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Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
PERFORMANCE APPRAISAL Chapter 8
Human Resource Management
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Performance appraisal
The process by which organizations evaluate individual job performance
OR
Process of defining “expectations” for employee's performance”, measuring,
evaluating against these “expectations” and providing “feedback”.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Uses of Performance Appraisal
Performance improvement- Performance feedback allows the employee, the manager & the HR personnel to intervene with appropriate actions to improve performanceCompensation adjustments – PA helps decision makers determine who should receive pay raisesPlacement decisions – Promotions, transfers, and demotions are based on PATraining & development needs – Poor performance may indicate a need for retraining. Likewise, good performance may indicate untapped potential that should be developed
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Uses of Performance Appraisal continue
Career Planning & Development- Performance feedback guides career decisions about specific career paths one should investigateStaffing Process Deficiencies – Good or bad performance implies strength or weaknesses in the personnel dept staffing proceduresJob Design Errors- Poor performance may be a symptom of improper job design. PA helps diagnose’ these errors.External Factors- Sometimes performance may be affected by external factor such as family, financial, health etc. If these factors are uncovered the HR dept may be able to provide assistanceFeedback To HR- Good or bad performance shows the overall function of HR department
Performance Appraisal Challenge
(a) Legal Constraints- PA must be free of discrimination. Whatever form of evaluation is used it should be reliable & valid; otherwise placement decisions which are based on PA can be challenged in the legal courtsGM example : From book
(b) Rater Biases-Bias is the inaccurate of a measurement. Human emotions of evaluators usually cause biasness in performance evaluation
(b) Rater Biases
The halo effect/ error
The error of central tendency
Leniency & strictness bias
Cross- cultural biases
Personal prejudice (discrimination)
The recency error
Rater Biases
Bias is the inaccurate of a measurement.
Human emotions of evaluators usually cause biasness in performance
evaluation
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Recency error
StereotypingPersonal prejudice
Cross-culture biases
Leniency &Strictness bias
Error ofCentral tendency
Halo effecterror
Distortions
Factors that can Distort Appraisals
• Leniency & Strictness bias– Leniency-Raters tend to be easy in evaluating the
performance of the employees– Strictness bias-opposite, it results when raters
being too harsh in their evaluations• Halo error
– When the raters personal opinion of the employee influences the measurement of performance.
– Distort performance evaluation if a supervisor likes or dislikes a person & rates him good or bad accordingly
– When rater evaluates personality traits (instead of behaviors)
Factors that can Distort Appraisals– Central tendency:
– Raters do not like to rate employees as effective or ineffective, they distort the ratings to make each employee appear average
– The reluctance to use the extremes of a rating scale
Cross- cultural biases– Rater holds expectations about human behavior that are
based on his culture– When people are expected to evaluate others from different
cultures, they may apply their cultural expectations to someone who has a diff set of beliefs or behaviors (“respect & esteem” may bias the rating)
– Due to cultural value of respect a young Asian employee would rate an elderly employee out of respect good
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Factors that can Distort Appraisals
– Stereotyping/Personal prejudice (discrimination)– raters dislike for a group or class of people may
distort the ratings those people receive– HR dept noticed that male supervisor give
undeserved low ratings to women who hold “traditionally male jobs”– this form of discrimination can lead to violation of EEO
– The recency error– Recent actions are remembered by the rater…
good or bad before evaluation.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
How to Reduce Rater Bias
When rater uses subjective performance measures, biases can be reduced through training, feedback & proper
selection of PA techniques……• Three approaches:
Absolute standards
Relative standards
Future-Oriented Appraisals
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Past- oriented Appraisal Methods
Evaluating absolute standards: • An employee’s performance is
measured against established standards.
• Evaluation is independent of any other employee.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Appraisal Methods
Relative standards: • Employees are evaluated by comparing
their performance to the performance of other employees.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Past- Oriented Appraisal Methods
Past-oriented approaches measures performance that has already occurred. The disadvantage of this approach is that past performance cannot be changed but employees do get feedback, which helps them
in their future performance.
• Rating scales Ranking Methods• Checklists Forced distribution• Forced choice method Point allocation method• Critical incident method Paired comparisons • Accomplishment Records• Behaviorally anchored rating scales• Field review method• Performance tests and observations
Absolute standards Relative standards
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Appraisal MethodsRelative standards:
– Rating Scale Appraisal: Appraiser rates employee on a number of job-related factors
– Subjective evaluation of an individuals performance along a scale from low to high
– Totally based on the opinions of rater– Criteria often is not directly related to job performance – Adv : simple, inexpensive– Dis-adv: specific criteria maybe omitted to make the
form applicable to a variety of jobs– Example: equipment maintenance-imp part of job, but
omitted b’coz it does not apply to all “Thus making evaluation ineffective”
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Checklist Appraisal
– Appraiser checks off behaviors that apply to the employee– Rater selects words or statement that describes the
employees performance & characteristics– With or without the rater knowledge the HR dept assign
weights to different items in the checklist depending on their importance- weighted checklist
– List contains enough items, it may provide an accurate picture
– Adv: limited training required– Dis adv: use of personality criteria instead performance
criteria- improper weights by HR dept– Does not allow rater to give relative ratings
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Appraisal Methods– Forced-Choice Appraisal: Appraisers choose from
sets of statements which appear to be equally favorable, the statement which best describes the employee.
– HR specialists code items on the form into predetermined categories such as learning ability, performance & interpersonal relations
1. Learns quickly…… works hard2. Absent too often…. Usually tardy 3. Work is reliable……performance is a good example
for othersDisadvantage: less job related statements employee may get offended--- one area overlooked
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Appraisal Methods
Critical Incident Appraisal• Rater record statements that describe extremely
good or bad behavior related to job performance• Recorded incidents briefly explain of what
happened• Incidents include both + (Positive)& - (Negative)
– Advantage: provide job related feedback» Reduces recency bias
– Disadvantage: rater looses interest in recording incidents after some time
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Appraisal Methods
• Accomplishment records: – Closely related to critical incident method– Primarily used by professionals– Employee-produced records of
publications, speeches, leadership roles & other professional related activities
– Disadvantage: list only includes good things the person did
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Behaviorally anchored rating scales
• BARS are families of evaluation approaches that identify & evaluate job related behaviors
• Specific name behaviors are used to give the rater reference points in making the evaluation
BES BOS
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Behavioral expectation scales• Specific behaviors are ranked along a scale For example BES for Bartender’s Customers Relations:
• Extremely Out Standing 7 you can expect this bartender• Performance to help customers in need.
• Good performance 6 you can expect this bartender to calm down arguments before they erupt into fires
-- --
• Poor performance 2 you can expect this bartender to check identification of customers on their first time in the bars.
• Extremely poor 1 you can expect this bartender Performance to pick up customers drinks
finished or not with little or no warning at close time.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Field review method • Skill representative of HR dept goes into field &
assists supervisor with their ratings• HR specialists obtain information from immediate
supervisor about employee performance• Expert prepares an evaluation• Evaluation sent to supervisor for review, changes,
approval and discussion with employee who was rated
• Reliability and comparability are more likely and rater biases are less common
• Bias may still exist since primary source of info is the supervisor
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Performance test & observations
Assignment
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Comparative Evaluation Approaches
Relative standards:– Individual Ranking: Employees are
ranked from highest to lowest– best to worst
– HR dept knows that certain employees are better than others but it doesn’t know by how much
– Paired Comparison: • Each individual is compared to every other.• Final ranking is based on number of times the
individual is preferred member in a pair.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Employees Tufail Waheed Asif Akmal Arif Sohrab Naeem Latif Farooq
1.Haris 1 1 4 1 1 1 1 9 1
2.Tufail 3 4 2 2 2 2 9 2
3.Waheed 4 3 3 3 3 9 3
4.Asif 4 4 4 4 9 4
5.Akmal 6 5 8 9 10
6.Arif 6 8 9 10
7.Sohrab 8 9 10
8.Naeem 9 10
9.Latif 9
10.Farooq
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Forced distributions
• Raters sort employees into different classifications, usually with specified proportions in each category
• Relative differences among employees are not known
• Overcome biases of Central tendency, leniency, and strictness errors
• Example from the book or handouts
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Point allocation
• Rater allocate a fixed number of points among employees in the group
• Good performers are given more points than poor performers
• Rater can recognize the relative differences between employees
• Halo effect & recency bias remain
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Point allocation method Points Employees • 17 A• 14 B• 13 C• 11 D• 10 E• 10 F• 9 G• 6 H• 5 I• 5 J• 100
Allocate all 100 points to all employees according to their
relative worth. The employee with the
maximum points is the best employee
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Future oriented appraisals
Future – orientated focus on future performance by evaluation an employee’s potential & setting future
goals.
• Self-appraisals • Management by Objectives (MBO’s)• Psychological appraisals • Assessment centers
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Self appraisals • Useful tool for employees who want to develop
themselves• Means evaluating oneself• Important dimension of self appraisals is the
employee involvement in & commitment to the improvement process
• Example: construction CO. supervisor telling employees what is expected- employees fill a sheet-understanding of the job before 10-15 days PA is to be done– job accomplishment, performance difficulties &
suggestions for improvement– tells supervisor what they need to do in future to eliminate roadblocks
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Future oriented appraisals
Management by Objectives (MBO)– includes mutual objective setting and
evaluation based on the attainment of the specific objectives
– It consists of goals that are objectively measured and mutually agreed on by employee and the manager.
Goal setting Action planning
Self-controlPeriodic review
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Appraisal Methods
Using Achieved Outcomes to Evaluate Employees – Common elements in an MBO program
are:• goal specificity• participative decision making• an explicit time period• performance feedback
– Effectively increases employee performance and organizational productivity.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Psychological appraisals• Org employs psychologists- to assess individuals future
potential, not that individuals past performance• In depth interviews, psychological tests, discussions with
supervisors and review of other evaluations• Raters writes an evaluation of employees intellectual,
emotional, motivational and other work related characteristics that may predict future performance
• relate to job opening for which the person is being considered- placement-development decisions can be made to shape persons career
• Slow and costly– good for young bright managers• Quality of appraisals depends on skills of psychologist-
some employees object to these evaluation
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Creating More Effective Performance Management Systems
Combine Absolute and Relative Standards:
• Absolute standards tend to be positively lenient; relative standards suffer when there is little variability.
• Combining the standards tends to offset the weaknesses of each.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Creating More Effective Performance Management Systems
Provide Ongoing Feedback:• Expectations and disappointments
should be shared with employees on a frequent basis.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Creating More Effective Performance Management Systems
Use Multiple Raters:• Increasing the number of raters leads to more
reliable and valid ratings. – Use peer evaluations: Coworkers offer
constructive insights and more specific evaluations.
– Upward appraisals allow employees to give their managers feedback.
– 360-Degree appraisals: Supervisors, peers, employees, team members, customers and others with relevant information evaluate the employee.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Creating More Effective Performance Management Systems
Rate Selectively– Appraisers only evaluate in those areas
about which they have sufficient knowledge.
– Appraisers should be organizationally as close as possible to the individual being evaluated.
– More effective raters are asked to do the appraisals.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Creating More Effective Performance Management Systems
Train Appraisers:• Untrained appraisers who do poor
appraisals can demoralize employees and increase legal liabilities.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Creating More Effective Performance Management Systems
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Guidelines for Evaluation Performance Interviews
Emphasize positive aspects of employee performance
Tell each employee that the evaluation session is to improve performance, not to discipline
Conduct the performance review session in private with the minimum interruptions
Review performance formally at least annually & more frequently for new employees or those who are performing poorly
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Guidelines for Evaluation Performance Interviews
Make criticisms specific, not general & vagueFocus criticisms on performance, not personality
characteristicsStay calm & do not argue with the person being evaluated Identify specific actions the employee can take to
improve performance Emphasize the evaluator’s willingness to assist the
employee’s efforts & to improve performanceEnd the evaluation sessions by stressing the positive
aspects of the employee’s performance