Chapter 8

Performance Appraisals

Performance Management

• Provides data to assess the current

skill, experience, and performance level

of every employee

• Impacts human resource planning,

training & development, career

development & compensation forecasts

• Requires effective performance

appraisal system i.e. valid

Uses of Performance

Appraisal

Performance improvement

Compensation adjustments

Placement decisions

Training & Development needs

Career planning & development

Identify deficiencies in staffing process

Detect informational inaccuracies

Diagnose job design errors

Avoidance of discrimination

External challenges

Key Elements

Employee

Feedback

Employee

Records &

HR Decisions

Human

Performance

Performance

Measures &

Criteria

Performance

Appraisal

Interview

Appraisal Systems

• Job-related

– System evaluates critical behaviours that

constitute job success

• Practical

– Understood and relatively simple

• Performance standards

– Related to the desired results of each job

• Performance measures

– Reports on critical behaviours

Performance Measures

Indirect

Objective

• Rater must evaluate substitutes for

performance (constructs)

• Verifiable by others

• Usually quantitative

Subjective• Not verifiable by others

• Usually rater’s personal opinions

Direct• Rater actually sees the employee’s

performance

Problems with Subjective

Measures

Rater Biases

Haloeffect

Error of central

tendency

Leniency &strictness bias

Recencyeffect

Personalprejudice

Characteristics for

Effectiveness

Effective

Performance

Appraisal

System

Validity

Reliability

Input into system development

Acceptable standards

Acceptable goals

Control of standards

more

Characteristics for

Effectiveness

Effective

Performance

Appraisal

System

Frequency of feedback

Rater training

Ratee training

Input into interview process

Appraisal consequences

Different sources (raters)

Past-Oriented:

Noncomparative

Critical

incident

Behaviourallyanchored

•Rater records performance statements

•Describes very effective/ineffective behaviour

•Behaviours are placed along a scale

•Looks at specific job-related factors

Rating scale•Oldest and most widely used method

•Subjective i.e. based on the rater’s opinion

•Responses may be given numerical values

•Appraisal based on a test

•Test may be pen & pencil or demonstration

Tests &

observations

Past-Oriented: Comparative

Forceddistributions

•Categories are developed

•Employees assigned to categories

Ranking •Employees ranked from best to worst

Future-Oriented Methods

Management-by-objectives

Assessmentcentre

•Employee & supervisor jointly establish goals

•Employee is later evaluated on the objectives

•Usually used to evaluate future potential

•Multiple types of evaluation

•Usually used for managers

Self-

Appraisals•Useful to further self-development

•Can be used with any evaluation approach

Recent Developments

• 360-degree appraisal

– In line with the trend toward flatter

organizations

– Combination of perspectives e.g. peer,

self, supervisor, client

• Balanced scorecard

– Integrates organizational performance

measures such as financial, customer

satisfaction, internal processes, learning

Evaluation Interviews

• Performance review sessions that give

employees feedback about their past

performance or future potential

• Interview should be a positive,

performance-improving dialogue

Effective Evaluation

Interviews

• Emphasize positive aspects of employee performance

• Tell each employee the evaluation session is to improve performance not to discipline

• Conduct the performance review session in private without interruptions

• Review performance formally at least annually

• Make criticisms specific, not general and vague

Effective Evaluation

Interviews

• Focus criticisms on performance, not on personality

• Stay calm and do not argue with the person being evaluated

• Identify specific actions to improve performance

• Emphasize willingness to assist the employee’s efforts to improve performance

• End the evaluation by stressing positive aspects and reviewing improvement plans