HRM ChAPTER 4

8/16/18
Human Resource Management

Fifteenth Edition
Chapter 4
Performance
Management and
Appraisal
Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Learning Objectives
4.1 Describe performance management, the performance
appraisal, and the performance appraisal process.
4.2 Explain the uses of performance appraisal and
performance criteria.
4.3 Describe the choice of various performance appraisal
methods.
4.4 Assess the effectiveness and limitations of performance
appraisal practices.
4.5 Explain how to conduct the appraisal interview.
4.6 Summarize key trends in performance appraisal practice.
Performance Management (PM)

• Goal-oriented process ensuring processes are in place to
maximize productivity at employee, team, and
organizational levels
• Close relationship between incentives and performance.
• Dynamic, ongoing, continuous process
• Each part of the system is integrated and linked for
continuous organizational effectiveness
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Performance Appraisal
• Formal system of review and evaluation of individual or
team task performance
Performance Appraisal Process
Uses of Performance Appraisal

• Human resource planning
• Training and development
• Career planning and development
• Compensation programs
• Internal employee relations
• Assessment of employee potential
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Establish Performance Criteria (Standards)

• Traits, behaviors, and competencies
• Goal achievement
• Improvement potential
Caution on Traits: Wade v. Mississippi

Cooperative Extension Service
In performance appraisal system, general characteristics
such as, “leadership, public acceptance, attitude toward
people, appearance and grooming, personal conduct,
outlook on life, ethical habits, resourcefulness, capacity
for growth, mental alertness, and loyalty to organization
are susceptible to partiality and to the personal taste, whim,
or fancy of the evaluator as well as patently subjective in
form and obviously susceptible to completely subjective
treatment by those conducting the appraisals.”
Responsibility for Performance Appraisal

• Immediate supervisor
• Employees
• Peers and team members
• Self-appraisal
• Customer appraisal
• 360-degree feedback
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The Appraisal Period

• Prepared at specific intervals
• Usually annually or semiannually
• Period may begin with employee’s date of hire
• All employees may be evaluated at same time
Performance Appraisal Systems

• Trait systems
• Comparison systems
• Behavioral systems
• Results-based systems
Trait Systems
• Evaluate employees based on traits (for example):
– Quality of work
– Dependability
• Limitations (e.g., traits represent a predisposition for
behavior, but not behavior itself)
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Trait-Oriented Performance Appraisal

Figure 4.2 A Trait-Oriented Performance Appraisal Rating Form
Comparison Systems
• Evaluate an employee’s performance against that of
another
• Employees ranked from the best performer to the poorest
performer
– Forced distribution: stacked rating system
– Paired comparison: variation of ranking system
Forced Distribution System (1 of 2)

Figure 4.3 A Forced Distribution Performance Appraisal Rating Form
Instructions: You are required to rate the performance for the previous 3
months of the 15 workers employed as animal keepers to conform with
the following performance distribution:
• 15 percent of the animal keepers will be rated as having exhibited
poor performance.
below-average performance.
average performance.
above-average performance.
superior performance.
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Forced Distribution System (2 of 2)

Figure 4.3 [Continued]
Use the following guidelines for rating performance. On the basis of the
five duties listed in the job description for animal keeper, the employee’s
performance is characterized as:
• Poor if the incumbent performs only one of the duties well.
• Below average if the incumbent performs only two of the duties well.
• Average if the incumbent performs only three of the duties well.
• Above average if the incumbent performs only four of the duties well.
• Superior if the incumbent performs all five of the duties well.
Paired Comparison System

Figure 4.4 A Paired Comparison Performance Appraisal Rating Form
Behavioral Systems
• Rates extent to which employees display successful job
performance behaviors
• Three types:
– Critical Incident Technique (CIT)
– Behaviorally Anchored Rating Scales (BARS)
– Behavioral Observation Scale (BOS)
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Critical Incident Technique (CIT)

Figure 4.5 A Critical Incidents Performance Appraisal Rating Form
Behaviorally Anchored Rating Scales

(BARS) (1 of 2)
Table 4.1 BARS for Factor: Ability to Present Positive Company Image
Clearly Outstanding Makes excellent impression on college

Performance: recruits. Carefully explains positive aspects
of the company. Listens to applicant and
answers questions in a very positive manner.
Excellent Performance: Makes good impression on college recruits.
Answers all questions and explains positive
aspects of the company. Answers questions
in a positive manner.
Good Performance: Makes a reasonable impression on college
recruits. Listens to applicant and answers
questions in knowledgeable manner.
Average Performance: Makes a fair impression on college recruits.
Listens to applicant and answers most
questions in a knowledgeable manner.
Behaviorally Anchored Rating Scales

(BARS) (2 of 2)
Table 4.1 [Continued]
Slightly Below Average Attempts to make a good impression on

Performance: college recruits. Listens to applicants but at
times could be expected to have to go to other
sources to get answers to questions.
Poor Performance: At times makes poor impression on college

recruits. Sometimes provides incorrect
information to applicant or goes down blind
avenues before realizing mistake.
Very Poor Even with repeated instructions continues to

Performance: make a poor impression. This interviewer
could be expected to turn off college applicant
from wanting to join the firm.
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Behavioral Observation Scales

• Similar to BARS in its development
• Compared to BARS, BOS focuses exclusively on positive
performance behaviors
• Appropriate for jobs that require observable behaviors
• Requires observation of job behaviors on a regular basis
Results-Based Systems
• Focuses on measurable outcomes such as sales, accident
rates, and productivity
– Management by objective (MBO)
– Work standards method
Work Standards Example

Figure 4.6 Calculation of a Piecework Award for a Garment Worker
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Problems in Performance Appraisal (1 of 2)

• Appraiser discomfort
• Subjectivity
– Bias errors
§ First-impression effect
§ Halo effect (positive halo)
§ Horn effect (negative halo)
§ Similar-to-me effect
§ Illegal discriminatory bias
Problems in Performance Appraisal (2 of 2)

• Subjectivity
– Contrast errors
– Errors of central tendency
– Errors of leniency or strictness
• Employee anxiety
Characteristics of Effective Appraisal System

• Reliability and validity
• Job-related criteria
• Performance expectations
• Standardization
• Trained appraisers
• Continuous open communication
• Performance reviews
• Due process
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Legal Implications
• Employee lawsuits may result from negative evaluations
• Unlikely that any appraisal system will be immune to legal
challenge
Appraisal Interview
• Achilles heel of entire evaluation process
• Scheduling interview
• Interview structure
• Use of praise and criticism
• Employee’s role
• Concluding interview
Trends in Performance Appraisal Practice

• Question value of traditional PA
• Value of frequent feedback
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8/16/18

Human Resource Management

Performance Management (PM)

Performance Appraisal Process

Uses of Performance Appraisal

Establish Performance Criteria (Standards)

Caution on Traits: Wade v. Mississippi

Responsibility for Performance Appraisal

The Appraisal Period

Performance Appraisal Systems

Trait-Oriented Performance Appraisal

Forced Distribution System (1 of 2)

Forced Distribution System (2 of 2)

Paired Comparison System

Critical Incident Technique (CIT)

Behaviorally Anchored Rating Scales

Clearly Outstanding Makes excellent impression on college

Behaviorally Anchored Rating Scales

Slightly Below Average Attempts to make a good impression on

Poor Performance: At times makes poor impression on college

Very Poor Even with repeated instructions continues to

Behavioral Observation Scales

Work Standards Example

Problems in Performance Appraisal (1 of 2)

Problems in Performance Appraisal (2 of 2)

Characteristics of Effective Appraisal System

Trends in Performance Appraisal Practice

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