SUPERVISION

KEY LINK TO PRODUCTIVITY

Chapter 6

Appraising and Rewarding Performance

Performance Appraisal


Performance appraisal is a process that involves communicating to an employee how well he/she is performing the job Ideally, this also involves establishing a plan for improvement

Performance Appraisal


Performance appraisals are generally handled in one of two ways: Via an informal system, with no formal procedures, methods, or times

Via a formal appraisal system Any supervisors comment about an employees performance is viewed by the employee as a form of appraisal

What is Performance?
 

Performance is how well an employee is fulfilling the requirements of the job It is determined by a combination of three factors: Effort: how hard a person works Ability: how capable a person is Direction: how well the person understands what is expected on the job To obtain an acceptable level of performance, all three factors must be present to some extent
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What is Performance?
 

Performance should be evaluated on results achieved, not effort expended Performance factors outside employee control: Inadequate facilities and equipment Restrictive policies Lack of cooperation from others The supervisor should eliminate environmental factors that negatively impact performance

What is Performance?


The key to obtaining good performance is: Encouraging effort by employees Helping employees develop their abilities Clearly communicate what employees are expected to do on the job

Job Descriptions and Specifications



Two of the best ways to ensure that employees are properly directed: A job description states the characteristics of a job and the type of work required in the job A job specification states the qualifications necessary to do the job, including experience, training, education, knowledge, skills, and abilities

Job Descriptions and Specifications



A job description and job specification result from a job analysis Job analysis is the process of determining, through observation and study, the pertinent information regarding a specific job In most large organizations, job analyses, descriptions, and specifications are developed by the human resources department

Job Descriptions and Specifications



When developing job descriptions and specifications, carefully study each job to ensure that it is described accurately The overriding purpose is to communicate what the employee is to do on the job Many organizations combine the job description and job specification into one document

Performance Appraisal Defined



The performance appraisal communicates how well a job is being done and how performance can be improved Appraisals are also used for: Wage and salary administration Promotions or demotions Transfers, layoffs, and discharges Counseling Human resource planning
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Performance Appraisal Defined



Appraisal systems have three principal purposes: 1. Improve employee performance in present job 2. Prepare employee for future opportunities 3. Provide a record of employee performance

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Appraisal System Benefits



For the organization Provides an evaluation of the organizations human resources Gives a basis for future human resource decisions Increases the potential for the present human resources to meet future needs Improves employee morale

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Appraisal System Benefits



For the supervisor Presents a clearer picture of the employees understanding of job duties Allows supervisor input into employee development Improves employee morale and productivity Helps identify capable replacements for higherlevel jobs within the work unit Helps identify future training needs
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Appraisal System Benefits



For the employee Is allowed to present ideas for improvement Presents opportunity to change work behavior Lets employee know how the supervisor feels about current performance Assures employee of regular, systematic performance reviews Is an opportunity to discuss problem areas and design mutual solutions
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Performance Appraisal Methods



Performance appraisals should be directly related to job success Creating measures of success can be difficult Job type can make measuring difficult Performance may be influenced by factors outside the employees control Using personal characteristics and other subjective factors is common, but has problems

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Performance Appraisal Methods



Graphic rating scale Employee is rated on factors such as initiative, dependability, cooperativeness, and work quality Supervisors tend to evaluate everyone a little above average Provides the same information on all employees and is inexpensive to develop

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Performance Appraisal Methods



Essay appraisals Supervisor writes a series of statements about an employees past performance, potential for promotion, strengths, and weaknesses Evaluations vary considerably from supervisor to supervisor Method depends on the writing skills of the supervisor

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Performance Appraisal Methods



Checklist Supervisor records performance by checking yes or no to a series of questions Is easy to use Assembling the questions can be difficult and usually requires a different set for each job category

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Performance Appraisal Methods



Forced-choice rating Supervisor chooses mot applicable from set of two statements Method attempts to eliminate bias by using statements where the supervisor cannot determine which answer is best May frustrate supervisors May be expensive to develop

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Performance Appraisal Methods



Critical incident appraisals Supervisor keeps a written record of unusual incidents that show both positive and negative actions by an employee Employees should be given a chance to state their views Method is time consuming and tends to stress negative incidents

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Performance Appraisal Methods



Work standards approach Establishes objective measures, such as number of pieced produced or sales quota Used more frequently for operative workers in production Standards must be fair, and viewed as such by the employees

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Performance Appraisal Methods



Ranking methods Alternation: ranks employees from most to least valuable by alternatively selecting the most and least valuable out of a group Paired comparison: compares the performance of employee pairs to establish rankings Forced distribution: distributes employee performance according to a bell-shaped or normal curve
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Performance Appraisal Methods



Management by objectives The supervisor and employee jointly agree on the employees work objectives and how they will be accomplished The employees appraisal is based on the degree to which the work objectives are accomplished

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Frequency of Performance Appraisals



Appraisals should be done as frequently as necessary to let employees know how they are doing Many organizations require formal appraisals at least once a year Supervisors should do at least two or three reviews each year, in addition to the formal annual review New employees, or those being retrained, need more frequent appraisals
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Multi-Rater Assessment


Also known as 360-degree feedback Managers, peers, customers, suppliers, and/or colleagues are asked to assess the employee The person being assessed also completes an evaluation questionnaire The human resources department provides the results to the employee, who gets to see how his/her opinion differs from the others

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Supervisor Biases in Performance Appraisals

   

Leniency: grouping ratings at the positive end of the performance scale Central tendency: rating of all or most employees in the middle of the scale Recency error: occurs when the supervisor recalls only the events just prior to the appraisal Halo effect: a single prominent characteristic of an employee influences the supervisors judgment of all items in the appraisal

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Supervisor Biases in Performance Appraisals



Personal preferences and prejudices can also cause errors in performance appraisals Supervisors tend to look for employee behaviors that conform to their biases First impressions can influence later judgments People tend to retain these impressions even when faced with contradictory evidence later

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Overcoming Biases in Appraisals

 

The potential for biases in performance appraisals is great One way to overcome these biases is to refine the design of the appraisal method It is unlikely that instruments can be refined to the point of overcoming all obstacles A more promising approach is to improve the skills of raters

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Overcoming Biases in Appraisals



Raters should receive training in: The appraisal method used by the company Rater biases and causes of those biases The importance of the raters role in the appraisal process The use of performance appraisal information The communication skills necessary to provide feedback to the employee

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Conducting Appraisal Interviews



Communicating the appraisal: Provides a clear understanding of how the supervisor views the employees performance Clears up any misunderstanding about what is expected Establishes a program of improvement Improves the working relationship between the supervisor and the employee

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Conducting Appraisal Interviews



The appraisal interview should be: Planned ahead of time Held in a private room Kept confidential Specific The employee should be asked for feedback

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Conducting Appraisal Interviews



Questions to consider before the review On what will you compliment the employee? Which points do you intend to discuss? What reactions do you anticipate? Can you support the appraisal with facts? What help or corrective action will you offer? How will you gain acceptance of suggestions? What follow-up action will you take?
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Preparing for Your Appraisal Interview

     

Evaluate your own performance Outline ways in which your boss can help you do a better job List any additional training you believe you need Suggest any changes that would make you more effective Develop a program for your self-improvement Outline your long-range plans
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Handling the Poor Performer



Possible causes for an employees poor performance: Improper placement Poor training Poor communication Lack of motivation

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Handling the Poor Performer



Alternatives for dealing with the poor performer Improve the employees performance Transfer the employee to a job that better fits his/her abilities Demote the employee to a job that can be handled

Terminate the employee These alternatives are influenced by government regulations and unionization
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Handling the Poor Performer



A supervisor who has decided that an employees performance is unacceptable should plan for an immediate interview Delaying the interview is unfair to both the employee and the organization Delaying can also increase the chance of litigation when action is finally taken

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Appraisal Interview with a Poor Performer

    

Create a setting in which the employee can share his/her views and listen to what you say Be firm but fair Let the employee know exactly where he/she is weak and how to make improvements Get the employee to participate in setting goals for the present job If a transfer is in order, get the employee to participate in setting goals for the new job

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Appraisal Interview with a Poor Performer



Reach an agreement on what is to be achieved and the deadline for achieving it Emphasize your availability for future talks and encourage the employee to come to you if problems remain or develop

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Performance Appraisal and the Law



Title VII of the Civil Rights Act permits the use of a bona fide performance appraisal system Appraisal systems that have adverse effects for minorities, women, and older employees are not bona fide Evaluating employees by assuming or insisting that they match a stereotype is illegal

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Performance Appraisal and the Law



To make performance appraisal systems more legally acceptable: Derive the content of the appraisal system from job analyses Emphasize work behaviors, not personal traits Ensure that the results of appraisals are communicated to employees Ensure that employees are allowed to give feedback during the appraisal interview
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Performance Appraisal and the Law

Train managers to conduct proper evaluations Ensure that appraisals are written, documented, and retained Ensure that personnel decisions are consistent with performance appraisals

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Rewarding Performance


Organizational rewards: all types of intrinsic and extrinsic rewards received as a result of employment by the organization Intrinsic rewards are internal to the individual and derived from involvement in work activities Extrinsic rewards are directly controlled and distributed by the organization and are more tangible

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Rewarding Performance
Intrinsic Rewards  Sense of achievement  Feeling of accomplishment  Informal recognition  Job satisfaction  Personal growth  Status Extrinsic Rewards  Formal recognition  Fringe benefits  Incentive payments  Base wages  Promotion  Social relationships

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Rewarding Performance


Compensation consists of the extrinsic rewards offered by the organization and includes: Base wage or salary Incentives or bonuses Any benefits received in exchange for work Benefits are rewards received because of employment with the organization Paid vacations, health insurance, retirement plans, among others
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Relating Rewards to Performance



The free enterprise system is based on the premise that rewards should depend on performance Many extrinsic rewards do not lend themselves to being related to performance Examples include paid vacations, insurance plans, and paid holidays These rewards are often determined by organizational membership and seniority rather than performance
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Merit Pay
 

Merit pay means basing an employees annual pay raise on his/her performance Many U.S. companies offer merit pay, but most do a poor job of linking pay and performance Surveys show that neither top management nor rank-and-file employees believe there is a positive link between performance and pay

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Linking Pay to Performance



If relating rewards to performance is desirable, why isnt it more widespread? It is not easy to measure performance accurately It requires discipline Many union contracts require that certain rewards be based on objective variables, such as seniority No successful formula for implementing a merit pay program has been developed
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Linking Pay to Performance



Desirable preconditions include: Trust in management Absence of performance constraints Trained managers Good measurement systems Ability to pay Clear distinction among cost of living, seniority, and merit pay Well-communicated total pay policy Flexible reward schedule
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