Management by Objectives

 Involves setting specific measurable goals with each employee and periodically reviewing the
progress. Generally refers to comprehensive , organization-wide and appraisal program
consisting of 6 steps:
 Set the organization’s goal.
 Set the departmental goals.
 Discuss departmental goals.
 Define expected results
 Performance reviews.
 Provide feedback
Problems with Management by Objectives
 Setting unclear and immeasurable objectives.
 Management by Objectives is time consuming.
 Setting objectives with the subordinates may sometimes turn into a tug-of-war.
Computerized and Web-Based performance Appraisal
Several relatively inexpensive performance appraisal software programs are in the market. They
enable managers to keep notes on subordinates during the year, and then to electronically rate
employees on a series of performance traits. Technologically has changed the appraisal process. New
software is programs enable employees to check their own performance against prescribed criteria.
Mixing the Methods
Most companies combine several methods. Basically, this is a graphic rating scale with
descriptive phrases included to define each trait.
Appraisal Performance
Problems and solutions:
 Potential Rating Scale Appraisal Problems
Most employers still defend on graphic-type rating scales to appraise performances. But
these scales may create some problems such as unclear standards, halo effect, central tendency,
leniency or strictness and bias.
 Unclear Standards
o An appraisal that is too open for interpretation.
 Halo effect
o Problem occurs when a supervisor’s rating a subordinates on one trait biases the rating
of that person on other traits.
 Central Tendency
o A tendency to rate all employees the same way, such as rating them all as average.
 Leniency or Strictness
o Occurs when a supervisor has a tendency to rate all subordinates either as high or low.
 Bias
o The tendency to allow individual differences such as age, race, and sex to affect the
appraisal ratings employee receives.
How to avoid appraisal problems?
There are several ways to minimize appraisal problems:
 Learn and understand the potential problems and solutions for each.
 Use the right appraisal tools.
 Train supervisors to reduce rating errors such as halo, leniency and central tendency.
Who should do appraisal?
 Immediate supervisors
 Peer appraisal
 Rating committee
 Self rating
  Appraisal by subordinates
 360-degree feedbacks

Performance and Management Appraisal

Alternation Ranking Method

Ranking employees from best to worst on a particular trait, choosing highest

then lowest until all are ranked.

Paired Comparison Method

Ranking employees by making a chart of all possible pairs of the employees for

each trait and indicating which better employee of the pair is.

Forced Distribution Method

Similar to grading on a curve, predetermined percentages of rates are placed in

various performance categories.

Critical Incident Method

Keeping a record of uncommonly goods or undesirable examples of an

employee’s work-related behavior and reviewing it with the employees at

predetermined times.