Performance Management

Basic Concepts in Performance

Appraisal
 Performance Appraisal
∟ Evaluating an employee’s current and/or past
performance relative to his or her performance
standards
The Three-Step Performance Appraisal
Cycle: Figure 7.2
 Why Appraise Performance?

1. Most employers still base pay, promotion,

and retention decisions on the employee’s
appraisal.
2. Ensure employee’s performance aligning
with the company’s overall goals
3. An appraisal lets you and the subordinate
develop a plan for correcting any
deficiencies.
 Why Appraise Performance?

4. Appraisals provide an opportunity to review

the employee’s career plans in light of his or
her exhibited strengths and weaknesses.
5. Supervisors use appraisals to identify
employees’ training and development needs.
 Who Should Do the Appraising?

 The supervisor is usually in the best position

to observe and evaluate a subordinate’s
performance.
 Peer Appraisal

Peer appraisals have a positive impact on

improving perception of:
 Open communication
 Task motivation
 Social loafing
 Cohesion
 Satisfaction
 Rating Committee

 Composed of immediate supervisor and

three or four other supervisors
 Can help cancel out problems such as bias on
the part of individual raters
 Can include the different facets of an
employee’s performance observed by
different appraisers
 Self-Ratings

 One problem with self-ratings is that

employees usually rate themselves higher
than their supervisors or peers would rate
them.
 40% of employees in jobs of all types placed
themselves in the top 10%.
 Appraisal by Subordinates

 Upward feedback
∟ Subordinates
evaluate their
supervisors’
performance
∟ Usually for
developmental
rather than pay
purposes
 360-Degree Feedback

 Performance information is collected from

supervisors, subordinates, peers, and
internal/external customers
 More candid when subordinates know
rewards or promotions are not involved
Online 360-Degree Feedback:
Figure 7.3
Dealing with Appraisal Problems

Ensure fairness

Clarify standards
Avoid halo effect ratings

Avoid the middle

Don’t be lenient or strict

Avoid bias
Unclear Standards
 Common Appraisal Problems

 Halo effect
∟ The rating of a subordinate on one trait
influences the way you rate the subordinate on
other traits
 Central tendency
∟ The tendency to rate all employees about
average
 Leniency or strictness
∟ Rating all subordinates consistently high or low
 Avoid bias
 Handling the Appraisal Interview

 Appraisal interview
∟ Supervisor and
subordinate review
the appraisal and
formulate plans to
remedy deficiencies
and reinforce
strengths.
 Preparing for the Appraisal Interview

1. Give the subordinate at least a week’s notice

to review his or her work
2. Compare the employee’s performance to his
or her standards
3. Find a private area for the interview
4. Find a mutually agreeable time for the
interview and leave enough time
 Conducting the Interview

1. Talk in terms of objective work data

2. Don’t get personal
3. Encourage the person to talk
4. End with an action plan
 Performance Management vs.
Performance Appraisal
 Performance management is always goal-
directed.
 Performance management means
continuous, daily, or weekly interactions
and feedback to ensure continuous
improvement.
 Performance management means continuously
re-evaluating and (if need be) modifying how the
employee and team get their work done.
 Performance Management’s Basic
Elements

Ongoing
Direction Goal
performance
sharing alignment
monitoring

Coaching and
Recognition Ongoing
developmental
and rewards feedback
support