978-0134235455 Chapter 9 Lecture Note

Type

Quiz

Book Title

Human Resource Management 15th Edition

ISBN 13

978-0134235455

July 24, 2019

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

Performance Management and Appraisal 9- 2

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

Performance Management and Appraisal 9- 3

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.

Performance Management and Appraisal 9- 4

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.

Performance Management and Appraisal 9- 5

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.

Performance Management and Appraisal 9- 6

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.