Type
Quiz
Book Title
Human Resource Management 15th Edition
ISBN 13
978-0134739724

978-0134739724 Chapter 7

August 15, 2020
94
CHAPTER 7
PERFORMANCE MANAGEMENT AND APPRAISAL
CHAPTER OBJECTIVES
7.1 Describe performance management, performance appraisal, and the performance
appraisal process
7.2 Explain the uses of appraisal and performance criteria
7.3 Describe the choice of various performance appraisal methods
7.4 Assess the effectiveness and limitations of performance appraisal practices
7.5 Explain how to conduct the appraisal interview
7.6 Summarize key trends in performance appraisal practice
KEY TERMS
Performance management (PM): Goal-oriented process directed toward ensuring that
organizational processes are in place to maximize the productivity of employees, teams, and
Critical incident technique: Performance appraisal method that requires keeping written
records of highly favorable and unfavorable employee work actions.
Behaviorally anchored rating scale (BARS) method: Performance appraisal method that
combines elements of the traditional rating scale and critical incident methods; various
performance levels are shown along a scale with each described in terms of an employee’s
specific job behavior.
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Behavioral observation scales: A specific kind of behavioral system for evaluating job
performance by illustrating positive incidents (or behaviors) of job performance for various job
First-impression effect: An initial favorable or unfavorable judgment about an employee’s
performance which is ignored or distorted.
Positive halo effect: Evaluation error that occurs when a manager generalizes one positive
performance feature or incident to all aspects of employee performance, resulting in a higher
rating.
Negative halo effect (or horn error): Evaluation error that occurs when a manager generalizes
one negative performance feature or incident to all aspects of employee performance, resulting in
LECTURE OUTLINE
PERFORMANCE MANAGEMENT, PERFORMANCE APPRAISAL, AND THE
PERFORMANCE APPRAISAL PROCESS
PERFORMANCE MANAGEMENT (PM)
Goal-oriented process directed toward ensuring that organizational processes are in place to
maximize the productivity of employees, teams, and ultimately, the organization.
PERFORMANCE APPRAISAL
Formal system of review and evaluation of an individual or team’s job performance. A critical
point in the definition is the word formal because managers should be reviewing an individual’s
performance on a continuing basis.
PERFORMANCE APPRAISAL PROCESS
The starting point for the PA process is identifying specific performance goals. An appraisal
system probably cannot effectively serve every desired purpose, so management should select
the specific goals it believes to be most important and realistically achievable.
The next step in this ongoing cycle continues with establishing performance criteria
(standards) and communicating these performance expectations to those concerned. Then, the
work is performed and the supervisor appraises the performance. At the end of the appraisal
period, the appraiser reviews work performance and evaluates it against established performance
standards.
CRITERIA
The most common appraisal criteria are traits, behaviors, competencies, goal achievement, and
improvement potential. Once these considerations are well understood, HR professionals should
educate managers about who should be involved in the appraisal process
USES OF PERFORMANCE APPRAISAL
Performance appraisal data are potentially valuable for use in numerous human resource
functional areas.
COMPENSATION PROGRAMSPerformance appraisal results provide the basis for
decisions regarding pay increases.
INTERNAL EMPLOYEE RELATIONSPerformance appraisal data are also
frequently used for decisions in areas of internal employee relations including motivation,
Competencies include a broad range of knowledge, skills, traits, and behaviors that are
needed to perform a job successfully.
GOAL ACHIEVEMENTIf ends are considered more important than means, goal
achievement becomes the most appropriate factor to evaluate.
IMPROVEMENT POTENTIALSome attention must be given to the future and the
believed that such an approach is reliable if the workgroup is stable over a reasonably
long period of time and performs tasks that require considerable interaction.
SELF-APPRAISALIf individuals understand the objectives they are expected to
achieve and the standards by which they are to be evaluated, they areto a great
extentin the best position to appraise their own performance.
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PERFORMANCE APPRAISAL PERIOD
CHOOSING A PERFORMANCE APPRAISAL METHOD
Type of performance appraisal system utilized depends on its purpose. If the major emphasis is
on selecting people for promotion, training, and merit pay increases, a traditional method such as
rating scales may be appropriate. Collaborative methods, including input from the employees
themselves, may prove to be more suitable for developing employees.
.
TRAIT SYSTEMSType of performance-appraisal method, requiring raters (e.g.,
employee, identifying the better performer in each pair.
BEHAVIORAL SYSTEMSPerformance appraisal methods that focus on
distinguishing between successful and unsuccessful behaviors.
Critical incident technique (CIT): Performance appraisal method that requires
keeping written records of highly favorable, and unfavorable, employee work
actions.
RESULTS-BASED SYSTEMSSuperior and subordinate jointly agree on objectives
for the next appraisal period.
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Management by objectives (MBO): Supervisors and employees determine
objectives for employees to meet during the rating period and employees appraise
how well they have achieved their objectives.
Work standards method: Performance appraisal method that compares each
employee’s performance to a predetermined standard or expected level of output.
ASSESSING THE EFFECTIVENESS AND LIMITATIONS OF PERFORMANCE
APPRAISAL PRACTICES
It is important to understand how to distinguish between effective and ineffective performance
appraisal practices.
CHARACTERISTICS OF AN EFFECTIVE APPRAISAL SYSTEM
Systems that possess certain characteristics may be more legally defensible.
PERFORMANCE EXPECTATIONSManagers must clearly explain their
performance expectations to their subordinates in advance of the appraisal period.
accurate or fair.
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LIMITATIONS OF PERFORMANCE APPRAISAL
Many of the problems commonly mentioned are not inherent in the method but, rather, reflect
improper usage.
Positive halo effect: Evaluation error that occurs when a manager
generalizes one positive performance feature or incident to all aspects of
employee performance, resulting in a higher rating.
Negative halo effect: Evaluation error that occurs when a manager
generalizes one negative performance feature or incident to all aspects of
performance appraisal rating to an employee is a leniency error. Being unduly
critical of an employee’s work performance is a strictness error.
Employee anxiety: The evaluation process often creates anxiety for employees.
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LEGAL CONSIDERATIONS IN PERFORMANCE APPRAISAL
USE OF PRAISE AND CRITICISMPraise should be provided when warranted, but
it can have only limited value if it is not clearly deserved; criticism, even if warranted, is
especially difficult to give.
EMPLOYEES’ ROLETwo weeks or so before the review, they should go through
their diaries or files and make a note of every project worked on, regardless of whether
they were successful or not.
very important. However, only eight percent of the respondents stated that that their performance
management process drove business results. Some firms have transitioned to ongoing reviews
that entail more frequent, developmental feedback, often making pay raise and promotion
decisions separately.
ANSWERS TO CHAPTER 7 QUESTIONS FOR REVIEW
7-1. Define performance management and performance appraisal.
7-2. What are the uses of performance appraisal?
7-3. What are some reasons that people give for getting rid of performance appraisal?
7-4. What are the steps in the performance appraisal process?
7-5. What aspects of a person’s performance might an organization evaluate?
7-6. Many different people can conduct performance appraisals. What are the various
alternatives?
7-7. What appraisal intervals are often used in appraisal reviews?
7-8. Briefly describe each of the following methods of performance appraisal: (a) 360-degree
feedback evaluation; (b) Rating scales; (c) Critical incidents; (d) Essay; (e) Work
standards; (f) Ranking; (g) Forced distribution; (h) Behaviorally anchored rating scales;
and (i) Results-based systems.
360-degree feedback evaluation method: Popular performance appraisal method that
7-9. What are the various problems associated with performance appraisal? Briefly describe
7-10. What are the legal considerations associated with performance appraisal?
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7-11. Explain why the following statement is often true: “The Achilles’ heel of the entire
evaluation process is the appraisal interview itself.”
7-12. What are some of the considerations associated with changing from the use of employee
ratings to continuous discussions?
DISCUSSION OF CHAPTER 7 INCIDENTS
HRM Incident 1: These Things Are a Pain
In passing through Rajiv’s district a few days earlier, the governor had complained to the area
superintendent that repairs were needed on several of the highways. Because of this, the
superintendent assigned Rajiv’s crew an unusually heavy workload. In addition, Rajiv received a
call from the human resource office that week telling him that the performance appraisals were
late. Rajiv explained his predicament, but the HR specialist insisted that the forms be completed
right away.
Rajiv felt a twinge of guilt as he thought about Roger Short. He knew that Roger had been
goofing off, and the other workers had been carrying him for quite some time. He also knew that
Roger would be upset if he found that he had been marked lower than the other workers.
Consequently, he marked Roger the same to avoid a confrontation. “Anyway,” Rajiv thought,
“these things are a pain, and I really shouldn’t have to bother with them.”
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QUESTIONS
7-20. What weaknesses do you see in Rajiv’s performance appraisals?
7-21. Should HR have the ability to “insist that the forms be completed right away”? Discuss.
7-22. Many managers would agree with Rajiv in saying that “these things are a pain, and I
really shouldn’t have to bother with them.” What are the disadvantages in doing away
with performance appraisal?
HRM Incident 2: Good Job!
Chandra LaMar just celebrated her 20-year anniversary at Westfield Farm Implement Company,
a large retailer of farm equipment ranging from small riding lawn mowers to gigantic combines.
She started her career as an office clerk and received excellent performance reviews, which led
QUESTIONS
7-23. From Westfield Farm Implements standpoint, what difficulties might Chandra’s
evaluation of Janine create?
7-24. What are the possible long-term consequences for Janine’s employment status?
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7-25. What can Chandra do to correct her mistake?