© Farhan Mir 2008 IMS Human Resource Management MBA & BBA Performance Appraisal Lectures...

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Human Resource Human Resource ManagementManagement

MBA & BBAMBA & BBA

Performance AppraisalLectures 19,20,21

Course Lecturer: Farhan Mir

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Performance Performance Management DefinedManagement Defined

The means through which managers ensure that employees’ activities and outputs are congruent with the organization's goals.

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To provide information that can serve the organization’s goals and that complies with the law, a performance evaluation system must provide accurate and reliable data.

This is enhanced if a systematic process is followed.

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The Performance Management The Performance Management ProcessProcess

Identify specific performance goals (organization’s strategy)

Establish job expectations (job analysis ==> performance measures)

Examine work performed

Evaluate performance

Give feedback to employee (interview)

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Performance Appraisal and Other HRM Performance Appraisal and Other HRM FunctionsFunctions

Performance appraisal Performance appraisal validates selection functionvalidates selection function

Performance appraisal Performance appraisal validates selection functionvalidates selection function SelectionSelectionSelectionSelection

Selection should produce Selection should produce workers best able to meet workers best able to meet job requirementsjob requirements

Performance appraisal Performance appraisal determines training needsdetermines training needs

Training and Training and DevelopmentDevelopment

Training and development Training and development aids achievement of aids achievement of performance standardsperformance standards

Performance appraisal is a Performance appraisal is a factor in determining payfactor in determining pay

Compensation Compensation ManagementManagement

Compensation can affect Compensation can affect appraisal of performanceappraisal of performance

Performance appraisal judges Performance appraisal judges effectiveness of recruitment effectiveness of recruitment effortsefforts

RecruitmentRecruitmentRecruitmentRecruitmentQuality of applicants Quality of applicants determines feasible determines feasible performance standardsperformance standards

Quality of applicants Quality of applicants determines feasible determines feasible performance standardsperformance standards

Performance appraisal justifies Performance appraisal justifies personnel actionspersonnel actions

Performance appraisal justifies Performance appraisal justifies personnel actionspersonnel actions Labor RelationsLabor RelationsLabor RelationsLabor Relations

Appraisal standards and Appraisal standards and methods may be subject to methods may be subject to negotiationnegotiation

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Insufficient Insufficient reward for reward for

performanceperformance

Insufficient Insufficient reward for reward for

performanceperformance

Manager Manager lacks lacks

informationinformation

Manager Manager lacks lacks

informationinformationLack of Lack of

appraisal appraisal skillsskills

Lack of Lack of appraisal appraisal

skillsskills

Manager not Manager not taking taking

appraisal appraisal seriouslyseriously

Manager not Manager not taking taking

appraisal appraisal seriouslyseriously

Manager not Manager not preparedprepared

Manager not Manager not being honest being honest

or sincereor sincere

Manager not Manager not being honest being honest

or sincereor sincere

Employee not Employee not receiving receiving ongoing ongoing feedbackfeedback

Ineffective Ineffective discussion of discussion of

employee employee developmentdevelopment

Ineffective Ineffective discussion of discussion of

employee employee developmentdevelopment

Unclear Unclear languagelanguage

Performance Performance appraisals fail appraisals fail

because…because…

Performance Performance appraisals fail appraisals fail

because…because…

Presentation Slide 8–2

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Who Should Evaluate the Who Should Evaluate the Employee?Employee?

Immediate supervisorRating by a committee of several supervisorsRating by the employee’s peers (co-workers)Rating by the employee’s subordinatesRating by someone outside the immediate work situationSelf-evaluationRating by a combination of approaches

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Performance AppraisalPerformance Appraisal

Appraisal ProgramsAppraisal ProgramsAppraisal ProgramsAppraisal Programs

AdministrativeAdministrativeAdministrativeAdministrative DevelopmentalDevelopmentalDevelopmentalDevelopmental

CompensationCompensationCompensationCompensation Ind. EvaluationInd. EvaluationInd. EvaluationInd. Evaluation

Job EvaluationJob EvaluationJob EvaluationJob Evaluation

EEO/AA SupportEEO/AA SupportEEO/AA SupportEEO/AA Support

Training Training Training Training

Career PlanningCareer PlanningCareer PlanningCareer Planning

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Methods for MeasurementMethods for MeasurementComparative

straight rankingstraight ranking

alternation rankingsalternation rankings

paired comparisonspaired comparisons

forced distributionforced distribution

Attributegraphic rating scalegraphic rating scale

mixed standard scalesmixed standard scales

forced choiceforced choice

essayessay

Behavioralcritical incidentscritical incidents

Behavioral ChecklistBehavioral Checklist

BARSBARS

BOSBOS

assessment centersassessment centers

ResultsProductivityProductivity

MBOMBO

TQMTQM

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Performance Evaluation Methods

Individual Evaluation Methods

Multiple-Person Evaluation Methods

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Individual Evaluation Methods

Graphic Rating Scale

Forced Choice

Essay Evaluation

Critical Incident Technique

Checklists and Weighted ChecklistsBehaviorally

Anchored Rating Scales

Behavioral Observation Scales

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Multiple-Person Evaluation Multiple-Person Evaluation MethodsMethods

RankingPaired

Comparison

ForcedDistribution

Management byObjectives

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Alternative Sources of Alternative Sources of AppraisalAppraisal

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Sources of Performance Sources of Performance AppraisalAppraisal

Manager and/or SupervisorAppraisal done by an employee’s Appraisal done by an employee’s manager and reviewed by a manager one manager and reviewed by a manager one level higher.level higher.

Self-Appraisal Performance By the employee being evaluated, By the employee being evaluated, generally on an appraisal form completed generally on an appraisal form completed by the employee prior to the performance by the employee prior to the performance interview.interview.

Subordinate AppraisalAppraisal of a superior by an employee, Appraisal of a superior by an employee, which is more appropriate for which is more appropriate for developmental than for administrative developmental than for administrative purposes.purposes.

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Sources of Performance Sources of Performance AppraisalAppraisal

Peer AppraisalAppraisal by fellow employees, compiled Appraisal by fellow employees, compiled into a single profile for use in an interview into a single profile for use in an interview conducted by the employee’s manager.conducted by the employee’s manager.

Team AppraisalAppraisal, based on TQM concepts, Appraisal, based on TQM concepts, recognizing team accomplishment rather recognizing team accomplishment rather than individual performance.than individual performance.

Customer AppraisalAppraisal that seeks evaluation from both Appraisal that seeks evaluation from both external and internal customers.external and internal customers.

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Alternative Sources of Performance AppraisalAlternative Sources of Performance Appraisal

Supervisor

Subordinates

CustomersSelf

Presentation Slide 8–4

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The New Approach towards The New Approach towards Evaluation: from Single Vs. Evaluation: from Single Vs.

360-Degree Appraisal360-Degree Appraisal

The system is more comprehensive in that responses are gathered from multiple perspectives.

It may lessen bias/prejudice since It may lessen bias/prejudice since feedback comes from more people, not feedback comes from more people, not one individual.one individual.

Feedback from peers and others may Feedback from peers and others may increase employee self-development.increase employee self-development.

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360-Degree Appraisal360-Degree AppraisalProblems

The system is complex in combining all The system is complex in combining all the responses.the responses.

Feedback can be intimidating and cause Feedback can be intimidating and cause resentment if employee feels the resentment if employee feels the respondents have “ganged up.”respondents have “ganged up.”

There may be conflicting opinions, There may be conflicting opinions, though they may all be accurate from though they may all be accurate from the respective standpoints.the respective standpoints.

Employees may collude or “game” the Employees may collude or “game” the system by giving invalid evaluations to system by giving invalid evaluations to one another.one another.

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Trait MethodsTrait Methods

Trait Trait MethodsMethods

Graphic Rating Graphic Rating ScaleScale

Mixed Standard Mixed Standard ScaleScale

Forced-ChoiceForced-ChoiceForced-ChoiceForced-Choice

EssayEssayEssayEssay

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Graphic Rating-Scale MethodA trait approach to performance appraisal A trait approach to performance appraisal whereby each employee is rated whereby each employee is rated according to a scale of individual according to a scale of individual characteristics.characteristics.

Mixed-Standard Scale MethodAn approach to performance appraisal An approach to performance appraisal similar to other scale methods but based similar to other scale methods but based on comparison with (better than, equal to, on comparison with (better than, equal to, or worse than) a standard.or worse than) a standard.

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Graphic Graphic Rating Rating Scale Scale With With Provision Provision For For CommentCommentss

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Forced-Choice MethodRequires the rater to choose from Requires the rater to choose from statements designed to distinguish statements designed to distinguish between successful and unsuccessful between successful and unsuccessful performance.performance.

Essay MethodRequires the rater to compose a Requires the rater to compose a statement describing employee behavior.statement describing employee behavior.

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Example Of A Mixed-Example Of A Mixed-standard Scalestandard Scale

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Behavioral MethodsBehavioral Methods

Behavioral Behavioral MethodsMethods

Critical IncidentCritical IncidentCritical IncidentCritical Incident

Behavioral ChecklistBehavioral ChecklistBehavioral ChecklistBehavioral Checklist

Behaviorally Anchored Behaviorally Anchored Rating Scale (BARS)Rating Scale (BARS)

Behavior Observation Behavior Observation Scale (BOS)Scale (BOS)

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Behavioral MethodsBehavioral MethodsCritical Incident

An unusual event denoting superior or An unusual event denoting superior or inferior employee performance in some inferior employee performance in some part of the job.part of the job.

Behaviorally Anchored Rating Scale (BARS)

A performance appraisal that consists of A performance appraisal that consists of a series of vertical scales, one for each a series of vertical scales, one for each dimension of job performance.dimension of job performance.

Behavior Observation Scale (BOS)

A performance appraisal that measures A performance appraisal that measures the frequency of observed behavior.the frequency of observed behavior.

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Examples Of A Bars For Examples Of A Bars For Municipal Fire CompaniesMunicipal Fire Companies

HRM 4Source: Adapted from Landy, Jacobs, and Associates. Reprinted with permission.

FIREFIGHTING STRATEGY: Knowledge of Fire Characteristics.

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Results MethodsResults Methods

Management by Objectives (MBO)A philosophy of management that rates A philosophy of management that rates performance on the basis of employee performance on the basis of employee achievement of goals set by mutual achievement of goals set by mutual agreement of employee and manager.agreement of employee and manager.

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Performance Appraisal under Performance Appraisal under an MBO Programan MBO Program

Figure 8.6

Management by Objectives

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Problems with the MBO Problems with the MBO ProcessProcess

Too much paperwork is involvedToo many objectives are set, and confusion occursMBO is forced into jobs where establishing objectives is extremely difficultFailure to tie in MBO results and rewards

Too much emphasis on the short termSupervisors are not trained in the MBO process and the mechanics involvedOriginal objectives are never modifiedMBO is a used as a rigid control device that intimidates rather than motivates

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Performance AppraisersPerformance Appraisers

Recency errorsRecency errorsRecency errorsRecency errors

Leniency or strictness errorsLeniency or strictness errorsLeniency or strictness errorsLeniency or strictness errors

Common rater-related errorsCommon rater-related errorsCommon rater-related errorsCommon rater-related errors

Similar-to-me errorsSimilar-to-me errorsSimilar-to-me errorsSimilar-to-me errors

Contrast and halo errorsContrast and halo errorsContrast and halo errorsContrast and halo errors

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Rater ErrorsRater Errors

Leniency or Strictness ErrorA rating error in which the appraiser A rating error in which the appraiser tends to give all employees either tends to give all employees either unusually high or unusually low ratings.unusually high or unusually low ratings.

Recency ErrorA rating error in which appraisal is based A rating error in which appraisal is based largely on an employee’s most recent largely on an employee’s most recent behavior rather than on behavior behavior rather than on behavior throughout the appraisal period.throughout the appraisal period.

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Rater ErrorsRater Errors

Similar-to-Me ErrorAn error in which an appraiser inflates the An error in which an appraiser inflates the evaluation of an employee because of a evaluation of an employee because of a mutual personal connection.mutual personal connection.

© Farhan Mir 2008 IMS Human Resource Management MBA & BBA Performance Appraisal Lectures...

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