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Chapter 10: Performance Management and Appraisal
Chapter 10: Performance
Chapter Summary
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Learning Objectives
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Lecture Outline
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Critical Thinking Challenges
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Case: Deloitte Revolutionizes Performance Management
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Supplemental Cases
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Extra Teaching Video
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Chapter Summary
Chapter 10 covers managing and appraising employees’ work. The chapter begins by defining
performance management and describing how it fits in an organization’s culture. The next
section explains performance information. The third section explores the various uses of
Learning Objectives
After students have read this chapter, they should be able to accomplish the following objectives:
• Identify why performance management is necessary.
• Distinguish among three types of performance information.
• Explain the differences between strategic, administrative, and developmental uses of
performance appraisal.
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Chapter 10: Performance Management and Appraisal
Lecture Outline
HR Headline: Improving the Health of Performance Management and JBS United
JBS United is an organization that has experienced incredible growth in its 60-year history.
However, it relied on a traditional paper-and-pencil appraisal process. This eventually led to
inconsistencies that made it difficult for the organization to leverage its human capital. This
caused the company to revise its approach toward the appraisal process and adopt a streamlined
approach, which included the use of a software program. The result was a 50 percent drop in the
time required to complete performance management and a system that tracked employee
performance more efficiently than the previous method.
10-1. The Nature of Performance Management
• Performance management links organizational strategies to employee performance, as
shown in Figure 10-1.
• Performance management is an ongoing series of activities designed to align and
improve individual performance to drive organizational results.
HR Competencies & Applications: SHRM Develops Recommended Performance
Management Standard
Key Competencies: Consultation (Behavioral Competency), People (HR Expertise), and
Organization (HR Expertise)
SHRM worked with industry and academic experts to develop a performance management
standard that can be adopted by organizations across sizes, sectors, and industries. The standard
includes three key sections: (1) goal setting, (2) performance review, and (3) individual
performance improvement planning.
1. How can line managers and employees establish effective goals at the various levels for
employees to achieve? What types of goals are most appropriate for entry-level workers?
What about for senior executives?
Students’ answers may vary. Setting effective goals may involve analyzing the tasks (and
the skills required) that employees perform and the challenges associated with each task.
HR Perspective: Exposing Dead Wood
Kimberly-Clark, the century-old paper goods producer, had an appraisal system that did not
effectively address low performers. Its appraisal system was geared more toward minimizing
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Chapter 10: Performance Management and Appraisal
turnover than making employees accountable. However, a change in the appraisal system ensured
that each employee has personalized goals, thus increasing accountability. This has resulted in a
significant amount of turnover, but Kimberly-Clark now has a workforce of accountable and
honest high performers.
1. How can HR initiate a discussion about performance issues in an organization where long
service and loyalty have been the primary culture?
Students’ answers may vary. HR could create a report containing information on the losses
the organization has incurred and mention that these losses were due to the lack of an
appraisal system that addresses performance issues.
2. What can a line manager do to address a long-service employee whose performance has
declined? What resources might the manager use to assist the employee in improving his or
her performance?
Students’ answers may vary. A line manager could work with an HR professional to identify
areas of improvement and methods to address those areas via training. Resources could
include a module that assesses skill levels before and after training.
10-2. Identifying and Measuring Employee Performance
• Job duties are important elements in a given job.
• Most jobs have several elements and inherent complexities; multiple job duties are the rule
rather than the exception.
Teaching Tip: Weighting job duties is similar to weighting different activities and grades in a
classroom. Ask students how they would weigh the activities for this class.
10-2a. Types of Performance Information
• Managers can use three different types of information about employee performance, as
Figure 10-3 shows.
• Trait-based information is the least useful and results-based information is the most
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Chapter 10: Performance Management and Appraisal
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Results-based information considers employee accomplishments.
• Performance measures can also be viewed as objective or subjective.
o Objective measures are more fact-based while subjective measures require
judgment on the part of the evaluator.
Teaching Tip: Ask students to suggest adjectives that can be used for objective evaluations and
subjective evaluations.
10-2b. Performance Standards
• Performance standards define the expected levels of employee performance.
10-3. Performance Appraisals
• Performance appraisals are used to assess an employee’s performance and create a
mechanism for providing feedback about past, current, and future performance
expectations.
10-3a. Uses of Performance Appraisals
• While the performance management process in many companies is being dramatically
updated, the importance of periodic feedback to employees is still a high priority.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10-3b. Performance Appraisals and Ethics
• Many companies do not have a program to develop awareness of ethics, and some have
10-3c. Decisions about the Performance Appraisal Process
• Figure 10-6 provides information on the key decisions that need to be made while
designing an appraisal process.
10-3d. Legal Concerns and Performance Appraisals
• Performance appraisals must be job related.
HR Competencies & Applications: Elements of a Legal Performance Appraisal System
Key Competencies: Business Acumen (Behavioral Competency) and Workplace (Technical
Competency)
The elements of a performance appraisal system that can survive court tests can be determined
from existing case law.
1. Based on the legal criteria outlined, which points do you think are the most important?
Which ones would you focus on first as a practicing HR professional? Which legal
criteria do you think might be the most challenging to implement?
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Chapter 10: Performance Management and Appraisal
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Students’ answers will vary. Students should consider which points would be raised in
court. Documentation of all appraisal activities is needed if any legal trouble arises,
which would also place documentation high on HR’s list of priorities. Opinions will
vary on which item is more challenging; any items could leave openings for
questioning if the company is sued.
2. Do you think there are other approaches (not listed) that could be used to enhance the
legal defensibility of a performance appraisal system?
Yes, other approaches could be used. Recording performance appraisals would be an
option.
10-4. Who Conducts Appraisals?
• Performance appraisals can be conducted by anyone familiar with the performance of the
individual employee.
10-4a. Supervisory Ratings of Subordinates
10-4b. Employee Ratings of Managers
• Employee ratings of managers provide three advantages: (1) competent managers can
10-4c. Team/Peer Ratings
• Ratings by team members are useful when supervisors do not have the opportunity of
10-4d. Self-Ratings
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Chapter 10: Performance Management and Appraisal
• Employees working alone or possessing unique skills may be best able to rate
10-4e. Outsider/Customer Ratings
• People outside the immediate work group may be asked to participate in performance
10-4f. Multisource/360-Degree Rating
• Multisource rating, or 360-degree feedback, has grown in popularity.
• Multisource feedback recognizes that for many jobs, employee performance is
multidimensional and crosses departmental, organizational, and even national
boundaries.
HR Ethics: Building Ethics with Multisource Appraisals and Coaching
As business leaders get promoted, evidence suggests that there are more opportunities for
ethical transgressions. Companies can do several things to help prevent ethical lapses. (1)
Promote an ethical culture. (2) Use 360-degree evaluations. (3) Apply coaching. (4) Discuss
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Chapter 10: Performance Management and Appraisal
the importance of ethical leadership.
1. What kinds of approaches might you use to help leaders be more ethical? How could
performance management processes be used to facilitate this aim?
Students’ answers will vary. Students could consider creating a code of conduct for
executives that they must sign. If they break the code, they should be penalized.
2. Besides some of the ideas already discussed, what do you think companies can do to
reduce the likelihood of leaders acting unethically?
Students’ answers will vary. Students could consider adding an ethics executive to the
top management or requiring approval from several executives for some actions.
10-5. Methods for Appraising Performance
• Some employers use one method for all jobs and employees, some use different methods
for different groups of employees, and others use a combination of methods.
10-5a. Graphic Rating Scales
• A graphic rating scale is a scale that allows the rater to mark an employee’s
performance on a continuum indicating low to high levels of a particular characteristic.
• Figure 10-9 shows a sample graphic rating scale.
• Three aspects commonly appraised include descriptive categories, job duties, and
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10-5b. Comparative Methods
• Comparative methods are relative formats that require managers to compare the
performance levels of their employees against one another.
10-5c. Narrative Methods
• Some appraisals are entirely written.
10-5d. Goal Setting and Management by Objectives
• Goal setting is often viewed as one of the best approaches to enhance performance
management and the performance appraisal process.
• Positive goal setting allows employees to be more directed in their work efforts, which
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Chapter 10: Performance Management and Appraisal
HR Competencies & Applications: Mentorships Require Dynamic Goal Setting
Key Competencies: Relationship Management (Behavioral Competency) and People
(Technical Competency)
Mentors and mentees can have trouble setting goals. To help mentees set goals,
mentors should listen, provide good examples, match goals with the organization’s
objectives, brainstorm, and set priorities.
1. How can mentorships be used to improve job performance?
Students’ answers will vary. Mentors can help mentees set priorities and set
SMART goals.
2. How would you encourage mentors and mentees to be more engaged in the
goal-setting process? How could you better prepare individuals for the
challenges associated with mentorships?
Students’ answers will vary. Mentors can provide examples or real-life
instances of successfully setting and achieving goals from experience.
Reminding mentees of the advantages of having a mentor is valuable.
10-5e. Combinations of Methods
• Managers can mix methods to get the advantages from each approach.
10-6. Training Managers and Employees in Performance Appraisal
• For employees, performance appraisal training focuses on the purposes of appraisal, the