Performance Appraisal Defined

Formal system of review and

evaluation of individual or
team task performance

Often negative, disliked
activity that seems to elude
mastery
Appraisal Data Is Needed For...
Assessment of current employee performance
are performance standards being met?
Training needs
what does the employee need to learn in order to improve current work
performance?
Career planning and development
assessing an employees strengths and weaknesses to determine advancement
Compensation programs
provides a basis for rational decisions regarding pay adjustments (raises and
bonuses)
Internal employee relations
used for decisions in several areas of internal employee relations, including
promotion, demotion, termination, layoff, and transfer (transfers, layoffs,
terminations)
Recruitment and selection
generates data to validate selection criteria
Human resource planning
assessment data is helpful in building replacement or succession charts

Performance Appraisal Process
External Environment
Internal Environment
Identify Specific
Performance Appraisal
Goals
Establish Performance
Criteria (Standards) and
Communicate Them To
Employees
Examine Work Performed
Appraise the Results
Discuss Appraisal with
Employee
PERFORMANCE APPRAISAL REPONSIBILITY
HUMAN RESOURCE DEPARTMENT
Designs the performance appraisal system
Establishes and monitors a reporting system
Trains managers in how to conduct appraisals
Safeguards performance appraisal records

MANAGERS & SUPERVI SORS
Evaluates employee performance
Completes the appraisal documents and forms
Reviews appraisals with employees
WHAT IS THE PURPOSE OF THE
APPRAISAL?
JUDGMENTAL To make administrative decisions
(To justify rewards given for performance)

DEVELOPMENTAL To improve performance
(To provide feedback for learning and work improvement)

You cannot accomplish both purposes equally well with a single
appraisal system. Some appraisal tools are better at generating good
feedback than providing a consistent rationale for a judgment.
Similarly, negative feedback generated by judgmental appraisals is
unlikely to motivate the employee to work harder to improve
performance. If both appraisal objectives are important, separate
assessment systems should be created.

HOW OFTEN SHOULD APPRAISALS BE DONE?
ANNUALLY (Once a year)
SEMI-ANNUALLY (every 6 months)
QUARTERLY (every 3 months)
MONTHLY
CONTINUOUSLY

WHEN SHOULD APPRAISALS BE DONE?

DO ALL THE APPRAISALS AT ONE TIME
A lot of work to do at one time..overworks the supervisor
All appraisals cover the same time period
DO EACH ONE ON THE EMPLOYEES ANNIVERSARY
The appraisal process is spread over the whole year
Appraisals are not comparablethey dont cover the same time period
WHO SHOULD CONDUCT THE APPRAISAL?
IMMEDIATE SUPERVISOR
SUBORDINATES
COWORKERS (Peers)
OUTSIDERS
Customers
Constituents
Consultants
SELF-APPRAISAL
GROUPS or TEAMS

360 degree appraisal from above & below; insiders & outsiders
720 degree appraisal a second layer above and below
AN APPRAISER MUST:
BE AWARE OF THE OBJECTIVES & REQUIREMENTS OF
THE EMPLOYEES JOB

HAVE THE OPPORTUNITY TO FREQUENTLY OBSERVE
THE EMPLOYEE OR HIS/HER WORK

BE CAPABLE OF EVALUATING AND RECORDING
OBSERVED WORK BEHAVIOR OR PERFORMANCE

AVOID OR MINIMIZE POTENTIAL APPRAISAL ERRORS
AND BIAS
Problems in Performance Appraisal
Appraiser discomfort
Lack of objectivity
Halo/horn error
Leniency/strictness
Central tendency
Recent behavior bias
Personal bias
Manipulating the evaluation
Employee anxiety

Appraiser Discomfort
Performance
appraisal process cuts
into managers time
Experience can be
unpleasant when
employee has not
performed well
Lack of Objectivity
In rating scales method, commonly used
factors such as attitude, appearance, and
personality are difficult to measure
Factors may have little to do with
employees job performance
Employee appraisal based primarily on
personal characteristics may place
evaluator and company in untenable
positions
Halo/Horn Error
Halo error - Occurs when manager
generalizes one positive performance
feature or incident to all aspects of
employee performance resulting in higher
rating
Horn error - Evaluation error occurs when
manager generalizes one negative
performance feature or incident to all
aspects of employee performance resulting
in lower rating
Leniency/Strictness
Leniency - Giving undeserved
high ratings
Strictness - Being unduly
critical of employees work
performance
Worst situation is when firm
has both lenient and strict
managers and does nothing to
level inequities
Central Tendency
Error occurs when employees are
incorrectly rated near average or middle of
scale
May be encouraged by some rating scale
systems requiring evaluator to justify in
writing extremely high or extremely low
ratings
Recent Behavior Bias
Employees behavior often improves and
productivity tends to rise several days or
weeks before scheduled evaluation
Only natural for rater to remember recent
behavior more clearly than actions from
more distant past
Maintaining records of performance
Personal Bias (Stereotyping)
Managers allow individual differences such
as gender, race or age to affect ratings they
give
Effects of cultural bias, or stereotyping, can
influence appraisals
Other factors Example: mild-mannered
employees may be appraised more harshly
simply because they do not seriously object
to results
Manipulating the Evaluation
Sometimes, managers control virtually
every aspect of appraisal process and are in
position to manipulate system
Example: Want to give pay raise to certain
employee. Supervisor may give employee a
undeserved high performance evaluation
Employee Anxiety
Evaluation process may
create anxiety for
appraised employee
Opportunities for
promotion, better work
assignments, and increased
compensation may hinge
on results
THREE FOCAL POINTS OF APPRAISAL
1. PERSONAL TRAITS AND CHARACTERISTICS
+ inexpensive to develop and use
+ not specialized by position; one form for all workers
- high potential for bias and rating errors
- not very useful for feedback or development
- not easily justifiable for reward/promotion decisions

2. JOB BEHAVIOR AND ACTIVITY
+ can focus on specific duties listed in the job description
+ intuitively acceptable to employees and superiors
+ useful for providing feedback
+ seem fair for reward and promotion decisions
- are time consuming to develop and use
- can be costly to develop
- have some potential for rating error and bias

THREE FOCAL POINTS OF APPRAISAL
CONTD
3. WORK RESULTS AND OUTCOMES

+ less subjectivity bias
+ acceptable to employees and superiors
+ links individual performance to organizational objectives
+ seem fair for reward and promotion decisions
- are time consuming to develop and use
- may encourage a short-term perspective
- may use deficient or inappropriate criteria
SUMMARY GUIDELINES FOR APPRAISALS
1. Appraisal standards are job related -- based on job analysis
2. Standards are clearly communicated to employees in advance
3. Standards are responsive to actual worker behavior or effort
4. Activities performed and results achieved are both appraised
5. Acceptable vs. unacceptable results can clearly be discerned
6. Appraisal criteria are consistently applied
7. Raters are able to consistently observe work performance
8. Raters are trained in appraisal and how to feedback results
9. Developmental feedback is separated from judgmental appraisal
10. An appeal process exists to resolve (judgmental) rating disputes