HRM Topic 6: Performance Review and Appraisal PDF

Topic 6 Performance Review and Learning Objectives: At the end of the session, the students must have: defined performance, performance review, and performance management determined the person who evaluates performance and the methods used in performance appraisal...

Topic 6 Performance Review and Learning Objectives: At the end of the session, the students must have: defined performance, performance review, and performance management determined the person who evaluates performance and the methods used in performance appraisal defined feedback or appraisal interview crafted solutions to particular performance appraisal problems  Development of employees which is one of the major purposes of the human resource management is an essential function to get eh most from the employees, enabling companies to increase productivity. Part of this is the performance appraisal. To fully understand, key terms such as performance, performance review, and performance management must be understood. Performance is measured in terms of result and defined as the accomplishment of an employee or manager’s assigned duties and outcomes produced on a specified job function or activity during a specified time period. Performance review or evaluation refers to a systematic description and review of an individual’s job performance. Performance management is an ongoing communication process, undertaken in partnership between an employee and his/her immediate supervisor. Its primary goal is to improve organizational performance. Why Measure Performance? 1. Managers cannot manage and define what is expected and gives feedback and recognition without defining the basis or performance. It allows management to specify what must be done and to combine feedback with goal setting. 2. On the part of the employee, he/ she cannot improve on what he/she is supposed to do without the necessary data before and after to see if performance is actually improving. 3. Creating high performance requires a definition of clear goals so you will know it when you see it. In addition, all high performers get there because they have a clear picture of where they are going. 4. Pay for performance requires metrics. If the organization will be giving pay based on performance, there is a need to have some way of knowing when the payout has been earned. Performance Criteria In constructing performance evaluation, three criteria are suggested as follows: 1. Relevance – relevant performance dimensions are determined by the duties and responsibilities contained in the job description. 2. Reliability – produced consistent and repeatable evaluation 3. Freedom from contamination – should measure each employee’s performance without being contaminated by factors than an employee cannot control such as economic conditions, material shortage, or poor equipment *Indicators or Matrix that Can Help Measure Employee Performance According to Hakala (2008), a manager or supervisor can use the following indicators of performance to appraise subordinates. 1. Quantity: The number of units produced, processed, or sold is a good objective indicator of performance. 2. Quality: The percentage of work output that must be redone or is rejected is one indicator of quality. 3. Timeliness: How fast work is performed; it can be the number of units produced per hour. 4. Cost-effectiveness: The cost of work performed should be used as a measure of performance only if the employee has some degree of control over costs. 5. Absenteeism/Tardiness: An employee is obviously not performing when he or she is not at work. 6. Creativity: Supervisors and employees should keep track of creative work examples and attempt to quantify them. 2 7. Adherence to Policy: Deviations from policy indicate an employee whose performance goals are not well-aligned with those of the company. 8. Gossiping and other Personal Habits: This can disrupt job performance and interfere with the performance of others. The specific behaviors should be defined, and goals should be set for reducing their frequency. 9. Personal Appearance/Grooming: Examples of inappropriate appearance and grooming should be spelled out, their effects upon the employee’s performance and that of others explained, and corrective actions defined. Who Should Evaluate Performance? 1. Manager/Supervisor Appraisal – hierarchical arrangement of formal authority in most organizations gives the supervisor or the manager legitimate authority to evaluate subordinates. 2. Self-appraisal – the employee appraises his or her own performance, in many cases comparing the self-appraisal to management’s review. 3. Subordinates Appraisal – provides unique information because subordinates know better than anyone else whether leadership is good or bad. 4. Peer Appraisal – this is based on the assumption that coworkers are most familiar with an employee’s performance. 5. Customer/Supplier – this would be more relevant for service-oriented companies. (e.g., bank) 6. Team Appraisal – similar to peer appraisal in that members of a team, who may hold different positions, are asked to appraise each other’s work and work styles. 7. Assessment Center – the employee is appraised by professional assessors who may evaluate simulated or actual work activities. 8. 360-Degree or “Full-Circle” Appraisal – the employee’s performance is appraised by everyone with whom he or she interacts, including managers, peers, customers, and members of other departments. GOAL SETTING *Sources of Data in Appraisal: 1. Production Data – evaluate the degree of dependable task accomplishment by measuring quantity and quality of performance. (e.g. units produced per hour, peso volume of PERFORMANCE STANDARD SETTING sales, profit) 2. Personnel Data – type of information found in an individual’s personnel files. (e.g., absenteeism, tardiness, INFORMATION DISSSEMINATION training program completed, and critical incidents) 3. Judgment of Others – an assessment of others and ought to be obtained in every evaluation. ACTUAL PERFORMANCE MEASUREMENT Performance Appraisal Methods *Multiple Person Evaluation Methods: FEEDBACK EVALUATION RESULTS 1) Ranking Method – ranking the employee from the most efficient to the least capable on each trait or quality to be used in judging the employees’ performance or just simply REWARDING EXEMPLARY PERFORMANCE ranking the employee from the best to worst. 2) Paired Comparison Method – consists of asking an CORRECTING SUBSTANDARD PERFORMANCE evaluator to consider only two individuals at one time and to decide who is better. Then another pair of names is presented to the evaluator for another evaluation. Figure 4. Process Involved in Performance Evaluation 3  3) Forced Distribution – a method wherein the rater is asked to rate employees in some fixed distribution of categories such as superior, above average, average, below average, and poor. *Individual Evaluation Methods: 1. Critical Incident Method – the manager writes down positive and negative performance behavior of employees throughout the performance period. 2. Checklist and Weighted Checklist Method – a method wherein the rater who is familiar with the jobs being evaluated, prepares a large list of descriptive statements about effective and ineffective behavior on jobs. 3. Graphic Rating Scales – is the oldest and most widely used method for performance appraisal. The scales may specify five points, so a factor such as job knowledge might be rated from 1 (poorly informed about work duties) to 5 (complete mastery of all phases of the job). 4. Behaviorally Anchored Rating Scales (BARS) – used to describe a performance rating that is focused on specific behaviors or sets as indicators of effective or ineffective performance. 5. Management by Objective (MBO) – a process in which managers and their subordinates set objectives for the employee to achieve within a specific rating period. 6. Multi-rater Assessment or the 360-degree Performance Feedback – is a system or process in which employees receive confidential, anonymous feedback from people who work around them, their immediate superior, peers, customers, or suppliers. Performance Appraisal Problems and Solutions 1. Halo Effect The Problem: A manager or supervisor allows a general favorable impression of an employee to influence his/her judgment on each separate factor in the performance appraisal process. An unfriendly employee will often be rated unsatisfactory for all traits rather than just for the trait pertaining to interpersonal relation. The Solution: The rater should consider each factor independently of all other factors rather than rating the employee at the same level on all (or most) factors in an appraisal. Being aware of this problem is a major step towards avoiding it. 2. Recency Effect The Problem: Recent events tend to have an unusually strong influence on performance evaluation. Outstanding contribution or untimely mistake just prior to a performance review colors the manager’s perception of the employee’s performance for the entire appraisal period. (a similar pitfall, the unforgettable effect, occurs when an employee does something so extraordinary, either positively or negatively, that its impressions last for a long time, to the advantage and disadvantage of the employee.) The Solution: An alert manager compensates for lack of perspective by careful documentation and to make refinements in the design of the appraisal method, as well as improving the skills of the raters. 3. Previous Performance Bias The Problem: The employee who has performed well in the distant past is assumed to be acceptable in the recent past also. Previous good work tends to carry over into the new period being appraised. 4  The Solution: Once again, observation and documentation of the employee’s performance will give an accurate account of the performance period under scrutiny. 4. Leniency/Harshness/Strictness Error The Problem: Some managers tend to give mostly favorable ratings while others tend to evaluate the same performance levels unfavorably. This error is usually committed when managers feel uncomfortable about communicating negative feedback or do not want to hurt the employee’s feelings. The Solution: Understanding the constructive purposes of performance appraisal and acquiring effective skills in giving negative feedback should reduce the tendency to commit error. Raters can assess their own harsh and lenient rating tendencies by examining or distributing ratings forcing normal distribution to avoid this error. 5. Central Tendency The Problem: Central tendency occurs when a manager rates all employees as average by choosing the middle rating. The central tendency closes the door to an employee’s growth and improvement on a job, because no strengths or weaknesses are identified. The Solution: Ranking all employees can avoid this error because all employees must be ranked and thus, cannot all be rated average. 6. Carelessness The Problem: Managers make quick guesses based on first impressions of an employee’s performance. The Solution: Managers commit significant time observing staff members and forming judgments based on their observations. Major decisions are often based on performance rating, and ill-considered ratings will contribute unreliable information and detract from the organization’s goals. 7. Bias The Problem: Individual differences among rates in terms of characteristics like age, sex, race, and religious and political affiliations. Evaluations are dependent on the rater’s personal preferences, prejudices, and biases. The rater who has a biased or prejudiced attitude towards certain groups of people looks for a behavior in these groups that confirms his or her prejudices. The Solution: When rating the employees, the manager must consider the same relevant behaviors for all employees supervised. Individual differences and other nonperformance factors should not affect performance appraisal ratings. Careful observation, description, and documentation of actual performance on an ongoing basis reduce the tendency for bias by emphasizing job performance over a period of time. *Feedback or Appraisal Interview This is an interview in which the supervisor and subordinates review the appraisal and make plans to remedy deficiencies and reinforce strengths. It provides an opportunity to identify the subordinate’s feelings more thoroughly and thus improve communication between supervisor and the employee. Annual discussions of performance should include: 1. review of overall progress; 2. discussion of problems that were encountered; 3. discussion of sources of ineffective performance; 4. agreement about how performance can be improved; 5. discussions on how current performance fits with long-range career goals; and 6. specific action plans for the coming year and how to reach short and long-term objectives. 5 Additional Readings and References Additional Readings: “9 Common Errors in Performance Appraisals” by eHow money, http://www.ehow.com/ “Performance Appraisal Methods” by http://www.humanresources.hrvinet.com/ “Managing the Staff of the Local Church” by David R. Pollock, Alston-Kline, Inc. (2003) https://www.peoplemattersglobal.com/blog/performance-management/performance-management-simply-isnt- simple-21374 References: Corpuz, Crispina R. Human Resource Management. Third Edition. Rex Book Store, Inc. (RBSI), 856 Nicanor Reyes Sr. St., Sampaloc, Manila, Philippines. http://www.google.com/ http://www.ihrim.org/ http://www.shrm.org/Pages/default.aspx https://www.pmap.org.ph/ http://www.hreonline.com/HRE/index.jsp http://www.hrvillage.com/ http://www.ehow.com/ http://www.scribd.com/ http://www.humanresources.hrvinet.com/ “360-Degree or Full Circle Appraisal” by scribd.com, http://www.scribd.com/ Image Sources: https://www.managers.org.uk/knowledge-and-insights/listicle/10-common-problems-with-performance- appraisals/ https://www.peoplemattersglobal.com/site/interstitial?return_to=%2Fblog%2Fperformance- management%2Fperformance-management-simply-isnt-simple-21374 https://www.free-power-point-templates.com/articles/understanding-the-halo-effect-for-countering-cognitive- bias/ https://www.pinterest.ph/pin/353321533270048198/ https://thesaurus.plus/synonyms/leniency https://thesaurus.plus/antonyms/carelessness 6