Human Resource Management in the Hospitality IndustryChapter 9 – Performance Management and Appraisal

Once HR managers have recruited, hired and trained their staff, they must monitor and evaluate those staff members to ensure that they are doing their best job possible.

Performance Management

It is important that managers give feedback to their employees in order to maximize employee performance. While it may be the responsibility of the HR manager to document performance appraisals, evaluations are usually better performed by direct supervisors. Their direct supervisory roles enable them to offer informed evaluations and allow them to help employees improve performance.

Performance appraisals, which are objective and comprehensive ratings or evaluations of employees, aid managers in performance management, which is a systematic process by which managers help employees to improve their ability to achieve goals. Performance management should be ongoing and includes the following 5 steps:

Planning work and setting expectations Monitoring performance continually Developing employee skills Appraising performance periodically in an objective manner Rewarding good performance

An effective performance management program will focus on achieving results. A traditional performance appraisal system would focus on the hard work of an employee, whereas a performance management program will focus on the best way to utilize that employee’s knowledge and skills.

Overview of Performance Appraisal

There are typically four characteristics of performance appraisal programs: Performance goals set by supervisors and employees – these goals may be long- or short-term

and can address several issues. These goals are specific and can be easily measured; they may require additional training for the employee. These goals will change over time as the workplace changes.

Regular, informal feedback from supervisors – Employees need input more frequently than once a year, and an informal setting allows ongoing coaching.

A formal method to address performance or disciplinary problem – Any means of correction should be stated in written policies and procedures to ensure fair and equal treatment of all employees. Managers must document any problems. As well as planned steps toward a resolution.

Regular and formal appraisals – In addition to frequent, informal reviews, formal reviews should be conducted regularly and document each employee’s performance. These reviews may specify points for improvement, but should also identify any steps the employee can take to enhance their future within the organization.

An effective performance appraisal system will offer many benefits: Recognition of outstanding performance – giving praise where deserved makes employees more

open to constructive criticism

Identification of necessary improvements – employees are happier in a position where they are informed of expectations and are given the tools and training necessary to perform the requirements of the position

Clarification of work standards – performance appraisal should include the definition and communication of job expectations

Opportunity to analyze and redesign jobs – oftentimes, an employee who has been performing a job for some time will have a suggestion for a more efficient way of performing one or more tasks

Identification of specific training and development needs – the appraisal must not only identify areas that need improvement, but should also include specific steps to improve performance

Determine professional development activities – if the need for ongoing training is determined, an organization may agree to cover the cost of the training upon its successful completion; this would become a discussion point or a future evaluation

Validation of screening and selection processes – if employees consistently fail to meet expectations, hiring procedures may need to be revised

Opportunity for employee feedback and suggestions – employees who interact with customer are usually eager to give suggestions as to how their jobs or guest service can be improved

Objective measure to identify candidates for pay increases and promotion – employees who perform effectively are more likely to receive raises in pay or promotions

It is important that an appraisal system be applied fairly and equally. This means that appraisal procedures should be determined and put into writing to ensure equal compliance. HR managers have three primary roles in the appraisal process. These include advocating for effective appraisal, coordinating process planning and implementation and determining legal requirements. HR managers will help decide on an appraisal system and will help develop policies, procedures, forms and documentation to be used in the process. They will also train supervisors who will be conducting appraisals and revise any processes as necessary. Finally, HR managers will collect and manage any information that must be saved in the employee’s personal file.

Common Performance Appraisal Methods

The three most common methods for appraisal include applying absolute standards, relative standards and targeted outcomes. Each method has a distinct philosophy.

Absolute Standards – an employee’s performance is measured against an established standard – examples include:

Critical incidents – specific behaviors critical to performing a job successfully – this type of appraisal focuses on behavior rather than personal traits

Checklist appraisal – this approach applies yes or no questions to define job competency Continuum appraisal – performance is measured on a scale, i.e., 1 to 10 or very unsatisfactory

to satisfactory Forced choice appraisal – the evaluator must choose between two or more statements which

can describe the employees skills

Relative Standards – a supervisor compares one employee to another – employees are ranked either by group order or individually

Group order ranking occurs when employees are categorized by percentage, i.e., top 10%

Individual order ranking numbers employees from best to worst

An advantage to relative standards is that it prevents supervisors from appraising everyone as above average, but a problem is that it cannot account for degrees of “betterness”. In other words, how close in performance are the two top ranked employees?

Targeted Outcomes – an employee is evaluated based on how well they have achieved specific objectives – four components are required for this type of evaluation to be effective

Identification of performance targets Employee input in final target selection A defined time period for achievement Performance feedback, or appraisal

Other Performance Appraisal Methods (employees evaluate their supervisor). When taken as a whole, these combined methods are called a 360o appraisal method.

HR managers may choose to purchase appraisal tools or to create their own, but in either case, the system must be fair to employees, benefit the organization and meet all legal requirements. These systems must be reliable (consistently measures the trait being evaluated) and valid (measure the trait being evaluated and not another feature). Validity can be difficult to achieve if a manager allows their personal feelings toward an employee taint the evaluation process. HR managers must be aware of and avoid the following behaviors that can threaten the reliability and validity of the appraisal process to steer clear of any legal difficulties.

1. Basing evaluations on recent behavior rather than performance as a whole – for instance, giving a negative review following a disagreement

2. Allowing irrelevant or non-job related factors in appraisal – considering appearance, disabilities, race or use of time off, rather than actual job performance

3. Failure to include negative comments on the evaluation, even when justified – not discussing negative attitude or poor personal grooming in order to spare the employee’s feelings

4. Ranking all subordinates at the same level – occurs when a supervisor wants to avoid unpopularity by listing negative or positive comments

5. Judging all employees too harshly or too leniently – occurs when a supervisor wants to enhance his or her own credibility

6. Permitting personal feelings to influence the evaluation – giving high ratings to the employees they like and low ratings to those they do not

7. Allowing a single trait to influence the rating of all traits – good trait refers to the halo effect, bad trait refers to the pitchfork effect

Progressive Discipline

Rather than punishment, the term discipline refers to a situation where employees are compliant with the rules and procedures of an organization. When talking about management action, discipline means any effort made to influence the behavior of the employee. Positive discipline encourages good behavior (praise) and negative discipline is designed to correct undesirable behavior (punishment). When employees make errors or mistakes, coaching can usually correct the behavior, but occasionally, when employees deliberately refuse to comply, progressive discipline is warranted.

Progressive discipline refers to a system of steps taken to modify employee behavior, with each step becoming more severe than the last. A progressive discipline must me established, communicated to all employees, and consistently enforced. A coaching session may be attempted to correct the behavior the first time it occurs, but if it continues, the additional steps must be followed. Records regarding to progressive discipline may be added to the employee’s personal file, or they may be stored separately by management. Regardless of the

choice, the progressive discipline program should explain exactly where and how the records are to be stored in order to ensure that all employees receive equal treatment.

1. Documented oral warning – if a coaching session does not correct a problem, the employee should be taken aside and be given an explanation of why the desired behavior is important and then given an opportunity to respond. There may have been a misunderstanding of the desired behavior and if so, the problem should be resolved. The employee and supervisor should agree on a solution to the problem and the employee must be informed of the consequences if the behavior continues. An oral reprimand record should be filled out and signed by both the employee and the supervisor. The record should include the name of the employee, the date of the incident, the name of the supervisor issuing the warning, and the plan to prevent future occurrences.

2. Written warning - a written warning should include the same information as a verbal warning report, but it should also contain a space for the employee to record his or her version of events. It is important that written warnings be handled correctly in order to meet legal requirements; they must be related to the same behavior as the oral warning. For instance, if an employee is given a verbal warning for improperly preparing a recipe, a written warning would not be appropriate of tardiness.

3. Suspension – suspension is the third step in a progressive discipline program and signals that the behavior is unacceptable. Suspension may be with or without pay, and for any length of time deemed appropriate by the organization. However, all suspensions for the same offense must be treated equally. Suspension must be documented and the information placed in the employee’s file. The employee should be given the opportunity to sign the report, but some may refuse to sign under the mistaken belief that their refusal to sign will invalidate the report. If this occurs, the supervisor should simply note the employee’s refusal as part of the report.

4. Dismissal – dismissal is the final step in a progressive discipline program and should be regarded as a failure on the part of the employer as well as the employee. While the employee has failed to meet the standards established, the employer has failed to convince the employee to modify their behavior in order to perform their job.

Throughout a progressive discipline program, supervisors should focus on future behavior, not the past. Any potential consequences must be communicated as facts rather than threats.

Behavior Improvement Tactics

Discipline involves efforts to encourage acceptable behavior and eliminate unacceptable behavior. Each process may be accomplished in several ways.

Reinforcement of Acceptable Behavior

Praise can go a long way in encouraging good behavior and improving morale. It is not necessary to wait until a desired outcome is achieved to offer praise; recognition of effort is also important. Praise and encouragement focus on the employee’s intrinsic motivation, and can be more effective that criticism of poor performance. Specific tactics that encourage behavior include:

Using specific language to pinpoint the behavior to be reinforced, rather than a vague “Good job!”

Offering encouragement as behavior is observed, rather than waiting for a formal review Communicating praise directly to the employee Meaning what is said Putting praise in writing, even if it is only a short handwritten note

Elimination of Unacceptable Behavior

There are generally three reasons for employees to exhibit unwanted behavior: they are unaware of the desired behavior, they know what is expected but do not know how to perform it, or they know what is expected and do not wish to perform it.

In the instance when an employee is unaware of expected behavior, it may only be necessary to carefully explain the performance standard. In the second case, training may give the employee the knowledge necessary to perform tasks correctly. It is usually when people choose to behave unacceptably that progressive discipline is needed, often in the form of counseling. For counseling to be effective, it needs to be planned in advance and the manager should have relevant information regarding complaints to be addressed. The employee should be given advance notice of the meeting and be made aware of the subject matter in order to be able to prepare. The counseling session should focus on specific behaviors, not personality traits, and the manager should encourage the employee to explain their behavior. Ideally, the manager will work with the employee to develop a solution and a plan to implement it. In some cases, the performance issue may stem from factors beyond the control of the employee, and in others may be the result of poor life choices. In either case, the manager should refer the employee to an employee assistance program.

Employee Separation

While HR managers strive to maintain low employee turnover rates, turnover does occur and in some instances can be beneficial to the operation. Employee separation may be voluntary or involuntary.

Voluntary Separation – Voluntary separation occurs at the initiation of the employee for a variety of reasons. Employees may retire, change careers, move away, etc. Voluntary separation usually does not cause too much of a problem for managers if the employee gives enough notice that a replacement can be hired and trained.

Involuntary Separation – Involuntary separations are usually the result of poor employee performance, but they may sometimes be the result of inadequate screening, hiring or training practices. In most states, employees who lose employment for no cause are entitled to unemployment compensation. Exceptions exist for employees fired because of theft, assault or other illegal activities. Companies are required to make quarterly payments into the state unemployment compensation insurance plan, and the size of the payments is related to the amount of unemployment claims against the employer. This means that large numbers of claims will result in higher premiums.

Voluntary/Involuntary – this type of separation refers to employees who leave a job they otherwise enjoy due to a specific issue such as a lack of appreciation by a supervisor.

Exit Interviews – Exit interviews are useful in gathering information when an employee leaves voluntarily. Information about training procedures, managerial support and other aspects of the job are more likely to be discussed candidly when an employee is leaving.

At Will Employment – At will employment means that either party in an employment relationship may terminate the relationship at any time and without justification. However, there are a few exceptions.

When there is a contract, there must be cause to terminate the employment Implied contractual relationship – an implied contract exists when verbal or written statements

are made by members of the organization that seem to promise or guarantee continued employment

Public policy violation – an employee may not be terminated for refusing to obey an order to commit an illegal activity, such as bribing a health inspector

Statutory considerations – at will employment does not supersede state or federal statutes such as the Civil Rights Act of 1964

Breach of good faith – an employer may not terminate an employee to avoid making a payment, such as a commission, if the employee acted in good faith that they would be paid for their work efforts

Legal Considerations of Performance Management and Appraisal

Most HR managers will not blatantly disregard employment statutes, but they should be aware that an informal culture of discrimination can exist.

Title VII of The Civil Rights Act of 1964 – prohibits discrimination in employment on the basis of race, religion or gender – signs of informal discrimination include an underrepresentation of a protected class of workers in desirable jobs, variations in appraisal scores based on membership in a protected class, inequities in pay based on membership in a protected class or variations in promotions based on membership in a protected class.

Equal Pay Act or 1963 – requires equal pay for men and women doing equal wok if jobs require equal skill, effort and responsibility and are performed under similar circumstances – HR managers must take care that certain types of jobs are given only to men while other types of jobs are given only to females. They also need to be sure that men and women in the same positions are evaluated equitably so that women are not disqualified from higher paying jobs based on evaluation standards.

Americans with Disabilities Act – Workers with disabilities may not be evaluated in any way that considers the disability. This means that a worker with a hearing disability who is hired for a job where the hearing disability does not affect their work output, i.e., a prep cook, can only be evaluated based on the performance of job specific tasks, not on their ability to hear. This worker is not held to a lower standard than other employees and may be reprimanded in the same way as other employees if standards are not met.

Age Discrimination in Employment Act – prohibits employers with 20 or more employees from treating workers aged 40 and older any differently from their younger counterparts. HR managers must be sure that the following practices do not occur:

Hiring younger, more attractive wait staff to the exclusion of older qualified workers Offering advanced training only to younger employees who have a potentially longer future

with the company Firing or laying off older workers with higher salaries and retaining younger employees who are

paid less Giving older employees low evaluation scores and using those scores to justify termination Turning down older employees for promotion and hiring a younger, outside applicant to “bring

in fresh blood”