HRM Case

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Chapter 8: Performance Management and Appraisal

Performance Management vs Performance Appraisal

Performance Management

Identifying, measuring, managing, and developing HR performance; serves as systematic measurement of performance

Performance Appraisal

Evaluating individual employee performance; vital component of performance management process

Exhibit 8-1: The Performance Appraisal Process

Accurate Performance Measures Must Be…

Valid and reliable

Acceptable and feasible

Specific and pertinent to the job itself

Based on the mission and objectives

Why Do We Conduct Performance Appraisals?

Communication (Informing)

To communicate employee’s strengths and needs and to motivate performance

Decision-Making (Evaluating)

To make employment-related decisions (i.e., salaries, promotions, demotions, training, development, termination)

Motivation (Engaging)

To motivate employees to improve the way they work, which will in turn improve organizational productivity overall

What Do We Assess?

Trait Appraisals

Behavior Appraisals

Results Appraisals

Trait Appraisals

Traits identify the physical or psychological characteristics of a person.

There is evidence that certain traits such as inquisitiveness, conscientiousness, and general cognitive ability are valuable in jobs that require management and leadership.

Should We Measure Traits?

Important to ask whether both the manager and employee will agree with the measured rating as being accurate.

Behavioral Appraisals

Behaviors are the actions taken by an individual.

Behavior appraisals measure what individuals do at work.

Evaluated employees should have recourse to question outcome of their appraisals.

Should We Measure Behaviors?

The most useful and most acceptable feedback to employees is feedback on specific job-related behaviors.

Results Appraisals

Results are a measure of the goals achieved through a work process.

Results are concrete measures of performance.

Should We Measure Results?

Results-based evaluations are typically very acceptable to both the employee and the manager.

How Do We Use Appraisal Methods and Forms?

The formal performance appraisal usually involves the use of a standard form developed by the HR department to measure employee performance.

Employees need to know the standards and understand what good performance looks like, and they need to be able to measure their own performance.

Exhibit 8-2: Performance Appraisal Measurement Methods and Forms

Critical Incident Method

A performance appraisal method in which a manager keeps a record of the positive and negative performance of employees throughout the performance period.

A list of documented critical incidents is especially important to have leading up the evaluative decision of firing employees.

Management by Objectives (MBO)

Managers and employees jointly set employee objectives.

Managers give feedback, evaluate performance, and reward as merited.

It is not unusual to see misappropriation of resources used to fulfill MBOs. Misuse of MBOs can foster a “me-first” mentality.

Narrative Method or Form

Managers keep written records about employees’ performance.

Used for ongoing feedback and employee development planning.

Narratives capture employees’ values and contributions.

Graphic Rating Scale Forms

Managers use appraisal checklists to rate employee performance, often expressed as a numerical scale.

Typically used for evaluative decisions, but should also steer development decisions.

An effective rating is possible using a 1–5 Likert Scale, but examples provide greater clarity.

Behaviorally Anchored Rating Scales (BARS)

Managers use behaviorally-based continuum to rate employee performance, often expressed as a numerical scale.

It’s perhaps the best and most effective appraisal measurement.

It is typically used for evaluative decision-making, but should also steer development decisions.

Model 8-1: Setting Objectives Model

Ranking Method

Managers rank employees by comparing best to worst.

Forced distribution ranking of best to worst is the most used measure when companies resort to downsizing and layoffs.

It is typically used for evaluative decision-making and development.

Which Option Is Best?

Using a combination of the methods and forms is usually superior to using just one.

For developmental objectives, the critical incidents, MBO, and narrative methods work well.

Which Option Is Best?

For administrative decisions, a ranking method based on the evaluative methods and especially graphic rating scales or BARS forms work well.

The success of the performance appraisal process depends on the manager’s human relations skills in ongoing critical-incidents coaching.

Who Should Assess Performance?

Supervisors

Peers

Subordinates

Customers

Employees themselves

360-Degree Evaluations

Exhibit 8-3: Performance Appraisal Problems and Avoiding Them

Debriefing the Appraisal

Managers prepare for and communicate analysis of each employee’s performance with the employee.

There are two major reasons for assessing performance:

For evaluative decisions

For development

Model 8-2: The Evaluative Performance Appraisal Interview

Model 8-3: The Developmental Performance Appraisal Interview

Trends and Issues in HRM

Continuous Appraisals: Is it time to do continuous appraisals?

Competency-Based Performance Management: With the nature of work in today’s companies and the fact that competencies are becoming a significant issue, performance management systems need to be redesigned so that we can evaluate the skills and capabilities that are most important to the business.