Performance Management

-- Prof. Musarrat Shaheen

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 Factors that affect an Employee’s Performance

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 CONCEPT OF PERFORMANCE APPRAISAL

■ Performance - the degree of Performance Management (PM)

accomplishment of tasks by an Vs Performance Appraisal (PA)
Objectiv Setting targets
employee in his/her job in terms es of PA and goals as
of results achieved and targets PM is the process of creating a work
performance
accomplished. environment in which people can
perform to the best of their abilities in Developing
■ Performance Appraisal- the order to meet a company’s goals. Standards for
process of evaluating the Evaluating
performance of an employee Whereas, PA is the result of an annual or Performance
and communicating the results bi-annual process in which a manager
of evaluation to him/her for the evaluates an employee’s performance Identifying
purpose of rewarding or relative to the requirements of his or her training and
developing. development
job and uses the information to show the Needs
■ Food for Thought: person where improvements are needed
and why. Rewarding
Are performance appraisal and
performance management the same? Performance

Improving
performance
 Sources of Performance Related Information
(Who are the Appraisers?)

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 Who should appraise an employee’s Performance (The Appraisers)
• Manager and/or Supervisor
▪ Appraisal done by an employee’s manager and reviewed by a manager one level higher.
• Self-Appraisal
▪ Appraisal done by the employee being evaluated, generally on an appraisal form completed by the
employee prior to the performance interview.
• Subordinate Appraisal
▪ Appraisal of a superior by an employee, which is more appropriate for developmental than for
administrative purposes.
• Peer Appraisal
▪ Appraisal by fellow employees.
▪ Food for thoughts: Why peer appraisals are not used more often:
1. Peer ratings are simply a popularity contest.
2. Managers are reluctant to give up control over the appraisal process.
3. Those receiving low ratings might retaliate against their peers.
5 4. Peers rely on stereotypes during ratings. Human Resource Management
 Who should appraise an employee’s Performance (The Appraisers)
• Team Appraisal
▪ Based on TQM concepts; recognizes team accomplishment rather than individual performance
• Customer Appraisal
▪ A performance appraisal that, like team appraisal, is based on TQM concepts and seeks evaluation
from both external and internal customers
• 3600 appraisal
• It is intended to provide employees with as accurate a view of their performance as possible by getting
input from all angles viz., supervisors, peers, subordinates, customers, and the like.
• 360-Degree Performance Appraisal System Integrity Safeguards:
• Assure anonymity (except supervisor’s rating)
• Make respondents accountable
• Identify and quantify biases

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The Performance Appraisal Process

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 The Performance Standards

Strategic Extent to which the appraisal standards relate to strategic

Relevance organizational objectives.

Reliability
Measures that are consistent across raters and over time.
(Consistency)

Criterion contamination occurs when the criterion measure

Criterion
Contamination includes aspects of performance that are not part of the
job.

Criterion
Aspects of the actual performance that are not measured.
Deficiency

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 What Can Be Appraised/Assessed?
Traits
■ Traits
Such as honesty, patience, independence,
■ Behaviors And Actions persistence, humility, optimism, etc.
■ Results And Outcomes
Behaviors
■ Direct Relationship To Job How an employee or team respond to
Functions conditions.
■ Accurate, Reliable, And Valid For example, employees or teams who meet
Measures deadlines and who are conscientious, well
organized, and responsible.

Results
It represent a tangible confirmation of
acceptable actions
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 Performance Appraisal Methods
Performance appraisal methods can be broadly classified as measuring traits, behaviors
or results.
1. Traits approach is designed to measure the extent to which an employee possesses
certain characteristics that are viewed as important for job and the organization. It is
subjective, but used widely.
2. Behavioral approach provides a more action-oriented information and may be best
for development.
3. Results-oriented approach is popular because it focuses on the measurable
contributions that employees make to the organization.

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 Performance Appraisal Methods

Graphic Rating Scale

Mixed Standard Scale

Trait Methods
Forced-Choice

Essay

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 Trait Methods
Graphic Rating-Scale Method
▪ A trait approach to performance appraisal whereby each employee is rated according to a scale of
individual characteristics.

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 Mixed-Standard Scale Method
▪ An approach to performance appraisal similar to other scale methods but based on comparison
with (better than, equal to, or worse than) a standard.

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 Forced-Choice Method
▪ Requires the rater to choose from statements designed to distinguish between successful and
unsuccessful performance.
1. ______ a) Works hard _____ b) Works quickly

2. ______ a) Shows initiative_____ b) Is responsive to customers

3. ______ a) Produces poor quality _____ b) Lacks good work habits

Essay Method
▪ Requires the rater to compose a statement describing employee behavior.

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 Behavioral Methods

Critical Incident

Behavioral Checklist

Behavioral Methods
Behaviorally Anchored Rating Scale
(BARS)

Behavior Observation Scale (BOS)

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 Behavioral Checklist Method
Critical Incident Method
■ The rater checks statements on a
What are Critical incidents?
list that the rater believes are
■ An unusual event that denotes characteristic of the employee’s
superior or inferior employee performance or behavior.
performance in some part of
the job
■ The manager keeps a log or
diary for each employee
throughout the appraisal period
and notes specific critical
incidents related to how well
they perform.

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 Behaviorally Anchored Rating Scale (BARS)

• Consists of a series of vertical

scales, one for each dimension
of job performance; typically
developed by a committee that
includes both subordinates and
managers.

FIGURE 9–8
Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship Skills

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 Behavior Observation Scale (BOS)

• A performance appraisal that measures the frequency of observed

behavior (critical incidents).
• Preferred over BARS for maintaining objectivity, distinguishing good
performers from poor performers, providing feedback, and identifying
training needs.

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 Results & Outcomes
Performance Appraisal Methods
Productivity Measures Management by Objectives (MBO)
• Appraisals based on quantitative measures A philosophy of management that rates performance
(e.g., sales volume) that directly link what
on the basis of employee achievement of goals set by
employees accomplish to results
mutual agreement of employee and manager.
beneficial to the organization. (Focus on
short-term results)

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 New/Latest Methods of Performance Appraisal:
The Balanced Scorecard

The appraisal focuses on four related

categories
• Financial, customer, processes, and
learning & growth
Ensuring the method’s success:
• Translate strategy into a scorecard of
clear objectives.
• Attach measures to each objective.
• Cascade scorecards to the front line.
• Provide performance feedback based
on measures.
• Empower employees to make
performance improvements.
• Reassess strategy.
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TABLE 9–3 Important Advantages and Disadvantages of Appraisal Tools

Tool Advantages Disadvantages

Graphic rating scale Simple to use; provides a quantitative Standards may be unclear; halo effect,
rating for each employee. central tendency, leniency, bias can also be
problems.

BARS Provides behavioral “anchors.” Difficult to develop.

BARS is very accurate.

Alternation ranking Simple to use (but not as simple as graphic Can cause disagreements among
rating scales). Avoids central tendency and employees and may be unfair if all
other problems of rating scales. employees are, in fact, excellent.

Forced distribution End up with a predetermined number or % Employees’ appraisal results depend on
method of people in each group. your choice of cutoff points.

Critical incident Helps specify what is “right” and “wrong” Difficult to rate or rank employees relative
method about the employee’s performance; forces to one another.
supervisor to evaluate subordinates on an
ongoing basis.

MBO Tied to jointly agreed-upon performance Time-consuming.

objectives.
 New/Latest Methods of Performance Appraisal: 360 Degree Appraisal
A 360-degree feedback is a process through
which performance feedback is taken from –
• an employee's subordinates,
• colleagues,
• supervisor,
• as well as a self-evaluation by the employee
themselves

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 General Reasons Appraisal Programs Fail Sometimes

• Lack of top-management information and support

• Unclear performance standards
• Rater’s bias
• Too many appraisal forms to complete
• Use of the appraisal program for conflicting (political) purposes.

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 Managerial Level Issues Concerning Performance Appraisals

1. There is little face-to-face discussion between the manager and the employee being appraised.

2. The relationship between the employee’s job description and the criteria on the appraisal form isn’t
clear.

3. Managers feel that little or no benefit will be derived from the time and energy spent in the process, or
they are concerned only with bad performances.

4. Managers dislike the face-to-face confrontation of appraisal interviews.

5. Managers are not sufficiently adept at rating employees or providing them with appraisal feedback.

6. The judgmental role of appraisal conflicts with the helping role of developing employees.

7. The appraisal is just a once-a-year event, and there is little follow-up afterward.
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Pitfalls in Performance Appraisal

Common rater-related errors

Error of central tendency

Leniency or strictness errors

Similar-to-me errors

Recency errors

Contrast and halo errors

 Pitfall in Performance Appraisal: Rater Errors
Halo/Horn Error: Focusing positive/negative aspect of an employee and generalizing it into overall
performance rating.
Error of Central Tendency: A rating error in which all employees are rated about average.
Leniency or Strictness Error: A rating error in which the appraiser tends to give all employees either
unusually high or unusually low ratings.
Forced distribution: A performance appraisal ranking system whereby raters are required to place a
certain percentage of employees into various performance categories.
Recency Error: A rating error in which appraisal is based largely on an employee’s most recent behavior
rather than on behavior throughout the appraisal period.
Contrast Error: A rating error in which an employee’s evaluation is biased either upward or downward
because of comparison with another employee just previously evaluated.
Similar-to-Me Error: An error in which an appraiser inflates the evaluation of an employee because of a
mutual personal connection.
Stereotyping error: An error that occurs when evaluations are influenced to some degree by a person's
membership in a particular social group.
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How to Avoid Appraisal Pitfalls/ Problems

■ Develop accurate performance measures

– Use multiple criteria.
– Minimize use of trait-based evaluations.
– Give measures the OUCH and Blanchard tests.
■ Train Evaluators
– Overcome common problems of assessment.
– Use measurement methods and forms.
■ Use Multiple Raters

**Note:OUCH test measures objective, uniform in application, and consistent in effect, and does it
have job relatedness?
Blanchard test, does everyone understand why they are assessed at a specific level (evaluation) and
what it takes to get a higher rating (development) 27
 How to Avoid Appraisal Pitfalls/ Problems
Training Appraisers-

• Establishing an Appraisal Plan

▪ Provide an explanation of the performance appraisal system’s objectives so that raters
will understand the compensation and development purposes for which the appraisal is
to be used.
▪ Explain the mechanics of the rating system
– How frequently the appraisals are to be conducted
– Who will conduct them
– What are the standards of performance.
▪ Alert raters to the weaknesses and problems of appraisal systems so that they can be
avoided.

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Debriefing the Employees Before Performance Appraisal
▪ The debriefing process is where we communicate the analysis of each individual’s performance with that
person. There are two major reasons for assessing performance: For evaluative decisions & For
development.
▪ It is suggested that the Formal Performance Appraisal debriefing should be broken into two separate
interviews— Evaluative Interviews & Developmental Interview.

Evaluative Interviews

Developmental Interview

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 What is an Appraisal
Interview?
Conducting Appraisal
Interviews
■ The appraisal procedure starts Appraisal Interview:
• Ask for self-assessment
with employee himself/herself Challenges
• Invite participation • Organizational Culture
■ He/she evaluates his/her own
performance on various factors • Express Appreciation • Employee-Boss relationship
mentioned in the appraisal • Minimize Criticism • Maturity level of individual
form and assesses his/her
• Change the behavior not the • An apprehensive employee
strengths and weaknesses
person • A wary appraiser
■ Then, he/she discusses his/her
• Focus on solving problems • A biased appraiser
appraisal form with the
supervisor and takes inputs • Be supportive • Inexperience
and reaches an agreement on • Establish goals
future course of action
• Follow-up day to day
■ This interaction is called as
Appraisal interview
FIGURE 9–13
Checklist During
the
Appraisal
Interview
Quality of Work-Life(QWL): Definition

■ QWL is defined as the extent to which the environment at the workplace

stimulates or hinders the productivity of the employees

■ It is the quality of the relationship between employees and the total working
environment

■ QWL programs aim at developing work conditions that satisfy employee needs

■ QWL activities must cater to follow physical and emotional needs of employees
QWL activities

■ Providing a safe and healthy environment

■ Establishment of effective supervision and management
■ Adequate and fair compensation
■ Development of work skills
■ Creation of a positive attitude towards work and organization
■ Effective Management of change and transition
QWL Benefits

■ Creation of a healthy, satisfied and productive workforce

■ Provide a safe and healthy environment
■ Develop a positive attitude in employees towards their jobs and organizations
■ Provide opportunities for learning and professional growth
■ Enhance employee participation in organizational decision-making
■ Foster better communication between labor and management
■ Ensure fair compensation and security for workers
■ Motivating employees to perform better and to be loyal
■ Encourage employee interaction
■ Build mutual trust among the members of the organization
Potential Difficulties of QWL

■ Implementation of QWL initiatives poses difficulties

■ Management might feel that collaborative venture might result in loss of
managerial control over the union
■ Union might feel that it might be overpowered by the management
■ The difficulties may be minimized if there is mutual trust between the
two parties
Strategies for QWL

■ Effective Career Guidance

■ Reward Systems

■ Role of Supervision and Management

■ Job Design

■ Design and maintaining group and inter- group relationships

Exercises on Errors in Performance Appraisal
Example-1

Rajan believes that all those from Xavier’s College are very
arrogant and complacent. This is reflected in his performance
appraisal of Preeti who is from Xavier’s
Example-1: Key

Rajan believes that all those from Xavier’s College are very
arrogant and complacent. This is reflected in his performance
appraisal of Preeti who is from Xavier’s- Stereotyping
Example 2

Priyank is a good sales executive and works for an IT

company. But, his performance in 2019-20 was affected
because of the sudden economic slump in the IT market.
However, his boss fails to acknowledge it and rates his
performance as poor.
Example 2: Key

Priyank is a good sales executive and works for an IT

company. But, his performance in 2019-20 was affected
because of the sudden economic slump in the IT market.
However, his boss fails to acknowledge it and rates his
performance as poor- Fundamental Attribution Error
Example 3

Veena always give high ratings to all her subordinates

irrespective of their performance level. She is quite liberal and
don’t believe in coercion.
Example 3: Key

Veena always give high ratings to all her subordinates

irrespective of their performance level. She is quite liberal and
don’t believe in coercion - Leniency effect
Example 4

Navjith Gupta, the manager of Celestial Technologies, holds

high regards for the communication skills of Vishnu Sehgal,
the Assistant Manager. This influences Navjith to rate Vishnu
high in his performance appraisal
Example 4: Key

Navjith Gupta, the manager of Celestial Technologies, holds

high regards for the communication skills of Vishnu Sehgal,
the Assistant Manager. This influences Navjith to rate Vishnu
high in his performance appraisal – Halo Effect
Example 5

Umesh Mathur, a 28 year old Senior Manager, is given the responsibility

to appraise the performance of Rakesh Sharma, a 43 year old Office
incharge. He gives him higher ratings than his performance warrants
Example 5: Key

Umesh Mathur, a 28 year old Senior Manager, is given the responsibility

to appraise the performance of Rakesh Sharma, a 43 year old Office
incharge. He gives him higher ratings than his performance warrants-
Culture
Example 6

A professor had huge expectations from one of his students and zero
expectations from one of his other students. However, the result of the
exam was quite contrary. The student with high expectations scored
poorly and the student with zero expectations did very well. While
evaluating the answer sheets of both these students, the professor cut
more marks of the student with expectations than what he deserved and
gave more marks to the student with zero expectations than what he
deserved
Example 6: Key

A professor had huge expectations from one of his students and zero
expectations from one of his other students. However, the result of the
exam was quite contrary. The student with high expectations scored
poorly and the student with zero expectations did very well. While
evaluating the answer sheets of both these students, the professor cut
more marks of the student with expectations than what he deserved and
gave more marks to the student with zero expectations than what he
deserved – Perceptual Set
Example 7

Gautam Goyal, the Assistant Manager at Horizon

Technologies, did very well in the months of January, February
and March and did not do that well in the preceding months.
Ishita Malik, Assistant Manager, performed well in the months
of April, May and June. However, she couldn’t deliver the
optimal output in the months, January, February and March.
Gautam Goyal was rated higher than Ishita Malik
Example 7: Key

Gautam Goyal, the Assistant Manager at Horizon

Technologies, did very well in the months of January, February
and March and did not do that well in the preceding months.
Ishita Malik, Assistant Manager, performed well in the months
of April, May and June. However, she couldn’t deliver the
optimal output in the months, January, February and March.
Gautam Goyal was rated higher than Ishita Malik- Recency
Effect
Example 8

Mohan Krishna, the Senior manager, Elegant Decors, feels that

the rules and standards of the company should be followed at
any cost come what may. So, he evaluates the performance of
his employees accordingly
Example 8: Key

Mohan Krishna, the Senior manager, Elegant Decors, feels that

the rules and standards of the company should be followed at
any cost come what may. So, he evaluates the performance of
his employees accordingly- Stringency Effect
Example 9

Pratham Jain, the Finance head of Vintage Industries, has a

habit of giving 5 Points out of 10 Maximum points whenever
he is asked to assess the performance of his employees even if
the performance deserve 8 or 3 actually
Example 9: Key

Pratham Jain, the Finance head of Vintage Industries, has a

habit of giving 5 Points out of 10 Maximum points whenever
he is asked to assess the performance of his employees even if
the performance deserve 8 or 3 actually- Central Tendency
Effect
Example 10

Ashrith Kumar, the Business Development Executive of a bank acquired

a new and big Channel One Current Account in the month of May. Later,
he couldn’t get that many accounts as per his set targets as compared to
this one big account. However, while appraising his performance, the
Branch Manager gave a good rating to him for his performance
Example 10: Key

Ashrith Kumar, the Business Development Executive of a bank acquired

a new and big Channel One Current Account in the month of May. Later,
he couldn’t get that many accounts as per his set targets as compared to
this one big account. However, while appraising his performance, the
Branch Manager gave a good rating to him for his performance- Primacy
Effect