Performance Appraisal & Management

Performance Appraisal

• Performance appraisal is a crucial aspect of human resource management
• It helps organizations assess employee performance

Performance Management

• Performance management ensures employee activities align with organizational goals

Performance Appraisal Purpose

• Organizations use it to gather insights into individual job performance

Performance Feedback Objective

• Performance feedback provides employees with valuable information regarding their performance

Real-World Relevance

• Performance management is widely used but is often undervalued

Manager Perspectives

• Many managers do not find annual evaluations particularly helpful/useful

Employee Surveys

• Nearly half are caught off guard by the ratings they receive
• Many employees are disappointed, expecting higher ratings

Effective Performance Management Process

• Consists of six key steps: defining performance outcomes, developing employee goals, providing support, evaluating performance, identifying improvements, and providing consequences

Performance Management Process - Step 1

• Focuses on understanding and identifying important performance outcomes, aligning these with organizational strategies and goals

Performance Management Process - Step 2

• Centers on understanding the process to achieve set goals
• This involves identifying measurable goals, behaviors, and activities

Performance Management Process - Step 3

• Involves providing the necessary training, resources, tools, and frequent feedback to employees
• It also focuses on accomplishments and challenges influencing performance

Performance Management Process - Step 4

• Involves a discussion between manager and employee
• Involves comparing targeted performance goals and behaviors with actual results, often through annual reviews

Performance Management Process - Step 5

• Focuses on identifying how employees can capitalize on strengths and address weaknesses

Performance Management Process - Step 6

• Ensures that consequences are provided based on performance outcome, or lack there of

Strategic Purpose of Performance Management

• Aims to link employee activities with organizational goals
• It defines necessary results, behaviors, and employee characteristics
• Measurement and feedback systems are developed in this step

Administrative Purpose of Performance Management

• It is designed to inform salary decisions, promotions, and layoffs
• It also aids retention, termination, and performance recognition
• It acknowledges that managers may feel uneasy when rating employees

Developmental Purpose of Performance Management

• Serves to improve employee performance
• It addresses deficiencies and identifies the causes
• It also helps high performers gain access to training and opportunities

Strategic Congruence in Performance Measures

• Underlines the need for a performance management system to guide employees toward contributing to the organization's success
• It emphasizes flexibility and critical success factors

Strategic Congruence Implementation

• Achieved through nonfinancial measures and models
• Utilizes existing databases, statistical and qualitative methods, and audits

Validity in Performance Measures

• Requires measures to be neither deficient nor contaminated
• Deficiency refers to incomplete measurement, while contamination involves irrelevant factors
• Maximizing the overlap between actual and measured performance is key

Reliability in Performance Measures

• Includes interrater reliability, where consistency is achieved among raters, and test-retest reliability over time

Acceptability in Performance Measures

• Hinges on fairness across procedural, interpersonal, and outcome categories

Specificity in Performance Measures

• Ensures relevance to both strategic and developmental purposes
• Involves measuring what employees must do to achieve company goals

The Comparative Approach to Measuring Performance

• Focuses on ranking
• Consists of simple ranking, from highest to lowest performer
• It uses alternation ranking, by crossing names off a list

Forced Distribution in Comparative Approach

• Is used to rank employees into predetermined categories
• It is seen as more ethical if the system is communicated clearly, is part of a positive culture, and allows appeals

Performance and Development Based on Forced Distribution and Ranking

• Category A (above average) accelerates development and recognizes contributions
• Category B (average) provides feedback for improvement
• Category C(below expectations) addresses specific skill development with an agreed timetable

Paired Comparison in the Comparative Approach

• Involves comparing each employee with every other employee
• It is generally regarded as time consuming

Evaluating the Comparative Approach

• It virtually eliminates leniency issues, yet detachment from goals and subjectivity can cause issue
• Individuals are often unaware of what to do differently
• This may lead to lower acceptance of evaluations

The Attribute Approach to Measuring Performance

• Relies on Graphic Rating Scales to evaluate a list of traits using a five-point scale, either discrete or continuous

Mixed-Standard Scales in Attribute Approach

• Involves definitions around relevant performance
• Statements representing good, average, and poor performance are developed

Evaluating the Attribute Approach

• A key attribute is that they are easy to develop and generalize
• They suffer from issues with congruence and vague performance standards

The Behavioral Approach

• Makes use of Behaviorally Anchored Rating Scales (BARS)
• This can increase interrater reliability but may bias recall

Behavioral Approach - the BOS

• Behavioral Observation Scales (BOS) may require more information than managers utilize

Competency Models in the Behavioral Approach

• Are useful for recruiting, selection, training, and development
• They identify top employees, serve as a foundation for development plans
• Competency models must remain up-to-date

Evaluating the Behavioral Approach

• It links strategy to specific behaviors, provides clear guidance, and is highly acceptable and reliable
• Behaviors and measurement must be monitored and revised continually
• It assumes one best way exists to perform the job

The Results Approach

• Uses objectives in performance measuring
• These objectives are set by managers
• Three components; goal setting (SMART), measurement types, and manager subordinate collaboration

Best Practices in Goal Setting

• Goal setting occurs between manager and employee for three to five goals
• Goals need to be challenging and meaningful with set time frames
• They must also relate to rewards, and function, team and employee goals should relate to company goals

Balanced Scorecard from The Results Approach

• Involves key perspectives like financial, customer, internal, and learning and growth

ProMES (Productivity Measurement and Evaluation System) from The Results Approach

• Establishes activities that need accomplishing
• It defines indicators of the product, establishes contingencies, and develops feedback

Evaluating the Results-Based Approach

• Subjectivity is minimized and results are linked to strategy
• Contamination and deficiency can be challenges
• Individuals are likely to focus on the measured tasks and lose focus on other important tasks

The Quality Approach

• Encompasses customer orientation, error prevention, and continuous improvement

Shortcomings of the Quality Approach

• Existing systems focus on quantity, not quality
• Employees tend to be accountable for what they can not control
• Success rewards and business results rarely get appropriately connected

Statistical Process Control Techniques

• Used to implement the Quality Approach
• Include process-flow analysis, cause-and-effect diagrams, Pareto charts, control charts, histograms and scattergrams

The Quality Approach evaluation

• Emphasizes a systems-oriented focus and personal trait assessments
• The evaluation of personal traits can be difficult to measure unless the organization is team oriented

Managers as a source of information

• Considered the most frequent and reliable source of performance review information
• Managers are often more motivated
• Feedback from supervisors is related to accuracy and perceptions

Peers as a source of information

• Have expert knowledge, and the most opportunity to watch
• They are in the best position to praise each other in day-to-day activities
• Peers are not always expected to provide feedback

Direct Reports as a source of performance review

• Good source to evaluate how a manager treats employees
• Subordinates hold power in this scenario, causing satisfaction to be emphasized

Self assessments

• Self-assessments are great but not the only source of information
• Tendency to inflate assessments

Customer reviews

• Especially useful because they observe a company's employees or customer service directly
• Customers also determine the product service

360-Degree Appraisal

• Multiple raters such as boss, peers, customers, and subordinates provide input
• These reviews are the most effective at eliminating bias

Technology in Performance Management

• Technology impacts in three ways
• Including web based, social media, and electronic tracking services

Social Performance and its purpose

• Social media helps track behavior on the internet

Privacy Concerns surrounding technology in Performance Management

• Rights and dignity of employees can be threatened when monitored
• Productivity decreases and motivation diminishes; can also cause stress

Addressing Rater Errors

• Ratings can be made more valid and reliable by minimizing errors
• Heuristics include bias and appraisal politics

Rater Errors

• "Similar to me" occurs when those similar to the rater are rated higher than others
• Contrast occurs when employees are compared to outstanding peers and are negatively affected
• Leniency and strictness occur when the employee is always graded high or always graded low, respectively
• Central tendency is when the overall grade is average
• Halo occurs when one positive aspect impacts all areas in reviews
• Horns occurs when areas are rated low because of an initially negative impression

Addressing Rater Errors Through Training

• Error awareness
• Frame of reference is a great training tool to provide context
• Unconscious bias requires training
• Calibration meetings allows those being assessed to work together to meet the standard

Effective Performance Feedback

• Provide feedback consistently
• Ask the employee for session feedback
• Encourage continuous conversations
• Recognize and focus on accomplishments
• Remain calm
• Give constructive feedback

Actions for Diagnosing Poor Performance

• Consider the impact, determine the root cause, and meet with employee

Actions for Managing Employees' Performance

• Take into account the employees abilities and motivation
• Solid performers possess both
• Misdirected efforts are motivated but lack ability/skills
• Under-utilizers have the ability but lack motivation
• Deadwood lack both

Legal Guidelines in Performance Management

• Avoid discrimination based on gender, race, or orientation
• Avoid claims of "unjust dismissal"