Human Resource Management PDF

Chapter 9 Performance Management and Appraisal Part Three | Training and Development Copyright © 2011 Pearson Education,...

Chapter 9 Performance Management and Appraisal Part Three | Training and Development Copyright © 2011 Pearson Education, Inc. PowerPoint Presentation by Charlie Cook publishing as Prentice Hall The University of West Alabama WHERE WE ARE NOW… Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–2 LEARNING OUTCOMES 1. Define performance management and discuss how it differs from performance appraisal. 2. Set effective performance appraisal standards. 3. Describe the appraisal process. 4. Develop, evaluate, and administer at least four performance appraisal tools. 5. Explain and illustrate the problems to avoid in appraising performance. 6. Discuss the pros and cons of using different raters to appraise a person’s performance. 7. Perform an effective appraisal interview. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–3  Basic Concepts in Performance Management and Appraisal Performance Appraisal Performance Management The process of setting An integrated approach work standards, to ensuring that an assessing employee’s performance performance, and supports and contributes providing feedback to to the organization’s employees to motivate, strategic aims. correct, and continue their performance. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–4 Performance Management Performance Management Is the continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning their performance with the organization’s goals. How Performance Management Differs From Performance Appraisal A continuous process for continuous improvement A strong linkage of individual and team goals to strategic goals A constant reevaluation and modification of work processes Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–5  Basic Building Blocks of Performance Management Ongoing Goal Direction sharing performance alignment monitoring Coaching and Rewards, Ongoing development recognition, and feedback support compensation Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–6 Basic Building Blocks of Performance Management Performance management’s basic building blocks or “DNA” are: Direction sharing means communicating the company’s higher-level goals (including its vision, mission, and strategy) throughout the company and then translating these into doable departmental, team, and individual goals. Goal alignment means having a process that enables any manager to see the link between an employee’s goals and those of his or her department and company. Ongoing performance monitoring usually includes using computer- based systems that measure and then e-mail progress and exception reports based on the person’s progress toward meeting his or her performance goals. Ongoing feedback includes both face-to-face and computer-based feedback regarding progress toward goals. Coaching and developmental support should be an integral part of the feedback process. Rewards, recognition, and compensation all play a role in providing the consequences needed to keep the employee’s goal-directed performance on track.  Why Performance Management? Total Quality Management The Performance Resolution of Appraisal Issues Management Approach Strategic Goal Alignment Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–8 An Introduction to Appraising Performance Why Appraise Performance? 1 Is basis for pay and promotion decisions. 2 Plays an integral role in performance management. Helps in correcting deficiencies and reinforcing good 3 performance. 4 Is useful in career planning. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–9  Defining the Employee’s Goals and Work Standards Guidelines for Effective Goal Setting Set Assign Assign Assign Encourage SMART specific measurable challenging/ participation goals goals goals doable goals Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–10 Setting SMART Goals Specific, and clearly state the desired results. Measurable in answering “how much.” Attainable, and not too tough or too easy. Relevant to what’s to be achieved. Timely in reflecting deadlines and milestones. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–11 (Un)Realistic Appraisals Why managers do soft appraisals? The fear of having to hire and train someone new. The unpleasant reaction of the appraisee. An appraisal process that’s not conducive to candor. Hazards of Soft Appraisals Employee loses the chance to improve before being discharged or forced to change jobs. Lawsuits arising from dismissals involving inaccurate performance appraisals. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–12 Performance Appraisal Roles The Supervisor’s Role Usually do the actual appraising Must be familiar with basic appraisal techniques Must understand and avoid problems that can cripple appraisals Must know how to conduct appraisals fairly Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–13 Performance Appraisal Roles (cont’d) The HR Department’s Role Serves a policy-making and advisory role. Provides advice and assistance regarding the appraisal tool to use. Trains supervisors to improve their appraisal skills. Monitors the appraisal system effectiveness and compliance with EEO laws. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–14 Effectively Appraising Performance Steps in Appraising Performance 1 Defining the job and performance criteria 2 Appraising performance 3 Providing feedback session Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–15 Designing the Appraisal Tool What to Measure? Work output (quality and quantity) Personal competencies Goal (objective) achievement How to Measure? Generic dimensions Actual job duties Behavioral competencies Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–16 Performance Appraisal Methods Appraisal Methodologies 1 Graphic rating scale 6 Narrative forms Behaviorally anchored rating 2 Alternation ranking 7 scales (BARS) 3 Paired comparison 8 Management by objectives (MBO) Computerized and Web-based 4 Forced distribution 9 performance appraisal 5 Critical incident 10 Merged methods Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–17 Graphic rating scale Figure 9-2 shows one graphic rating scale. A graphic rating scale lists traits (such as “quality and reliability” or “teamwork”) and a range of performance values (from “unsatisfactory” to “outstanding,” or “below expectations” to “role model”) for each trait.  FIGURE 9–2 Sample Graphic Rating Performance Rating Form Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–19  Figure 9-3 shows part of an appraisal form for a pizza chef. This form assesses the job’s main sets of job- specific duties, one of which is “Maintain adequate inventory of pizza dough.” Here you would assess how well the employee did in exercising each of these duties  FIGURE 9–3 One Item from an Appraisal Form Assessing Employee Performance on Specific Job-Related Duties Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–21  Some graphic rating forms assess several things. Figure 9-4 (Section I) assesses the employee’s performance relating to both competencies and objectives. The employee and supervisor would fill in the objectives section at the start of the year, and then assess results and set new ones as part of the next appraisal.  FIGURE 9–4 Appraisal Form for Assessing Both Competencies and Specific Objectives Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–23  Some graphic rating forms assess several things. In Figure 9-4, Section II illustrates the competencies an employee is expected to develop and exhibit such as “identifies and analyzes problems” (Problem Solving), and “maintains harmonious and effective work relationships with co-workers and constituents” (Teamwork).  FIGURE 9–4 Appraisal Form for Assessing Both Competencies and Specific Objectives (cont’d) Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–25  Ranking employees from best to worst on a trait or traits is another option. Supervisors choosing the alternation ranking method would use a form like that in Figure 9-5 to alternately choose and list employees who are the highest on the characteristic being measured and the ones who are the lowest.  FIGURE 9–5 Scale for Alternate Ranking of Appraisee Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–27  The paired comparison method helps make the ranking method more precise. For every trait (quantity of work, quality of work, and so on), you pair and compare every subordinate with every other subordinate. In the paired comparison method, you make a chart, as in Figure 9-6, of all possible pairs of employees for each trait.  FIGURE 9–6 Ranking Employees by the Paired Comparison Method Note: + means “better than.” - means “worse than.” For each chart, add up the number of +’s in each column to get the highest ranked employee. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–29  With the critical incident method, the supervisor keeps a log of positive and negative examples (critical incidents) of a subordinate’s work-related behavior. Every 6 months or so, supervisor and subordinate meet to discuss the latter’s performance, using the incidents as examples. In Table 9-1, one of the assistant plant manager’s continuing duties was to supervise procurement and to minimize inventory costs. The critical incident log shows that the assistant plant manager let inventory storage costs rise 15%; this provides an example of what performance she must improve in the future.  TABLE 9–1 Examples of Critical Incidents for Assistant Plant Manager Continuing Duties Targets Critical Incidents Schedule production 90% utilization of Instituted new production for plant personnel and machinery scheduling system; decreased in plant; orders delivered late orders by 10% last month; on time increased machine utilization in plant by 20% last month Supervise procurement Minimize inventory costs Let inventory storage costs rise of raw materials and while keeping adequate 15% last month; over-ordered on inventory control supplies on hand parts “A” and “B” by 20%; under- ordered part “C” by 30% Supervise machinery No shutdowns due Instituted new preventative maintenance to faulty machinery maintenance system for plant; prevented a machine breakdown by discovering faulty part Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–31  All or part of the written appraisal may be in narrative form as shown in Figure 9-7. The supervisor’s narrative assessment aids the employee in understanding where his or her performance was good or bad, and how to improve that performance.  FIGURE 9–7 Appraisal-Coaching Worksheet Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–33  A behaviorally anchored rating scale (BARS) is an appraisal tool that anchors a numerical rating scale with specific examples of good or poor performance. Its proponents say it provides better, more equitable appraisals than do the other appraisal tools. It takes more time to develop a BARS, but the tool has several advantages Behaviorally Anchored Rating Scale (BARS) Developing a BARS Advantages of BARS 1. Write critical incidents A more accurate gauge 2. Develop performance Clearer standards dimensions Feedback 3. Reallocate incidents Independent dimensions 4. Scale the incidents Consistency 5. Develop a final instrument Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–35  Figure 9-8 presents an example of a section of a final BARS instrument that lists the critical incidents that serve as behavioral anchors on the performance scale for the dimension Salesmanship Skills.  FIGURE 9–8 Example of a Behaviorally Anchored Rating Scale for the Dimension Salesmanship Skills Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–37 Management by Objectives (MBO) A comprehensive and formal organization-wide goal-setting and appraisal program requiring: 1. Setting of organization’s goals 2. Setting of departmental goals 3. Discussion of departmental goals 4. Defining expected results (setting individual goals) 5. Conducting periodic performance reviews 6. Providing performance feedback Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–38  Using MBO Potential Problems with MBO Conflict with Setting unclear Time-consuming subordinates over objective appraisal process objectives Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–39 Computerized and Web-Based Performance Appraisal Systems Allow managers to keep notes on subordinates. Notes can be merged with employee ratings. Software generates written text to support appraisals. Allows for employee self-monitoring and self-evaluation. Electronic Performance Monitoring (EPM) Systems Use computer network technology to allow managers access to their employees’ computers and telephones. Managers can monitor the employees’ rate, accuracy, and time spent working online. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–40  FIGURE 9–9 Online Performance Appraisal Tool Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–41  Dealing with Performance Appraisal Problems Potential Rating Scale Appraisal Problems Unclear Halo Central Leniency or Bias standards effect tendency strictness Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–42  Guidelines for Effective Appraisals How to Avoid Appraisal Problems Get Know the Use the Keep a Be agreement on problems right tool diary fair a plan Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–43 Choosing the Right Appraisal Tool Criteria for Choosing an Appraisal Tool Employee Accessibility Ease-of-use Accuracy acceptance Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–44  FIGURE 9–10 Selected Best Practices for Administering Fair Performance Appraisals Base the performance review on duties and standards from a job analysis. Try to base the performance review on observable job behaviors or objective performance data. Make it clear ahead of time what your performance expectations are. Use a standardized performance review procedure for all employees. Make sure whoever conducts the reviews has frequent opportunities to observe the employee’s job performance. Either use multiple raters or have the rater’s supervisor evaluate the appraisal results. Include an appeals mechanism. Document the appraisal review process and results. Discuss the appraisal results with the employee. Let the employees know ahead of time how you’re going to conduct the review and use the results. Let the employee provide input regarding your assessment of him or her. Indicate what the employee needs to do to improve. Thoroughly train the supervisors who will be doing the appraisals. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–45  FIGURE 9–11 Guidelines for a Legally Defensible Appraisal 1. Preferably, conduct a job analysis to establish performance criteria and standards. 2. Communicate performance standards to employees and to those rating them, in writing. 3. When using graphic rating scales, avoid undefined abstract trait names (such as “loyalty” or “honesty”). 4. Use subjective narratives as only one component of the appraisal. 5. Train supervisors to use the rating instrument properly. 6. Allow appraisers substantial daily contact with the employees they’re evaluating. 7. Using a single overall rating of performance is usually not acceptable to the courts. 8. When possible, have more than one appraiser, and conduct all such appraisals independently. 9. One appraiser should never have absolute authority to determine a personnel action. 10. Give employees the opportunity to review and make comments, and have a formal appeals process. 11. Document everything: Without exception, courts condemn informal performance evaluation practices that eschew documentation. 12. Where appropriate, provide corrective guidance to assist poor performers in improving. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–46  Who Should Do the Appraising? Immediate Self-rating supervisor Peers Potential Subordinates Appraisers Rating 360-degree committee feedback Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–47  The Appraisal Interview Satisfactory—Promotable Satisfactory—Not Promotable Types of Appraisal Interviews Unsatisfactory—Correctable Unsatisfactory—Uncorrectable Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–48  FIGURE 9–12 Sample Employee Development Plan Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–49  Appraisal Interview Guidelines Guidelines for Conducting an Interview Talk in terms of Don’t get Encourage the Get objective work personal person to talk agreement data Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–50  FIGURE 9–13 Checklist During Appraisal Interview Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–51 Using Information Technology to Support Performance Management Assign financial and nonfinancial goals to each team’s activities along the strategy map chain of activities leading up to the company’s overall strategic goals. Inform all employees of their goals. Use IT-supported tools like scorecard software and digital dashboards to continuously monitor and assess each team’s and employee’s performance. Take corrective action at once. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–52  FIGURE 9–14 Performance Management Report Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–53 KEY TERMS performance appraisal graphic rating scale alternation ranking method paired comparison method forced distribution method critical incident method behaviorally anchored rating scale (BARS) electronic performance monitoring (EPM) unclear standards halo effect central tendency strictness/leniency bias appraisal interview performance management Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–54  All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9–55