Performance Appraisal

Performance Appraisal: 

11- 1 Performance Appraisal

Outline: 

11- 2 Outline Performance Measurement Functions of Performance Appraisal Types of Performance to Measure Performance Appraisal Methods Performance Raters Performance Feedback

Performance Management: 

11- 3 Performance Management Goal: Improve the effectiveness & efficiency of the organization by: Aligning the employee’s work behaviors & results with the organization’s goals Improving the employee’s work behaviors & results On-going, integrative process

Performance Management Cycle: 

11- 4 Performance Management Cycle Source of figure: Fisher, Schoenfeldt, & Shaw (2003), Figure 11.1

Functions of Performance Appraisal: 

11- 5 Functions of Performance Appraisal Employee Development Tool Set goals Involve employee Measurable Challenging but realistic, difficult but achievable Empower employee to achieve goals Provide feedback to reinforce and sustain performance Provide help and advice to improve performance

Functions of Performance Appraisal: 

11- 6 Functions of Performance Appraisal Employee Development Tool (cont’d.) Assist employee in achieving career progression goals Determine training needs Administrative Tool Link rewards to performance Pay increases, promotions, demotions, dismissals, disciplinary actions Evaluate HRM policies and programs Example: before-after study (pretest-posttest design)

Types of Performance to Measure: 

11- 7 Types of Performance to Measure Results-based (results-oriented): measure the results produced by the employee Examples for a retail store manager: Sales of the store Profit per square foot Inventory shrinkage Customer satisfaction Makes sense for many jobs Use it where results matter

Types of Performance to Measure: 

11- 8 Types of Performance to Measure Results-based (cont’d.): Challenges: Which results are relevant may not be obvious for all jobs Some results are not under the employee’s control May foster “results at all costs” mentality May interfere with teamwork May be difficult to provide effective feedback

Types of Performance to Measure: 

11- 9 Types of Performance to Measure Behavior-based (behavior-oriented): measure the employee’s behaviors Examples for a retail store manager: Good teamwork Welcome & thank customers Good attendance Monitor customers & employees for theft Makes sense for many jobs Use it where how the employee produces results matters

Types of Performance to Measure: 

11- 10 Types of Performance to Measure Behavior-based (cont’d.): Makes it easier to provide detailed feedback Examples for a retail store manager: Results: “You didn’t achieve your sales goal.” Behavior: “You are allowing your employees to wait too long before offering help to customers.” Challenges: Difficult to capture the full range of relevant behaviors Different behaviors can lead to the same results — do we always care which behaviors were used?

Types of Performance to Measure: 

11- 11 Types of Performance to Measure Trait-based (trait-oriented): measure the employee’s abilities and other personal characteristics Examples for a retail store manager: Pleasant personality Effective communicator Usually a bad idea: Poor reliability & validity Weak linkages with job effectiveness Measurement subject to biases (racism, ) Difficult to provide effective feedback

Performance Appraisal Methods: 

11- 12 Performance Appraisal Methods Objective Measures: measure performance in terms of things we can see and count Production measures: count units produced Sales measures: count sales Personnel data: count things in the employee’s personnel file, such as: Number of times late to work Number of times absent Number of disciplinary actions taken

Performance Appraisal Methods: 

11- 13 Performance Appraisal Methods Objective Measures (cont’d.) Performance tests: evaluate a sample of the employee’s work Business unit performance measures: Examples: Stock price Market share Profit measures: profits, return on sales, return on assets, return on equity Use for managers with business unit responsibility

Performance Appraisal Methods: 

11- 14 Performance Appraisal Methods Subjective measures: measure performance using human judgment Ranking: subjectively rank employees from best to worst Example: 1. Bob 2. Carol 3. Ted 4. Alice

Performance Appraisal Methods: 

11- 15 Performance Appraisal Methods Subjective measures (cont’d.) Paired Comparisons: in all possible pairs of employees, subjectively rate which employee is better # of paired comparisons = (N 2 – N)/2 Example: N = 4 → 6 paired comparisons: Bob > Carol; Bob > Ted; Bob > Alice Carol > Ted; Carol > Alice Ted > Alice Example: N = 12 → 66 paired comparisons

Outline: 

11- 16 Outline Performance Measurement Functions of Performance Appraisal Types of Performance to Measure Performance Appraisal Methods Performance Raters Performance Feedback

Performance Appraisal Methods: 

11- 17 Performance Appraisal Methods Subjective measures (cont’d.) Rating scale (graphic rating scale): subjectively rate the employee’s performance on a labeled numeric measuring scale Rate overall job performance as well as specific aspects of job performance Example: 5 = Excellent 4 = Very satisfactory 3 = Satisfactory 2 = Unsatisfactory 1 = Very unsatisfactory

Examples of Rating Scales: 

11- 18 Examples of Rating Scales Use a graphic or just use words? Label all the points in the scale, or just label the endpoints of the scale? Odd or even number of points in the scale? Fewer points in the scale, or more points in the scale? Source of figure: Fisher, Schoenfeldt, & Shaw (2003), Figure 11.7

Performance Appraisal Methods: 

11- 19 Performance Appraisal Methods Subjective measures (cont’d.) Forced distribution: evaluator must place a fixed percentage of employees in each performance category Example: 10% must be rated 5 = Excellent 20% must be rated 4 = Very satisfactory 50% must be rated 3 = Satisfactory 15% must be rated 2 = Unsatisfactory 5% must be rated 1 = Very unsatisfactory But what if the distribution being forced doesn’t fit?

Performance Appraisal Methods: 

11- 20 Performance Appraisal Methods Subjective measures (cont’d.) Behaviorally Anchored Rating Scale (BARS): replace the vague descriptors in a traditional rating scale with specific examples of performance Example: Customer assistance 5 = Could be expected to volunteer to help customer and to walk with customer to desired product location 4 = Could be expected to walk with customer to desired product location when asked for help by customer 3 = Could be expected to tell and point customer to where the desired product is located 2 = Could be expected to shrug shoulders and walk away when asked for assistance by customer 1 = Could be expected to hide from customers in the employee break-room

Performance Appraisal Methods: 

11- 21 Performance Appraisal Methods Subjective measures (cont’d.) BARS (cont’d.) A different scale will be needed for each aspect of performance Advantages: Job-relevant measures of performance Involves employees in developing scales Disadvantages: More work to develop BARS (time & money) Employees may not consistently fit into one of the BARS categories (solution to this problem is BOS)

Performance Appraisal Methods: 

11- 22 Performance Appraisal Methods Subjective measures (cont’d.) Behavioral Observation Scales (BOS): evaluators rate the frequency with which an employee engages in specific behaviors Example: on a list of possible employee behaviors, rate how often the employee engages in each behavior using a rating scale where: 1 = almost never  5 = almost always Weighted checklist: from a list of possible employee behaviors, check off the ones that apply to the employee

Performance Appraisal Methods: 

11- 23 Performance Appraisal Methods Management By Objectives (MBO): At the beginning of the review period, meet with employee and agree on goals for the employee to achieve by the end of the period Involve employee in setting goals Measurable goals Challenging but realistic, difficult but achievable At the end of the review period, meet with employee and, for each goal, determine if the goal has been achieved

Performance Raters: 

11- 24 Performance Raters Who should we ask to rate an employee’s job performance? Need: Opportunity to observe the employee’s performance Ability to translate observations of employee’s performance into a rating Motivation to do a good job of observing and rating

Performance Raters: 

11- 25 Performance Raters Options for performance raters: Supervisors Self-evaluation Peers (co-workers) Subordinates Customers 360-Degrees

Performance Feedback: 

11- 26 Performance Feedback Employees need good feedback Allow time & eliminate distractions Types of feedback sessions: Tell-and-sell Tell-and-listen Problem-solving Mixture of tell-and-sell and problem-solving

Performance Feedback: 

11- 27 Performance Feedback Doesn’t hurt to cover both administrative (e.g., pay increase) and developmental (e.g., future goals) issues in one feedback session Provide specific feedback Don’t say: “You’re always late.” Do say: “You were more than 5 minutes late on 25 separate occasions in the last 3 months. This is unacceptable. We need to develop (1) a specific goal concerning prompt attendance, and (2) an action plan that you will follow to achieve the goal.”

Outline: 

11- 28 Outline Performance Measurement Functions of Performance Appraisal Types of Performance to Measure Performance Appraisal Methods Performance Raters Performance Feedback