1

PERFORMANCE

APPRAISAL

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Chapter Objectives

Describe the 360-degree feedback

evaluation method.

Define performance appraisal and identify

the uses of performance appraisal.

Discuss the performance appraisal

environmental factors.

Describe the performance appraisal

process.

3

Chapter Objectives (Continued)

Identify the aspects of a person’s performance that an organization should evaluate.

Identify who may be responsible for performance appraisal and the performance period.

Identify the various performance appraisal methods used.

Describe how computer software is used in performance appraisal.

4

Chapter Objectives (Continued)

List the problems associated with

performance appraisal.

Explain the characteristics of an effective

appraisal system.

Describe the legal implications of

performance appraisal.

Explain how the appraisal interview should

be conducted.

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Performance Appraisal Defined

System of review and

evaluation of job

performance

Assesses

accomplishments and

evolves plans for

development

6

Performance Management

Process that significantly affects

organizational success

Managers and employees work

together to set expectations, review

results and reward performance.

7

Appraiser Discomfort

Performance appraisal process cuts into manager’s time

Experience can be unpleasant when employee has not performed well

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Employee Anxiety

Creates anxiety for appraised employee

Rationale for Performance

Appraisal

Provides legal and other benefits for

employers

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Uses of Performance Appraisal

Human resource planning

Recruitment and selection

Training and development

Career planning and development

Compensation programs

Internal employee relations

Assessment of employee potential

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Performance Appraisal

Environmental Factors

External:

Legislation requiring

nondiscriminatory

appraisal systems

Labor unions

Factors within the internal

environment, such as type

of corporate culture

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The Performance Appraisal ProcessExternal Environment

Internal EnvironmentPlan the Performance

Identify Performance Goals

Communicate Goals

Establish Performance Criteria

Determine:

Responsibility for Appraisal

Appraisal Period

Appraisal Method(s)

Computer Software

Examine Work Performed

Appraise the Results

Conduct Appraisal Interview

Discuss Goals for Next Period

Anticipate and Consider

Problems in PA

Effective PA Systems

Management Support

Coaching and T&D

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Establish Performance Criteria

Traits

Behaviors

Competencies

Goal Achievement

Improvement

Potential

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Responsibility for Appraisal

Immediate supervisor

Subordinates

Peers

Rationale for evaluations conducted

by team members

Self-appraisal

Customer appraisal

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The Appraisal Period

Prepared at specific

intervals

Usually annually or

semiannually

Period may begin with

employee’s date of hire

All employees may be

evaluated at same time

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Performance Appraisal Methods

360-Degree Valuation

Rating Scales

Critical Incidents

Essay

Work Standards

Ranking

Paired Comparisons

Forced Distribution

Behaviorally

Anchored Rating

Scales (BARS)

Result-Based

Systems

Assessment Centers

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360-Degree Valuation

Multi-rater evaluation

Input from multiple levels with firm and

external sources

Focuses on skills needed across

organizational boundaries

More objective measure of performance

Process more legally defensible

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Rating Scales

Rates according to

defined factors

Judgments are

recorded on a scale

Many employees are

evaluated quickly

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Critical Incidents

Written records of highly favorable

and unfavorable work actions

Appraisal more likely to cover entire

evaluation period

Does not focus on last few weeks or

months

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Essay

Brief narrative describing

performance

Tends to focus on extreme

behavior

Depends heavily on

evaluator's writing ability

Comparing essay

evaluations might be

difficult

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Work Standards

Compares performance to

predetermined standard

Standards - normal output of

average worker operating at

normal pace

Time study and work sampling

used

Workers need to know how

standards were set

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Ranking

All employees from group

ranked in order of overall

performance

Comparison is based on

single criterion, such as

overall performance

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Paired Comparison

Variation of ranking method

Compares performance of

each employee with every

other employee in the group

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Forced Distribution

Rater assigns individual in work

group to a limited number of

categories similar to a normal

distribution

Assumes all groups of employees

have the same distribution

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Behaviorally Anchored Rating

Scales (BARS)

Combines traditional rating

scales and critical

incidents methods

Job behaviors derived

from critical incidents

described more objectively

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Result-Based Systems

Manager and

subordinate agree on

objectives for next

appraisal

Evaluation based on

how well objectives

accomplished

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Assessment Centers

Adjunct to appraisal

system

Predict employee

potential for advancement

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Use of Computer Software

Available in recording

appraisal data

Reduces required

paperwork

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Problems in Performance Appraisal

Lack of objectivity

Halo error

Leniency/strictness

Central tendency

Recent behavior bias

Personal bias

Manipulating the evaluation

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Reasons for Intentionally Inflating or Lowering Ratings

Believe accurate ratings would have a damaging effect on subordinate’s motivation and performance.

Improve employee’s eligibility for merit raises.

Avoid airing department’s “dirty laundry.”

Avoid creating negative permanent record that might haunt employee in the future.

Protect good workers whose performance suffered because of personal problems.

Reward employees displaying great effort even when results were relatively low.

Avoid confrontation with hard-to-manage employees.

Promote a poor or dislike employee up and out of the department.

Scare better performance out of an

employee.

Punish a difficult or rebellious

employee.

Encourage a problem employee to

quit.

Create a strong record to justify a

planned firing.

Minimize the amount of merit increase

a subordinate receives.

Comply with an organizational edict

that discourages managers from giving

high ratings.

Inflating Ratings Lowering Ratings

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Characteristics of an Effective

Appraisal System

Job-related criteria

Performance expectations

Standardization

Trained appraisers

Continuous open communication

Performance reviews

Due process

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Legal Implications

With enactment of

Americans with Disabilities

Act and civil rights

legislation, employers must

prepare for more

discrimination lawsuits and

jury trials related to

performance appraisals

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The Appraisal Interview

Scheduling the interview

Interview structure

Use of praise and criticism

Employees’ role

Use of software

Concluding the interview