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Presentation 8.2

Performance Appraisal Methods

Learning Outcomes

Introduce Ten different methods in apprising employees’ performance and the most three methods commonly used.

Illustrate each method by figures.

Performance Appraisal Methods

Alternation ranking

Graphic rating scale

Paired comparison

Forced distribution

Critical incident

Behaviorally anchored rating scales (BARS)

Narrative forms

Management by objectives (MBO)

Computerized and Web-based performance appraisal

Merged methods

Human Resources Management 12e Gary Dessler

9–3

Appraising performance requires choosing an appraisal tool, form, or methodology that provides an effective means for comparing a subordinate’s actual performance to the standards for his or her job.

1. Management by objective the result approach

Dr. Hayat Habhab

MBO Approach is the most commonly used method in appraising the employee performance.

It is a method by which managers and subordinates are both involved in planning, organizing, communicating, debating, and controlling the departments’ workflow.

MBO Process

A comprehensive and formal organizationwide goal-setting and appraisal program requiring:

Setting of organization’s goals

Setting of departmental goals

Discussion of departmental goals

Defining expected results (setting individual goals)

Conducting periodic performance reviews

Providing performance feedback

Human Resources Management 12e Gary Dessler

9–5

Employers use management by objectives (MBO) for one of two things. Many use it as the primary appraisal method. Others use it to supplement to a graphic rating or other appraisal method. MBO generally refers to the comprehensive and formal organizationwide goal-setting and appraisal program.

Using MBO

Setting unclear objective

Conflict with subordinates over objectives

Potential Problems with MBO

Time-consuming appraisal process

Human Resources Management 12e Gary Dessler

9–6

In using MBO, it is best to keep the guidelines for goal setting (SMART, specific, and so on) in mind. Setting objectives with the subordinate sometimes turns into a tug-of-war, with the supervisor pushing for higher quotas and the subordinate pushing for lower ones.

The more that is known about the job and the person’s ability, the more confident a supervisor can be about setting standards.

2. Forced Distribution Method

Supervisors are forced to distribute ratings into pre-specified performance distribution.

They are given a series of MCQ regarding the employee.

Each question asks to select one choice from a list that contains only positive or negative .traits or behaviors related to performance

“See the figure below”.

Forced Distribution Method

3. Graphic Rating Scale

Lists traits such as quality, communication skills or teamwork.

Use a scale of range of performance values from “unsatisfactory” to “outstanding”, or from “below expectations” to “role model” for each trait.

“see the figure below”.

Human Resources Management 12e Gary Dessler

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Sample Graphic Rating Performance Rating Form

Human Resources Management 12e Gary Dessler

9–10

Figure 9-2 shows one graphic rating scale. A graphic rating scale lists traits (such as “quality and reliability” or “teamwork”) and a range of performance values (from “unsatisfactory” to “outstanding,” or “below expectations” to “role model”) for each trait.

Graphic Rating Scale, cont’d.

Some graphic rating forms assess objectives.

The employee and supervisor fill in the objectives’ section at the beginning of the year.

Then they assess results and set new objectives as part of the next appraisal. (see the figure below)

Human Resources Management 12e Gary Dessler

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Appraisal Form for Assessing Competencies and Specific Objectives

Human Resources Management 12e Gary Dessler

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Some graphic rating forms assess several things. Figure 9-4 (Section I) assesses the employee’s performance relating to both competencies and objectives. The employee and supervisor would fill in the objectives section at the start of the year, and then assess results and set new ones as part of the next appraisal.

Graphic Rating Scale cont’d

Another graphic rating forms assess the competencies expected from an employee to develop and exhibit, such as “problem solving”, maintain effective work relationships with co-workers, and building effective teamwork.

(see the figure below).

FIGURE Appraisal Form for Assessing Both Competencies and Specific Objectives

Human Resources Management 12e Gary Dessler

9–14

Some graphic rating forms assess several things. In Figure 9-4, Section II illustrates the competencies an employee is expected to develop and exhibit such as “identifies and analyzes problems” (Problem Solving), and “maintains harmonious and effective work relationships with co-workers and constituents” (Teamwork).

4. Behaviorally Anchored Rating Scale (BARS)

BARS

Measures an employee’s performance against specific examples of behavior that are given a number rating.

Differs from Behavioral Observation Scale in that employees in BOS are evaluated according to how frequently they exhibit a required behavior for effective performance.

Advantages of BARS

More accurate

Clearer standards

Provide Feedback

Independent dimensions

Consistency

Human Resources Management 12e Gary Dessler

9–15

A behaviorally anchored rating scale (BARS) is an appraisal tool that anchors a numerical rating scale with specific examples of good or poor performance. Its proponents say it provides better, more equitable appraisals than do the other appraisal tools. It takes more time to develop a BARS, but the tool has several advantages.

FIGURE Example of a Behaviorally Anchored Rating Scale for the Dimension Salesmanship Skills

Human Resources Management 12e Gary Dessler

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Figure 9-8 presents an example of a section of a final BARS instrument that lists the critical incidents that serve as behavioral anchors on the performance scale for the dimension Salesmanship Skills.

5. Alternation Ranking Method

Ranking employees from best to worst. Supervisors alternately choose and list employees who are the highest/lowest on the characteristics/trait being measured

(see the figure below).

FIGURE Scale for Alternate Ranking of Appraisee

Human Resources Management 12e Gary Dessler

9–18

Ranking employees from best to worst on a trait or traits is another option. Supervisors choosing the alternation ranking method would use a form like that in Figure 9-5 to alternately choose and list employees who are the highest on the characteristic being measured and the ones who are the lowest.

6. Paired Comparison Method

Supervisors pair and compare every subordinate with every other subordinate for every trait such as quality or quantity of work by using a chart.

(see the figure below).

FIGURE Ranking Employees by the Paired Comparison Method

Note: + means “better than.” - means “worse than.” For each chart, add up the number of +’s in each column to get the highest ranked employee.

Human Resources Management 12e Gary Dessler

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The paired comparison method helps make the ranking method more precise. For every trait (quantity of work, quality of work, and so on), you pair and compare every subordinate with every other subordinate. In the paired comparison method, you make a chart, as in Figure 9-6, of all possible pairs of employees for each trait.

7. Critical Incidents Method

Supervisor uses a log of positive and negative examples of a subordinate’s work-related behavior.

Then they meet, periodically, to discuss performance.

The figure below, provides an example of what performance an assistant plant manager must improve as his log shows that he let inventory storage costs rise 15%.

TABLE Examples of Critical Incidents for Assistant Plant Manager

Continuing Duties	Targets	Critical Incidents
Schedule production for plant	90% utilization of personnel and machinery in plant; orders delivered on time	Instituted new production scheduling system; decreased late orders by 10% last month; increased machine utilization in plant by 20% last month
Supervise procurement of raw materials and on inventory control	Minimize inventory costs while keeping adequate supplies on hand	Let inventory storage costs rise 15% last month; over-ordered parts “A” and “B” by 20%; under-ordered part “C” by 30%
Supervise machinery maintenance	No shutdowns due to faulty machinery	Instituted new preventative maintenance system for plant; prevented a machine breakdown by discovering faulty part

Human Resources Management 12e Gary Dessler

9–22

With the critical incident method, the supervisor keeps a log of positive and negative examples (critical incidents) of a subordinate’s work-related behavior. Every 6 months or so, supervisor and subordinate meet to discuss the latter’s performance, using the incidents as examples.

In Table 9-1, one of the assistant plant manager’s continuing duties was to supervise procurement and to minimize inventory costs. The critical incident log shows that the assistant plant manager let inventory storage costs rise 15%; this provides an example of what performance she must improve in the future.

8. Narrative Forms Method

A written analysis of an employee’s performance which is very individualized and qualitative method in nature.

Supervisor’s narrative assessment helps an employee in understanding where the performance is good or bad, and how to improve it.

The figure below, provides an example of all or part of the narrative written appraisal.

FIGURE Appraisal-Coaching Worksheet

Human Resources Management 12e Gary Dessler

9–24

All or part of the written appraisal may be in narrative form as shown in Figure 9-7. The supervisor’s narrative assessment aids the employee in understanding where his or her performance was good or bad, and how to improve that performance.

9. Computerized and Web-Based PA Systems

Electronic Performance Monitoring (EPM) Systems

Use computer network technology to allow managers access to their employees’ computers and telephones.

Managers can monitor the employees’ rate, accuracy, and time spent working online.

Allow managers to keep notes on subordinates.

Notes can be merged with employee ratings.

Software generates written text to support appraisals.

Allows for employee self-monitoring and self-evaluation.

Human Resources Management 12e Gary Dessler

9–25

Employers increasingly use computerized or Web-based performance appraisal systems that enable them to keep computerized notes on subordinates during the year. The notes can then be merged with ratings of employees on several performance traits. The software then generates written text to support each part of the appraisal. Most appraisal software combines several of the basic methods such as graphic ratings plus critical incidents or BARS.

Electronic performance monitoring (EPM) systems use computer network technology to allow managers access to their employees’ computers and telephones. They allow managers to monitor the employees’ rate, accuracy, and time spent working online.

10. Using IT to Support Performance Management

Assign financial and nonfinancial goals to each team’s activities along the strategy map chain of activities leading up to the company’s overall strategic goals.

Inform all employees of their goals.

Use IT-supported tools like scorecard software and digital dashboards to continuously monitor and assess each team’s and employee’s performance.

Take corrective action at once.

Human Resources Management 12e Gary Dessler

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This slide sums up how IT-supported performance management process supports performance management.

FIGURE Performance Management Report

Human Resources Management 12e Gary Dessler

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Information technology does enable management to automate performance management. Figure 9-14 presents an example of an employee’s online performance management report.