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Managing Human ResourcesBohlander • Snell
© 2007 Thomson/South-Western.All rights reserved.
Appraising and Improving Performance
© 2007 Thomson/South-Western. All rights reserved. 8–2
Performance Appraisal and Other HRM Functions
Performance appraisal validates selection function
Performance appraisal validates selection function SelectionSelection
Selection should produce workers best able to meet job requirements
Selection should produce workers best able to meet job requirements
Performance appraisal determines training needs
Performance appraisal determines training needs
Training and Development
Training and Development
Training and development aids achievement of performance standards
Training and development aids achievement of performance standards
Performance appraisal is a factor in determining pay
Performance appraisal is a factor in determining pay
Compensation Management
Compensation Management
Compensation can affect appraisal of performance
Compensation can affect appraisal of performance
Performance appraisal judges effectiveness of recruitment efforts
Performance appraisal judges effectiveness of recruitment efforts
RecruitmentRecruitmentQuality of applicants determines feasible performance standards
Quality of applicants determines feasible performance standards
Performance appraisal justifies personnel actions
Performance appraisal justifies personnel actions Labor RelationsLabor Relations
Appraisal standards and methods may be subject to negotiation
Appraisal standards and methods may be subject to negotiation
© 2007 Thomson/South-Western. All rights reserved. 8–3
Performance Appraisal Programs
• Performance AppraisalA process, typically performed annually by a
supervisor for a subordinate, designed to help employees understand their roles, objectives, expectations, and performance success.
• Performance managementThe process of creating a work environment in which
people can perform to the best of their abilities.
© 2007 Thomson/South-Western. All rights reserved. 8–4
Figure 8–1 Purposes for Performance Appraisal
© 2007 Thomson/South-Western. All rights reserved. 8–5
Figure 8–3 Establishing Performance Standards
© 2007 Thomson/South-Western. All rights reserved. 8–6
Strategic RelevanceStrategic Relevance
Individual standards directly relate to strategic goals.Individual standards directly relate to strategic goals.
Criterion DeficiencyCriterion Deficiency
Standards capture all of an individual’s contributions.Standards capture all of an individual’s contributions.
Criterion ContaminationCriterion Contamination
Performance capability is not reduced by external factors.Performance capability is not reduced by external factors.
Reliability(Consistency)Reliability(Consistency)
Standards are quantifiable, measurable, and stable.Standards are quantifiable, measurable, and stable.
Performance Standards Characteristics
© 2007 Thomson/South-Western. All rights reserved. 8–7
Figure 8–4 Alternative Sources of Appraisal
Source: From The Wall Street Journal—permission, Cartoon Features Syndicate.
© 2007 Thomson/South-Western. All rights reserved. 8–8
Sources of Performance Appraisal
• Manager and/or SupervisorAppraisal done by an employee’s manager and
reviewed by a manager one level higher.
• Self-Appraisal Appraisal done by the employee being evaluated,
generally on an appraisal form completed by the employee prior to the performance interview.
• Subordinate AppraisalAppraisal of a superior by an employee, which is
more appropriate for developmental than for administrative purposes.
© 2007 Thomson/South-Western. All rights reserved. 8–9
Sources of Performance Appraisal
• Peer Appraisal Appraisal by fellow employees, compiled into a
single profile for use in an interview conducted by the employee’s manager.
Why peer appraisals are used more often:1. Peer ratings are simply a popularity contest.
2. Managers are reluctant to give up control over the appraisal process.
3. Those receiving low ratings might retaliate against their peers.
4. Peers rely on stereotypes in ratings.
© 2007 Thomson/South-Western. All rights reserved. 8–10
Sources of Performance Appraisal
• Team Appraisalbased on TQM concepts, that recognizes team
accomplishment rather than individual performance
• Customer AppraisalA performance appraisal that, like team appraisal, is
based on TQM concepts and seeks evaluation from both external and internal customers
© 2007 Thomson/South-Western. All rights reserved. 8–11
Figure 8–5 Pros and Cons of 360-Degree Appraisal
Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, “Has 360-Degree Feedback Gone Amok?” Academy of Management Executive 12, no. 2 (May 1998): 86–94; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, “Does 360-Degree Feedback Negatively Affect Company Performance?” HRMagazine 47, no. 6 (June 2002): 54–59; Maury Peiperl, “Getting 360-Degree Feedback Right,” Harvard Business Review 79, no. 1 (January 2001): 142–47; Joyce E. Bono and Amy E. Colbert, Understanding Responses to Multi-Source Feedback: The Role of Core Self-Evaluations,” Personnel Psychology 58, no. 1 (Spring 2005): 171–205.
• PROS The system is more comprehensive in that responses are
gathered from multiple perspectives.
Quality of information is better. (Quality of respondents is more important than quantity.)
It complements TQM initiatives by emphasizing internal/external customers and teams.
It may lessen bias/prejudice since feedback comes from more people, not one individual.
Feedback from peers and others may increase employee self-development.
© 2007 Thomson/South-Western. All rights reserved. 8–12
Figure 8–5 Pros and Cons of 360-Degree Appraisal (cont’d)
Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, “Has 360-Degree Feedback Gone Amok?” Academy of Management Executive 12, no. 2 (May 1998): 86–94; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, “Does 360-Degree Feedback Negatively Affect Company Performance?” HRMagazine 47, no. 6 (June 2002): 54–59; Maury Peiperl, “Getting 360-Degree Feedback Right,” Harvard Business Review 79, no. 1 (January 2001): 142–47; Joyce E. Bono and Amy E. Colbert, Understanding Responses to Multi-Source Feedback: The Role of Core Self-Evaluations,” Personnel Psychology 58, no. 1 (Spring 2005): 171–205.
• CONS The system is complex in combining all the responses.
Feedback can be intimidating and cause resentment if employee feels the respondents have “ganged up.”
There may be conflicting opinions, though they may all be accurate from the respective standpoints.
The system requires training to work effectively.
Employees may collude or “game” the system by giving invalid evaluations to one another.
Appraisers may not be accountable if their evaluations are anonymous.
© 2007 Thomson/South-Western. All rights reserved. 8–13
360-Degree Performance Appraisal System Integrity Safeguards• Assure anonymity. • Make respondents accountable.• Prevent “gaming” of the system. • Use statistical procedures. • Identify and quantify biases.
© 2007 Thomson/South-Western. All rights reserved. 8–14
Training Performance Appraisers
Recency errorsRecency errors
Leniency or strictness errorsLeniency or strictness errors
Common rater-related errorsCommon rater-related errors
Error of central tendencyError of central tendency
Similar-to-me errorsSimilar-to-me errors
Contrast and halo errorsContrast and halo errors
© 2007 Thomson/South-Western. All rights reserved. 8–15
Rater Errors
• Error of Central TendencyA rating error in which all employees are rated about
average.
• Leniency or Strictness ErrorA rating error in which the appraiser tends to give all
employees either unusually high or unusually low ratings.
• Recency ErrorA rating error in which appraisal is based largely on
an employee’s most recent behavior rather than on behavior throughout the appraisal period.
© 2007 Thomson/South-Western. All rights reserved. 8–16
Rater Errors
• Contrast ErrorA rating error in which an employee’s evaluation is
biased either upward or downward because of comparison with another employee just previously evaluated.
• Similar-to-Me ErrorAn error in which an appraiser inflates the evaluation
of an employee because of a mutual personal connection.
© 2007 Thomson/South-Western. All rights reserved. 8–17
Rater Errors: Training and Feedback
• Rating Error TrainingObserve other managers making errorsActively participate in discovering their own errorsPractice job-related tasks to reduce the errors they
tend to make
• Feedback Skills TrainingCommunicating effectivelyDiagnosing the root causes of performance problemsSetting goals and objectives
© 2007 Thomson/South-Western. All rights reserved. 8–18
Performance Appraisal Methods
Trait Methods
Trait Methods
Graphic Rating Scale
Graphic Rating Scale
Mixed Standard Scale
Mixed Standard Scale
Forced-ChoiceForced-Choice
EssayEssay
© 2007 Thomson/South-Western. All rights reserved. 8–19
Trait Methods
• Graphic Rating-Scale MethodA trait approach to performance appraisal whereby
each employee is rated according to a scale of individual characteristics.
• Mixed-Standard Scale MethodAn approach to performance appraisal similar to other
scale methods but based on comparison with (better than, equal to, or worse than) a standard.
© 2007 Thomson/South-Western. All rights reserved. 8–20
Highlights in HRM 2
Graphic Rating Scale with Provision for Comments
© 2007 Thomson/South-Western. All rights reserved. 8–21
Highlights in HRM 3
Example of a Mixed-Standard Scale
© 2007 Thomson/South-Western. All rights reserved. 8–22
Trait Methods
• Forced-Choice MethodRequires the rater to choose from statements
designed to distinguish between successful and unsuccessful performance.
1. ______ a) Works hard _____ b) Works quickly 2. ______ a) Shows initiative _____ b) Is responsive to
customers 3. ______ a) Produces poor quality _____ b) Lacks good work
habits
• Essay MethodRequires the rater to compose a statement describing
employee behavior.
© 2007 Thomson/South-Western. All rights reserved. 8–23
Behavioral Methods
Behavioral Methods
Behavioral Methods
Critical IncidentCritical Incident
Behavioral ChecklistBehavioral Checklist
Behaviorally Anchored Rating Scale (BARS)
Behaviorally Anchored Rating Scale (BARS)
Behavior Observation Scale (BOS)
Behavior Observation Scale (BOS)
© 2007 Thomson/South-Western. All rights reserved. 8–24
Behavioral Methods
• Critical Incident MethodCritical incident
An unusual event that denotes superior or inferior employee performance in some part of the job
The manager keeps a log or diary for each employee throughout the appraisal period and notes specific critical incidents related to how well they perform.
• Behavioral Checklist MethodThe rater checks statements on a list that the rater
believes are characteristic of the employee’s performance or behavior.
© 2007 Thomson/South-Western. All rights reserved. 8–25
Behavioral Methods
• Behaviorally Anchored Rating Scale (BARS)Consists of a series of vertical scales, one for each
dimension of job performance; typically developed by a committee that includes both subordinates and managers.
• Behavior Observation Scale (BOS)A performance appraisal that measures the frequency
of observed behavior (critical incidents).Preferred over BARS for maintaining objectivity,
distinguishing good performers from poor performers, providing feedback, and identifying training needs.
© 2007 Thomson/South-Western. All rights reserved. 8–26
Highlights in HRM 4
Example of a BARS for Municipal Fire Companies
FIREFIGHTING STRATEGY: Knowledge of Fire Characteristics.
Source: Adapted from Landy, Jacobs, and Associates. Reprinted with permission.
© 2007 Thomson/South-Western. All rights reserved. 8–27
Highlights in HRM 5
Sample Items from Behavior Observation Scales
© 2007 Thomson/South-Western. All rights reserved. 8–28
Results Methods
• Productivity MeasuresAppraisals based on quantitative measures (e.g.,
sales volume) that directly link what employees accomplish to results beneficial to the organization. Criterion contamination Focus on short-term results
• Management by Objectives (MBO)A philosophy of management that rates performance
on the basis of employee achievement of goals set by mutual agreement of employee and manager.
© 2007 Thomson/South-Western. All rights reserved. 8–29
Figure 8–6 Performance Appraisal under an MBO Program
MANAGEMENT BY OBJECTIVES
© 2007 Thomson/South-Western. All rights reserved. 8–30
Summary of Appraisal Methods
• Trait MethodsAdvantages
Are inexpensive to develop Use meaningful dimensions Are easy to use
Disadvantages Have high potential for rating errors Are not useful for employee counseling Are not useful for allocating rewards Are not useful for promotion decisions
© 2007 Thomson/South-Western. All rights reserved. 8–31
Summary of Appraisal Methods (cont’d)• Behavioral Methods
Advantages Use specific performance dimensions Are acceptable to employees and superiors Are useful for providing feedback Are fair for reward and promotion decisions
Disadvantages Can be time-consuming to develop/use Can be costly to develop Have some potential for rating error
© 2007 Thomson/South-Western. All rights reserved. 8–32
Summary of Appraisal Methods (cont’d)• Results Methods
Advantages Have less subjectivity bias Are acceptable to employees and superiors Link individual to organizational performance Encourage mutual goal setting Are good for reward and promotion decisions
Disadvantages Are time-consuming to develop/use May encourage short-term perspective May use contaminated criteria May use deficient criteria
© 2007 Thomson/South-Western. All rights reserved. 8–33
Figure 8–7 Summary of Various Appraisal Methods
© 2007 Thomson/South-Western. All rights reserved. 8–34
Appraisal Interviews
Tell and Listen - nondirectiveTell and Listen - nondirective
Types of Appraisal InterviewsTypes of Appraisal Interviews
Tell and Sell - persuasionTell and Sell - persuasion
Problem Solving - focusing the interview on problem resolution and employee development
Problem Solving - focusing the interview on problem resolution and employee development
© 2007 Thomson/South-Western. All rights reserved. 8–35
Figure 8–8 Factors That Influence Performance