Training, Career Development and Performance Management

41

8 Performance Management

and Appraisal

Case 8.1. Why Do We Conduct Performance Appraisals? Jennee LeBeau and the Case of the Missing Performance Appraisal System Jennee LeBeau was very excited to be hired as the director of human resources at Sunshine Hotels. Her office was located at the Main Island Hotel. Jennee spent her first year at Sunshine Hotels getting used to the processes used by HR. She spent most of her time in her office at Main Island Hotels. She didn’t get to visit the other two Sunshine Hotels very often. Jennee’s employees in HR like her hands-off supervisory style. However, they also feel she would be an even better supervisor if she left her office and interacted with the employees more often.

Jennee had spent the last 7 years as the assistant director of human resources for a chain of 10 fast-food restaurants. She figured being in charge of HR for a growing chain of three hotels would be similar to her experiences working in the fast-food industry.

While working in her office, she noticed Sunshine Hotels didn’t conduct perfor- mance appraisals. Jennee thought performance appraisals (PA) were a common pro- cess in all companies. She was quite shocked at finding such a review process was not in place at Sunshine Hotels since they have nearly 30 employees. She decided the hotel chain was not overly concerned with evaluating employees in their first two hotels since the employees were mostly family and friends. But the addition of a third hotel has forced the Sunshine Hotel owners to create more HR policies, rules, and forms to make sure they are following all the laws of HR.

Jennee did some research and found that a performance appraisal is an ongoing process of evaluating employee performance. However, it is also a tool of the large

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Part III • Developing and Managing4 2

process of having a performance management system, which is the process of identify- ing, measuring, managing, and developing the performance of the human resources in an organization. Thus, a PA is really a mechanism to help evaluate employees so they can develop into larger roles and to ensure the success of the company going into the future.

The good news is that Jennee figured out she could start from scratch and develop her own performance management system (PMS). She figured she could set up an entirely new PMS. PAs of individuals could be part of an ongoing process of evaluating employees.

Jennee has to decide what will be included in her new PMS. She wants the PA to collect valid information. That means what she measures must be true and correct. She wants to be sure to measure the performance process. Although Jennee wants to col- lect valid information, she also has to be concerned that the process isn’t overly long or costly. She figures she can keep costs lower by emailing the PA to each employee to reduce mailing costs. She also wanted to use a multiple choice style PA so she could easily quantify the results.

The PA also has to be reliable. She has to trust that the performance data collected are consistent and that the PA works the same each time she uses it.

Jennee wants the employees to accept the process as important to their own career development. Acceptability means that the use of PA is satisfactory or appropriate to the employees that will use the PA to improve their work performance.

Jennee also wants to develop a process that would not be overly expensive or time consuming to implement. If the PA is overly long to complete, then the manager and employee will not use the PA as a tool to improve performance.

The PA has to be specific about an employee’s job performance so that it is a useful instrument for improving areas that need development for that specific employee.

Another important goal is the PA has to help achieve the mission and goals of Sunshine Hotels. Completing the PA process should help employees better understand what Sunshine expects from them and how they can complete their own job to help the company fulfill its mission.

Jennee is starting to realize that she has walked into a very large project in design- ing a PMS from scratch. She is starting to realize she will need to organize a committee to help develop the process, especially the PA form. In answering her own questions, she realized she will be putting together a PA that Sunshine employees will be using for the first time. Employees currently receive a straight raise across the board. If the owners of Sunshine Hotels determine everyone deserves a 3 percent raise, then all employees get the raise irrespective of their own work performance. A new perfor- mance management system and performance appraisal process will most likely make it easier to administer raises based on the rating each employee receives as part of the process. However, the employees might prefer the across-the-board raises rather than having to personally earn their raises.

Jennee decided to create a first draft of her performance appraisal form. She can show this draft to her committee. The following is Jennee’s performance appraisal:

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Chapter 8 • Performance Management and Appraisal 4 3

PERFORMANCE APPRAISAL FORM

NAME:

HOTEL:

DEPARTMENT and JOB TITLE:

DATE OF APPRAISAL:

FROM: TO:

Employee Signature

Employer Signature

Exceptional Successful Needs

Improvement Unsatisfactory

Demonstrates Required Job Knowledge

Quality of Work & Productivity

Makes Effective Decisions

Builds and Maintains Relationships With Others

Communicates Effectively

Exhibits Supervisory Abilities

Overall Performance Appraisal Plan of Action

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Part III • Developing and Managing4 4

Case Questions

1. What is the real goal(s) of a performance appraisal?

2. How can Jennee be sure to collect valid and reliable data with her new performance system?

3. How can Jennee get the employees to accept the process as important to their own career development?

4. Can Jennee develop a process that is not overly expensive to conduct with employees?

5. Complete the performance appraisal form in the case using Jennee LeBeau as the employee you are rating. Assume you are Patrick Staal, who is the chief financial officer (CFO) who is rating Jennee’s first year of performance.

EMPLOYEE PERFORMANCE APPRAISAL FORM

NAME: Jennee LeBeau

HOTEL: Main Island

DEPARTMENT & JOB TITLE: Director of Human Resources

DATE OF APPRAISAL:

FROM: January 1, 2016 TO: December 31, 2016

Employee Signature: Jennee LeBeau

Supervisor Signature: Patrick Staal

Exceptional Successful Needs

Improvement Unsatisfactory

Demonstrates Required Job Knowledge

X

Quality of Work & Productivity

X

Makes Effective Decisions

X

Builds & Maintains Relationships With Others

X

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Chapter 8 • Performance Management and Appraisal 4 5

Exceptional Successful Needs

Improvement Unsatisfactory

Communicates Effectively

X

Exhibits Supervisory Abilities

X

Overall Performance Appraisal Plan of Action

Jennee LeBeau has been the Director of Human Resources for the last year. She has excellent knowledge of the human resource concerns at Main Island Hotel.

As the Director of HR. Jennee is well liked. However, there is room for improvement since she spends most of the time in her office.

Jennee needs to develop better social skills. Developing better social skills will help her to improve her communication and supervisory abilities.

Jennee will participate in team building sessions to improve her communication and supervisory skills.

Case 8.2. Performance Appraisal Problems: The Trouble With Performance Systems It is unfortunate that employees fear their performance appraisal since the goal of a performance management system is to help employees develop. However, sitting across a table from your manager and discussing your performance record is most likely going to be a high-stress situation.

Janice Flahive didn’t look forward to her performance appraisal. As an advertising salesperson for her local newspaper, the Miami News, it was Janice’s job to sell adver- tising space in the newspaper. Her performance was mainly based upon how much ad space she sold. Janice felt she should have also been evaluated on customer satisfac- tion, creating new accounts, or developing relationships with prospective businesses that could lead to future sales opportunities. Instead, Janice’s performance appraisals usually ended up being a one-way communication process where her employer criti- cized her for not selling enough advertising space.

The PMS process is full of potential problems if it is not administered properly. Many of these problems occur because managers are not properly trained to administer

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Part III • Developing and Managing4 6

a performance management system. The lack of training can lead to “rating errors,” where one manager grades employees easier than a fellow manager who is a tougher grader. The result of inconsistent grading can lead to star employees receiving the same grades as weaker employees.

Poorly trained managers do not provide continuous feedback to their employ- ees. Feedback is provided only during the performance appraisal meeting. Managers need to provide performance feedback more often and document their interactions with the employee. It cannot be stressed enough that managers need to document, document, and collect even more documentation on each employee under their supervision. Documentation is needed to support strong employees for raises and pro- motions. Even more important, documentation is critical if an employee needs to be reprimanded or fired as a result of the performance appraisal.

Much in the manner of Janice’s experience, performance appraisals often fail to critique the employee in all areas of performance. Janice’s job is in sales, which makes it easier to evaluate her in that area since sales can be quantified—she either makes her sales quota or she doesn’t. However, Janice still deserves to be evaluated on qualitative areas such as customer service skills or leadership ability, which are often not able to be quantified.

Janice’s performance appraisals should help her to develop into a better salesper- son and potential management leader. It appears that Janice’s performance appraisal is a meeting that tends to discuss her past performance. Instead, the meeting should help Janice to develop a performance plan with specific goals for the coming year.

One of the more controversial rating systems is the ranking method. Ranking is a performance appraisal method that is used to evaluate employees from best to worst. At the Miami News, Janice’s office is evaluated using the ranking system. Since the rank order is posted in the office, Janice knows she is currently seventh on the list of 10 employees. The list is as follows as it is displayed outside the human resources office:

1. Samuel Garcia

2. Rosa McGowan

3. Meghan Shotland

4. Albert Smithfield

5. Jerry Jones

6. Samantha Barron

7. Janice Flahive

8. Karreem Rush

9. Monique Wayne

10. Sarah Badlementi

Janice is concerned that her company will decide to keep the top three star employees, try to develop the next three employees, and try to lay off the bottom four employees.

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Chapter 8 • Performance Management and Appraisal 47

Although there are many potential problems with a PMS that is not well organized, such a system is still very much needed in all organizations. Dr. Samuel Culbert, pro- fessor of management from UCLA, does not believe in the performance review; he supports a performance preview. This would be where Janice and her manager would sit down and together discuss how they can each help improve her overall performance. Janice can write “I” statements such as, “I will increase the amount of time I spend actually selling my products.” Or, her employer might say, “I will check in with Janice on a monthly basis, instead of every six months.”1

Another option for improving the performance appraisal system is to develop a team of people to review the employee. The traditional method is for the direct super- visor to evaluate his or her own employee. However, a more comprehensive 360-degree evaluation will analyze individual performance from many sides—from the supervi- sor’s viewpoint, from subordinates’ viewpoints, from the customers’ viewpoints, from peers’ viewpoints, and from a self-evaluation. Unfortunately, it will take extra time and money to collect data from all the different people who would be involved in that type of evaluation. However, the 360-degree evaluation might be worth the time and effort to help the employee develop under the guidance of multiple stakeholders instead of just the supervisor’s.

Case Questions

1. Why are there problems with most performance management systems?

2. What is the potential problem with a performance review conducted by a team of managers?

3. Why is an “I” statement a good method for developing a positive PA?

4. What are the positive and negative aspects of using a ranking method at Janice’s office at the Miami News?

5. What type of PA do you or did you have in the company you work or worked for?

Note

1. Culbert, Samuel A., “Get Rid of the Performance Review! It Destroys Morale, Kills Teamwork and Hurts the Bottom Line. And That’s Just for Starters,” Wall Street Journal, October 20, 2008.

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