“Nurturing

turns
potential into
performance”
Performance Management
and Appraisal
Designing and Maintaining
Effective Organizations
For and With People
 Performance Standards

Performance Standards. The benchmark

against which performance is measured.
 Performance Measures

Performance Measures. The ratings

used to evaluate employee performance
Performance Management
–
Broader
Than Performance
Appraisal
Begins with a look at goals
& strategies of the
organization
 Performance Management

Performance management can be

defined as a systematic process for
improving organizational performance
by developing the performance of
individuals and teams.
It is a means of getting better results by
understanding and managing
performance within an agreed
framework of planned goals, standards
and competency requirements.
 Performance Management
System
A performance management system
consists of the processes used to
identify, encourage, measure, evaluate,
improve, and reward employee
performance at work.
 Performance Management
a Cascading Process

• Mission, goals, and strategies should

be defined, and clearly understood by
everyone
• How do all tasks contribute to overall
plans for the organization?
 Annual Plans Should Create
Performance Standards for Each
Department
 These should translate into
performance goals for each worker
• Quantity
• Quality
• Time
• Cost
 Step 1: March/April
Supervisor & Employee
develop & agree on
performance objectives/
targets Step 2: June/July
Step 5: March/April
Annual Review, Review performance
Setting targets for in relation to targets
new financial year, & agree appropriate
including those in adjustments/ action
relation to training &
development

Step 4: December/January Step 3: September/October

Review performance in relation to Review performance in relation to
targets & agree appropriate targets & agree appropriate
adjustments/ action adjustments/ action
 Linkage
between
Strategy,
Outcomes, and
Organizational
Results
Performance Appraisal

Developmental and
Administrative Decision
Processes
 Performance Appraisal
• We all measure our subordinates’
performance whether we do it formally
or informally
• Very important to document what we
evaluate
• Also necessary to show a clear link
between what we evaluate and job
requirements
Performance Appraisal
Performance appraisal
is the process by which
organizations evaluate employee
job performance.
 Performance Appraisal
 Performance appraisal (PA) is the
process of evaluating how well employees
perform their jobs when compared to a set
of standards, and then communicating
that information to those employees.
 Such appraisal also has been called
employee rating, employee evaluation,
performance review, performance
evaluation, and results appraisal.
 Why Have Performance Appraisal ?

 Performance Appraisal offers several

advantages at the level of the:
 Individual
 Recognition of past effort
 Developmental requirements can be uncovered
 Team
 Alignment of effort with objectives
 Motivation of team members
 Organization
 Development of staff
 Achievement of key objectives
 Best and focused utilization of human resources
 Objectives / Uses of Performance
Appraisals

 Performance Improvement.
 Compensation Adjustments.
 Placement decisions.
 Training and development needs.
 Career planning and development.
 Informational inaccuracies.
 Job design error.
 Avoidance of discrimination.
The Performance Appraisal Process

Establish performance standards

Communicate the standards
Measure actual performance
Compare actual performance with
standards and discuss the appraisal
Take corrective action, if necessary
 Characteristics of an Effective
Appraisal System

 Job-related criteria
 Performance expectations
 Standardization
 Trained appraisers
 Continuous open communication
 Performance reviews
 Selected Evaluation Techniques

 Ways of evaluating employees can

generally be divided into two categories:
 Methods that evaluate employees individually
 Multiple-person evaluations
 In a multiple-person evaluation, the
supervisor directly and intentionally
compares the performance of one employee
to that of others
Performance Appraisal Methods
 Individual Evaluation Methods
 Graphic rating scale

A scale that allows the rater to mark an employee’s

performance on a continuum.

 The rater is presented with a set of traits

 The employee is rated on the traits
 Ratings are assigned points, which are then
computed
 Raters are often asked to explain each rating with
a sentence or two
 Individual Evaluation Methods
 Checklists
Performance appraisal tool that uses a list of statements
or words that are checked by raters.
 In its simplest form, the checklist is a set
of objectives or descriptive statements
 If the rater believes that the employee

possesses a listed trait, the item is

checked
 A rating score equals the number of

checks
 Individual Evaluation Methods

 Essay Evaluation
 The rater is asked to describe the strong and weak
aspects of the employee’s behavior
 It can be used by superiors, peers, or subordinates
 Essay evaluations are flexible; an evaluator can
specifically address the ratee’s skill in any area
 Comparing essays is difficult.
 Individual Evaluation Methods
 Critical Incident Technique
 Raters maintain a log of behavioral incidents that
represent effective and ineffective performance for
each employee
 Two factors determine the success of this technique:
 The supervisor must have enough time to observe

subordinates during the evaluation period

 The supervisor must record incidents as they are

seen
 Logs can help avoid common rating errors and
facilitate discussions about performance improvement
 Behaviorally Anchored Rating
Scale (BARS)
 A behavioral approach to
performance appraisal that
consists of a series of
vertical scales, one for
each important dimension
of job performance.
 Behaviorally Anchored Rating Scale
Uses specific descriptions of actual behaviors to rate various levels of actual
performance
Performance dimension: New group project leadership

1) Describes goals of each project in depth

Almost never Half of the time Every time
0 0 0 0 0

2) Outlines strengths, weaknesses, opportunities, threats

Almost never Half of the time Every time
0 0 0 0 0

3) Creates clearly itemized budgets

Almost never Half of the time Every time
0 0 0 0 0

4) Maintains budgets within 15% of original estimates

Almost never Half of the time Every time
0 0 0 0 0

5) Uses informal rewards for group members

Almost never Half of the time Every time
0 0 0 0 0
 Multiple-Person Evaluation
Methods
 Ranking
 A supervisor is asked to rank subordinates in order
on some overall criterion
 It is easier to rank the best and worst employees
than average ones
 Alternative rankings can help with this difficulty
 Pick the top employee first, then the bottom one
 The second best is chosen, then the second worst
 Follow this process until everyone has been ranked
 Multiple-Person Evaluation
Methods
 Paired Comparison
 The supervisor reviews a series of cards; each
contains two subordinates names
 The higher performer in each pair is chosen
 Final ranking is made by counting how many times
a given employee was chosen as the better
performer
 A major limitation is the number of paired
comparisons that must be made
 With only 10 subordinates, a supervisor would have
45 pairs of names
Paired Comparison Method
 Multiple-Person Evaluation
Methods
 Forced Distribution
 Employees are rated on a pre-existing
distribution of pre-determined categories
 The predetermined distribution must be followed,
regardless of how well the employees performed
 A supervisor with all exceptional subordinates
will be forced to rate some poorly
 A supervisor with mediocre subordinates must
rate some highly
This technique is similar to grading on a curve
Forced Distribution Method

Example:
15% high performers
20% high-average performers
30% average performers
20% low-average performers
15% low performers .6

.4

Fraction
.2

0
0 2 4 6
xc
Normal distribution
 Multiple-Person Evaluation
Methods
 An MBO program follows a systematic process:
 Superior/subordinates define tasks and set objectives
 The superior, consulting with subordinates, sets criteria
for assessing objective accomplishment
 Dates to review progress are agreed upon and used
 Superior and subordinates make any required
modifications in the original objectives
 A final evaluation by the superior is made
 The superior meets with the subordinate in a
counseling, encouraging session
 Objectives for the next cycle are set
Performance Evaluation
Problems

No technique is perfect;
they all have limitations
 Standards of Evaluation
 Problems with evaluation standards arise
because of perceptual differences in the
meaning of words
 Good, adequate, satisfactory, and excellent mean
different things to different evaluators
 If only one rater is used, evaluations can be
distorted
 This arises most often in graphic rating scales
 It may also appear with essays, critical incidents,
and checklists
 Types of Rating Errors
 Leniency/Strictness Error
Define Anchors (Dimensions)
Force A Curve

 Central Tendency
Reluctant to Give High/Low
Explain Need for Variability

 Recency Error
Last Action Halo
Encourage Frequent Evaluation
Error of Central Tendency
 Performance-rating error in
which all employees are
rated about average.
Leniency or Strictness Error
 Performance-rating error in which
the appraiser tends to give
employees either unusually high
or unusually low ratings.
 Recency Error
 Performance-rating error in
which the appraisal is
based largely on the
employee’s most recent
behavior rather than on
behavior throughout the
appraisal period.
 Rating Errors Example
Job Rating Scale
Halo EXCELLENT
on all factors
Job Rating Job Rating Job Rating
Job Rating Scale
Scale Scale Scale
Leniency Employee A
Employee B Employee C Employee D
EXCELLENT
EXCELLENT SUPERIOR EXCELLENT
Job Rating Job Rating Job Rating
Job Rating Scale
Central Scale Scale Scale
Employee A
Tendency Employee B Employee C Employee D
AVERAGE
AVERAGE AVERAGE AVERAGE

Recency Job rating scale behavior during

Bias the last month has been POOR.
 Guidelines for Conducting the
Interview
 Begin the interview session by an attempt to put the employee
at ease.
– A refreshment and small talk may help break the ice.
 Review the employee’s self-evaluation first, if there is one.
– Ask for reasons for the various ratings.
– Then the supervisor describes his or her evaluation of the
employee.
 Start with an overall impression, then explain the
contents of the appraisal forms.
 Most employees are waiting for the “bad news,” so it is
probably most effective to describe areas for
improvement first.
 Then describe the employee’s strengths.
 Allow time for the employee to respond to
the performance appraisal.
– The employee should be allowed to
agree or disagree with the supervisor’s
conclusions, as well as to ask questions.
– It is important for the supervisor to keep
an open mind and listen to the
employee.
 When the supervisor and employee understand
each other’s point of view, they should reach a
decision on how to solve problems described in
the appraisal.
– At the end of the interview, the supervisor
and employee are usually required to sign
the appraisal form.
– By doing so, they acknowledge that the
interview has been conducted and that the
employee has read and understood the
form.
 After the interview is over, the
supervisor continues to appraise
performance.
 Training and coaching for improvement
should ensue.
 The follow-up is an ongoing process.
 360-degree feedback

 360-degree feedback has been defined

by Ward (1995) as: ‘The systematic
collection and feedback of performance
data on an individual or group derived
from a number of the stakeholders on
their performance.’
 360-degree feedback is also referred to
as multi-source assessment or multi-
rater feedback.
 Performance data in a 360-degree
feedback process, can be generated for
individuals from the person to whom
they report, their direct reports, their
peers (who could be team members
and/or colleagues in other parts of the
organization) and their external and
internal customers.
360-degree feedback model
 USE OF 360-DEGREE
FEEDBACK

 71 per cent used it solely to support

learning and development;
 23 per cent used it to support a number
of HR processes such as appraisal,
resourcing and succession planning;
 6 per cent used it to support pay
decisions.
 RATIONALE FOR 360-DEGREE
FEEDBACK

 360-degree feedback can become a

powerful organizational intervention to
increase awareness of the importance
of aligning leader behaviour, work unit
results and customer expectations, as
well as increasing employee
participation in leadership development
and work unit effectiveness.
 360-degree feedback recognizes the
complexity of management and the value of
input from various sources – it is axiomatic that
managers should not be assessing behaviours
they cannot observe, and the leadership
behaviours of subordinates may not be known
to their managers.
 360-degree feedback calls attention to
important performance dimensions which
may hitherto have been neglected by the
organization.
 360-DEGREE FEEDBACK –
METHODOLOGY

 The questionnaire
360-degree feedback processes usually
obtain data from questionnaires, which
measure from different perspectives the
behaviours of individuals against a list
of competencies.
 The dimensions may broadly refer to
leadership, management and
approaches to work.
 The headings used in the Performance
Management Group’s Orbit 360-degree
questionnaire are:

● leadership;
● team player/manage people;
● self-management;
● communication;
● vision;
● organizational skills;
● decision making;
● expertise;
● drive;
● adaptability.
 Ratings

 Ratings are given by the generators of

the feedback on a scale against each
heading.
 This may refer both to importance and
performance.
 Data processing
 Questionnaires are normally processed with
the help of software developed within the
organization or, most commonly, provided by
external suppliers.
 This enables the data collection and analysis to
be completed swiftly, with the minimum of
effort and in a way that facilitates graphical as
well as numerical presentation.
 Graphical presentation is preferable as a
means of easing the process of assimilating
the data.
Feedback
 Action

 The action generated by the feedback will

depend on the purposes of the process, ie
development, appraisal or pay. If the purpose
is primarily developmental, the action may be
left to individuals as part of their personal
development plans, but the planning process
may be shared between individuals and their
managers if they both have access to the
information.
 DEVELOPMENT AND
IMPLEMENTATION

 Define objectives
 Decide on who will give the feedback
 Decide on the areas of work and behaviour
 Decide on the method of collecting the data
 DecPlan initial implementation programme
 Plan initial implementation programme
 Analyse outcome of pilot scheme
 Plan and implement full programme
 Monitor and evaluate