Chapter-09 Performance Management and Appraisal

The purpose of this chapter is to show you how to appraise employees’ performance. The main topics we cover include the performance management process, appraisal methods, appraisal performance problems and solutions, and the appraisal interview.

BASIC CONCEPTS IN PERFORMANCE MANAGEMENTR AND APPRAISAL

We may define performance appraisal as any procedure that involves (1) setting work standards, (2) assessing the employee’s actual performance relative to those standards, and (3) providing feedback to the employee with the aim of motivating him or her to eliminate performance deficiencies or to continue to perform above par.

Comparing Performance Appraisal and Performance Management

We may define performance management as a process that unites goal setting, performance appraisal, and development into a single, common system whose aim is to ensure that the employee’s performance is supporting the company’s strategic aims.

Why Performance Management

The fact that managers are emphasizing such a performance management approach reflects several things.

Total Quality It reflects, first, the total quality management(TQM) concepts advocated by management experts like W.Edwards Deming.

Appraisal Issues Second, it reflects the fact that traditional performance appraisals are often not just useless but tense and counterproductive.

Strategic Focus Third, performance management recognizes that in today’s globally competitive environment, every employee’s competencies and efforts must focus on helping the company achieve its strategic goals.

Defining the Employee’s Goals and Work Standards

The idea that the employee’s effort should be goal directed is central to performance management and appraisal. Guidelines for effective goal setting include the following.

Assign Sepecific Goals Employees with specific goals usually perform better.

Assign Measurable Goals Express goals in quantitative terms and include target dates or deadlines.

Assign Challenging but Doable Goals Goals should be challenging, but not so difficult that they appear impossible or unrealistic.

Encourage Participation SMART. Goals should be specific, and clearly state the desired results. They are measurable, and answer the question “how much”. They are attainable, and not to tough or too easy. They are relevant, and clearly derive from what the manager and company want to achieve. And, they are timely, and reflect deadlines and milestones.

AN INTRODUCTION TO APPRAISING PERFORMANCE

Why Appraise Performance?

There are four reasons to appraise subordinates’ performance.

• First, from a practical point of view, most employers still base pay and promotional decisions on the employee’s appraisal.
• Second, appraisals play an integral role in the employer’s performance management process.
• Third, the appraisal let the boss and subordinate develop a plan for correcting any deficiencies, and to reinforce the things the subordinate does right.
• Fouth, appraisals shoud serve a useful career planning purpose.

Realistic Appraisals

There is nothing crueler than telling someone who’s doing a mediocre(平庸) job that he or she is doing well.–Jack Welch, GE’s former CEO.

The Supervisor’s Role

Appraising performance is both a difficult and an essential supervisory skill. The human resources department serves a policy-making and advisory role.

Steps in Appraising Performance

The performance appraisal process itself contains three steps: define the job, appraise performance, and provide feedback.

The Appraisal Method The two basic considerations in designing the actual appraisal tool are what to measure(such as quality, quantity, and timelines of work) and how to measure it(including graphic rating scales, the alternation ranking method, and “MBO”).

Graphic Rating Scale Method

A graphic rating scale list traits(such as quality and reliability) and a range of performance values(from unsatisfactory to outstanding) for each trait.

What to Measure? There are three basic options.

• The manager may opt for generic dimensions such as communications, teamwork, know-how, and quantity.
• Another option is to appraise performance based on the job’s actual duties.
• Competency-based appraisals are another option.

Alternation Ranking Method

Ranking employees from best to worst on a trait or traits is another option.

Paired Comparison Method

For every trait(quantity of work, quality of work), you pair and compare every subordinate with every other subordinate.

Forced Distribution Method

The forced distribution method is similar to grading on a curve. With this method, you place predetermined percentages of ratees into several performance categories. GE used top 20%, middle 70%, and bottom 10% for managers.

Sun Microsystems force-ranks all its 43,000 employees. Managers appraise employees in groups of about 30, and those in the bottom 10% of each group get 90 days to improve. If they’re still in the bottom 10% in 90 days, they can resign and take severance pay.

To protect against unfairness, and bias claims, employers should take several steps. Appoint a review committee to review any employee’s low ranking. Train raters to be objective, and consider using multiple raters in conjunction with the forced distribution approach.

Critical Incident Method

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 six months or so, supervisor and subordinate meet to discuss the latter’s performance, using the incidents as exmaples.

Narrative Forms

All or part of the written appraisal may be in narrative(叙述文) form.

Behaviorally Anchored Rating Scales (BARS)

A BARS is an appraisal tool that anchors a numerical rating scale with specific behavioral examples of good or poor performance. Developing a BARS typically requires five steps:

1. Generate critical incidents.
2. Develop performance dimensions.
3. Reallocate incidents.
4. Scale the incidents.
5. Devlop a final instrument.

Advantages

1. A more accurate gauge.
2. clearer standards.
3. Feedback.
4. Independent dimensions.
5. Consistency.

Management by Objectives (MBO)

MBO requires the manager to set specific measurable goals with each employee and then periodically discuss the latter’s progress toward these goals. consisting of six steps:

1. Set the organization’s goals.
2. Set departmental goals.
3. Discuss departmental goals.
4. Define expected results.
5. Performance reviews.
6. Provide feedback.

There are three problems in using MBO. Setting unclear objectives is one. Second, MBO is time-consuming. Third, setting objectives with the subordinate sometimes turns into a tug-of-war, with you pushing for higher quotas and the subordinate pushing for lower ones.

Computerized and Web-Based Performance Appraisal

Online Appraisals Fore example, PerformanceReview.com lets managers evaluate employees online based on their competencies, goals, and development plans. The Web site decwise.com/360Demo/ directs employees to a 360 online appraisal they can use for their supervisor.

Electronic performance monitoring (EPM) means having supervisors electronically observe the employee’s output or whereabouts.

Merging the Methods

The best forms merge several approaches.

APPRAISING PERFORMANCE: PROBLEMS AND SOLUTIONS

Technical appraisal problems and how to solve them, and several other pertinent appraisal issues.

Potential Rating Scale Appraisal Problems

Most employers use graphic-type rating scales to appraise performance, but these scales are especially susceptible to several problems: unclear standards, halo effect, central tendency, leniency(宽大) or strictness, and bias.

Unclear Standards The traits and degrees of merit are ambiguous. The best way to fix this problem is to develop and include descriptive phrases that define each trait.

Halo Effect Experts define halo effect as “the influence of a rater’s general impression on ratings of specific ratee qualities.” Supervisory training can also alleviate the problem, as can using a BARS.

Central Tendency basically means rating all employees average. Ranking employees instead of using graphic rating scales can reduce this problem.

Leniency or Strictness a supervisor has a tendency to rate all subordinates either high or low. distribution can solve this problem.

Bias In sum, studies suggest that “rater idiosyncratic biases account for the largest percentage of the observed variances in performance rating.”

How to Avoid Appraisal Problems

Problems aren’t inevitable, but you can minimize them.

Know Problems First, learn and understand the potential problems and their solutions.

Use Right Tool Second, use the right appraisal tool.

Train Supervisors Third, train supervisors to reduce rating errors such as halo, leniency, and central tendency.

Control Outside Influences Fourth, reduce the effects of outside factors such as union pressure and time constraints.

Keep a Diary Fifth, keep a diary of employees’ performance over the year.

Who Should Do the Appraising?

Traditionally, the person’s direct supervisor appraises his or her performance. However, other options are available and are increasingly used. We’ll look at the main ones.

The Immediate Supervisor Supervisors’ ratings are the heart of most appraisals.

Peer Appraisals With more firms using self-managing teams, peer or team appraisals are becoming more popular. Typically, an employee chooses an appraisal chairperson each year. That person then selects one supervisor and three or four other peers to evaluate the employee’s work.

Rating Commitees These committees usually contain the employee’s supervisor and three or other supervisors.

Self-Ratings The basic problem is that employees usually rate themselves higher than they are rated by supervisors or peers.

Appraisal by Subordinates upward feedback, At firms such as FedEx, subordinate rating are especially valuable when used for development rather than evaluative purposes.

Resarch Insight Knowing their subordinates would be appraising them, may have been enough to prompt the improved behavior.

360-Degree Feedback Here ratings are collected “all around” an employee, from supervisors, subordinates, peers, and internal or external customers. Employers generally use the feedback for development rather than for pay increases.

THE APPRAISAL INTERVIEW

Adequate preparation and effective implementation are therefore essential.

Types of Appraisal Interviews

There are four basic types of appraisal interviews:

• Satisfactory–Promotable is the eaiest interview: The person’s performance is satisfactory and there is a promotion ahead.
• Satisfactory–Not promotable is for employees whose performance is satisfactory but for whom promotion is not possible.
• Unsatisfactory but correctable, the interview objective is to lay out an action plan for correcting the unsatisfactory performance.
• Unsatisfactory and uncorrectable, you can usually skip the interview.

How to Conduct the Appraisal Interview

Preparation is essential. Review the person’s job description, compare performance to the standards, and review the employee’s previous appraisals.

Guidelines There are four things to keep mind when actually conducting the interview:

1. Talk in terms of objective work data.
2. Don’t get personal.
3. Encourage the person to talk.
4. Don’t tptoe around.

How to Ensure the Interview Leads to Improved Performance Clearing up job-related problems with the employee and setting measurable performance targets and a schedule for achieving them–an action plan–are essential.

How to Handle a Defensive Subordinate Defenses are an important and familiar aspect of our lives. In his book Effective Psychology for Managers, psychologist Mortimer Feinberg suggests the following:

1. Recognize that defensive behavior is normal.
2. Never attack a person’s defenses.
3. Postpone action. Sometimes it is best to do nothing.
4. Recognize your own limitations.

How to Criticize a Subordinate When you must criticize, do it in a manner that lets the person maintain his or her dignity(尊严). Criticize in private, and do it constructively. Provide examples of critical incidents and specific suggestions of what could be done and why.

How to Handle a Formal Written Warning should identify the standards by which the employee is judged, make it clear that the employee was aware of the standard, specify any deficiencies relative to the standard, and show the employee had an opportunity to correct his or her performance.

Appraisals in Practice

In one survey, About 32% used MBO, 24% used the graphic rating scale, 10% used “other”, and, about 34% used a narrative essay format. 52% use appraisals for promotions, 60% do not link appraisals to pay raises. About half used appraisals for succession planning.

CREATING THE TOTAL PERFORMANCE MANAGEMENT PROCESS

Performance management starts at the end and works back.

Improving Productivity Through HRIS: TRW’s New Performance Management System

The result is an integrated, goal-oriented employee development and appraisal Performance Management Process.

SUMMARY

1. Most companies have some formal or informal means of appraising their employees’ performance. Performance appraisal means evaluating an employee’s current and/or past performance relative to his or her performance standards.
2. We defined performance management as a process that consolidates goal setting, performance appraisal, and development into a single, common system, the aim of which is to ensure that the employee’s performance is supporting the company’s strategic aims.
3. Performance management includes practices through which the manager defines the employee’s goals and work, develops the employee’s capabilities, and evaluates and rewards the person’s effort.
4. The employer must decide exactly what sort of performance to measure. The employer may opt for generic dimensions such as quality and quantity, or appraise performance one the job’s actual duties. With competency-based appraisals the idea is to focus on the extent to which the employee exhibits the competencies that the employer values for this job. The employer may also want to appraise the employee based on the extent to which he or she is achieving his or her objectives.
5. Performance appraisal tools include the graphic rating scale, alternation ranking method, forced distribution method, BARS, MBO, critical incident method, and computer and Web-based methods.
6. Appraisal problems to beware of include unclear standards, halo effect, central tendency, leniency or strictness problems, and bias.
7. Most subordinates probably want a specific explanation or examples regarding why they were appraised high or low, and for this, compiling a record of positive and negative critical incidents can be useful.
8. There are three types of appraisal interviews:unsatisfactory; unsatisfacory but correctable performance; satisfactory but not promotable; and satisfactory–promotable.
9. To bring about constructive change in a subordinat’s behavior, get the person to talk in the inteview. Use oepn-ended questions, state questions in terms of a problem, use a command question, use questions to try to understand the feelings underlying what the person is saying, and restate the person’s last point as a question. On the other hand, don’t do all the talking, don’t use restrictive questions, don’t be judgmental, don’t give free advice, and don’t get involved with name calling, ridicule, or sarcasm.