PERFORMANCE APPRAISAL SYSTEMS

1. PERFORMANCE APPRAISAL SYSTEMS

2. Introduction • Performance management: the process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals. • The process of performance management requires: • Knowing what activities and outputs are desired • Observing whether they occur • Providing feedback to help employees meet expectations

3. The Process of Performance Management • Performance appraisal: the measurement of specified areas of an employee’s performance. • Stages of the performance management process include: • Defining performance • Measuring performance • Providing feedback on performance • Using this type of performance management process in place of the traditional performance appraisal routine helps managers and employees focus on the organization’s goals.

4. Stages of the Performance Management Process

5. Purposes of Performance Management • Three broad purposes include: • Strategic purposes: helps the organization achieve its business objectives • Administrative purposes: the ways in which the organization uses the system to provide information for day-to-day decisions about salary, benefits, and recognition programs • Developmental purposes: serves as a basis for developing employees’ knowledge and skills

6. PERFORMANCE APPRAISAL METHODS • Essay Appraisal • Check List • Ranking method • Forced Distribution Method • Critical Incident method • MBO(Management by Objectives) • Behaviorally Anchored Rating Scale • 360 degree appraisal

7. ESSAY APPRAISAL • The rater is asked to express the strong as well as weak points of employee’s behavior. • The rater considers the employee’s : • Job knowledge • Understanding of company’s programs, policies, objectives etc • Relation with co-workers and supervisors • Planning, organizing and controlling ability • Attitude and perception

8. CHECK LIST • A checklist is a set of objectives or descriptive statements about the employee and his behavior. • Example: • Is the employee really interested in the task assigned? Yes / No • Is he respected by his colleagues? Yes / No

9. RANKING METHOD • Here the appraiser ranks all his employees from the most valuable to the least valuable, based on their performance and contributions to the organization.

10. GRAPHIC RATING METHOD • Lists traits and provides a rating scale for each unit. • The employer uses the scale to indicate the extent to which an employee displays each trait.

11. FORCED DISTRIBUTION METHOD • Here, the employees are categorized as “Top”, “Standard” and “Bottom” and placed under a forced distribution curve. • A certain percentage of employees have to be placed under each category.

12. FORCED DISTRIBUTION METHOD • Eg – General Electric • Eg - At Sun Micro Systems the format is top ranked staff 20%, full contributor 70%, and bottom 10%

13. CRITICAL INCIDENT METHOD • Here the manager prepares lists of statements of very effective and ineffective behavior of an employee. • These critical incidents represent the outstanding or poor behavior of the employees. • The manager periodically records critical incidents of employee’s behavior

14. EXAMPLE OF CRITICAL INCIDENT METHOD July 20 - Sales clerk patiently attended to the customers complaint. He is polite, prompt, enthusiastic in solving the customers’ problem July 20 - The sales assistant stayed 45 minutes beyond his break during the busiest part of the day. He failed to answer store manager’s call thrice. He is lazy, negligent, stubborn and uninterested in work

15. MANAGEMENT BY OBJECTIVES • MBO emphasizes collectively set goals that are tangible, verifiable, and measurable. • Focuses attention on goals rather than on methods. • Concentrates on Key Result Areas (KRA) Systematic and rational technique that allows management to attain maximum results from available resources by focusing on achievable goals

16. MANAGEMENT BY OBJECTIVES • Identify KRAs • Define expected results • Define authority and responsibility relationship • Conducting periodic progress review • Conducting annual performance review

17. BEHAVIOURALLY ANCHORED RATING SCALE(BARS) • It is a combination of rating scale and critical incidence method. • Steps: • Collect critical incidents Identify performance dimensions • Reclassification of incidents • Assigning scale values to incidents • Producing the final instrument

18. EXAMPLE OF BARS SYSTEM Dimension: Planning and Organizing

19. 360 DEGREE APPRAISAL • It is a systematic collection and feedback of performance data on an individual or group, derived from a number of stakeholders. • Data is gathered and fed back to the individual participant in a clear way designed to promote understanding, acceptance and ultimately behavior

20. PITFALLS IN PERFORMANCE APPRAISAL • Halo Effect • Leniency Effect • Stringency Effect • Recency Effect • Central Tendency Effect • Stereotyping

21. Preparing for a Feedback Session • To prepare for a feedback session managers should: • Be well prepared • Create the right context for the meeting • Select a neutral location • Enable the employee to be well prepared • Ask employees to complete a self-assessment ahead of time

22. When giving performance feedback, do it in an appropriate meeting place. Meet in a setting that is neutral and free of distractions. What other factors are important for a feedback session?

23. Conducting the Feedback Session • During the feedback session, managers can take any of three approaches: • Tell and sell approach: managers tell the employees their ratings and then justify those ratings • Problem-solving approach: managers and employees work together to solve performance problems in an atmosphere of respect and encouragement • Tell and listen approach: managers tell the employees their ratings and then let the employees explain their side of the story

24. Finding Solutions to Performance Problems • The feedback process should launch an effort to correct any problems. • identifying areas for improvement and ways to improve performance in those areas. • should consider whether the employee has the knowledge, skills, and abilities needed to perform the job effectively. • An employee’s level of motivation is affected by whether the employee is holding a job he or she wants.

25. Improving Performance

26. Group Exercise -- Lucy's • MANAGING PERFORMANCE: • The Purpose of this exercise is to apply the principles of Performance Management to a real business. • Context: • Lucy’s Restaurant: • History: Lucy's has grown from a small 3-person sandwich shop to a medium sized restaurant with nine employees to its current status as a large, full-service restaurant with 120 employees. • There are 6 leads among the wait staff who are responsible for the supervision and performance management of the 90 (including the leads) wait staff employees • You are the restaurant manager. • Your job is to evaluate the 6 lead wait staff. • I… What are the 5 criteria for evaluation? And how will you measure each? • Criteria ?Measures for Criteria? • II.. Using a scale of 1 to 5 (5 is the best rating) rate each person. • III. Each group must show one slide with the criteria and one with the rating results. • If time: • IV. Each group must have 2 members conduct a role-play with one person being the manager performing the performance review; and the other member is the lowest rated lead wait person.

27. CRITERIA ?

28. RATINGS

29. MANAGING PERFORMANCE: The Purpose of this exercise is to apply the principles of Performance Management to a real business. Context:Lucy’s Restaurant: History: Lucy’s has grown from a small 3-person sandwich shop to a medium sized restaurant with nine employees to its current status as a large, full-service restaurant with 120 employees.; There are 6 leads among the wait staff who are responsible for the supervision and performance management of the 90 (including the leads) wait staff employees You are the restaurant manager.Your job is to evaluate the 6 lead wait staff. . I… What are the 5 criteria for evaluation? And how will you measure each? II.. Using a scale of 1 to 5 (5 is the best rating) rate each person