The Gentleman’s “Three”By: Brian J. Hall & Andrew Wasynczuk

Debanshu Ghosh

Rahul Sahu

Rupa Ray

Soni Hembrom

OVERVIEW

What the name signifies?Case studyHow to solve the problem?

GENTLEMAN’S “THREE”

PERFORMANCE APPRAISAL

It is based on the HBS case study “Compensation and performance evaluation at Arrow Eletronics” by Brian J.Hall and Carleen Madigan.

PERFORMANCE APPRAISAL

According to Dessler, “Performance appraisal may be defined as any procedure that involves (1) Setting work standards, (2) Assessing employee’s actual performance relative to these standards; and (3) Providing feedback to the employees with the aim of motivating the person to eliminate performance deficiencies or to continue to perform above par.”

CONFLICTING ROLES FOR PERFORMANCE APPRAISAL

TYPES OF PERFORMANCE INFORMATION

JobPerformance?

JobPerformance?

Trait-basedInformation

Trait-basedInformation

Behavior-basedInformation

Behavior-basedInformation

Results-basedInformation

Results-basedInformation

THE CASE STUDY...

No one gets a low score in this company performance reviews. Is there a better system for evaluating employees???

CHARACTERS

1. Human Resource & VP – Nils Ekdahl

2. CFO – Anita Fierst

3. CEO – Hal Taylor

4. Chief Architect – Michael Milanese

PROBLEM

The corporation wanted to cut $20

million dollar from their payroll after the

merger and acquisition

Circale Corporation

OBJECTIVE : Decisions about postmerger personnel cuts

THE STATED GOAL : Place the best person in every position

PREVIOUSLY :

• Objective evaluation was given importance• It would be wrong to simply pare away employee from the acquired

company and retain the veteran• The executives had received powder-pu performance reviewsff for years

NOW :

• HR department create a new system that would force manager to be brutally honest

GRADE INFLATION

Seven performance dimensions, ranging from “delivers results” to “builds internal

goodwill,” managers were asked to rate employees on a five-point scale: “Significantly

below others” was a 1, “somewhat below others” a 2, and so on up to “significantly

above others,” a 5.

RESULT

Everyone was above average No one get a 2s or 1s Average is 4.6 “But even the best-designed system can’t force

people to be honest without an incentive. I’ve just generated an entire database of results I can’t use”

“Performance reviews have very limited usefulness. Managers don’t like to be honest. The best way to evaluate an employee is to look at his unit’s P&L. If there’s no relevant P&L, you’re pretty much flying blind.”

People give almost everyone the same grade, and distinctions become impossible to make managers seemed to have given high marks to people who were up for promotion anyway and low ratings to employees they didn’t know well. In one case, a manager gave someone all 1s. The employee, it turned out, had recently died.

Well-executed evaluations give a company the data it requires to develop talent. Employees need to know what they’re doing well and what they’re doing poorly so that they can improve.

People will just manufacture low grades for employees they don’t like and fudge the rest.

EVALUATION REDUX

RESULT

Now Everyone Is Average 3

Should Ekdahl order another round of reviews or make do with the data he has???

RATE ERRORS

Error of Central Tendency A rating error in which all employees are rated about average.

Leniency or Strictness Error A rating error in which the appraiser tends to give all employees either

unusually high or unusually low ratings.

Recency Error A rating error in which appraisal is based largely on an employee’s

most recent behavior rather than on behavior throughout the appraisal period.

Contrast Error A 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 Error An error in which an appraiser inflates the evaluation of an employee

because of a mutual personal connection.

METHODS

360 degree appraisal Assessment Centre Management by objectives BARS HRA Balanced scorecard

360 DEGREE APPRAISAL

This technique is understood as systematic collection of performance data on an individual or group derived from a no. of stake holders – The stake holders being the immediate supervisor, team members, customers, peers and self.

It is also referred as multi source assessment or multi-rater feedback.

MANAGEMENT BY OBJECTIVES

It is a process of collaborative goal setting by manager & subordinate; the extent to which the goals are accomplished is a major factor in evaluating and rewarding the subordinate’s performance.

It is primarily a corporate performance system leads up to individual efforts.

BARS :BEHAVIOURALLY ANCHORED RATING SCALES

It is a sophisticated rating method in which supervisors construct rating scale associated with behavioural anchors.

It combines the benefits of critical incidence and graphic rating scale by anchoring rating scale with specific behavioural examples of good or poor performance.

BALANCED SCORE CARD

It is a way of measuring organizational, business unit or department success, balancing long term and short term actions & balancing different measures of success:

Financial CustomerInternal Business ProcessesLearning & Growth

It is a conceptual framework for translating an organizations vision into a set of performance indicators distributed among four perspectives

THANK YOU...