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PART THREE TRAINING AND HR DEVELOPMENT
C H A P T E R
T E i g h t
Performance Management and
Appraisal Today
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Lecture Outline
I. Basic Concepts in Performance Appraisal
A. Why Appraise Performance?
B. Steps in Performance Appraisal
C. Defining the Employee’s Performance Standards
D. Who Should Do the Appraising?
II. Traditional Appraisal Methods
A. Graphic Rating Scale Method
B. Alternation Ranking Method
C. Paired Comparison Method
D. Forced Distribution Method
E. Critical Incident Method
F. Behaviorally Anchored Rating Scales
G. Appraisal Forms in Practice
H. The Management by Objectives Method
I. Computerized and Online Performance Appraisals
J. Virtual Appraisal Games
K. Electronic Performance Monitoring
L. Talent Management and Differential Employee Appraisal
M. Conversation Days
III. How to Deal with Rater Error Problems and the
Appraisal Interview
A. Clarify Standards
B. Avoid Halo Effect Ratings
C. Avoid the Middle
D. Don’t Be Lenient or Strict
E. Diversity Counts
F. Know Your Employment Law
G. How to Conduct the Appraisal Interview
IV. Employee Engagement Guide for Managers: Use
the Appraisal Interview to Build Engagement
V. Performance Management Today
A. Total Quality Management and Performance Appraisal
B. What Is Performance Management?
C. HR and Social Media
D. The Manager’s Role in Performance Management
In Brief: This chapter gives an
overview of the performance
appraisal process and the
different tools and methods
available. The main topics
covered include the performance
management process, appraisal
methods, appraisal performance
problems and solutions, and the
appraisal interview.
Interesting Issues: Despite lots
of attention, money, and effort,
performance appraisals remain
an area with which few managers
or employees are satisfied. The
following questions may be
worth discussing. Do we have a
good enough system yet? Is there
an intrinsic problem with
performance appraisals? Is it just
human nature to dislike them?
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I. Basic Concepts in Performance Management and Appraisal
A. Why Appraise Performance? Many employers still base pay, promotions,
assignments and the like on employee appraisals. Appraisals play an
integral role in the employer’s performance management process. The
appraisal lets the supervisor and subordinate develop a plan for
correcting any deficiencies, and reinforce those things the employee
does correctly. Appraisals serve a useful career planning purpose.
Finally, appraisals play an important role in identifying training and
development needs.
B. Steps in Performance Appraisal Stripped to its essentials,
performance appraisal always involves the three-step performance
appraisal process: (1) setting work standards, (2) assessing the
employee’s actual performance relative to those standards which
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.
C. Defining the Employee’s Performance Standards Managers use
goals, job dimensions or traits, and competencies—or some combination
of these—to establish performance standards. These allow managers to
assess to what extent the employee is attaining his or her numerical
goals. Effective goals are S.M.A.R.T: specific, measurable, attainable,
relevant, and timely. Job dimensions permit evaluation of non–numerical
goals. Setting goals for competencies allows the manager to appraise
the employee’s skills, knowledge, and behaviors.
D. Who Should Do the Appraising? The immediate supervisor is usually
2. Rating Committees Consist of multiple raters, typically the
3. Self-Ratings Tend to be higher than supervisor or peer ratings.
5. 360-Degree Feedback Ratings are collected from the employee’s
supervisors, subordinates, peers, and internal or external customers.
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KEY TERMS
Performance appraisal
Any procedure that involves (1) setting work standards; (2)
assessing the employee’s actual performance relative to
the standards; and (3) providing feedback to the employee
with the aim of motivating that person to eliminate
performance deficiencies or to continue the performance
above par.
360-degree feedback
The employer collects performance information all around
an employee—from his or her supervisors, subordinates,
peers, and internal or external customers.
Graphic rating scale
The graphic rating scale is a performance appraisal tool
that lists several job dimensions and a range of
performance values for each. The supervisor rates each
subordinate by circling or checking the score that best
describes the subordinate’s performance for each trait or
dimension.
Performance management
The continuous process of identifying, measuring, and
developing the performance of individuals and teams and
aligning their performance with the organization’s goals.
DISCUSSION QUESTIONS
8-1. Answer the question, “Who should do the appraising?” (LO 8.1: Explain the purpose
8-2. Discuss the pros and cons of at least eight performance appraisal tools. (LO 8.2:
8-3. Explain how to conduct an appraisal feedback interview. (LO 8.4: List steps to take in
the appraisal interview to improve employee engagement.) Plan ahead by reviewing the
8-4. Give examples of five potential appraisal problems. (LO 8.3: Give examples of how to
8-5. Explain how to install a performance management program. (LO 8.5: Explain how
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8-15. Explain the purpose of performance appraisal. (LO 8.1: Explain the purpose of
performance appraisal.)
8-16. Compare and contrast performance appraisal and performance management,
using specific examples. (LO 8.5: Explain how you would take a performance
management approach to appraisal.)
HR in Action Case Incident 1: Appraising the Secretaries at Sweetwater U
8-17. Do you think that the experts’ recommendations will be sufficient to get most of
the administrators to fill out the rating forms properly? Why? Why not? What
additional actions (if any) do you think will be necessary? (LO 8.2: Discuss the pros
8-18. Do you think that Vice President Winchester would be better off dropping graphic
rating forms, substituting instead one of the other techniques we discussed in this
chapter such as a ranking method? Why? (LO 8.2: Discuss the pros and cons of at
8-19. What performance appraisal system would you develop for the secretaries if you
were Rob Winchester? Defend your answer. (LO 8.2: Discuss the pros and cons of
at least eight traditional performance appraisal methods.) If the development costs are
HR in Action Case Incident 2: Carter Cleaning Company: The Performance Appraisal
8-20. Is Jennifer right about the need to evaluate the workers formally? The managers?
Why or why not? (LO 8.1: Explain the purpose of performance appraisal.) Based on
8-21. Develop a performance appraisal method for the workers and managers in each
store. (LO 8.2: Discuss the pros and cons of at least eight traditional performance
appraisal methods.) The students need to be familiar with different appraisal methods
APPLICATION EXERCISES
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Experiential Exercise: Setting Goals for and Appraising the Professor
Purpose: The purpose of this exercise is to give you practice in developing and using a
performance appraisal form.
Required Understanding: You are going to develop a performance appraisal form for an
How to Set Up the Exercise/Instructions: Divide the class into groups of four or five students.
8-22. First, based on what you now know about performance appraisals, do you think
Figure 8.1 is an effective scale for appraising instructors? Why or why not? (LO 8.1:
8-23. Next, your group should develop its own tool for appraising the performance of an
instructor. Decide which of the appraisal tools (graphic rating scales, alternation ranking,
8-24. Next, have a spokesperson from each group put his or her group’s appraisal tool on
the board. How similar are the tools? Do they all measure about the same factors? Which
factor appears most often? Which do you think is the most effective tool on the board?
Can you think of any way of combining the best points of several of the tools into a new
performance appraisal tool? (LO 8.2: Discuss the pros and cons of at least eight traditional
performance appraisal methods.)
Students should develop their own tools for appraising the performance of an instructor. Look for
them to apply concepts discussed in this chapter. Students should present their tools to the class.
1. Based on sites such as http://www.starbucks.com/careers what do you think of the
benefits that Starbucks offers its employees? Do you think they are better, worse, or
about average, and why? On average, the benefits that Starbucks’ offers appear to be
2. Judging from what you can find at
www.wegmans.com/webapp/wcs/stores/servlet/CategoryDisplay?identifier=CATEGOR
Y_533&catalogId=10002&storeId=10052&langId=-1, what sorts of pay policies does
Wegmans seem to have, and why do you think they follow such policies? Wegmans
WEB-e’s (WEB EXERCISES)