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Performance Management and Appraisal

中國經濟管理大學1年前 (2023-07-31)國際教育學院1010

Lecture Outline:

The Basics of Performance Management and Appraisal

The Performance Appraisal Process

Why Appraise Performance?

Performance Management

Using Information Technology to Support Performance Management

Defining the Employee's Goals & Performance Standards

Who Should Do the Appraising?

Techniques for Appraising Performance

Graphic Rating Scale Method

Alternation Ranking Method

Paired Comparison Method

Forced Distribution Method

Critical Incident Method

Narrative Forms

Behaviorally Anchored Rating Scales

Mixed Standard Scales

Management by Objectives (MBO)

Computerized and Web-Based Performance Appraisal

Electronic Performance Monitoring

Dealing with Rater Error Appraisal Problems

Potential Rating Problems

Guidelines for Effective Appraisals

Managing the Appraisal Interview

How to Conduct the Appraisal Interview

How to Handle a Defensive Subordinate

How to Criticize a Subordinate

How to Handle a Formal Written Warning

Talent Management and Employee Appraisal

Appraising and Actively Managing Employees

Segmenting and Actively Managing Employees in Practice

In Brief:

This chapter gives an overview of the performance appraisal process and the different tools and methods available. The main topics covered include the performance management process, appraisal methods, appraisal performance problems and solutions, and the appraisal interview.

Interesting Issues:

Despite lots of attention, money, and effort, performance appraisals remain an area with which few managers or employees are satisfied. The following questions may be worth discussing. Is it just that we don't have a good enough system yet, is there an intrinsic problem with performance appraisals, or is it just human nature to dislike them.

Learning Objectives:

1.Describe the appraisal process.

2.Define performance management and discuss how it differs from performance appraisal.

3.Develop, evaluate, and administer at least four performance appraisal tools.

4.Explain and illustrate the problems to avoid in appraising performance.

5.Perform an effective appraisal interview.

6.Explain how to “segment” employees for appraisal and reward purposes.

Annotated Outline:

I. The Basics of Performance Management and Appraisal

A.The Performance Appraisal Process - Stripped to its essentials, performance appraisal always involves the 3-step performance appraisal process: (1) setting work standards; (2) assessing the employee’s actual performance relative to those standards, which usually involves some rating form; and (3) providing feedback to the employee with the aim of helping him or her to eliminate performance deficiencies or to continue to perform above par.

B. Why Appraise Performance? - For several reasons: 1) many employers still base pay, etc. on employee appraisals; 2) appraisals play an integral role in the employer's performance management process; 3) the appraisal lets the boss and subordinate develop a plan for correcting any deficiencies, and reinforce those things the employee does correctly; 4) they serve a useful career planning purpose; and 5) appraisals play a role in identifying training and development needs.

C. Performance Management includes continuously adjusting how an organization and its team members do things. Team members who need coaching and training receive it, and procedures that need changing are changed.

D. Using Information Technology to Support Performance Management - Many companies use information technology to automate performance management and to monitor feedback, and to correct deviations in real time.

E. Defining the Employee's Goals & Performance Standards - At the heart of performance management is the idea that employees’ effort should be goal directed, which involves clarifying expectations and quantifying them by setting measurable standards for each objective. Some guidelines for effective goal setting are: 1. assign specific goals; 2. assign measurable goals; 3. assign challenging but doable goals; and 4. make sure the goals are relevant, and 5. timely.

F. Who Should Do the Appraising?

1.The immediate supervisor is at the heart of the appraisal process. However, it does not stop with him or her.

2.Peer Appraisals – Becoming more popular with firms using self-managing teams.

3.Rating Committees – Consist of multiple raters, typically the employee’s immediate supervisor and three or four other supervisors.

4.Self-Ratings – Tend to be higher than supervisor or peer ratings.

5.Appraisal by Subordinates – Also known as upward feedback. It is where subordinates anonymously rate their supervisor’s performance.

6.360-Degree Feedback – Ratings are collected from the employee’s supervisors, subordinates, peers, and internal or external customers. This method is the subject of considerable debate. One study found significant correlation between 360-degree ratings and conventional ratings. Firms should carefully assess potential costs, carefully train those giving feedback, and not rely solely on 360-degree feedback.

II. Techniques for Appraising Performance

A.Graphic Rating Scale Method – It is the simplest and most popular performance appraisal technique. A scale is used to list a number of traits and a range of performance for each, then the employee is rated by identifying the score that best describes his/her performance level for each trait. Managers must decide which job performance aspects to measure. Some options include generic dimensions, actual job duties, or behaviorally recognizable competencies.

B.Alternation Ranking Method – Employees are ranked from best to worst on a particular trait, choosing highest, then lowest, until all are ranked.

C.Paired Comparison Method – It involves ranking employees by making a chart of all possible pairs of employees for each trait and indicating which one is the better employee of the pair.

D.Forced Distribution Method – Predetermined percentages of rates are placed in various performance categories, which is similar to grading on a curve.

E.Critical Incident Method – A supervisor keeps a record of uncommonly good and/or undesirable examples of an employee’s work-related behavior, and reviews the record with the employee at predetermined times.

F.Narrative Forms – The method involves rating the employee’s performance for each performance factor, writing down examples and an improvement plan, aiding the employee in understanding where his/her performance was good or bad, and summarizing with a focus on problem solving.

G.Behaviorally Anchored Rating Scales (BARS) – A method that combines the benefits of narratives, critical incidents, and quantified scales by anchoring a scale with specific behavioral examples of good or poor performance. The five steps in developing a BARS are: 1) generate critical incidents; 2) develop performance dimensions; 3) reallocate incidents; 4) scale the incidents; and 5) develop a final instrument. The advantages of BARS include a more accurate gauge, clearer standards, feedback, independent dimensions, and consistency.

H.Mixed Standard Scales – These are similar to BARS but generally list just 3 behavioral examples or standards for each, of 3, performance dimensions.

I.Management by Objectives (MBO) – The manager sets specific measurable goals with each employee and then periodically discusses the employee’s progress toward these goals. The process consists of six steps: 1) set the organization's goals; 2) set departmental goals; 3) discuss departmental goals; 4) define expected results; 5) conduct performance reviews; and 6) provide feedback.

J.Computerized and Web-Based Performance Appraisal – This method generally enables managers to keep notes on subordinates during the year, to rate employees on a series of performance traits, and then generate written text to support each part of the appraisal. About 1/3 of employers use online performance management tools for at least some employees.

K.Electronic Performance Monitoring – These systems use computer network technology to allow managers access to their employees’ computers and telephones.

III. Dealing with Rater Error Appraisal Problems - It can be difficult to rate performance for several reasons. Much depends on a good rating, including career progress, or being able to obtain a raise. There are also technical problems that can affect the fairness of the process.

A.Potential Rating Problems:

1.Unclear Standards – Ambiguous traits and degrees of merit can result in an unfair appraisal.

2.Halo Effect – The influence of a rater’s general impression on ratings of specific qualities can be a problem.

3.Central Tendency – This occurs when supervisors stick to the middle of the rating scales, thus rating everyone average.

4.Leniency or Strictness – Supervisors have the tendency to rate everyone either high or low.

5. Regency Effects – This involves letting what the employee has done recently blind the manager to the employee’s performance over the rest of the year.

6.Bias – The tendency to allow individual differences such as age, race, and sex affect employee appraisal ratings is a problem.

B. Guidelines for Effective Appraisals – Appraisal problems can be more effective by following these five things: 1) know the problem; 2) use the right appraisal tool; 3) keep a diary; 4) get agreement on a plan and; 5) be fair.

IV. Managing the Appraisal Interview – The supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths.

A. How to Conduct the Appraisal Interview - Prepare for the interview by assembling the data, preparing the employee, and choosing the time and place. Be direct and specific, using objective examples; don’t get personal; encourage the person to talk; and reach agreement.

B. How to Handle a Defensive Subordinate - Recognize that defensive behavior is normal; never attack a person’s defenses; postpone action; and recognize your own limitations.

C. How to Criticize a Subordinate - When required, criticize in a private and constructive manner that lets the person maintain his/her dignity and sense of worth.

D. How to Handle a Formal Written Warning - Written warnings should identify the standards by which the employee is judged, make it clear that the employee was aware of the standard, specify any violation of the standard, and show that the employee had an opportunity to correct the behavior.

V. Talent Management and Employee Appraisal

A.Appraising and Actively Managing Employees – Talent management requires actively managing decisions like these. The point is that the traditional practice of allocating pay raises, development opportunities, and other scarce resources across the board or based just on performance makes less sense than it used to. Today, employers also need to focus their attention and resources on their company’s mission-critical employees, who are essential to the firm’s strategic needs.

B.Segmenting and Actively Managing Employees in Practice – Examples are discussed of organizations who actively manage their employees.

Improving Performance Questions:

9-1: Describe three examples of scorecard displays GDAS might show on their performance management system’s digital dashboard-type display.

9-2: Explain what performance management behaviors the Ball program included.

9-3: Write a short paragraph that addresses the question: “Why is it not a good idea to simply tell employees to ‘do their best’ when assigning a task?”

9-4: TRW wanted a “consistent” system it could use globally. A study similarly found that large multinational companies from the United States, Holland, Japan, Korea, and Taiwan used the same performance management forms and procedures abroad that they do at headquarters. Discuss two cultural differences between the United States and any one other country that you might have thought would make having a single system less than feasible.

Discussion Questions:

9-5: What is the purpose of a performance appraisal?

The purpose of a performance appraisal is to provide employees with feedback on how they are doing, as well as give them an opportunity to give feedback.

9-6: Answer the question, “Who should do the appraising?”

Appraisals by the immediate supervisor are still the heart of most appraisal processes, however, with more firms using self-managing teams, appraisal of an employee by his or her peers—peer appraisal—is popular, as is 360° feedback. With 360-degree feedback, the employer collects performance information all around an employee—from his or her supervisors, subordinates, peers, and internal or external customers—generally for developmental rather than pay purposes. Some employers obtain employees’ self-ratings, usually in conjunction with supervisors’ ratings. Many employers even have subordinates rate their managers, usually for developmental rather than for pay purposes. Anonymity affects the feedback.

9-7: Discuss the pros and cons of at least four performance appraisal tools.

The text lists eight different performance appraisal tools. Students might discuss the pros and cons of any four of these eight. An example of some of the pros and cons is: Graphic Rating Scale method is easy to use, simple, and does not take much time to administer. However, different supervisors may interpret a numerical rating differently and the traits rated may or may not relate to performance.

9-8: Explain how you would use the alternation ranking method, the paired comparison method, and the forced distribution method.

The alternation ranking method would be used by listing all employees to be rated, deciding who is the best in a trait to be rated, and which employee is the worst. Then decide who is the second best, and the second worst ... the third best and the third worst ... and so on until all the employees have been ranked for that trait. Then do the same with the next trait to be rated. With the paired comparison, for each trait to be rated, the supervisor would have a sheet with employee names in pairs. For each pair, the supervisor would circle the one of the two employees that is better in that trait. Forced Distribution gives the supervisor a set rating scale (such as 1 through 5). The supervisor is limited to giving a pre-determined percentage of his or her employees' rating.

9-9: Explain in your own words how you would go about developing a behaviorally anchored rating scale.

Each student should express the five steps in his or her own words. Those five steps are: 1) generate critical incidents; 2) develop performance dimensions; 3) reallocate incidents; 4) scale the incidents; and 5) develop a final instrument.

9-10: Explain the problems to be avoided in appraising performance.

The five main rating scale problems listed in the text are: 1) unclear standards; 2) halo effect; 3) central tendency; 4) leniency or strictness; 5) regency effects; and 6) bias.

9-11: Compare and contrast performance management and performance appraisal.

Performance appraisal means evaluating an employee's current and/or past performance relative to his or her performance standards. Performance management is the 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. Performance management includes practices through which the manager defines the employee's capabilities, and evaluates and rewards the person's effort.

Individual and Group Activities:

9-12: Working individually or in groups, develop a graphic rating scale for the following jobs: secretary, professor, bus driver.

Answer should include job characteristics for each position. In each case, the students should come up with a defining statement that clarifies what the job characteristic means.

9-13: Working individually or in groups, describe the advantages and disadvantages of using the forced distribution appraisal method for college professors.

Students should review the section on the forced distribution method and describe how the use of this method would impact the rating of their college professors.

9-14: Working individually or in groups, develop, over the period of a week, a set of critical incidents covering the classroom performance of one of your instructors.

If you had the class conduct a job analysis and create a job description for an instructor in Chapter 3, it would be helpful to refer to that to help identify what kinds of behavior and tasks the instructor should be doing. This will give a good basis for students to observe and watch for critical incidents. If they find critical incidents that are not based in these other documents, it will be a good opportunity to go back and review how all this ties together and that we haven't communicated to the instructor in the job description these behaviors or tasks that they are now wanting to rate them on.

9-15: Appendix A, PHR and SPHR Knowledge Base at the end of this book lists the knowledge someone studying for the HRCI certification exam needs to have in each area of human resource management (such as in Strategic Management, Workforce Planning, and Human Resource Development). In groups of 4-5 students, do four things: (1) review Appendix A; (2) identify the material in this chapter that relates to the required knowledge Appendix A lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team's questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

9-16: Just about every week, Donald Trump tells another "apprentice," "You're fired." Review recent (or archived) episodes of Donald Trump's Apprentice show, and answer this: What performance appraisal system did Mr. Trump use, and do you think it resulted in valid appraisals? What techniques discussed in this chapter did he seem to apply? How would you suggest he change his appraisal system to make it more effective?

Most critics agree that Trump's method of providing performance feedback could be vastly improved. Lead a discussion by first asking students to identify the methods Trump used, a critique on how well he used any methods discussed in this chapter, and then suggest which methods outlined in this chapter would be more effective, and specifically how it would be applied in the scenario/episode they selected.

Experiential Exercise: Grading the Professor

Purpose: The purpose of this exercise is to give you practice in developing and using a performance appraisal form.

Required Understanding: You are going to develop a performance appraisal form for an instructor and should therefore be thoroughly familiar with the discussion of performance appraisals in this chapter.

How to Set up the Exercise/Instructions: Divide the class into groups of four or five students.

9-17: First, based on what you now know about performance appraisal, do you think Figure 9-1 is an effective scale for appraising instructors? Why? Why not?

9-18: Your group should develop its own tool for appraising the performance of an instructor. Decide which of the appraisal tools (graphic rating scales, alternation ranking, and so on) you are going to use, and then design the instrument itself.

9-19: Have a spokesperson from each group post his or her group’s appraisal tool on the board. How similar are the tools? Do they all measure the same factors? Which factor appears most often? Which do you think is the most effective tool on the board?

9-20: The class should select the top 10 factors from all of the appraisal tools presented to create what the class perceives to be the most effective tool for appraising the performance of the instructor.

Video Case Appendix:

Video Title: Performance Management (California Health Foundation)

Synopsis:

Kim Galvin, the human resources director of the California Health Foundation, explains the nature of the company’s performance management system. The employee appraisal system is open-ended and includes just a few general categories, covering the employees’ past performance with respect to their objectives set at the previous year’s appraisal, and their future goals in the company.

Discussion Questions:

9-21: Specifically what type of appraisal tool does the company seem to be using, based on what you read in this chapter? How would you modify it?

9-22: What do you think of the idea of getting anonymous third party feedback on the employee? Why?

9-23: Why does Kim Galvin think that, besides the human resources director, only an employee and his or her manager should review the employee’s performance review? What (if any) is the drawback of not having the supervisor’s own manager review the appraisal? Would you require some type of review, and why?

9-24: Suppose, as Kim Galvin says, you have an employee who is very well liked but not meeting the job expectations. What would you do?

9-25: How does the California Health Foundation handle employees who may be candidates for future promotion?

Video Title: Appraising (Hautelook)

Synopsis:

Performance appraisal can be performed both by employees and by their supervisors. The online clothing retail company Hautelook conducts evaluations by both a formal and an informal process. Informal evaluations can happen at any time during the year, whereas formal evaluations are in January, with an informal mid-year review in July. Hautelook has an informal culture, where managers have an open-door policy and employees are encouraged to have regular discussions with managers as to their performance, as well as to self-evaluate their own performance continually. Hautelook rewards employees in various ways, such as by recognition, raises, bonuses, and promotions. Filling positions by internal promotion is strongly emphasized, and employees are encouraged to think about how they might advance their position in the company in the future.

Discussion Questions:

9-26: What appraisal tool or tools would you recommend using at Hautelook, and why?

9-27: What do you think of how Hautelook handled its attendance problem? Was this an appraisal or a discipline problem? What difference would it make in how you handle the problem?

9-28: Which appraisal problems from this chapter would help to explain the “fairness and accuracy” issues that sometimes arise in the company’s appraisals?

9-29: From what you’ve seen in this video, what exactly would you do to turn Hautelook’s appraisal process into more of a performance management process?

Video Title: Appraising (The Weather Channel)

Synopsis:

Employee appraisals at The Weather Channel are recommended to be done on an ongoing, continual basis so that an employee always knows where he or she stands as far as what is expected and how well he or she is doing. This way, the employee can look forward to performance reviews instead of dreading them. The idea is that the appraisals will be a confirmation of the progress the employee has been making. An employee is recognized not just for what he or she has achieved during the appraisal year, but for the ways in which his or her goals were accomplished. The employee can thereby have opportunities identified for building on his or her previous performance and better progress within the company.

Discussion Questions:

9-30: From what Ms. Taylor says, does The Weather Channel really use a “performance management” process? Why do you conclude that?

9-31: How, specifically, does a firm’s performance management process support its training process?

9-32: How would you reduce the anxiety and stress of an appraisal, based on what you read in this chapter?

9-33: How exactly would you appraise the employees’ “competencies”? What tools would you use specifically, and why?

Application Case: Appraising the Secretaries at Sweetwater U

9-34: Do you think that the experts' recommendations will be sufficient to get most of the administrators to fill out the rating forms properly? Why? Why not? What additional actions (if any) do you think will be necessary?

While controversial, the recommendations would, in fact, encourage administrators to fill the forms out correctly. Using the more detailed form and not tying the performance ratings to salary increases would allow the managers to feel more free about rating the secretaries accurately. There would, however, need to be some strong training sessions (both for administrators and secretaries) to help them understand the new system. Since all secretaries have traditionally received the same salary increases and have been pleased with that, it would be advisable to consider lowering the maximum increase to an amount that could be given to all secretaries while staying within budget. Then all secretaries with a satisfactory rating or better would receive that increase.

9-35: Do you think that Vice President Winchester would be better off dropping graphic rating forms, substituting instead one of the other techniques we discussed in this chapter such as a ranking method? Why?

Certainly other methods could be used. He has already had a taste of what would result if he went to a forced distribution or other ranking method. A BARS system might be best, but it could be costly to develop if the clerical staff has positions that are significantly different.

9-36: What performance appraisal system would you develop for the secretaries if you were Rob Winchester? Defend your answer.

If the development costs are not too great, the BARS system would give the strongest solution to the current situation. The behavioral anchors would make it more difficult to just rate everyone at the top. It would also help to eliminate the different interpretations of what the rating scales mean.

Continuing Case: Carter Cleaning Company - The Performance Appraisal

9-37: Is Jennifer right about the need to evaluate the workers formally? The managers? Why or why not?

Based on the information presented in the chapter, the students need to determine if the workers and managers should be evaluated formally or informally, and they need to provide reasons for their decision. Outcome: Describe the process of performance appraisal and different appraisal methods.

9-38: Develop a performance appraisal method for the workers and managers in each store.

The students need to be familiar with different appraisal methods discussed in the chapter. They should use the sample appraisal forms given in the chapter as guides.

Hotel Paris: Improving Performance at the Hotel Paris – The New Performance Management System

9-39: Choose one job, such as front desk clerk. Based on any information you have (including job descriptions you may have created in other chapters), write a list of duties, competencies, and performance standards for that chosen job.

Answers should include competencies that will help Hotel Paris become more service oriented. Use examples from the case itself, such as “ability to check a guest in or out in five minutes or less,” to get the class started. Discuss what has made students happy or unhappy when checking into a hotel, or in seeking other services.

9-40: Based on that, create a performance appraisal form for appraising that job.

There are samples in the text. If possible, before class ask students to bring sample performance appraisal forms in to class, either from jobs they have held or samples from the Internet. Suggest combining graphic rating scales with the critical incident method to improve on-going coverage of employee performance. Also stress that a once-yearly formal appraisal will not be sufficient unless it is supplemented by regular verbal feedback.

Key terms:

Performance Appraisal - Evaluating an employee’s current and/or past performance relative to his or her performance standards.

Performance Appraisal Process - A 3-step appraisal processing involving (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 helping him or her to eliminate performance deficiencies or to continue to perform above par.

Performance Management - Managing all elements of the organizational process that affect how well employees perform.

Graphic Rating Scale - A scale that lists a number of traits and a range of performance for each. The employee is then rated by identifying the score that best describes his or her performance for each trait.

Alternation Ranking Method - Ranking employees from best to worst on a particular trait, choosing highest, then lowest, until all are ranked.

Paired Comparison Method - Ranking employees by making a chart of all possible pairs of the employees for each trait and indicating which is the better employee of the pair.

Forced Distribution Method - Similar to grading on a curve; predetermined percentages of rates are placed in various performance categories.

Critical Incident Method - Keeping a record of uncommonly good or undesirable examples of an employee's work-related behavior and reviewing it with the employee at predetermined times.

Behaviorally Anchored Rating Scale (BARS) - An appraisal method that aims at combining the benefits of narrative and quantified ratings by anchoring a quantified scale with specific narrative examples of good and poor performance.

Electronic Performance Monitoring (EPM) - Having supervisors electronically monitor the amount of computerized data an employee is processing per day, and thereby his or her performance.

Unclear Standards - An appraisal scale that is too open to interpretation.

Halo Effect - In performance appraisal, the problem that occurs when a supervisor's rating of a subordinate on one trait biases the rating of that person on other traits.

Central Tendency - A tendency to rate all employees the same way, such as rating them all average.

Strictness/Leniency - The problem that occurs when a 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 rates these employees receive.

Appraisal Interviews - An interview in which the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths.