Performance Appraisal

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Performance Appraisal
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Performance Appraisals

• Improve job performance
• By directing employee behavior toward
  organizational goals
• By monitoring that behavior to ensure that goals
  are met
• Make the correct employment decisions
• Ensure legal compliance
• Minimize job dissatisfaction and turnover

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Standards for Effective Performance Appraisal
Systems

• The quality of the rating form
• Accuracy of the ratings
• Legal standards

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Quality of Rating Form

• Relevance
• The degree to which the rating form includes
  necessary information
• To be relevant, the form must
• Include all the pertinent criteria for evaluating
  performance
• Exclude criteria that are irrelevant to job
  performance
• Criterion deficiency Omission of pertinent
  performance criteria
• Criterion contamination Occurs when irrelevant
  criteria are included on the rating form

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Accuracy of the Ratings

• Leniency and severity errors
• Leniency error
• Occurs when raters provide ratings that are
  unduly high
• Severity error
• Occurs when ratings are unduly low
• Causes of leniency and severity errors
• Political reasons
• Raters lack of conscientiousness
• Personal bias

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Accuracy of Ratings (cont.)

• Central tendency error
• Occurs when appraisers purposely avoid giving
  extreme ratings even when such ratings are
  warranted
• Causes of central tendency error
• Result of administrative procedures
• When the end points of the rating scale are
  unrealistically defined

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Accuracy of Ratings (cont.)

• Halo effect
• Occurs when an appraisers overall impression of
  an employee is based on a particular
  characteristic
• Causes of the halo effect
• Vague rating standards
• Failure to conscientiously complete the rating
  form

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Accuracy of Ratings (cont.)

• Implicit personality theory
• When the raters estimation is based on a
  personal theory of how different types of
  people behave in certain situations
• Rater cannot observe all aspects of a workers
  performance.
• Rater classifies employee by type of person.
• Using this theory, organizations are unable to
  identify employees specific strengths and
  weaknesses.

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Legal Standards

• Appraisal systems must meet all the criteria
  imposed by EEO laws.
• Specifically a court would examine
• The nature of the appraisal instrument
• The fairness and accuracy of the ratings

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Types of Rating Instruments

• Employee comparison systems
• Management-by-objectives (MBO)

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Employee Comparison Systems

• Employee performance is evaluated relative to
  other employees performances.
• Ranking formats
• Simple rankings
• Require raters to rank-order their employees from
  best to worst, according to their job performance
• Paired comparison
• A rater compares each possible pair of employees.
• Forced distribution
• Requires a rater to assign a certain percentage
  of employees to each category of excellence, such
  as best, average, or worst.

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Management-by-Objectives (MBO)

• A management system designed to achieve
  organizational effectiveness by steering each
  employees behavior toward organizations
  mission.
• MBO process includes
• Goal setting
• Planning
• Evaluation

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MBO Goal Setting

• Goal setting Starts at the top of the
  organization with the establishment of the
  organizations mission statement and strategic
  goals
• It then cascades down through the organizational
  hierarchy to the level of the individual
  employee.

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MBO Planning and Evaluation

• Planning Employees and supervisors work together
  to identify potential obstacles to reaching goals
  and devise strategies to overcome these
  obstacles.
• Evaluation In the final phase, the employees
  success at meeting goals is evaluated against the
  agreed-on performance standards.

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Designing an Appraisal System

• Step 1 Gaining support for the system
• To gain the support of managers
• Get managers input in developing the system
• Train managers
• Hold managers accountable for providing accurate
  ratings on a timely basis
• To gain the support of employees
• Encourage users (both managers and workers) to
  participate in the planning and development of
  the system to enhance support for it.

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Step 2 Choosing Appropriate Rating Instrument

• Practicality
• Cost
• Development costs
• Constructing an appraisal system
• Implementation costs
• Training appraisers
• Developing written guidelines
• Utilization costs
• Appraisers time observing, rating, and giving
  performance feedback
• Nature of job

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Step 3 Choose Raters

• Supervisory ratings
• Appraisals are typically responsibility of the
  immediate supervisor.
• Peer ratings
• Supplement supervisory ratings
• May also help eliminate biases
• Competitive nature of the organizations reward
  system and friendships are potential problems if
  used in lieu of supervisory ratings.

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Step 3 Choose Raters (cont.)

• Self-ratings
• May not be effective as an evaluative tool
• May be used for employee development
• Using multiple raters 360-degree
• Evaluating managers performance using several
  raters
• Ratings are made by a circle of people who
  frequently interact with the manager
• Primarily used as feedback devices

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Step 4 Determining Timing

• Mostly conducted annually
• Difficulty remembering events
• Appraisers should maintain records of employee
  performance to minimize this problem.
• Record keeping also serves as documentation for
  EEO suits.
• Companies avoid more frequent appraisals because
  they are considered too time-consuming.

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Step 5 Ensuring Fairness

• Upper-level management review
• May serve to keep appraisers honest
• Appeals system
• Means for employees to obtain a fair hearing if
  dissatisfied with their appraisals
• Considered beneficial because it
• Allows employees to voice their concerns
• Fosters more accurate ratings
• Prevents the involvement of outside third parties