Northern Arizona University
College of Business Administration

MGT 310--Human Resource Management

Ch 8: Appraising and Improving Performance

• Performance appraisal programs
  • Performance appraisal--(annual) process to help employees understand roles, objectives, expectations and performance success
  • Performance management--process of creating a work environment to help people perform to the best of their abilities
  • Purposes
    • Administrative
      • Compensation, esp. pay-for-performance
      • Promotion, transfer or layoff decisions
      • HR planning
      • Documentation, documentation, documentation (paper trail) for legal protection
    • Developmental
      • Assess strengths and weaknesses
      • Training and development
    • Often fall short
      • Individual achievement - focus on self
      • Useful only at the extremes
      • Short-term achievements
      • Too subjective
      • Inconsistent
      • Autocratic
      • Create distance between manager and employee
    • Reasons for failure
      • Perceptual errors--halo effect, recency effect, fundamental attribution error, self-serving bias...
      • Common problems--see fig 8.2, p. 351
      • Other reasons
        • Little face-to-face discussion
        • Relationship between job description and performance appraisal form are not clear
        • Managers see little or not benefit from time and energy required
        • Managers dislike the face-to-face confrontation
        • Managers are not adept at providing feedback (often lack documentation)
          • Measurement--"On the Folly of Rewarding A While Hoping for B"
        • The judgmental role conflicts with the helping role
        • Employees question fairness
        • Employees dislike the anxiety or frustration
        • Performance may decrease afterwards
• Developing an effective program
  • Performance standards--clearly defined, job-related, support organizational goals, convey expected performance (see Fig. 8.3, p 353)
    • Strategic relevance--linked to goals/objectives
    • Criterion deficiency--performance that is NOT measured (esp. at higher levels may by 80+%)
    • Criterion contamination--measurements that are not part of actual performance (team, circumstances...)
    • Reliability--stability or consistency
    • Quantification creating the illusion of objectivity
  • Legal issues
    • Validity--same as selection process
      • Subjectivity
      • Statistical evidence of the effect
    • Guidelines (p. 355)
      • Job related
      • Written copy in advance
      • Observable behaviors ("measurable")
      • Trained supervisors
      • Effort to improve poor performance
      • Appeals procedure
      • Documentation, documentation, documentation (daily!)
• Who should conduct the appraisal? (See Fig. 8.4, p. 356)
  • Manager/supervisor--extent of actual observation
  • Self-appraisal--self-serving bias
  • Subordinate appraisal--extent of actual observation
  • Peer appraisal--competition
  • Team appraisal--nearly impossible to separate out individual contributions
  • Customer appraisals (external/internal)--limited scope
  • 360-degree appraisal
    • SMART goals (specific, measurable, achievable, results-oriented, time-bound)
      • Behavior rubrics (examples for each score)
    • Multiple-rater inputs
    • Pros and Cons--Fig. 8.5, p. 361
    • Safeguards (p. 360)
      • Assure anonymity--not always possible
      • Make respondents accountable--training, reliability (personal agendas)
      • Prevent "gaming"--collusion
      • Use statistical procedures, e.g., weighted averages (measurement trap)
      • Identify (and quantify?) biases--protected classes
  • Training
    • Purpose
    • Mechanics
    • Standards
    • Rater errors
      • Error of central tendency--all average
      • Leniency or strictness error--all above or below average
        • Use "anchors" or behavioral rubrics (see below)
        • Forced distribution (ranking)--legal challenges re. validity
      • Recency error
      • Contrast error--person just prior
      • Similar-to-me error--favorable impressions (biases)
      • Stereotypes
      • Fundamental attribution error and self-serving bias
    • Feedback
      • Communication skills
      • Diagnosing root causes of performance problems
      • Setting goals and objectives
  • Supervisor's checklist (see HRM 1, p. 365)
    • Scheduling--ask employee to prepare
    • Preparing
      • Review documentation, specific examples
      • Changes needed
    • The meeting
      • Neutral location
      • Discuss each topic
      • Be specific, descriptive and non-judgmental
      • Discuss differences
      • Solicit agreement--ask for their suggestions
      • Develop a plan--corrective ("work plan") or developmental
      • Be professional and supportive (even when taking corrective action)
    • NOTE: This should be a review! There should never be any surprises for the employee.
• Appraisal methods
  • Trait methods
    • Graphic rating scales (HRM 2, p 366)--clearly defined points, observable behaviors [rubrics] (also see "behavioral methods" below)
    • Mixed-standard scales--better, same, worse than standard (HRM 3, p. 367)
    • Forced-choice method--choose between pairs [often frustrating for raters] (see p. 368)
    • Essay method--descriptive, time-consuming, supervisor's writing skills, subjectivity
  • Behavioral methods
    • Critical incident method--unusual successes/failures (documentation required)
    • Behavioral checklist method--check items from a list (oldest method) (see p. 369)
    • Behaviorally-anchored rating scales (BARS) [rubrics]--specific examples of behaviors from high to low (based on panel of experts, may include managers and subordinates) [similar to "graphic rating scales" above] ... time consuming to develop, not always able to "observe" the behaviors (see HRM 4, p. 370)
    • Behavior observation scales--frequency of observation [attention--those like/dislike, recordkeeping] (see HRM 5, p. 371)
  • Results methods--more objective and empowering [IF no barriers or unfair advantages]
    • Productivity measures--output divided by input (usually in terms of dollars)
      • Criteria contamination--external factors
      • Criterion deficiency--"what gets measured gets done"
      • Consider both results and methods/processes used to achieve them (and contextual circumstances)
        • Becomes very subjective
    • Management-by-objectives (MBO)--usually top-down, then bottom-up
      • Same issues as productivity
      • Becomes laborious/time-consuming/repetitive
    • Balanced scorecard--broader perspective, most applicable to highest-level managers
      • Financial
      • Customer
      • Processes/operations
      • Learning/development
  • Summary--see Fig. 8.7, p 377)
• Appraisal interviews
  • Types
    • Tell-and-sell--persuade to change
    • Tell-and-listen--describe strong/weak points; listen to feelings
    • "Problem-solving" interview
      • May be appropriate when there is a problem, but NOT during review (unless concluding an on-going intervention with the employee)
      • May be used for training and development
  • Appraisal interview
    • Ask for self-assessment [conduct 360-degreee assessment]
    • Invite participation
    • Express appreciation
    • Minimize criticism--focus on improvement
    • Change the behavior, not the person
    • Solve problems (if necessary; think "training and development")
    • Be supportive
    • Establish goals (and measurements)
    • Follow up day to day--coaching
  • Improving performance
    • Seek the root cause of performance problems (Is it really the person or circumstances? Fundamental attribution error?)
      • Ability
      • Motivation
      • Environment
    • Managing ineffective performance--options
      • Training
      • Transfer
      • Motivation[?]
      • Disciplinary action--progressive discipline, work plan
      • Discharge
• VIDEO critique--Pepsico