Transcript Slide 1

Appraising Employees Job
Performance
Chapter 8
Gaining Competitive Advantage
• Corning had inadequate performance
management system—this did not provide
the organization with sound bases for
making decisions regarding:
– Promotions
– Transfers
– Pay raises
Contained no vehicle for providing
employee feedback on strengths and
weaknesses
Corning Solution
• New performance appraisal system which
consisted of 3 parts:
– Rating form containing behavioral standards
– Rating form containing performance
objectives
– Form where supervisors made salary and
promotion recommendations
How Did the New System Enhance
Competitive Advantage
• Performance profiles derived from the
behavioral ratings enabled supervisors to give
employees specific feedback geared to improve
their performance
• Performance objectives ensured that employee
efforts were consistent with company goals
• Salary and Promotion Recommendations
ensured that employees selected for promotion
were qualified for their new jobs and those
associates receiving merit increases were truly
deserving of these
Linking Performance Appraisal to
Competitive Advantage
• Performance appraisal system can create
competitive advantage by improving employee
job performance in two ways:
– Directing ee behavior toward organizational goals
(focus on their contributions toward achieving
their portion of the organizational goals)
– Monitoring behavior to ensure goals are met
(supervisors can monitor direct reports’ job
performance and adherence to the strategic
plan—Is performance on target?
Linking Performance Appraisal to
Competitive Advantage
• Performance appraisal systems often yield
information for making employment decisions,
like pay raises, promotions, discharges,
demotions, transfers, training and the
completion of probationary periods
• Performance appraisal systems also ensure
legal compliance—a decision on an individual’s
employment status was a fair one (i.e., an
accurate assessment of job performance)
• Systems must ensure accurate and fair ratings
Linking Performance Appraisal to
Competitive Advantage
• Minimize job dissatisfaction and turnover if
employees view ratings as accurate and
fair
• Retention issue—ees will stay with the
organization if they perceive the
atmosphere to be fair, progressive, and
dynamic and an effective performance
appraisal system fosters this perception
HRM Issues & Practices
• Clear a good performance management
system can greatly benefit an organization
– 65% of companies are dissatisfied with their
system
– 90% of HR professionals and business
executives felt their system needed reform
(Discuss Exhibit 8-1—Identify a student to
discuss)
HRM Issues & Practices
• Quality of the rating form must be relevant and
the rating standards must be clear
• Relevance—the degree to which the rating form
includes necessary information:
– Include all pertinent criteria for evaluating
performance
– Exclude criteria that are irrelevant to job performance
– Criterion deficiency—omission of pertinent
performance criteria (i.e., police officer—base criteria
on the number of arrests made—other aspects of
performance (conviction record, court performance,
number of commendations)
HRM Issues & Practices
• Relevance:
– Criterion contamination—employees are
evaluated on factors that are irrelevant to the
job (i.e., auto mechanic evaluated on personal
cleanliness—what does this have to do with
job performance)
• Clear Performance Standards—level of
performance an ee is expected to achieve
(load truck in one hour vs. “work quickly”
HRM Issues & Practices
• Accuracy of the ratings—reflect the employees’
actual job performance levels:
– Trust is an issue when ees don’t feel ratings
accurately reflect their performance levels
– Leniency error—ratings are unduly favorable—no
need for ee to improve?
– Severity error—ratings are unduly unfavorable
Managers do this for political reasons—manipulate
the ratings to enhance or protect their selfinterests—or may result from a manager’s lack of
conscientiousness (Discuss Exhibit 8-2—student)
HRM Issues & Practices
• Halo Effect—ratings on each scale are influenced by the
appraiser’s overall impression of an employee (i.e., if a
rater is impressed with an individual’s intelligence they
may overlook some deficiencies
• Implicit personality theory—a rater’s personal theory of
how different types of people behave in certain
situations—(i.e., conscientious person—come into work
early—may not have observed attention to detail—just
what the conscientious person is like
• Recency Error—an error that occurs when ratings are
heavily influenced by recent events—ee performance
reviewed once a year causes this to occur
HRM Issues & Practices
• Legal standards:
– Charge of disparate impact in promotions
(e.g., fewer members of a protected class are
being promoted) the court could scrutinize the
job-relatedness of the appraisal form and
the accuracy of ratings
– Judge would look at whether appropriate
safeguards were taken:
• Upper management review of ratings
• Formal system that allows ees to appeal their
ratings if perceived unfair
Types of Rating Instruments
• Employee comparison systems—ee
performance is evaluated relative to other
employees’ performances
– Ranking formats:
• Simple rankings—rank order ees from best to worst,
according to job performance
• Paired comparison—compare each possible pair of
employees (i.e., ee 1 is compared to ee 2 and 3, and ee 2 is
compared to ee 3—the ee winning the most “contests”
receives the highest ranking
• Forced distribution—assign certain percentage of ees to
each category of excellence (i.e., “best,” “average,” or
“worst.” (analogous to grading on a curve—(HINT HINT
Professor Duchon)
Types of Rating Instruments
• Employee comparison systems
– Strengths—low cost and practical; ratings take little time and
effort—eliminates some rating errors like leniency is eliminated
since the rater cannot give every ee an outstanding rating—only
50% above average
• Decisions on pay raises and promotions become much easier
– Weaknesses—rating standards for judging performance are
vague or nonexistent, the accuracy and fairness of ratings can
be seriously questioned. Don’t state what a worker must do to
get a good rating—don’t direct or monitor ee behavior—and can’t
compare performance from people of different departments fairly
Types of Rating Instruments
• Graphic rating scales—present appraisers with a list of
traits assumed to be necessary to successful job
performance (e.g., cooperativeness, adaptability, etc..)
– 5 or 7 point scale
– Strengths—many use these because they are practical and cost
little to develop—HR can develop the forms quickly—traits and
anchors are written at a general level—they can be used by all
job levels in the organization
– Weakness—vaguely defined traits to evaluate; fail to provide
specific, non-threatening feedback; and rating accuracy—two
raters may interpret the word “average” differently. Courts may
view as a “subjective judgment call.” (Exhibit 8-4 page 240)
Types of Rating Instruments
• Behaviorally Anchored Rating Scales—requires
appraisers to rate ees on their traits—better here
A BARS anchors each trait with examples of
specific job behaviors that reflect varying levels
of performance (Figure 8-2 page 241)
– Strengths—most legally defensible; we don’t have to
choose one behavior; and effective in directing ees’
behavior because it specifies what they need to do in
order to receive a high performance rating
– Weaknesses—not practical like BARS takes a lot of
time to develop; need a separate instrument for each
job—would work with many incumbents
Types of Rating Instruments
• Management By Objectives (MBO)—a
management system designed to achieve
organizational effectiveness by steering each
ee’s behavior toward the organization’s
mission—process includes Goal setting,
Planning, and Evaluation
– Strengths—improves job performance by directing
behavior; performance standards are stated in
objective terms; little time to develop and low cost;
ees have a say in how their performance will be
measured—opens the lines of communication
Types of Rating Instruments
– Weaknesses—
• Focus on attention to goals—doesn’t specify behavior
required to achieve them
• Successful achievement of MBO goals may be partly a
function of factors outside the worker’s control
• Performance standards vary from ee to ee—goals set for an
“average” ee may be less challenging than goals set for a
“superior” ee—Who should get the bigger raise?
• Puts stress and pressure on individual
(Discuss Exhibit 8-7 page 246—good test questions)
Designing an Appraisal System
• Step 1: Gaining Support for the System
– Must have support of the entire workforce
(appraisers, ees, and upper management)—”real
work” significance
– Gain support of Upper-Level Managers
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Make process meaningful
Input in developing the system
Train managers
Hold manager’s accountable for providing accurate ratings
on a timely basis
Designing an Appraisal System
• Step 1: Gaining Support for the System
– Gain support of EES
• Encourage users to participate in the planning and
development of the system (i.e., task force devise a step-bystep approach in developing, implementing, and
administering the system)
• Step 2: Choosing the Appropriate Rating
System
– Cost for development, implementation, and utilization
– Nature of Job—Probably best to utilize “How” and
“What” of performance in addition to a development
plan (i.e., executives and managers and professional
level are more results orientation
Designing an Appraisal System
• Step 3: Choosing the Rater(s)
– Supervisory ratings—responsibility of immediate
supervisor about 98% of the time—REALLY??
– Peer Ratings—supplement supervisor ones—can
develop a consensus about an individual’s
performance
• Issues competitive nature of the organization’s reward
system and friendship
– Self-Ratings—used for ee development
– Multiple raters—360 degree feedback systems—
circle of people who frequently interact with the
manager
Designing an Appraisal System
• Step 4: Determining the Appropriate Timing of
Appraisals
– Annually or anniversary based—(discuss impact on merit
increases and strategic intent)
• Step 5: Ensuring Appraisal Fairness
– Upper level management review of appraisals—are halo or
central tendency errors occurring
– Appeals System—provides a means for ees to obtain a fair
hearing if they are dissatisfied with their appraisals:
• Allow ees to voice their concerns
• Fosters more accurate ratings
• Often prevents the involvement of outside parties
Downside may undermine the authority of the supervisor—but
then again it keeps issues internal