Managing Performance Appraisal Chapter

Performance Appraisal

• Performance appraisal is a regular review of an employee's job performance and productivity in relation to certain pre-established criteria and organizational goals.
• It involves establishing job criteria, comparing and measuring actual performance vs. job criteria, and communicating results to employees.
• Performance appraisal can be conducted annually, every six months, or in a shorter cycle such as weekly or bi-weekly.

Purposes of Performance Appraisal

• The central reason for using performance appraisal is to measure, correct, and improve employee work performance.
• It can be used as a basis for employment decisions such as promotion, termination, transfers, and demotion.
• Two basic reasons for using performance appraisal that are favorable to both organizations and employees are:
  • As an administrative tool, helping in HR roles such as promotions, demotions, and re-assignments.
  • As a development-oriented tool, helping in feedback, identifying strengths and weaknesses, and acknowledging training needs.

Creating Performance Criteria

• Fundamental points to consider in creating performance criteria include:
  • Relevance to company strategic goals.
  • All aspects of an individual's responsibilities should be covered.
  • The more deficiencies, the more irrelevant the criterion becomes.

Performance Appraisal Methods

• Subordinate appraisal: done by a subordinate to his supervisor, also referred to as upward appraisal.
• Peer appraisal: done by an employee to another employee.
• 360-degree assessment: gathers feedback from peers, colleagues, supervisors, and external sources such as customers, investors, and suppliers.
• Character traits method: evaluates the extent to which an individual possesses certain traits or behavior.
• Behavior-based method: focuses on specific behaviors or actions of an employee.
• Output-based method: focuses on production or outcomes.

Types of Performance Appraisal Methods

• Graphic rating scale: evaluates the extent to which an individual possesses certain traits or behavior.
• Mixed standard rating scale: provides performance dimensions showing outstanding, average, and bad performance.
• Forced choice method: requires the evaluator to choose a single option in rating the employees.
• Written report method: prepares a written report that details the employee's strengths and weaknesses.
• Critical incident appraisal method: keeps a record of exceptionally good and unacceptable employee behaviors.
• Behavioral checklist method: rates behavioral aspects relevant to the employee's job.
• Behaviorally anchored rating scale: uses rating scales that are behaviorally anchored on a sequence of statements descriptive of the employee's behavior.

Performance Appraisal Errors

• Halo effect: gives an all-positive rating based on one or more traits and characteristics of an employee.
• Horn error: sees only a particular negative trait of an employee and gives the employee a low rating on all areas of performance.
• Central tendency: rates the performance of all or almost all employees as average.
• Strictness/leniency: rates employee performance as either too low or too high.
• Bias: negatively rates employee performance based on age, sex, race, and other personal characteristics.

Employee Appraisal Interview

• It is a friendly dialogue between an employee and the manager or supervisor.
• The employee gets the chance to improve their efficiency and change work manners.
• It assures a good environment and professional development.