Performance Appraisal

1. “A person who feels
genuinely appreciated will
always do more than what
is expected.”

2. Performance
Appraisal Systems
Chapter 11: EMPLOYEE ASSESSMENT

3. • The term “performance appraisal” refers to the regular
review of an employee's job performance and overall
contribution to a company in a systematic way.
• Also known as an annual review, employee appraisal,
performance review or evaluation, a performance
appraisal evaluates an employee's skills,
achievements, and growth, or lack thereof.
WHAT IS PERFORMANCE APPRAISAL?

4. IMPORTANCE OF SYSTEMATIC
APPROACH
•Encouraging Positive Performance and Behavior
•Satisfying Employee Curiosity
•Tool for Employee Development
•Basis for Pay Raises, Promotions, and
Disciplinary Actions

5. DESIGNING A PERFORMANCE APPRAISAL
1. Frequency of Performance Appraisals
2. Estimating Costs of Performance Evaluation
3. Tying Pay Increases to Performance
Evaluations
4. Goal Setting
5. Developing Evaluation Forms
6. Selecting Evaluators

6. 1. Frequency of Performance Appraisal
o The frequency of performance appraisals should be determined based on
organizational needs and resources. Options include once per year, twice
per year, or more frequently. More frequent evaluations provide more
feedback and opportunities for employee development but may require more
time and resources. The decision should consider factors such as the span
of control (the number of employees managed by each manager) and
feedback from managers and employees.

7. NARROW SPAN OF CONTROL
Average Span Control 8
Average Time to Complete
One Written Review
1 hour
Average Time to Discuss
with Employee
1 hour
Administrative Time to set
up Meeting with Employees
½ hour
8 employees x 2 hours per employee + 1/2 hour for
administrative time to set up meeting with employes = 16.5hours
of time to complete all performance reviews.

8. WIDER SPAN OF CONTROL
Average Span Control 25
Average Time to Complete
One Written Review
1 hour
Average Time to Discuss
with Employee
1 hour
Administrative Time to set
up Meeting with Employees
1 hour
25 employees x 2 hours per employee + 1 hour for
administrative time to set up meeting with employes = 51 hours
of time to complete all performance reviews.

9. 16 hours x 50 per hour= 850
51 hours x 50per hour = 2550

10. 2. Estimating Costs of Performance Evaluation
o Assess the costs associated with implementing and
maintaining the performance evaluation system,
considering factors such as time, resources, and potential
disruptions to workflow.

11. 4. Tying Pay Increases to Performance Evaluation
o Consider whether pay increases should be linked to performance
evaluations. Research suggests that employees may be more accepting
of performance reviews if they are tied to rewards. This linkage can
motivate employees to perform at a high level and align their efforts with
organizational goals.

12. 5. Goal Setting
o Define the goals and objectives of the performance appraisal process. This
includes determining what the organization hopes to achieve through the
process, such as improving employee performance, identifying areas for
development, and aligning individual goals with organizational objectives.

13. 6. Developing Evaluation Forms
o Create evaluation forms that are tailored to each job within the
organization. These forms should be directly linked to the
employee's job description and include specific criteria for
assessing performance.

15. 7. Selecting Evaluators
o Decide who will evaluate the performance of employees. Options include
the direct manager (the most common method), subordinates, customers
or clients, self-assessment, and peers. Each source of information has
its advantages and disadvantages, and using a combination of sources
may provide more comprehensive and balanced feedback.

16. Advantages and Disadvantages of Each
Source for Performance Evaluations
Source Advantages Disadvantages
Manager/Supervisor
• Usually has extensive knowledge of the
employee’s performance and abilities
• Favoritism
• Bias
Self
• Self-analysis can help with employee
growth
• In the employee’s interest
to inflate his or her own
ratings
Peer
• Works well when the supervisor doesn’t
always directly observe the employee
• If confidential, may create mistrust within
the organization
• If evaluations are tied to
pay, this can put both the
employee and the peer in
an awkward
situation

17. Advantages and Disadvantages of Each
Source for Performance Evaluations
Source Advantages Disadvantages
Customer/Client
• Customers often have the best view of
employee behavior
• Can enhance long-term relationship with the
customer by asking for feedback
• Possible bias
Subordinate
• Data garnered can include how well the
manager treats employees
• Can determine if employees feel there is
favoritism within their department
• Can be used as a self-development tool for
managers
• If nothing changes despite the evaluation,
could create motivational issues among
employees
• If confidential, may create
mistrust within the
organization

18. 360-Degree Performance Appraisal Method
o The 360-degree performance appraisal method is a
comprehensive approach to evaluating an employee's
effectiveness by gathering feedback from multiple sources. This
includes not only direct supervisors but also peers, subordinates,
and sometimes even clients or customers. The idea is to provide a
well-rounded assessment of the employee's performance from
various perspectives within the organization.

19. Example:
• Mathewson aloha Airlines case, peer evaluations were found to
be retaliatory against a pilot who had crossed picket lines during
the pilot’s union strike against a different airline.

20. Software Programs Available to Help Administer
and Assess 360 Review Feedback
• Halogen 360- is a software platform developed by Saba Software (now
part of Cornerstone On Demand) that provides a comprehensive solution
for performance management, including 360-degree feedback.
• Carbon360- offers customizable evaluation forms, automated
processes, and analytics capabilities to support performance
management processes.
• Argos- is a performance management software developed by a
company called ETS. It offers a range of features to support
performance appraisal and feedback processes.

22. Performance Appraisal System Errors
o Halo Effect
o Validity Issues
o Reliability
o Acceptability
o Specificity

23. Performance Appraisal System Errors
o Halo Effect- halo/horns effect occurs when a manager allows one positive
or negative trait to 'color' their whole evaluation of an employee. In other
words, the manager becomes either too lenient or too critical of the
employee based on a single trait. This can lead to inaccurate and unfair
performance reviews.
o Validity Issues-Validity is the extent to which an instrument actually
measures what it intends to measure.
o Reliability-reliability is the extent to which the instrument consistently
yields the same results each time it is used.

24. Performance Appraisal System Errors
o Acceptability-Acceptability refers to how well the organization's members,
including managers and employees, perceive the appraisal tool. Even if the
tool is valid, if it is perceived as burdensome or time-consuming, it may not
be used effectively, leading to acceptability errors.
o Specificity- The clarity and specificity of performance expectations are
crucial for both employees and managers. Vague standards make it difficult
for employees to understand expectations and for managers to assess
performance accurately.

25. Performance Appraisal Legal Considerations
• Brito v. Zia (1973)
• Civil Service Reform Act of
1978

26. The Reform Act created the following criteria for performance
appraisals in government agencies:
1. All agencies were required to create performance review
systems.
2. Appraisal systems would encourage employee participation
in establishing the
performance standards they will be rated against.
3. The critical elements of the job must be in writing.
4. Employees must be advised of the critical elements when
hired.

27. The Reform Act created the following criteria for performance
appraisals in government agencies:
5. The system must be based exclusively on the actual
performance and critical elements of
the job. They cannot be based on a curve, for example.
6. They must be conducted and recorded at least once per year.
7. Training must be offered for all persons giving performance
evaluations.
8. The appraisals must provide information that can be used for
decision making, such as
pay decisions and promotion decisions.

28. The authors of the study determined that the cases that were won by the
defendant had similar characteristics:
1. Appraisers were given written instructions on how to complete the
appraisal for
employees.
2. Job analysis was used to develop the performance measures of the
evaluation.
3. The focus of the appraisal was actual behaviors instead of personality
traits.
4. Upper management reviewed the ratings before the performance
appraisal interview was
conducted.

29. Performance appraisal process:
1. Performance standards should be developed using the job analysis and should
change as
the job changes.
2. Provide the employees with a copy of the evaluation when they begin working for the
organization, and even consider having the employees sign off, saying they have
received it.
3. All raters and appraisers should be trained.
4. When rating, examples of observable behavior (rather than personality
characteristics)
should be given.
5. A formal process should be developed in the event an employee disagrees with a
performance review.

30. THANK YOU FOR
LISTENING!