Chap 9 - Performance Management and Appraisal
 Basic problems: employees rate themselves higher than
Performance Appraisal
- Evaluating employee's current and/or past performance relative
to his or her performance standards.
- More than just forms; involves setting performance standards,
assuming employee receives training, feedback, & incentives
Performance Appraisal Process
1. Setting work standards
2. Assessing employee's actual performance relative to standards
3. Providing feedback with the aim of helping them eliminate
performance deficiencies or to continue to perform above par
5 Reasons to Appraise Performance
1. Basis for pay, promotion, & retention decisions
2. Play central role in performance management
- continuous process of identifying, measuring, & developing
performance of individuals &teams & aligning it with org. goals
3. Allows for correcting deficiencies & reinforce strengths
4. Opportunity to review career plans on strengths & weaknesses
5. Identify need for training & remedial steps required
Basis for appraising employees
Managers use at least 1 to establish work standards
1. Asses to what extent employee is attaining numerical goals
(profitability, cost reduction, efficiency goals)
2. Use a form with basic job dimensions/traits
3. Based on mastery of competencies (skills, knowledge, and/or
personal behaviors)
Four Guidelines for setting performance goals
1. Assign specific goals – for better performance
2. Assign measurable goals – quantitative; target dates, deadlines
3. Assign challenging but doable goals – not so difficult/unrealistic
4. Encourage participation – higher performance
**goals should be SMART (specific, measurable, attainable,
relevant, & timely) to be effective
Who does the appraising?
 Supervisor – in the best position to observe & evaluate
 HR department serves an advisory role
 Relying only on supervisor’s appraisal – not advisable
 Peer appraisals
 People come across differently to their peers & boss
 Increasingly popular
 Employee chooses appraisal chairperson who selects a
supervisor & several peers to evaluate employee’s work
 Can be effective
 Had immediate positive impact on perception of open
communication, task motivation, social loafing, group
viability, cohesion, & satisfaction
 Rating committees
 Consists of immediate supervisor + 3/4 other supervisors
 Cancel out bias
 Ratings from supervisor, their boss, & at least 1 manager
familiar with the work
 Self-ratings
their peers & supervisors
 Average of ratings predicted assessment center
performance
 Appraisals by subordinates
 For developmental purposes
 Anonymity affects feedback
 Upward feedback improves manager’s performance
 360-degree feedback
 Performance info from all around
 Complete a survey
 Make sure feedback is productive, unbiased, &
development oriented
Techniques for Appraising Performance
 Graphic Rating Scale
- Simplest & most popular; has several varieties
- lists a job dimensions/traits & a range of performance for each
- rated by identifying the score that best describes level of
performance for each trait
- competency-, skill-, or behavior- based scales = other option
- may also rate how well employee did in achieving specific
profit, cost, of efficiency goals
 Alternation Ranking Method
- Most popular for distinguishing between worst & best
- Ranking employees from best to worst on a particular trait,
choosing highest, then lowest, until all are ranked
 Paired Comparison Method
- More precise ranking
- Ranking employees by making a chart of all possible pairs of
employees for each trait & indicating the better one of the pair
 Forced Distribution Method
- Similar to grading on a curve
- Predetermined percentages of ratees in various categories
- Big advantage: prevents supervisor from rating all/most highly
- May increase risk of discriminatory adverse impact
- The challenge is in differentiating
 Critical incident method
- Supervisor keeps of good & bad work-related behavior (critical
incidents) & reviewing it with employee at predetermined times
- Anchors eventual appraisal in reality & improves outcome
- Doesn’t produce rating for pay raise
 Narrative Forms/Essay Evaluation
- Assesses past performance & required areas of improvement
- Helps employee understand whether performance was good or
bad & how to improve it
 Behaviorally anchored rating scale (BARS)
- aims to combine benefits of narrative critical incidents &
quantified ratings by anchoring a quantified scale with specific
narrative examples of good or poor performance
 5 Steps in developing BARS
1. Write critical incidents
2. Develop (5 or 10) performance dimensions
3. Reallocate incidents
 4. Scale/rate the incidents
5. Develop a final instrument (~6/7 incidents as dimensions)
 Behavioral Observation Scales (BOS)
1. Similar to BARS
2. Indicated how frequently illustrative behaviors/critical incidents
were exhibited by ratees
 Mixed Standard Scales
1. Mixes good & poor behaviors sequentially when listed
2. Reduce rating errors by making the performance dimensions &
their intensities (low – high) less obvious to the appraiser
 Management by Objectives
- Multistep company-wide goal-setting & appraisal program
- Requires manager to set goals & periodically discuss progress
- If formal, requires numerous time-consuming meetings
- Use has diminished
 6 Steps in developing MBO
1. Set organizational goals (for next year)
2. Set department goals (done by heads & superiors)
3. Discuss departmental goals (with subordinates & ask them
to develop individual goals)
4. Define expected results (short-term performance targets)
5. Conduct performance reviews (actual vs expected results)
6. Provide feedback (hold periodic meetings)
 Computerized & Web-based Performance Appraisals
1. Enable managers to compile computerized notes on
subordinates then merge these with ratings on several traits
2. Combine several appraisal tools; usually graphic ratings
anchored by critical incidents
 Electronic Performance Monitoring (EPM)
- Supervisors electronically monitor the amount of computerized
data processed per day, and thereby performance
- Computer network technology allow for monitoring computers;
employee’s rate, accuracy, & time spent on working online
- Can improve productivity but also raise stress
- Tracking is sometimes done through wearables
 Conversation Days
- Manager-employee conversations stressing on areas for
improvement & growth, & stretching goals that align with
career interests
- No explicit performance rating
Potential Rating Problems
**graphic-type rating forms, in particular, are susceptible
 Unclear Standards
- Appraisal that is too open to interpretation
- Fix by including descriptive phrases that define/illustrate each
trait, to be more consistent & easily explainable
 Halo Effect
- Rating on one trait biases the rating of other traits
- Fix by using BARS
 Central tendency
- Tendency to rate all employees the same way: all average
- Distorts evaluation; less useful for promotion, salary, &
counseling purposes
- Fix by ranking employees instead
 Strictness/Leniency
- Tendency to rate all subordinates low or high
- Fix by using ranking or require a distribution
 Recency Effects
1. What has been done recently blinds you from overall
performance for the year
2. Fix by accumulating critical incidents all year long
 Bias
- Tendency to allow individual differences such as age, race, &
sex affect the appraisal ratings employees receive\fix by
having multiple raters, supervisor review ratings, or
calibration meetings (discussion of reasons behind appraisals
**The need for fairness
- Many appraisals are unfair
- Some managers ignore accuracy & use appraisals for political
purposes
- Make sure employee has the opportunity to express opinions
- In practice, quality of interpersonal relationship shape
appraisal’s impact & worth
- Employers should evaluate & reward supervisors based on their
effectiveness in managing performance
Managing Appraisal Interview
 Traditional periodic appraisal typically culminates in an
appraisal interview
- in which supervisor & subordinate review the appraisal &
make plans to remedy deficiencies and reinforce strengths
- often uncomfortable
- aim: to improve unsatisfactory performance and/or reinforce
exemplary performance
 4 types of appraisal situations
1. Satisfactory-promotable
- Easiest; performance is satisfactory, promotion looms
- Objective: develop specific developmental plans
2. Satisfactory-not promotable
- Promotion is not possible
- Objective: maintain satisfactory performance
- Find incentives important to employee & sufficient to
maintain performance
3. Unsatisfactory-correctable
- Objective: lay out action/developmental plan to
correct unsatisfactory performance
4. Unsatisfactory-uncorrectable
- Particularly tense
- Dismissal – often preferred option
 How to conduct
- Review job description, performance standards, & any
previous appraisals beforehand
- Give employee at least a week’s notice to review work
- Set time; 1>hour lower-level, ½ hours management
employees
- Conduct privately; no interruptions
- Requires effective coaching skills for effective interview
o A process:
 1. Preparation – understanding the problem & 7. Engagement rises when employees have an opportunity to
employee; watch employee, review productivity improve their careers
data, & observe workflow 8. There is a significant positive association between employee
2. Planning – for the solution; requires reaching engagement and distributive (rewards people get) &
agreement on the problem & laying out change plan informational (information people get) justice dimensions
as steps to take, measures of success, & target date
Performance Management
3. Actual coaching – offer ideas & advice for employee
- In theory, appraisals are fine but in practice, they don’t always
to hear them, respond to them, and appreciate them
go smoothly
- Guidelines:
- Employees should know their goals, performance feedback
1. Talk in terms of objective work data (use examples)
should be useful, & if there is a problem, take action right away
2. Don’t get personal (compare to standard not people)
3. Encourage the person to talk (stop & listen, ask, Total Quality Management
command, restate) - Organizationwide programs that integrate functions &
4. Get agreement (make sure they understand) processes of the business
- Built on a philosophy encapsulated by every principle
How to handle a defensive subordinate
- Organization
**denial is a defense mechanism
1. Recognize defensive behavior as normal  System of interrelated parts
2. Never attack defenses **employee performance is more of a function of training
3. Postpone action communication, tools, & supervision than motivation
4. Recognize your limitations  6 basic elements:
1. Direction sharing
How to criticize a subordinate - communication goals to all employees then turning them
- If necessary, criticize in a manner that lets the person maintain into doable departmental, team, & individual goals
dignity – in private & constructively 2. Goal alignment
- Provide critical incidents & suggestions - Enables managers & employees see link between goals
- Give feedback periodically 3. Ongoing performance monitoring
- Be objective & free of bias - Computerized systems
**not all employees are salvageable & not all managers will spend - Measure progress toward meeting performance goals
time trying to overcome an employee’s faults 4. Ongoing feedback
- Face-to-face & computerized continuous feedback on
How to handle a written formal warning
progress toward goals
- When performance is so weak
5. Coaching & developmental support
- 2 purposes: shake employee out of bad habits & help you
- Part of feedback process
defend your rating (if needed)
6. Recognition & rewards
- List employee’s standards
- Provide incentives to keep goal-directed performance on
- Make is clear the employee was aware of the standards
track
- Specify deficiencies
- Show the employee had a chance to correct performance

Employee Engagement Guide for Managers

- Relevant findings & implications:
1. Employees who understand how they & their departments
contribute to the company’s success are more engaged
2. Employee engagement rise as they experience psychological
meaningfulness
- Perception that one’s role in the organization is worthwhile
& valuable
3. Employees who experienced psychological safety were more
engaged
- Perception that it is safe to bring oneself to a role without
fear of damage to self-image, status, or career
4. Efficacy drives engagement
5. Employees whose managers focused on strengths were 3
times more engaged
6. Involvement in decision making & letting employees voice
opinions improve employee engagement