PERFORMANCE

MANAGEMENT:
APPRAISAL
BY GROUP 2
DEFINITION OF PERFORMANCE MANAGEMENT

Performance Management is the process of identifying, measuring, managing, and

developing the performance of the human resources in an organization in accordance to
organizational activities and goals.
Three parts of performance management: defining performance, measuring performance
and feedback performance information
Performance Appraisal is the process of evaluating employee performance, usually done
annually. It is often used as primary method for evaluating employee performance and
productivity.
PURPOSES OF PERFORMANCE MANAGEMENT

1. Strategic Purpose – linking employee activities with organizational goals by defining

results and sets standards on behaviors and employee characteristics necessary for
achieving goals.
2. Administrative Purpose – using performance information to make administrative
decisions concerning salary administration (pay raises), promotions, retention
termination, layoffs, and recognition of individual performance.
3. Developmental Purpose – developing employee performance by informing them of
their performance strengths and weaknesses and providing suggestions to reducing
performance deficiencies.
PERFORMANCE MEASURES CRITERIA

• Strategic Congruence – extent to which a performance management system elicits

job performance that is congruent with the organization's strategy, goals, and culture.
• Validity – extent to which performance measure assesses all relevant aspects of
performance.
• Reliability – how consistent and free from random errors performance measure is
• Acceptability – degree of satisfaction and adequacy of performance measures.
• Specificity – how well performance expectations are communicated to employees and
how helpful measures are to guiding employees on how they can meet expectations.
APPROACHES TO MEASURING PERFORMANCE
(PAGE 1)
• Comparative Approach – rater compares employee’s performance with that of other
employees.
• Attribute Approach – emphasizes employee traits desirable for company’s success
such as initiative, leadership and competitiveness.
• Behavioral Approach – defines employee behaviors for effective job performance.
• Results Approach –focuses on objective, measurable results of a job or work group
and seeks to eliminate subjectivity in measurement process.
APPROACHES TO MEASURING PERFORMANCE
(PAGE 2)
• Quality Approach – focus lies on customer orientation and prevention approach to
errors
• Assesses both person and system factors in measurement system
• Emphasizes cooperation between managers and employees to solve performance problems.
• Involves internal and external customers in setting performance standards and measuring
performance
KINDS OF COMPARATIVE APPROACHES

• Ranking – managers rate individual employee performance from highest to

lowest in comparison to others.
• Simple Ranking – ranking employees based on their performance in the order highest
to lowest.
• Alternation Ranking– ranks employees based from best to worst on traits and cross
out the best and worst performers alternately.

• Forced Distribution – employees are ranked in groups depending on

categories or divisions they are put in.
• Paired Comparison – employees are compared with other employees in work
groups. A score of 1 is given to every high performer.
ADVANTAGES TO COMPARATIVE APPROACH

• Effective for differentiating employee performance

• eliminates problems of leniency, central tendency and strictness
• Results are especially valuable in making administrative decisions involving pay raises and
promotions
• Are easy to develop and usually easy to use.
DISADVANTAGES TO COMPARATIVE APPROACH

• Often fails to link performance measurement to organizational strategic goals.

• The extent to which individual performance supports strategy is not always made
explicit.
• Nature of ratings tend to be subjective, thus not entirely valid or reliable.
• Techniques lack specificity in feedback as employees might be unaware of what they must
change in their performance.
• Employees and managers are less likely to accept comparative approach evaluations.
KINDS OF ATTRIBUTIVE APPROACHES

• Graphic Rating Scales – uses scales to rate employee against a list of performance
traits
• Mixed-Standard Scales – employees are rated based on statements representing
good, average and poor performance.
ADVANTAGES OF ATTRIBUTIVE APPROACH

• Methods are easy to develop and can be used generally for different jobs, strategies and
organizations.
• Reliable and valid, because much attention is given to identifying and defining relevant
attributes to measure
DISADVANTAGES OF ATTRIBUTIVE APPROACH

• Little congruence between techniques and company strategies

• Vague performance standards due to generalization of criteria
• Don’t provide specific guidance on how employees could support company goals and
correct performance deficiencies
KINDS OF BEHAVIORAL APPROACHES (PAGE 1)

• Critical Incidents – managers keep record of specific examples of effective and

ineffective performance examples of each employee.
• Behaviorally Anchored Rating Scales (BARS) – similar to Critical Incidents but
defines performance dimensions by developing behavioral anchors according to different
performance levels.
• Behavioral Observation Scales (BOS) – a variation of BOS and BARS but involves
defining all behaviors needed for effective performance and the frequency of each
behavior.
KINDS OF BEHAVIORAL APPROACHES (PAGE 2)

• Organizational Behavior Modification (OBM) – uses formal behavioral feedback

and reinforcement system to manage employee behavior were future behavior is
determined by positively reinforced past behaviors.
• Assessment Centers – usually used for selection and promotion decisions and
measuring managerial performance. Here, individuals perform simulated tasks like
leaderless group discussions, in-basket management, and role playing while individual’s
behavior ad skills are observed.
ADVANTAGES OF BEHAVIORAL APPROACH

• Best suited for less complex jobs

• Very effective in linking company strategy and specific behaviors for implementing those
strategies.
• Provides guidance and feedback on expected performances
• Acceptability of this performance measure is high as it is very reliable
DISADVANTAGES OF BEHAVIORAL APPROACH

• Not suitable for complex jobs

• Constant monitoring and revisions of behaviors to ensure linkage to strategies
• Gives the assumptions that there is no best way to do a job, thus managers seek to
control behaviors
KINDS OF RESULTS APPROACHES

• Management by Objectives (MBO) – top management defines company’s strategic

goals and managers measures performance based on how much is contributed to
achieving goals.
• Productivity Measurement and Evaluation System (PROMES) – main goal is to
motivate employees to increase productivity.
ADVANTAGES TO RESULTS APPROACH

• Minimizes subjectivity, because it relies on objective, quantifiable indicators of

performance
• Link individual’s results with organization strategies and goals
DISADVANTAGES TO RESULTS APPROACH

• Objective measurements can be affected by factors not under employee’s control like
economic recessions.
• Individuals tend to focus only on aspects that are measured and neglect those that are
not.
TOOLS IN QUALITY APPROACHES

• Process-Flow Analysis – identifies all decisions and actions in completing work and
redundancies inn processes.
• Cause-and-Effect Diagrams – identifies events/causes that result in undesirable outcomes.
• Pareto Chart – highlights most important causes of a problem in decreasing order of
frequency and influence of causes.
• Control Charts – collects data at multiple points in time and points out factors contribute
to an outcome and when they tend to occur.
• Scattergrams – show positive, negative or zero relationship between two variables.
ADVANTAGES TO QUALITY APPROACH

• Relies mainly on a combination of attribute and results approaches

• Is most effective when using two or more alternatives to performance measurements
• Results are linked to business goals.
• Provides employee feedback and holds both employee and managers accountable for
changing behaviors.
DISADVANTAGE TO QUALITY APPROACH

• Managers would rather use traditional performance management systems over quality
approaches.
• Evaluating personal traits are difficult to measure to job performance unless company is
structured into work teams.
THE MANAGER’S ROLE IN AN EFFECTIVE
PERFORMANCE FEEDBACK PROCESS (PAGE 1)
Managers should
• Give feedback frequently, not only once a year to ensure continuous performance
improvements.
• Create right context for the discussion.
• Ask employees to rate their own performance before feedback session.
• Encourage subordinates to participate in feedback sessions.
• Praise employees for effective performance as encouragement to continue current
performance practices.
• Focus on solving problems.
THE MANAGER’S ROLE IN AN EFFECTIVE
PERFORMANCE FEEDBACK PROCESS (PAGE 2)
Managers should
• Focus feedback on behavior and results, not on the person themselves to avoid biases.
• Minimize criticism to prevent discouraging and offending employees.
• Agree to specific goals and set a date to review progress to give employees.
USING PERFORMANCE MANAGEMENT
APPLICATIONS FOR DECISION MAKING
Performance Management Applications are software that help managers monitor
performance problems, set job performance standard, and rates how well employee
performances match and differentiates to those standards.
• Summarizes employees’ strengths and weaknesses.
• Can be used to customize performance rating forms for each job.
Performance Diagnosis Applications identifies and analyzes information about
performance problems and provides solutions to those problems.