Type
Quiz
Book Title
Human Resource Management 15th Edition
ISBN 13
978-0134235455

978-0134235455 Chapter 9 Lecture Note

July 24, 2019
Copyright © 2017 Pearson Education, Inc.
Part Three
Training and Development
Chapter 9
Performance Management and Appraisal
Lecture Outline:
Basics of Performance Appraisal
The Performance Appraisal Process
Why Appraise Performance?
Defining the Employee’s Goals and Performance Standards
Improving Performance: HR as a Profit Center
Improving Performance: HR Tools for Line Managers and Small Businesses
Who Should Do the Appraising?
Techniques for Appraising Performance
Graphic Rating Scale Method
Alternation Ranking Method
Paired Comparison Method
Forced Distribution Method
Critical Incident Method
Narrative Forms
Behaviorally Anchored Rating Scales
Mixed Standard Scales
Management by Objectives (MBO)
Computerized and Web-Based Performance Appraisal
Electronic Performance Monitoring
Conversation Days
Appraisal in Practice: Using Multiple Methods
Trends Shaping HR: Customized Talent Management
Improving Performance: The Strategic Context
Dealing with Rater Error Appraisal Problems
Potential Rating Problems
Diversity Counts: The Problem of Bias
The Need for Fairness
Know Your Employment Law
Managing the Appraisal Interview
How to Conduct the Appraisal Interview
How to Handle a Defensive Subordinate
How to Criticize a Subordinate
How to Handle a Formal Written Warning
Employee Engagement Guide for Managers
Use the Appraisal Interview to Build Engagement
Performance Management
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Copyright © 2017 Pearson Education, Inc.
Total Quality Management and Performance Appraisal
What Is Performance Management?
Trends Shaping HR: Digital and Social Media
Improving Performance: HR Practices Around the Globe
The Manager’s Role in Performance Management
Chapter Review
Where Are We Now…
The purpose of this chapter is to show you how to appraise employee’s performance. The
main topics we cover include the basics of performance appraisal, tools for appraising
performance, dealing with rater error appraisal problems, the appraisal interview, employee
engagement guide for managers, and performance management.
Interesting Issues:
TRW supplies automotive steering, braking, and safety and electronic equipment to customers
worldwide. Several years ago, TRW was deeply in debt. With over 100,000 employees on five
continents, TRW management knew it had to base its new strategy on improving
competitiveness and performance. At the time, most of the firm’s far-flung departments used
their own paper-based performance appraisal systems. Top management decided it needed a
new company-wide performance management system to help bring what TRW’s employees
were doing into synch with the firm’s new strategic goals. We’ll see what they did.
Learning Objectives:
9-1: Describe the appraisal process.
9-2: Discuss the pros and cons of at least eight performance appraisal methods.
9-3: Give examples of potential appraisal problems and how to deal with them.
9-4: List steps to take in the appraisal interview.
9-5: Explain key points in how to use the appraisal interview to boost employee engagement.
9-6: Explain how you would take a performance management approach to appraisal.
Annotated Outline:
I. Basics of Performance Appraisal
A. The Performance Appraisal Process stripped to its essentials, performance
appraisal always involves the 3-step performance appraisal process: (1) setting
work standards; (2) assessing the employee’s actual performance relative to
those standards, which usually involves some rating form; and (3) providing
feedback to the employee with the aim of helping him or her to eliminate
performance deficiencies or to continue to perform above par.
B. Why Appraise Performance? for several reasons: 1) many employers still base
pay, promotion, and retention on employee appraisals; 2) appraisals play a
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Copyright © 2017 Pearson Education, Inc.
central role in the employer's performance management process; 3) the appraisal
lets the manager and subordinate develop a plan for correcting any deficiencies,
and reinforce those things the employee does correctly; 4) they serve a useful
career planning purpose; and 5) appraisals play a role in identifying training and
development needs.
C. Defining the Employee’s Goal and Performance Standards includes comparing
“what should be” with “what is” and assess to what extent the employee is
attaining his or her numerical goals. Effective goals should be SMART =
specific, measurable, attainable, relevant, and timely.
D. Improving Performance: HR as a Profit Center
E. Improving Performance: HR Tools for Line Managers and Small Businesses
How to Set Effective goals involve four guidelines: 1) Assign specific goals, 2)
Assign measurable goals, 3) Assign challenging but doable goals, 4) Encourage
participation.
F. Who Should Do the Appraising?
1. The immediate supervisor is at the heart of the appraisal process. Getting a
supervisor’s appraisal is relatively straightforward and makes sense.
However, it does not stop with him or her.
2. Peer Appraisals – being appraised by one’s peer can be effective. One’s
peer sees aspects of the person that the boss may never see, so peers’
opinions can be useful developmentally.
3. Rating Committees – consist of multiple raters, typically the employee’s
immediate supervisor and three or four other supervisors.
4. Self-Ratings – tend to be higher than supervisor or peer ratings.
5. Appraisal by Subordinates – also known as upward feedback. It is where
subordinates anonymously rate their supervisor’s performance.
6. 360-Degree Feedback – ratings are collected from the employee’s
supervisors, subordinates, peers, and internal or external customers. One
study found significant correlation between 360-degree ratings and
conventional ratings. Firms should carefully assess potential costs,
carefully train those giving feedback, and not rely solely on 360-degree
feedback.
II. Techniques for Appraising Performance
A. Graphic Rating Scale Method it is the simplest and most popular
performance appraisal technique. A scale is used to list a number of traits and
a range of performance for each, then the employee is rated by identifying the
score that best describes his/her performance level for each trait. Managers
must decide which job performance aspects to measure. Some options include
generic dimensions, actual job duties, or behaviorally recognizable
competencies. Figure 9-2 illustrates.
B. Alternation Ranking Method employees are ranked from best to worst on a
particular trait, choosing highest, then lowest, until all are ranked.
C. Paired Comparison Method it involves ranking employees by making a
chart of all possible pairs of employees for each trait and indicating which one
is the better employee of the pair.
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Copyright © 2017 Pearson Education, Inc.
D. Forced Distribution Method predetermined percentages of rates are placed
in various performance categories, which is similar to grading on a curve.
E. Critical Incident Method a supervisor keeps a record of positive and
negative examples of a subordinate’s work-related behavior, and reviews the
record with the employee at predetermined times.
F. Narrative Forms the method involves rating the employee’s performance for
each performance factor, writing down examples and an improvement plan,
aiding the employee in understanding where his/her performance was good or
bad, and summarizing with a focus on problem solving.
G. Behaviorally Anchored Rating Scales (BARS) a method that combines the
benefits of narratives, critical incidents, and quantified scales by anchoring a
scale with specific behavioral examples of good or poor performance. The
five steps in developing a BARS are: 1) generate critical incidents; 2) develop
performance dimensions; 3) reallocate incidents; 4) scale the incidents; and 5)
develop a final instrument. The advantages of BARS include a more accurate
gauge, clearer standards, feedback, independent dimensions, and consistency.
H. Mixed Standard Scales – these are similar to BARS. The employer “mixes”
together sequentially the good and poor behavioral example statements when
listing them. The aim is to reduce rating errors by making it less obvious to
the appraiser 1) what performance dimensions he or she is rating; and 2)
whether the behavioral example statements represent high, medium, or low
performance.
I. Management by Objectives (MBO) the manager sets specific measurable
goals with each employee and then periodically discusses the employee’s
progress toward these goals. The process consists of six steps: 1) set the
organization's goals; 2) set departmental goals; 3) discuss departmental goals;
4) define expected results (set individual goals); 5) conduct performance
reviews; and 6) provide feedback.
J. Computerized and Web-Based Performance Appraisal this method generally
enables managers to keep notes on subordinates during the year, to rate
employees on a series of performance traits, and then generate written text to
support each part of the appraisal. About 1/3 of employers use online
performance management tools for at least some employees.
K. Electronic Performance Monitoring – these systems use computer network
technology to allow managers to monitor their employees’ computers and
employee rate, accuracy, and time spent working online.
L. Conversation Days – manager-employee conversation that focus on areas of
improvement, growth, and setting stretch goals.
M. Appraisal in Practice: Using Multiple Methods
N. Trends Shaping HR: Customized Talent Management
O. Improving Performance: The Strategic Context
III. Dealing with Rater Error Appraisal Problems – it can be difficult to rate performance for
several reasons, such as a systematic error in judgment that occurs when people evaluate
each other: unclear standards, halo effect, central tendency, leniency or strictness, and
bias.
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A. Potential Rating Problems:
1. Unclear Standards – ambiguous traits and degrees of merit can result
in an unfair appraisal.
2. Halo Effect – the influence of a rater’s general impression on ratings
of specific qualities can be a problem.
3. Central Tendency – this occurs when supervisors stick to the middle of
the rating scales, thus rating everyone average.
4. Leniency or Strictness – supervisors have the tendency to rate
everyone either high or low.
5. Regency Effects – this involves letting what the employee has done
recently blind the manager to the employee’s performance over the
rest of the year.
B. Diversity Counts: The Problem of Bias –the tendency to allow individual
differences such as age, race, and sex affect employee appraisal ratings is
a problem.
C. The Need for Fairness – due to a supervisor’s ineptness or the method’s
inherent unfairness many are unfair.
D. Know Your Employment Law – it’s important for an employer to ensure
that appraisals are legally defensible.
IV. Managing the Appraisal Interview – the supervisor and subordinate review the appraisal
and make plans to remedy deficiencies and reinforce strengths.
A. How to Conduct the Appraisal Interview – prepare for the interview by assembling the
data, preparing the employee, and choosing the time and place. Be direct and specific,
using objective examples; don’t get personal; encourage the person to talk; and reach
agreement.
B. How to Handle a Defensive Subordinate – recognize that defensive behavior is normal;
never attack a person’s defenses; postpone action; and recognize your own limitations.
C. How to Criticize a Subordinate – when required, criticize in a private and
constructive manner that lets the person maintain his/her dignity and sense of
worth.
D. How to Handle a Formal Written Warning – written warnings should identify
the standards by which the employee is judged, make it clear that the
employee was aware of the standard, specify any deficiencies relative of the
standard, and show that the employee had an opportunity to correct the
behavior.
V. Employee Engagement Guide for Managers
A. Use the Appraisal Interview to Build Engagement – managers can use the
appraisal interview to improve their employee’s engagement by doing some of
the following:
1. Take the opportunity to show the employee how his or her efforts
contribute to the “big picture.”
2. Use the interview to emphasize the meaningfulness to the company of
what the employee is doing.
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3. Be candid and objective but do so supportively and without
unnecessarily undermining the employee’s self-image.
4. Make certain the employee has what he or she needs to do a good job.
5. Managers should be candid and honest. Focus on the strengths.
6. Show your employees that you listen to their ideas and value their
contributions.
7. Allow the opportunity for the employee to discuss where he or she
sees himself or herself heading career-wise to improve their career.
8. Make sure that the interviewee views the appraisal and the rewards or
remedial actions as fair.
VI. Performance Management
A. Total Quality Management and Performance – (TQM) Total Quality
Management programs are organizationwide programs that integrate all
functions and processes of the business. TQM advocates argue that the
organization is a system of interrelated parts, and that employees’
performance is more a function of things like training, communication,
tools, and supervision than of their motivation.
B. What is Performance Management? – is a continuous process of
identifying, measuring, and developing the performance of individuals and
teams and aligning their performance with the organization’s goals.
C. Trends Shaping HR: Digital and Social Media
D. Improving Performance: HR Practices Around the Globe
E. The Manager’s Role in Performance Management – link employees’ goals
to the company’s goals, give employees continuous feedback, provide
required resources and coaching, reward good performance, and remember
that employees’ performance reflects more than just whether they’re
motivated.
Chapter Review
Chapter Section Summaries:
9-1: Performance appraisal means evaluating an employee’s current or past performance
relative to his or her performance standards.
9-2: The appraisal is generally conducted using one or more popular appraisal methods or
tools.
9-3: The appraisal process can be improved by eliminating chronic problems that often
undermine appraisals and graphic rating scales in particular.
9-4: An appraisal typically culminates in an appraisal interview.
9-5: The manager can use the appraisal interview to improve the employees’ level of
engagement.
9-6: Performance management is the continuous process of identifying, measuring, and
developing the performance of individuals and teams and aligning their performance with
the organization’s goals.