All rights reserved.8-2a Standards for Effective Performance Appraisal Systems • The quality of the rating form • Accuracy of the ratings... All rights reserved.8-2a Standards for Effect
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Chapter 8
Appraising Employee Job Performance
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Chapter Outline
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8-1a Opening Case: Gaining Competitive Advantage at McKesson Information
enhanced competitive advantage
Employees’ job satisfaction levels have enhanced
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8-1b Linking Performance Appraisal
to Competitive Advantage
the quality of employee job performance.
Directing employee behavior towards organizational goals
Monitoring behavior to ensure that goals are met
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Figure 8-1 Performance Appraisals Can Help Assess the Quality of Employee
Performance
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8-2a Standards for Effective Performance Appraisal Systems
• The quality of the rating form
• Accuracy of the ratings
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8-2a Standards for Effective Performance Appraisal Systems (cont.)
• The quality of the rating form
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8-2a Standards for Effective Performance Appraisal Systems (cont.)
• The quality of the rating form (cont.)
- Indicate the level of performance an employee is
expected to achieve.
- Help direct employee behavior.
- Help supervisors provide more accurate ratings.
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8-2a Standards for Effective Performance Appraisal Systems (cont.)
• Accuracy of the ratings
Accurate ratings reflect the employees’ actual job
performance levels
Inaccuracy is most often attributable to the presence
of rater errors
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8-2a Standards for Effective Performance Appraisal Systems (cont.)
• Leniency error: Raters provide ratings that are unduly
high.
• Severity error: Ratings are unduly low.
• Causes of leniency and severity errors:
Political reasons
Raters’ lack of conscientiousness
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8-2a Standards for Effective Performance Appraisal Systems (cont.)
• Central tendency error: Appraisers purposely avoid
giving extreme ratings even when such ratings are warranted.
• Causes of central tendency error:
Administrative procedures
End points of the rating scale are unrealistically
defined
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8-2a Standards for Effective Performance Appraisal Systems (cont.)
• Halo effect:
Appraiser’s overall impression of an employee is
based on a particular characteristic
Acts as a barrier to accurate appraisals
Caused due to vague rating standards and failure to conscientiously complete the rating form
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8-2a Standards for Effective Performance Appraisal Systems (cont.)
• The rater’s use of implicit personality theory
Implicit personality theory: Rater’s estimation based on
a personal “theory” of how different types of people behave in certain situations
Using this theory, organizations are unable to identify employees’ specific strengths and weaknesses
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8-2a Standards for Effective Performance Appraisal Systems (cont.)
Ratings are heavily influenced by recent events that are more easily remembered
Ratings that unduly reflect recent events can present a false picture of the individual’s job performance during the entire rating period
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8-2a Standards for Effective Performance Appraisal Systems (cont.)
Appraisal systems must meet all the criteria imposed
by EEO laws
Specifically, a court would examine the:
- Nature of the appraisal instrument.
- Fairness and accuracy of the ratings.
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8-2b Types of Rating Instruments
• Behaviorally anchored rating scale (BARS)
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8-2b Types of Rating Instruments (cont.)
Employee performance is evaluated relative to other employees’ performances
Uses rankings rather than ratings
- Simple rankings: Require raters to rank-order their
employees from best to worst, according to their job performance.
- Paired comparison: A rater compares each possible pair
of employees.
- Forced distribution: Requires a rater to assign a certain percentage of employees to each category of excellence such as “best,” “average,” or “worst.”
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8-2b Types of Rating Instruments (cont.)
Low cost and practical.
Take very little time and
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8-2b Types of Rating Instruments (cont.)
• Graphic rating scales
Presents appraisers with a list of traits assumed to be necessary to successful job performance
A five- or seven-point rating scale accompanies each trait
Points on the scale are defined by numbers and/or descriptive words or phrases that indicate level of performance
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8-2b Types of Rating Instruments (cont.)
• Graphic rating scales
Does not effectively direct behavior.
Fails to provide specific, nonthreatening feedback.
Accurate ratings are not likely
to be achieved.
Can lead to a multitude of rating errors.
Occurrence of bias.
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8-2b Types of Rating Instruments (cont.)
Similar to graphic rating scale
Requires appraisers to rate employees on their traits
Includes seven or eight traits, referred to as
“dimensions,” each anchored by a seven- or nine-point scale
Anchors each trait with examples of specific job
behaviors that reflect varying levels of performance
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8-2b Types of Rating Instruments (cont.)
employee’s performance.
Time consuming to develop.
Requires a lot of effort to develop.
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8-2b Types of Rating Instruments (cont.)
Contains a list of desired behaviors required for the successful performance of specific jobs
Developed like BARS, where critical incidents are
collected and categorized into dimensions
An appraiser rates job performance by indicating the frequency with which the employee engages in each behavior
A five-point scale is used ranging from “almost never” (1) to “almost always” (5)
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8-2b Types of Rating Instruments (cont.)
Is more legally defensible
than BARS or graphic rating scales.
Effective in directing
employees’ behavior.
Used to monitor behavior
and give specific feedback.
Time consuming to develop.
Not always cost-effective.
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8-2b Types of Rating Instruments (cont.)
organizational effectiveness by steering each employee’s behavior towards the organization’s mission
- Goal setting: Establishment of the organization’s mission statement and strategic goals
- Planning: Identify potential obstacles to reaching goals and devise strategies to overcome these obstacles
- Evaluation: Success at meeting goals is evaluated against agreed-on performance standards.
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8-2b Types of Rating Instruments (cont.)
Practical and cost effective
Success may be attributed
to factors outside employee’s control.
Performance standards vary, providing no common basis for comparison.
Creates performance pressures and stress.
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8-2c Designing an Appraisal System
• Step 1: Gaining support for the system
Gain the support of upper-level managers:
- Make the performance appraisal process meaningful.
- Get managers’ input in developing the system.
- Train managers and help them find a way to keep track
of things employees have done during the review period.
- Hold managers accountable for providing accurate
ratings on a timely basis.
- Encourage both managers and workers to participate in
the planning and development of the system to enhance support for it.
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8-2c Designing an Appraisal System (cont.)
• Step 2: Choosing the appropriate rating Instrument –
Three important factors to be considered are:
Practicality: The performance appraisal instrument
must be practical
costs, and utilization costs
Nature of job: The choice of rating instrument
depends, in part, on the type of data that can be realistically collected about a particular job
- Executive, managerial, and professional employees are usually rated based on results.
- Lower-level jobs are most often rated on behavioral or
trait-oriented criteria.
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8-2c Designing an Appraisal System (cont.)
• Step 3: Choosing the rater(s)
Supervisory ratings: Serve as management tools for supervisors, giving them a means to direct and monitor employee behavior
Peer ratings: Supplement supervisory ratings, helping develop a consensus about an individual’s
performance; helps eliminate biases and leads to greater employee acceptance of appraisal systems
- Competitive nature of the organization’s reward system
and friendship are potential problems limiting the usefulness of peer ratings.
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8-2c Designing an Appraisal System (cont.)
• Self-ratings
May not be effective as an evaluative tool
a “circle” of people who frequently interact with the manager
Evaluations are limited to job behaviors directly
observed
Primarily used as feedback devices
Lacks accountability
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8-2c Designing an Appraisal System (cont.)
• Step 4: Determining the appropriate timing of
appraisals
Mostly conducted annually; frequent appraisals are
considered too time-consuming
have a difficult time remembering events of the past year; this can be minimized by:
- Maintaining records of employee performance; record
keeping also serves as documentation for EEO suits.
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8-2c Designing an Appraisal System (cont.)
• Step 5: Ensuring appraisal fairness
fairness, and may serve to keep appraisers “honest.”
- Provides a means for employees to obtain a fair hearing
if they are dissatisfied with their appraisals
- Allows employees to voice their concerns.
- Fosters more accurate ratings.
- Prevents the involvement of outside third parties.
- Tends to undermine the authority of the supervisor and may encourage leniency error.
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8-3a Performance Appraisal and the Manager’s Job
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8-3b How the HRM Department Can Help
• Providing rater training: Usually focuses on:
Establishing work expectations
coaching
Appraising performance and avoiding rating errors
Providing written justifications for ratings
conferences
Identifying training needs and formulating a
development plan for employees
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8-3b How the HRM Department Can Help (cont.)
• Monitoring and evaluating the appraisal system
Monitoring means taking steps to ensure that each appraisal has been completed on time and that
instructions have been followed
Evaluation consists of gauging the users’ satisfaction with the appraisal system
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8-3c HRM Skill-Building for Managers
Objective is to identify problems the employee is
facing and to discuss solutions to these problems
Should be brief, informal, and employee-centered
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8-3c HRM Skill-Building for Managers
(cont.)
• Setting goals for MBO: An individual’s goals must be:
Consistent with goals set at higher organizational
levels
Specific and challenging
Realistic and achievable