LEC06 Performance Management and Appraisal PDF

HRMN3111 Human Resource Management Lecture 06 Performance Management and Appraisal Juley XIAO Department of Management and Marketing Hong Kong Polytechnic University  Recap of previous lecture (Kahoot!) Agenda Performance management Performance appraisal methods...

HRMN3111 Human Resource Management Lecture 06 Performance Management and Appraisal Juley XIAO Department of Management and Marketing Hong Kong Polytechnic University  Recap of previous lecture (Kahoot!) Agenda Performance management Performance appraisal methods Potential appraisal problems Where We Are Now 1.0 Describe the performance appraisal process.  Defining Performance Performance is All about Behaviors and Results Behaviors and actions: what an employee does Results and products: the outcomes of an employee’s behavior Effective performance management systems include measures of both behaviors and results. Performance is evaluative Performance is multidimensional  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. ❖ Six basic elements 1. Direction-sharing: communicate goals 2. Goal alignment: link goals 3. Ongoing performance monitoring 4. Ongoing feedback 5. Coaching and developed support 6. Recognition and rewards Performance Management Process Performance Appraisal Why appraise performance? What to appraise? Who do the appraisal? How to appraise? Why appraise performance?  Performance Appraise Performance appraisal/assessment/rating/analytics/evaluation Evaluating an employee’s current and/or past performance relative to his or her performance standards. Defining the job: making sure that the manager and employees agree on the duties and job standards and on the appraisal method that will be used. Effective appraisals actually begin before the actual appraisal, with the manager defining the employee’s job and performance criteria. Evaluations about performance are made all the time — explicitly or implicitly  Why Appraise Performance? A. Administrative Purpose Performance appraisal results used for salary decisions, promotions, retention- termination, layoffs, and recognition of individual performance B. Strategic Purpose Performance appraisal as part of Performance Management System - link employee activities with the organization’s goals Define the results, behaviors, and employee characteristics necessary for carrying out organization’s strategies C. Developmental Purpose Improve the performance of employees, provide suitable training Employee career development  Why Appraise Performance? 1. Used for pay, promotion, and retention decisions 4. With appraisals employee’s can review career plans 2. Links performance management to company goals 5. Identify training needs. 3. The manager can correct deficiencies and reinforce strengths  The Performance Appraisal Process 1 2 3 Who do the appraisal? 1 What to evaluate? Defining the Employee’s Goals and Performance Standards Assess to what extent the employee is attaining the numerical goals Goals should derive from the organization’s overall goals (e.g. profitability, cost reduction, efficiency) Managers often say that effective goals are “SMART.” (Specific, Measurable, Attainable, Relevant, Timely) Use a form with basic job dimensions or traits Based on the mastery of competencies to perform the job requires 1 Who Should Do the Appraising? Appraisal by the immediate/direct supervisor is still the heart of most appraisals 1 Rating Sources Supervisors Knowledgeable about strategic issues Understand performance In charge of managing employee performance 1 Rating Sources Peers Teamwork is crucial to change management initiatives Not be readily accepted when employees believe there is friendship bias Halo effect: less discriminate among performance dimensions compared to supervisors Affected by context effects (e.g. specific situation vs. general situation) 1 Rating Sources Subordinates/Direct Reports/Upward Feedback Rate manager’s ability to: Remove barriers that employees face Shield employees from politics Raise employees’ competence Help to improve manager’s performance Information is more accurate when the resulting ratings are to be used for developmental purposes, rather than administrative purposes. 1 Rating Sources Self Important for performance management Increase acceptance of the resulting decision Less lenient when they are used for developmental purposes How to improve the quality of self-appraisals Use comparative as opposed to absolute measurement systems Allow employees to practice their self-rating skills Assure confidentiality Emphasize the future 1 Rating Sources Customer can be costly and time-consuming useful for jobs that require a high degree of interaction with the public performance information can also be collected from internal customers 1 Rating Sources Electronic Performance Monitoring (EPM) Big Data vs. Smart Data Analytics mindset: collect, compile, and analyze data as to enhance performance and well-being EPM can lead to very useful data Be transparent Be aware of all potential employee reactions Use EPM for learning and development Restrict EPM to job-related behaviors It is necessary to come up with one overall and consistent conclusion regarding the employee’s performance? Why? 1 Disagreement Across Rating Sources Expect disagreements Ensure employee receives feedback by source Assign differential weights to scores by source, depending on importance Ensure employees take active role in selecting which sources will rate which dimensions If disagreements are found, what need to consider when making the decision? 2.0 Define the pros and cons of performance appraisal methods. Performance Appraisal Methods Comparative systems/Ranking base the measurement on comparing employees with one other. Take “other employees” as reference Absolute systems/Rating base the measurement on comparing employees with a prespecified performance standard. Take “standard” as reference  Performance Appraisal Methods Comparative Systems / Ranking Advantages Easy to explain Straightforward: easy to see which employees are where in the distributions Control several biases and errors (e.g., leniency, severity, central tendency) Beneficial for independent jobs Signal that the organization values high achievement, and attract individuals with high cognitive abilities Disadvantages The ranking results are not sufficient for employees to received useful feedback for performance improvement No information about the relative distance between employees No clear explanation of how ratings were produced  Performance Appraisal Methods Absolute systems/Rating Rating formats can have different type of anchor (descriptors) Adjectives Behaviors Results/Outcomes Agreement Frequency Evaluation Amount Agree strongly Always Well above average All Agree Fairly often Above Average A great amount of Neutral Often Average Quite a bit of Disagree Sometimes Below Average Some Disagree strongly Never Far below average None  Performance Appraisal Methods Absolute systems/Rating Advantages Can be used in large and small organizations Evaluations more widely accepted by employees Disadvantages Higher risk of leniency, severity, and central tendency biases Generally, more time consuming than comparative systems 2 Appraisal Methods Graphic Rating Scale 01 List traits and a range of performance values for each Job dimensions or traits Competence(skill/behavior) ▪Simplest and most popular ▪Provides quantitative rating for each employee ▪Unclear stands ▪Central tendency 2 Appraisal Methods Alternation Paired Comparison Forced Distribution Ranking 02 03 04 Rank employees from best Compare all possible pairs Predetermined percentages to worst on a particular for each trait of ratees are placed into trait, choosing highest, various performance More precise for every then lowest, until all are categories. Similar to trait ranked grading on a curve List all familiar Preventing supervisors subordinates to be rated from simply rating all or most employees the same Rank from Highest to Lowest on one Motivate effort and performance dimension performance Then choose the next Harm to employee morale highest and the next Results depend on cutoff lowest points 2 Ranking Employee by Paired Comparison Method Do you think that PolyU should adopt a Forced Distribution Method in all courses in assessing students’ course grade? (e.g., A/A+ 15% ; C to B+ 70%; D or below 15%) Why and why not? If yes, what distribution cutoff points you suggest? 2 Appraisal Methods Critical Incident Behavior Anchored Narrative Forms Method Rating Scale (BARS) 05 06 07 Keep a log of positive and Narrative assessment Anchors a quantified scale negative examples of a with specific narrative Assesses past subordinate’s work-related examples of good and poor performance and required behaviors performance areas of improvement ▪Provide examples (e.g. 1. Write critical incidents. Helps the ratee diary) to explain rating 2. Develop performance understand where his or dimensions ▪The rating doesn’t just her performance was reflect the employee’s good or bad, and how to 3. Reallocate incidents most recent but the whole improve that performance 4. Scale the incidents period 5. Develop a final ▪Not produce rating for instrument pay raise purposes Easier for the rater to determine superior, average, and poor performance 2 2 Appraisal Methods Management by Electronic Performance Conversation Days Objectives (MBO) Monitoring (EPM) 08 09 10 Multistep companywide Electronically monitor the Frequent conversations to goal-setting and appraisal amount of computerized substitute traditional program data an employee is appraisals 1. Set the organization’s processing per day, and Conversations is on areas goals thereby the performance for improvement and 2. Set departmental goals. Improve productivity growth, and on setting 3. Discuss departmental stretch goals that align The future of goals with the employee’s career performance feedback: interests. 4. Individual goals(Define more objective, rating expected results) immediately available and No explicit performance 5. Conduct performance visible. ratings reviews Raise employee stress 6. Provide feedback 2 Important Advantages and Disadvantages of Appraisal Tools  Evaluating Performance Appraisal Method A good method scores well on five dimensions 1. Employee development potential – feedback has a positive impact on job performance. 2. Administrative ease – typically a numerical rating of performance. 3. Personnel research potential – Does it lend itself to validating employment tests? 4. Cost – Is it time-consuming or expensive? 5. Validity – performance-based decisions can be made with confidence. Organizations attach different weights to these dimensions. 3.0 Potential appraisal problems and how to deal with them.  A Model of Rater Motivation Expected Positive and Negative Consequences of Rating Accuracy Motivation to Provide Accurate Ratings Probability of Experiencing Positive and Negative Consequences Rating Behavior Expected Positive and Negative Consequences of Rating Distortion Motivation to Distort Ratings Probability of Experiencing Positive and Negative Consequences 2 Dealing with Rater Error Appraisal Problems 02 01 03 05 04 2 Types of Rating Errors Intentional errors Rating inflation Rating deflation Unintentional errors Due to complexity of task 2 Intentional Errors Rating Inflation Maximize merit raise/rewards Encourage employees Avoid creating a written record Avoid confrontation with employees Promote undesired employees out of unit Make manager look good in the eyes of his own supervisor 2 Intentional Errors Rating Deflation Shock employees Teach rebellious employee a lesson Send a message to employee that he/she should consider leaving Build a strongly documented, written record of poor performance 2 Unintentional Rating Errors Similar to Me Contrast Halo Negativity Recency Primacy First Impression Spillover Stereotype Attribution How to reduce rating errors? 2 Reducing Intentional Rating Errors Have raters justify their ratings Ratings are more accurate when raters justify their ratings to someone with authority, such as their own supervisors Have raters justify their ratings in a face-to-face meeting Ratings are also more accurate when the rating justifications are offered in a face- to-face meeting, compared to justifications offered in writing only 2 Reducing Unintentional Rating Errors Rater Error Training (RET) Goals of RET: aware of rating errors they are likely to make Frame of Reference Training (FOR) Goal of FOR: provides a standard of comparison or frame of reference for making appraisals, develop a common mental picture Behavioral Observation Training (BO) Goal of BO: skills of observe, store, recall, and use information about performance 4.0 Appraisal Interview 3 Appraisal Interview Appraisal Interview: An interview in which the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths. These interviews are often uncomfortable Supervisors face four types of appraisal situations Satisfactory—Promotable: performance is satisfactory and promotion looms. The objective is to develop specific development plans. Satisfactory—Not promotable: performance is satisfactory, but promotion is not possible. The objective is to maintain satisfactory performance. The best option is usually to find incentives that maintain performance, such as extra time off, a small bonus, or recognition. Unsatisfactory but correctable: the interview objective is to lay out an action/development plan for correcting the unsatisfactory performance. Unsatisfactory and uncorrectable: may be particularly tense. Dismissal is often the usual option. 3 How to Conduct the Appraisal Interview Appraisal Interview Process Preparation: understand the problem and the employee Planning the solution: reach agreement on the problem steps to take measures of success date to complete Coaching: “An effective coach offers ideas and advice in such a way that the subordinate can hear them, respond to them, and appreciate their value.” 3 Guidelines to Conducting the Appraisal Interview Talk in terms of objective work data Don’t get personal Encourage the person to talk Get agreement 3 Handle a Defensive Subordinate Criticize a Subordinate Maintain his or her dignity Recognize behavior Discuss in private Never attack defenses Provide constructive criticism Provide examples Postpone action Give feedback periodically Be objective and free of personal bias Recognize limitations Get agreement on a plan 5.0 The main grounds for dismissal.  Managing Dismissals Unsatisfactory Performance Misconduct Grounds for Dismissal Lack of Qualifications for the Job Changed Requirements of the Job Insubordination  Managing Dismissals Fairness Safeguards Allow a full explanation Multistep procedure (e.g. warning) / Appeal process Person who does the dismissal Severance pay The Termination Interview and the Exit Process 1. Plan the interview 2. Get to the point 3. Describe the situation 4. Listen 5. Review the severance package 6. Identify the next step  Summary Define Performance Management Why need to Conduct Performance Appraisal Performance Appraisal Process Performance Rating Source Performance Appraisal Methods (Comparative systems/Ranking, Absolute systems/Rating) Potential appraisal problems (Un/Intentional Errors, Reducing rating errors) Appraisal interview Grounds for dismissal Thank you!