoids central
tendency and other problems of
rating scales.
Can cause disagreements among
employees and may be unfair if all
employees are, in fact, excellent.
Forced distribution
method
End up with a predetermined
number or % of people in each
group.
Employees’ appraisal results depend
on your choice of cutoff points.
Critical incident
method
Helps specify what is “right” and
“wrong” about the employee’s
performance; forces supervisor to
evaluate subordinates on an ongoing
basis.
Difficult to rate or rank employees
relative to one another.
MBO Tied to jointly agreed-upon
performance objectives.
Time-consuming.

36. © 2008 Prentice Hall, Inc. All rights reserved. 9–36
Who Should Do the Appraising?Who Should Do the Appraising?
Self-Rating
Subordinates
360-Degree
Feedback
Potential
Appraisers
Immediate
Supervisor
Peers
Rating
Committee

37. © 2008 Prentice Hall, Inc. All rights reserved. 9–37
The Appraisal InterviewThe Appraisal Interview
Satisfactory—Promotable
Satisfactory—Not Promotable
Unsatisfactory—Correctable
Unsatisfactory—Uncorrectable
Types of Appraisal
Interviews

38. © 2008 Prentice Hall, Inc. All rights reserved. 9–38
The Appraisal Interview (cont’d)The Appraisal Interview (cont’d)
Talk in terms
of objective
work data.
Don’t tiptoe
around.
Don’t get
personal.
Encourage
the person to
talk.
Guidelines for
Conducting an Interview

39. © 2008 Prentice Hall, Inc. All rights reserved. 9–39
The Appraisal Interview (cont’d)The Appraisal Interview (cont’d)
1
Recognize your own limitations.
Never attack a person’s defenses.
How to Handle a Defensive Subordinate
Recognize that defensive behavior is normal.
Postpone action.
2
3
4

40. © 2008 Prentice Hall, Inc. All rights reserved. 9–40
The Appraisal Interview (cont’d)The Appraisal Interview (cont’d)
1
2
3
4
5
How to Criticize a Subordinate
Criticize in private, and do it constructively.
Do it in a manner that lets the person maintain
his or her dignity and sense of worth.
Give daily feedback so that the review has no
surprises.
Never say the person is “always” wrong.
Criticism should be objective and free of biases.

41. © 2008 Prentice Hall, Inc. All rights reserved. 9–41
The Appraisal Interview (cont’d)The Appraisal Interview (cont’d)
1
2
3
4
5
How to Ensure Improved Performance
Give the subordinate the opportunity to present
his or her ideas and feelings.
Don’t make the subordinate feel threatened
during the interview.
Give daily feedback so that the review has no
surprises.
Never say the person is “always” wrong.
Criticism should be objective and free of biases.

42. © 2008 Prentice Hall, Inc. All rights reserved. 9–42
FIGURE 9–11
Performance
Contract
Source: David Antonion,
“Improving the Performance
Management Process Before
Discontinuing Performance
Appraisals,” Compensation and
Benefits Review May–June
1994, p. 33, 34.
Reprinted by permission of
Sage Publications, Inc.

43. © 2008 Prentice Hall, Inc. All rights reserved. 9–43
FIGURE 9–12
Checklist
During the
Appraisal
Interview

44. © 2008 Prentice Hall, Inc. All rights reserved. 9–44
Formal Written WarningsFormal Written Warnings
• Purposes of a Written WarningPurposes of a Written Warning
 To shake your employee out of bad habits.To shake your employee out of bad habits.
 To help you defend your rating, both to your ownTo help you defend your rating, both to your own
boss and (if needed) to the courts.boss and (if needed) to the courts.
• A Written Warning Should:A Written Warning Should:
 Identify standards by which employee is judged.Identify standards by which employee is judged.
 Make clear that employee was aware of theMake clear that employee was aware of the
standard.standard.
 Specify deficiencies relative to the standard.Specify deficiencies relative to the standard.
 Indicate employee’s prior opportunity for correction.Indicate employee’s prior opportunity for correction.

45. © 2008 Prentice Hall, Inc. All rights reserved. 9–45
Creating the Total PerformanceCreating the Total Performance
Management ProcessManagement Process
• ““What is our strategy and what are our goals?”What is our strategy and what are our goals?”
• ““What does this mean for the goals we set forWhat does this mean for the goals we set for
our employees, and for how we train, appraise,our employees, and for how we train, appraise,
promote, and reward them?”promote, and reward them?”

46. © 2008 Prentice Hall, Inc. All rights reserved. 9–46
FIGURE 9–13 Information Required for TRW’s Web-Based Performance
Management System
Page 1 biographical data
Identification information
Education
Experience summary
Pages 2–3 performance summary
Accomplishments against previous year goals
TRW behaviors
TRW initiatives
Legal and ethical conduct/diversity and cultural sensitivity
Previous year’s professional development activities
Employee comments
Overall performance—manager’s overall rating and comments
Page 4 development summary
Demonstrated strengths
Improvement opportunities
Performance goals for the upcoming year
Professional development activities for the upcoming year
Future potential/positions (employee perspective)
Future potential/positions (manager perspective)
Electronic sign-off from both employee and manager
Page 1 biographical data
Identification information
Education
Experience summary
Pages 2–3 performance summary
Accomplishments against previous year goals
TRW behaviors
TRW initiatives
Legal and ethical conduct/diversity and cultural sensitivity
Previous year’s professional development activities
Employee comments
Overall performance—manager’s overall rating and comments
Page 4 development summary
Demonstrated strengths
Improvement opportunities
Performance goals for the upcoming year
Professional development activities for the upcoming year
Future potential/positions (employee perspective)
Future potential/positions (manager perspective)
Electronic sign-off from both employee and manager
Source: D. Bradford
Neary, “Creating a
Company-Wide, Online,
Performance
Management System: A
Case Study at TRW,
Inc.,” Human Resource
Management 41, no. 4
(Winter 2002), p. 495.
Reprinted by
permission of
Society for Human
Resource
Management via
Copyright
Clearance Center.

47. © 2008 Prentice Hall, Inc. All rights reserved. 9–47
K E Y T E R M S
performance appraisalperformance appraisal
performance managementperformance management
graphic rating scalegraphic rating scale
alternation ranking methodalternation ranking method
paired comparison methodpaired comparison method
forced distribution methodforced distribution method
critical incident methodcritical incident method
behaviorally anchored ratingbehaviorally anchored rating
scale (BARS)scale (BARS)
management by objectives (MBO)management by objectives (MBO)
electronic performance monitoringelectronic performance monitoring
(EPM)(EPM)
unclear standardsunclear standards
halo effecthalo effect
central tendencycentral tendency
strictness/leniencystrictness/leniency
biasbias
appraisal interviewappraisal interview