Performance Appraisal

Human Resource Management

HRM 351
 Strategic HRM

Figure 1.1
Human Resource Management Practices
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 Learning objectives
● EXPLAIN the importance of performance appraisal
● DESCRIBE the appraisal process
● DESCRIBE options of who should conduct the appraisal
● DESCRIBE various appraisal methods and the advantages
and disadvantages of each method

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 Performance management
Vs Performance appraisal
● High-performance work system – the right combination of
people, technology, and organizational structure that makes full
use of the organization’s resources and opportunities in
achieving its goals.
● A performance evaluation system is a systematic way to
examine how well an employee is performing in his or her job.
● Performance appraisal means evaluating an employee’s
current and/or past performance relative to his or her
performance standards.
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Performance Appraisal Cycle
Superior Objectives ● In an annual cycle employee
and their immediate supervisor
agree on objectives both in
Performance Objective
terms of performance and
Review Setting development
● Individual objectives derive
from superior objectives
● In a backwards perspective
achievements/performance of
the employee will be reviewed
● The annual meeting between
employee and supervisor is
Mid-Year Review
called “appraisal interview“
Performance appraisal involves:
❖ Setting work standards
❖ Employees’ actual performance vs standards set
❖ Feedback to employees to motivate them to eliminate
deficiencies and perform above par

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Basic Concepts in Performance
Management and Appraisal
Defining Employee’s Goals and Work Standards
❖ Quantify standards by setting measurable standards for each
objective
❖ “SMART” goals
➢ Specific goals
➢ Measurable goals (set in absolute terms)
➢ Challenging goals (realistic and not impossible)

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Importances of Performance Appraisal
Why appraise performance?
● It provides the opportunity to review employees’ career plans
based on their weaknesses and strengths.
● It provides information for making decisions on promotion and
salary.
● It provides an opportunity for supervisors and subordinates to
review their work-related behavior.
● It helps the company to better manage employees and improve
overall performance.

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Who conducts performance appraisal?
 Roles in conducting performance appraisal
Supervisors
● 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.

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 Roles in conducting performance appraisal
HR department
● Serves a policy-making and advisory role.
● Provides advice and assistance regarding the appraisal tool to use.
● Prepares forms and procedures and insists that all departments use
them.
● Responsible for training supervisors to improve their appraisal
skills.
● Responsible for monitoring the system to ensure that appraisal
formats and criteria comply with laws and are up to date.

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 Steps in Appraising Performance

IDENTIFY MEASURE
MANAGE
Define the job Appraise
Provide Feedback
● What to exam? performance
● Discuss results
● Related to ● Method?
● Plan for
organization ● Good or bad
development
success performance?

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 Identify
What to measure? How to measure?
• Work output (quality and • Trait method
quantity)
• Behavioral method
• Personal competencies
• Results method
• Goal (objective) achievement

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Performance Appraisal _ In-class team assignment
What to measure for key person in
your team project ?
• Work output (quality and
quantity)
• Personal competencies
• Goal (objective) achievement
 Appraisal methods
Trait method: A category of performance evaluation in which
managers look at an employee’s specific traits in relation to the
job, such as friendliness to the customer.
1. (Graphic) Rating Scale
2. Mixed Standard Scale
3. Forced Choice
4. Essay

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Graphic rating scale
A scale that lists a number of
traits and a range of
performance for each that is
used to identify the score that
best describes an employee’s
level of performance for each
trait.
Mixed
Standards
Scale
Forced
Choice
Essay appraisal
Advantages Trait Method
● Are inexpensive to develop
● Use meaningful dimensions
● Are easy to use
Disadvantages
● Have high potential for rating errors
● Are not useful for employee counseling
● Are not useful for allocating rewards
● Are not useful for promotion decisions

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 Appraisal methods
Behavioral method: A category of performance evaluation in
which managers look at individual actions within a specific job.
1. Critical Incident
2. Behavioral Checklist
3. Behaviorally Anchored Rating Scale (BARS)

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Critical Incident
Appraisals
● Keeps record of uncommonly
good or undesirable examples
of an employee’s work-related
behavior and reviewing it with
the employee at predetermined
times
● Provides actual examples
● Ensures supervisor thinks about
appraisal during the year
● Numerical rating needed for
comparing employees or
making salary decisions
Behavioral
Checklist
Behaviorally Anchored Rating Scale (BARS)

Behaviorally anchored rating scale (BARS)

An appraisal method that aims at combining the benefits of
narrative critical incidents and quantified ratings by anchoring a
quantified scale with specific narrative examples of good and
poor performance.
Behaviorally Anchored Rating Scale (BARS)
Behaviorally
Anchored
Rating Scale
(BARS)
Advantages Behavioral Method
● Use specific performance dimensions
● Are acceptable to employees and superiors
● Are useful for providing feedback
● Are fair for reward and promotion decisions
Disadvantages
● Can be time-consuming to develop/use
● Can be costly to develop
● Have some potential for rating error

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 Appraisal methods
● Comparative method: A category of performance evaluation in
which managers compare one employee with other
employees.
● Results method: A category of performance evaluation in
which managers are focused on the accomplishments of the
employee, such as whether or not they met a quota.
● Management By Objectives (MBO)

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Comparative
method
Management by Objectives (MBO)
MBO: Set specific measurable goals with each employee
and then periodically review progress.
1. Set the organization’s goals
2. Set departmental goals
3. Discuss departmental goals
4. Define expected results (set individual goals)
5. Performance reviews
6. Provide feedback
Management by Objectives (MBO)
Advantages
● Have less subjectivity bias
Results Method
● Are acceptable to employees and superiors
● Link individual to organizational performance
● Encourage mutual goal setting
● Are good for reward and promotion decisions
Disadvantages
● Are time-consuming to develop/use
● May encourage short-term perspective
● May use contaminated criteria
● May use deficient criteria
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 360-Degree Feedback Systems
Watch the Video and answer the questions
https://www.youtube.com/watch?v=eT4tohLWeUw

1. What is 360 degree feedback?

2. What is it used for?
3. Who is involved?
4. How to choose the “raters” for the survey?
5. What happens after the 360 survey is completed?
6. What can the value be gained from the 360 degree survey report?
7. What are the tips for success?
 Appraising Performance: Problems and Solutions
● Potential Rating Scale Appraisal Problems
● Unclear standards
● An appraisal that is too open to interpretation.
● Halo effect
● Occurs when a supervisor’s rating of a subordinate on
one trait biases the rating of that person on other traits.

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Appraising Performance: Problems and Solutions
● Central tendency
● A tendency to rate all employees the same way, such as
rating them all average.
● Leniency or Strictness
● Problem when supervisor has a tendency to rate all
subordinates either high or low.
● Bias
● The tendency to allow individual differences such as age,
race, and sex to affect the appraisal ratings employees
receive.
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Avoid
rating
errors
 How to Avoid Appraisal Problems
● Learn and understand the potential problems, and the solutions
for each.
● Use the right appraisal tool. Each tool has its own pros and cons.
● Train supervisors to reduce rating errors such as halo, leniency,
and central tendency.
● Have raters compile positive and negative critical incidents as
they occur.

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Leadership Vs Performance Appraisal
Roles of
“new" supervisors
in Performance Appraisal
Performance Appraisal _ In-class team assignment

Which appraisal method will be used

for key person in your team project ?
THANK YOU!