Employees generally like to see performance evaluations as having a direct effect on their work lives.

The performance management systems need to include: Decisions on: ◦ Who should evaluate performance◦ What format should be used◦ How the results should be utilized

Purposes of Performance Management System

◦Feedback - Let employees know, how well

they have done and allow for employee input. ◦Development – Identify areas in which

employees have deficiency or weaknesses. ◦Documentation - To meet legal requirements.

Difficulties in Performance Management Systems

◦ Focus on the individual: may draw strong emotions and may generate conflicts while disagreed

◦ Focus on the process: Existing setup may present barriers to a proper appraisal process.

◦ Additionally, Appraisers may be poorly trained.

1). Establishment/ Set the performance standards ◦ Derived from company’s strategic goals. ◦ Based on job analysis and job description.

2).Communication of performance standards to employee.

3).Measurement of performance tools : ◦ personal observation ◦ statistical reports ◦ oral reports ◦ written reports

4). Comparison of actual performance with the standards.

5). Discussion of appraisal with employee. 6). Identification of corrective action where

necessary. ◦ Immediate action deals with symptoms. ◦ Basic corrective action deals with causes.

Three Approaches: Absolute standards Relative standards Objectives

Evaluating Absolute Standards: An employee’s performance is measured,

against established standards. Evaluation is independent of any other

employee.

Relative standards: Employees are evaluated by comparing their performance to the performance of other employees.

Objective: Using Achieved Outcomes to Evaluate Employees Management by Objectives (MBO)◦Includes mutual objective setting and evaluation based on the accomplishment of the specific objectives

Using Achieved Outcomes to Evaluate Employees ◦Common elements in an MBO program are: goal specificity participative decision making an clear time period performance feedback

◦ Effectively increases employee performance and organizational productivity.

Use Behavior-Based Measures:

Measures based on specific descriptions of behavior are more job-related and draw out more inter-rater agreement than personality,

such as “loyalty” or “friendliness”.

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.

Provide Ongoing Feedback: Expectations and disappointments should be shared with employees on a frequent basis.

Train Appraisers: Untrained appraisers who do poor appraisals can demoralize employees and increase legal liabilities.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins