Human Resource Management

Lecture Slides # 8

Performance
Management
BS (Hons) Management Semester 5

Anwar Khurshid

November 8, 2023

1
 Performance Management Model

Performance
Appraisal

Individual
Goals
&
&
Group
Objectives
Performance
Coaching
& Reward
Feedback System
Uses of Performance Appraisals
Feedback to employees
Self-development
Reward systems.
Personnel decisions
Training and development
 Performance Appraisal and
Other HRM Functions
Performance appraisal judges Quality of applicants
effectiveness of recruitment Recruitment determines feasible
efforts performance standards

Selection should produce

Performance appraisal
Selection workers best able to meet
validates selection function
job requirements

Training and development

Performance appraisal Training and
aids achievement of
determines training needs Development performance standards

Performance appraisal is a Compensation Compensation can affect

factor in determining pay Management performance

Nguyen and Murray

Problems with Performance
Appraisals

Central Tendency
Strictness or Leniency Error
Halo Effect
Recency Error
Personal Biases
Reducing Errors in Performance
Appraisals
Avoiding terms such as “average.”
Ensuring that raters observe subordinates on a
regular basis.
Keeping the number of persons evaluated by one
rater to a reasonable number.
Ensuring that the dimensions used are clearly stated,
meaningful, and relevant to good job performance.
Training raters so they can recognize various sources
of error and understand the evaluation process.
Techniques of Performance
Appraisal
Graphic Rating Scales
Critical Incident Technique
Essay Method
Work Standard Method
Ranking Method
Paired Comparison
Techniques of Performance
Appraisal (cont’d.)
Forced Distribution
Behaviorally Anchored Rating Scales
Management-by-Objectives (MBO)
Assessment Centers
Techniques of Performance
Appraisal
Graphic rating scales method
Performance appraisal method that
rates employees according to defined
factors.
Critical incident technique
Performance appraisal method that
equires keeping written records of
highly favorable and unfavorable
employee work actions.
Graphic Rating Scale Example
Techniques of Performance
Appraisal
Essay method
Performance appraisal method in which
the rater writes a brief narrative
describing the employee’s
performance.
Work standards method
Performance appraisal method that
compares each employee’s
performance to a predetermined
standard or expected level of output.
Techniques of Performance
Appraisal
Ranking method
Performance appraisal method in which
the rater ranks all employees from a
group in order of overall performance.
Paired comparison
A variation of the ranking method in
which the performance of each
employee is compared with that of
every other employee in the group.
Paired Comparison Method Example
Techniques of Performance
Appraisal
Forced distribution method
Performance appraisal method in which
the rater is required to assign
individuals in a work group to a limited
number of categories, similar to a
normal frequency distribution (Bell
Curve).
Forced Distribution Method
Techniques of Performance
Appraisal
Behaviorally anchored rating scale
(BARS) method
Performance appraisal method that
combines elements of the traditional
rating scale and critical incident
methods; various performance levels
are shown along a scale with each
described in terms of an employee’s
specific job behavior
Behaviorally anchored rating scale (BARS)
Example
Performance Appraisal under an
MBO Program
Management by Objectives
Performance Appraisal Methods Examples
 Major Strengths and Weaknesses
of Appraisal Techniques

Rating Critical BARS MBO Assessment

Scales Incidents Centers
Meaningful dimensions Sometimes Sometimes Usually Usually Usually
Amount of time required Low Medium High High High
Development costs Low Low High Medium High
Potential for rating errors Low Medium Low Low Low
Acceptability to subordinates Low Medium High High High
Acceptability to superiors Low Medium High High High
Usefulness for allocating
rewards Poor Fair Good Good Fair
Usefulness for employee
counseling Poor Fair Good Good Good
Usefulness for identifying Poor Fair Fair Fair Good
promotion potential
Why Appraisal Programs Fail
Manager
lacks Lack of
information appraisal
Insufficient skills
reward for
performance Manager not
taking
appraisal
seriously

Performance
Unclear appraisals fail
language because…

Manager not
prepared
Ineffective
discussion of
Employee not
employee
Manager not receiving
development
being honest ongoing
or sincere feedback

Nguyen and Murray

Reasons Appraisal Programs
Fail

Lack of top-management support

Unclear performance standards
Rater bias
Too many forms to complete
Use of the appraisal program for
conflicting purposes.

Nguyen and Murray

 Managerial Issues
Concerning Appraisals
Managers feel that little or no benefit will
be derived from the time and energy spent
in the process.
Managers dislike the face-to-face
confrontation of appraisal interviews.
Managers are not sufficiently adept in
providing appraisal feedback.
The judgmental role of appraisal conflicts
with the helping role of developing
Nguyen and Murray
 Best Practice
Goal Setting
Managers must have a general idea of the goals they
would like their employees to set and be flexible as
they receive information from their employee(s) that
may be discovered through the goal-setting process.

Performance Management
American National Standard
ANSI and SHRM
 Best Practice
Feedback
Many organizations now use feedback from
individuals other than the employee’s direct manager.
These approaches include 360-degree feedback
(feedback from peers, subordinates and manager or
managers), peer-only feedback and subordinate
feedback, often called 180-degree or upward
feedback.
In some cases, this feedback is incorporated into the
performance review — but it is an additional process,
not part of the standard.
Performance Management
American National Standard
ANSI and SHRM
 Best Practice
Performance Improvement Plan (PIP)
PIP is used by management with the support of
human resources or other designated professionals
and includes elements such as current and expected
performance, timelines, measures of performance
improvement and potential outcomes based on
whether sufficient improvement was achieved.
It provides a vehicle for open dialogue and consistent
feedback, which can allow an employee who is not
meeting expectations the opportunity to succeed.

Performance Management
American National Standard
ANSI and SHRM
 5 best practices for revitalizing the
performance review process
A recent survey by the Society for Human Resource
Management (SHRM) shows that 90 percent of
respondents say performance reviews are “painful” and
don’t result in better performance.
Some say that the annual review is reactive because
most of the feedback is based on things that have
already happened.
 5 best practices for revitalizing the
performance review process
“Companies must focus on collaboration, professional
development, coaching and empowering people for
success…The performance management process should
focus on feedback and development.”

This way the evaluation is left out of the mix and

managers can focus on the development instead, PI
Worldwide explains.
 5 best practices for revitalizing the
performance review process
To get out of the evaluation stage and bring
performance reviews into the development stage, PI
Worldwide has compiled five of the best practices for
revitalizing the performance review process.

1. Conduct more reviews (formal and informal). By

conducting more reviews, you take the stigma out of
the “annual review”. A lot can ride on a performance
review and when you compile a year’s worth of work
in one sitting it can be pretty daunting.
 5 best practices for revitalizing the
performance review process
2. Objectify the conversation. Use your own strengths,
weaknesses, and work style to help objectify the
conversation. Employees will be able to relate to you
better and have a better understanding of what you
expect.
3. Understand your employee’s motivation. Take the
time to know the individual before the review.
Knowing how the employee will handle feedback,
what is causing their performance to dwindle or
excel, what drives their motivation, etc.—all these
things will prepare you for a productive review.
 5 best practices for revitalizing the
performance review process
4. Plan for the future. Performance reviews are the
perfect time to map out an individual’s future with
the organization. It allows you to see if your
employee plans on lasting or leaving!
5. Reevaluate job requirements. Looking at what the
job entails and what the employee is actually doing
is a great way to ensure both the employee and the
company’s success. Using tools that spell out the
requirements and keep up with the changes will also
ensure that your employees are doing the right jobs!
Normal Distribution
Moving Away from the Bell
Even the corporate giants like Microsoft and
Adobe have realized the need to rid their
organizational performance standards of the
Bell Curve.
It was a sharp realization when these
behemoths began to change their
performance management practices that
grading on a Bell Curve actually discourages
collaboration and damages productivity.
 KPMG Moves Away
KPMG to move away from bell curve-
based performance appraisal
Rica Bhattacharyya, ET Bureau Dec
19, 2014, 04.00AM
 Infosys Scraps Bell Curve
Infosys Scraps Bell Curve for
Performance Evaluation
The Power Law Distribution