HUMAN RESOURCEMANAGEMENT

PERFORMANCEMANAGEMENT

CHAPTER NO. 5

AFTER STUDYING THIS CHAPTER YOU SHOULD BE ABLE TO:

Understand and differentiate between Performance Management and Performance Appraisal.

Identify the factors that effect Performance.

Narrate Performance Management Cycle.

Describe two major purposes of Performance Management.

Understand three job criteria and information types.

Discuss the pros and cons of using different raters to appraise a person’s performance .

Develop , evaluate, and administer at least four appraisal methods to measure performance

Explain several rater errors by giving examples of them.

Perform an effective appraisal interview.

Design Appraisal form to measure employee performance effectively.

WHAT IS PERFORMANCE

PERFORMANCE

Performance is essentially what an employee does or does not do.

Quality of output Quantity of output Timeliness of output Presence at work Cooperativeness

Common Elements to Performance

FACTORS THAT INFLUENCEPERFORMANCE

Career Ambition Employee Conflict Frustration Fairness/Satisfaction Goals/Expectations

Equipment/MaterialsJob DesignEconomic ConditionsUnionsRules & PoliciesManagement SupportLaws & Regulations

Technical Skills Interpersonal Skills Problem Solving Skills Analytical Skills Communication Skills Physical Skills

1. MOTIVATION

2. ENVIRONMENT

3. ABILITY

P=f (M,E,A)

A Process that Consolidates:

PERFORMANCE MANAGEMENT

1. Defining Performance

2.Measuring Performance

3. Feedback Performance Information

Objective of this system is to align employee work behaviors with the

organization’s goals.

PERFORMANCE MANAGEMENT CYCLE

(1)Set clear

performance goals &

make developmen

tal plans

(2)Monitor goal

progress

(4)Annual

appraisal against

goals adjust & plan for next year

(3)Coaching by supervisor throughout

the year

Administrative Decisions Promotion Pay raise Transfer

PURPOSES FOR PERFORMANCEMANAGEMENT

Provide Performance Feedback Recognize Individual Performance Assist in Goal Identification Evaluate Goal Achievement Identify Individual Training Needs Improve Communication

Document Personnel DecisionsDetermine Promotion CandidatesIdentify Poor PerformanceDecide Retention or TerminationDecide on LayoffsValidate Selection CriteriaMake Reward/Compensation Decisions

1. DEVELOPMENTAL

2. ADMINISTRATIVE

PERFORMANCE APPRAISAL

DEFINITION

Performance appraisal is the process of evaluating how well employees perform their jobs when compared to a set of standards, and then communicating that information.

PERFORMANCE MANAGEMENTVS.

PERFORMANCE APPRAISAL

is used to align employee’s performance with the organization’s goals .

PERFORMANCE MANAGEMENT

is the part of performance management in which an

employee’s contribution to the organization during a specified

period of time is measured.

PERFORMANCE APPRAISAL

Defines Performance

Facilitates Performance

Encourages Performance

Measure Performance

Evaluate Performance

Feedback on Performance

WHAT IS IN PERFORMANCEAPPRAISAL SYSTEM

1. What is Measured 2. Who Measure

Performance

3. When is it Measured

4. How is it Measured

1. WHAT IS MEASURED

INFORMATION TYPE

2. WHO MEASURE PERFORMANCE

Peers

Subordinates Self

Team Supervisor

Customers

360 DEGREE PERFORMANCE APPRAISAL

Multisource feedback recognizes that the manager is no longer the sole source of performance

appraisal information. Instead, Feed back from various colleagues and constituencies is obtained

and given to the manager, thus allowing the manager to help shape the feedback from all

sources.

3. WHEN IS IT MEASURED

TASK ORIENT

ED

MONTHLY

QUARTERLY

ANNUALLY

4. HOW IS IT MEASURE

•a •b

•d•c

Category Rating

Methods

Comparative

Methods

Behavioral/

Objectives Methods

Narrative Methods

a. CATEGORY RATING METHODS

The simplest methods for appraising performance are category rating methods which require a manager to

mark an employee’s level of performance on a specific form divided into categories of performance.

i. Adjective/Graphic Rating Scales

ii. Checklist Appraisal

i. GRAPHIC/ADJECTIVE TRAITRATING SCALE

Allows the rater to mark an employee’s performance on a continuum. Because of its simplicity, this method is the one most frequently used. One of the oldest and most

popular methods of appraisal is the adjective rating scale in which a rating scale list traits (such as quality, quantity, job knowledge & integrity etc) and range of performance values (from unsatisfactory to outstanding for each traits.

i. GRAPHIC/ADJECTIVE TRAIT RATING SCALE

ii. CHECKLIST APPRAISALThis method is composed of a list of

statements or words. Raters check statements most representative of the characteristics and

performance of employees.

b. COMPARATIVE METHODS

Comparative methods require that managers directly compare the performance of their

employees against one another.

i. INDIVIDUAL RANKING

ii. FORCED DISTRIBUTION

iii. PAIRED COMPARISON

i. INDIVIDUAL RANKING

The ranking method consists of listing all employees from highest to lowest in

performance.

ii. FORCED DISTRIBUTION

The group order ranking method or forced distribution method is similar to grading on a curve and it requires

the evaluator to place employee into a particular classification.

High Performers

High Average Performer

Average Performer

Low Average Performer

Low Performer

15

20

30

20

15

Exampl

e

iii. PAIRED COMPARISON In paired comparison method for every

traits (quality of work, quantity of work, creativity etc) you pair and compare very subordinate. This

method become unwieldy when large numbers are being compared.

c. NARRATIVE METHODS

NARRATIVE METHODS

i. Critical Incident

Appraisal

ii. Essay Appraisal

iii. Field Review

i. CRITICAL INCIDENT APPRAISAL

In the critical incident method, the manager keeps a written record of both highly favorable and unfavorable actions in an employee’s performance. A list of critical incidents is kept during the entire rating period for each employee.

Critical incidents, with their focus on behaviors, judge performance rather then personalities.

SAMPLE CRITICAL INCIDENT APPRAISAL

ii. ESSAY APPRAISAL

The essay, or “Free-Form,” appraisal method requires the manager to write

a short essay describing each employee’s performance during the

rating period. The rater usually is given a few general headings under

which to categorize comments.

SAMPLE ESSAY APPRAISAL

Name:Position:Department:Date started on job:Date of last rating:Date of this rating:Appraisal of Performance: ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Suggestions for Development:____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Prepared By: Position:Manager’s Signature: Employee’s Signature:

iii. FIELD REVIEW

In the field review, the outside reviewer becomes an active partner in the rating process. The outsider

interviews the manager about each employee’s performance, then compiles the notes from each interview into a rating for each employee. Then the rating is

reviewed by the supervisor for needed changes. This method

assumes that the outsider knows enough about the job setting to help supervisors give more accurate and

thorough appraisals.

d. BEHAVIORAL/OBJECTIVES METHODS

Behavioral approaches hold promise for some situations in overcoming some of the problems with

other methods.

i. Behaviorally Anchored Rating Scales (BARS)

ii. Management by Objective (MBO)

i. BEHAVIORALLY ANCHORED RATING SCALES (BARS)

Assess an employee’s behaviors instead of other characteristics. BARS match

descriptions of possible behaviors with what the employee most commonly

exhibits i.e., Behavioral rating approaches describe examples of employee job

behaviors.

Group Member has read all agreed upon material

Group Member participate in discussion, through not always

prepare

Group members does little work & offer no valuable ideas

or feedback

5

4

3

2

1

Effective

Ineffective

BARS Dimensions (Sample) Quality of Group member

input

Can train and develop subordinates

Criticize of personnel in front of others.

Sets a poor example.

5

4

3

2

1

Effective

Ineffective

Exhibits respect towards subordinates

Does not lead by example.

BARS for Supervision (Sample)

ii. MANAGEMENT BY OBJECTIVE (MBO)

MBO involves setting specific measurable goals with each employee and then

periodically reviewing the progress made.

THE MBO PROCESS

a. Job review and Agreement

b. Development Of Performance Standards

c. Guided Settings of Objectives

d. Continuing Discussion of Performance

BEST APPRAISALMETHOD ?

COMBINATIONS OFMETHODS

BENEFITS OF PERFORMANCE APPRAISAL

For the Appraisee

For the Organization

For the Management

BENEFITS OF PERFORMANCEAPPRAISAL Cont . . .

Better understanding of his role. Clear understanding of strengths and weaknesses by employees. Increased motivation, job satisfaction, and self-esteem. Opportunity of open discussion regarding work problems & how to overcome them. Improved working relationships with the superiors.

Improved performance throughout the organization. Creation of a culture of continuous improvement and success. Conveyance of message that people are valued.

For the Appraisee For the Organization

BENEFITS OF PERFORMANCEAPPRAISAL Cont . . .

Identification of performers and non- performers and their development. Opportunity to prepare employees for assuming higher responsibilities. Opportunity to improve communication between the employees and the management. Identification of training an development needs. Generation of ideas for improvements. Better identification of potential and formulation of career plans.

For the Management

RATERS ERRORS

1. Problems of Varying

Standards

2. Recency Effect

3. Central Tendency

5. Rater Bias

6. Halo Effect

7. Contrast Error

RATERSERRORS

4. Leniency and Strictness Errors

RATERS ERRORS Cont . . .

1. Problems of Varying

Standards

2. Recency Effect

3. Central Tendency

When appraising employees, a manager should avoid using different

standards and expectations for employees performing similar jobs.

Error in which the rater gives greater weight to recent events when

appraising an individual’s performance.

Central tendency error Rating all employees in a narrow band in the

middle of the rating scale.

RATERS ERRORS Cont . . .

4. Leniency, and Strictness

Errors

5. Rater Bias

6. Halo Effect

The leniency error occurs when ratings of all employees are at the high end of the scale. The strictness error occurs when a manager uses only the lower part of the scale to rate employees.

Rater bias occurs when a rater’s values or prejudices distort the rating.

The halo effect occurs when a manager rates an employee high or

low on all items because of one characteristic.

RATERS ERRORS Cont . . .

6.Contrast Error

The tendency to rate people relative to other people rather

than to performance standards.

APPRAISAL FEEDBACK INTERVIEW

After appraisals, interview is conducted in which the supervisor and subordinate review the appraisal and manager

provide constructive feed back and mutually make

developmental plans.

Performance management

Factors that Influence

Performance

CHAPTER 7

Management Quality Circle

1. Motivation 2. Environment 3. Ability

Performance Management

Cycle

1. Set clear performance goals & make

developmental plans2. Monitor Goal Progress

3. Caching by supervisor throughout the year

4. Annual appraisal against goals adjust & plan for next

year

Administrative Decisions

Purposes for PerformanceManagement

1. Developmental

2. Administrative

Performance Management Vs.

Performance Appraisal

Performance ManagementPerformance

Appraisal

Defines Performance

Facilitates Performance

Encourages Performance

Measure Performance

Evaluate Performance

Feedback on Performance

What is in Performance

Appraisal System

1. What is Measured

2. Who Measure Performance

3. When is it Measured

4. How is it Measured

a. Trait Based Informationb. Behavior

Based Information

c. Result Based Information

SupervisorCustomers

SubordinatesPeersTeamSelf

Task Oriented

Monthly

Quarterly

Annually

c. Narrative Methods

b. Comparative Methods

a. Category Rating Methods

d. BehavioralMethods

i. Adjective Rating Scalesii. Checklist Appraisal

i. Individual Rankingii. Forced

Distributioniii. Paired

Comparison

i. Critical Incident Appraisalii. EssayAppraisal

iii. Field Review

i. Behaviorally Anchored Rating

Scalesii. Management by Objective

(MBO)

a. Job review and Agreement

b. Development Of Performance Standards

c. Guided Settings of Objectives

d. Continuing Discussion of Performance

BENEFITS OF PERFORMANCE

APPRAISAL

a. For the Appraisee

b. For the Organization

c. For the Management

RATERS ERRORS

1. Problems of Varying

Standards4. Leniency and Strictness Errors

2. Recency Effect

5. Rater Bias

3. Central Tendency

6. Halo Effect

7. Contrast Error

MBO Process

THOUGHT OF THE DAY

The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.“Michelangelo”