Purpose of Performance Appraisal

1. Purpose of Performance Appraisal • Employer’s side: • Communicate employer expectations. • Monitor performance to assess whether job’s requirements are met. • Document satisfactory and unsatisfactory performance. • Differentiate system from individual problems. • Develop plans to maintain & improve performance. • Employee’s side: • Communicate employee expectations. • Career and professional development. • Reinforcement and feedback.

2. Use of Performance Appraisal • Administrative: • Comparison of performance levels across employees and within employee. • Wage and salary adjustments. • Staffing decisions: promotions, demotions, transfers, layoffs. • Evaluation of recruitment, selection & placement systems. • Criterion for validating selection devices. • Developmental • Reinforcing individual’s behavior. • Career goals within organization. • Training and development needs assessment. • Job redesign & TQM. • Improving manager/employee relationship.

3. Who Conducts the Performance Appraisal? • Supervisors • Subordinates • Peers • Self • Outside Sources • Multisource (360 degree feedback) • How often? Annually, biannually, more frequently for new employees.

4. Performance Criteria and Approaches • Criteria: • Traits(leadership, initiative, cooperative) • Behaviors(based on job analysis) • Results(quantity, quality) • Best to use multiple criteria; differentially weighted. • Approaches: • Common (Category Rating methods) • Individual (Goals and Objectives; MBO) • Ranking (Comparative Methods)

5. Evaluation Against Common Performance Standards • Graphic Rating Scales • Performance rated by selected traits, behaviors or outputs. • Scale ranges from low to high. • Oldest & most widely used method. • Check Lists • Rater given adjectives, behavioral statements. • Forced-Choice • Statements appear to be equally favorable, but distinguish top performers. • Problems: • Ambiguous traits or behaviors. • Traits overlap. • Equal weighting of items, but how are they related to job?

6. CommonPerformance Standards (cont’d) • Behaviorally Rating Scales (BARS, BOS) • Based on job analysis and critical incident technique. • Steps: • Employee group identifies job dimensions based on job analysis. • Critical incidents developed for each job dimension. • Incidents used as anchors for scale. • Second group rates each incident as a cross-check. • Final version uses items agreed upon by both groups.

7. Evaluation Against Self: MBO Employee and manager review job description. They develop specific standards of performance. Employee sets individual performance objectives. Evaluation and feedback. Set new performance objectives. Useful for employee development in mgt. positions, but equity issues for high performers. Evaluation Against Others: Ranking Paired Comparisons Forced Distributions Useful for promotions, but limited use for compensation, employee development & feedback. Evaluation Against Self and Others

8. Rater Errors • Different standards for different employees. • Fair is as fair is perceived. • Halo Effect (positive or negative) • Good or poor rating in one category influences others. • Central Tendency • Lack of supervisory ability; difficulty with negative feedback. • Lack of knowledge of employee performance. • Organizational constraints against giving high or low ratings. • Leniency • Conflict aversion; attempt to make everyone happy. • High evaluations used to justify pay increases for mid-performers. • Lose high performers. • Strictness • Excuse for pay cuts; loss of morale and high performers. (cont’d)

9. Rater Errors (cont’d) • Recency Effect “What have you done for me lately?” • Avoid by keeping performance log & more frequent appraisals. • Primacy Effect • First impression overrides subsequent information. • New information distorted to fit first impression. • Similar/Dissimilar to Me Bias • Contrast Error • Rate according to others performance rather than performance standards. • Rater Training necessary to lessen errors.

10. Conducting Effective Performance Appraisals • Prepare in advance: • Separate administrative from developmental appraisal. • Focus on limited number of topics. • Support appraisal with facts. • Consider your role in subordinate’s performance. • State purpose of interview at beginning. • Indicate specific areas of good performance and those that need improvement. • Emphasize strengths to build on. • Suggest more acceptable/effective behaviors. (cont’d)

11. Set attainable work goals and action plans. • Focus on performance, not personality. • Invite participation • Shut up and really listen. • Reflect feelings. • Summarize all major points at end: • How current job relates to future promotions. • Performance levels necessary for promotion. • How they can improve and what results are expected by what time. • How organizational goals relate to their job.

12. Approaches to Performance Appraisal • TELL AND SELL: • “Let me tell you and convince you to change.” • Objective: Communicate appraisal and persuade employee to improve. • Outcome: one-way communication. • TELL AND LISTEN: • “Let me tell you and then hear your side.” • Objective: Communicate appraisal and allow release of defensive feelings. • Outcome: two-way communication. • PROBLEM-SOLVING APPROACH: • “Let’s figure this out together.” • Objective: Empowerment and exploration. • Outcome: Mutual learning.