PERFORMANCE

MANAGEMENT
LECTURE 8 & 9
I N S T R U C TO R : S A M E I A FA R H AT

©Adapted by Sameia Farhat 11–1

NATURE OF PERFORMANCE
MANAGEMENT
• Performance Management
– Processes used to identify, encourage, measure, evaluate, improve, and
reward employee’s performance
• Provide information to employees about their performance.
• Clarify organizational performance expectations.
• Identify the development steps that are needed to enhance
employee performance.
• Document performance for personnel actions.
• Provide rewards for achieving performance objectives.
©Adapted by Sameia Farhat 11–2
 DIFFERENCE BETWEEN PERFORMANCE
MANAGEMENT AND PERFORMANCE APPRAISALS
• Performance Management • Performance Appraisal
– Processes used to identify, – The process of evaluating how
encourage, measure, evaluate, well employees perform their jobs
improve, and reward employee and then communicating that
performance. information to the employees.

©Adapted by Sameia Farhat 11–3

WHY PERFORMANCE MANAGEMENT?

Total Quality

The
Performance
Appraisal Issues
Management
Approach
Strategic Focus

©Adapted by Sameia Farhat 11–4

 THE BUILDING BLOCKS OF AN EFFECTIVE
PERFORMANCE MANAGEMENT PROCESS
Direction sharing Role clarification Goal setting and planning

Goal alignment Developmental goal setting

Ongoing performance monitoring

Ongoing feedback Coaching and support

Performance assessment (appraisal)

Rewards, recognition, and compensation

Workflow, process control, and return on investment management

©Adapted by Sameia Farhat 11–5
 DEFINING THE EMPLOYEE’S
GOALS AND WORK STANDARDS
Guidelines for
Effective Goal Setting

Assign
Assign Assign
Challenging Encourage
Specific Measurable
but Doable Participation
Goals Goals
Goals

©Adapted by Sameia Farhat 11–6

SETTING GOALS

• SMART Goals:
– Specific, and clearly state the desired results.
– Measurable in answering “how much.”
– Attainable, and not too tough or too easy.
– Relevant to what’s to be achieved.
– Timely in reflecting deadlines and milestones.

©Adapted by Sameia Farhat 11–7

AN INTRODUCTION TO APPRAISING
PERFORMANCE
Why Appraise Performance?

1 Is basis for pay and promotion decisions.

2 Plays an integral role in performance management.

Helps in correcting deficiencies and reinforcing good

3
performance.

4 Is useful in career planning.

©Adapted by Sameia Farhat 11–8

(UN)REALISTIC APPRAISALS
• Motivations for Soft Appraisals
– The fear of having to hire and train someone new.
– The unpleasant reaction of the appraisee.
– An appraisal process that’s not conducive to candor.
• Hazards of Soft Appraisals
– Employee loses the chance to improve before being forced to change jobs.
– Lawsuits arising from actions involving inaccurate performance appraisals.

©Adapted by Sameia Farhat 11–9

PERFORMANCE APPRAISAL ROLES
• Supervisors
– Usually do the actual
appraising.
– Must be familiar with basic
appraisal techniques.
– Must understand and avoid
problems that can cripple
appraisals.
– Must know how to conduct
appraisals fairly.
©Adapted by Sameia Farhat 11–10
PERFORMANCE APPRAISAL ROLES
(CONTINUED)
• The HR Department
– Serves a policy-making and advisory role.
– Provides advice and assistance regarding the appraisal tool to use.
– Trains supervisors to improve their appraisal skills.
– Monitors the appraisal system effectiveness and compliance with relevant
laws and guidelines.

©Adapted by Sameia Farhat 11–11

AN INTRODUCTION TO APPRAISING
PERFORMANCE
Steps in Appraising Performance

1 Defining the job

2 Appraising performance

3 Providing feedback

©Adapted by Sameia Farhat 11–12

DESIGNING THE APPRAISAL TOOL
• What to Measure?
– Work output (quality and quantity)
– Personal competencies
– Goal (objective) achievement
• How to Measure?
– Generic dimensions
– Actual job duties
– Behavioral competencies

©Adapted by Sameia Farhat 11–13

PERFORMANCE APPRAISAL METHODS
Appraisal Methodologies

1 Graphic Rating Scale Method 6 Narrative Forms

Behaviorally Anchored Rating

2 Alternation Ranking Method 7
Scales (BARS)
Management by Objectives
3 Paired Comparison Method 8
(MBO)
Computerized and Web-Based
4 Forced Distribution Method 9
Performance Appraisal
5 Critical Incident Method 10 Merged Methods

11 Annual Confidential Report (ACR)

©Adapted by Sameia Farhat 11–14
Performance Appraisal Methods
• Graphic rating scale
 A scale that lists a number of traits and a range of
performance for each that is used to identify the
score that best describes an employee’s level of
performance for each trait.

9–15
FIGURE 9–3
SAMPLE
PERFORMANCE
R AT I N G F O R M

Source: Elaine Pulakos,

Performance Management
(SHRM Foundation, 2004)
p. 16–17.

Reprinted by permission of
Society for Human
Resource
Management via Copyright
Clearance Center.

©Adapted by Sameia Farhat 11–16

 FIGURE 9–3
SAMPLE
PERFORMANCE
R AT I N G F O R M
(CONTINUED)

Source: Elaine Pulakos,

Performance Management
(SHRM Foundation, 2004)
p. 16–17.

©Adapted by Sameia Farhat 11–17

 Graphic
Rating
Scale with
Space for
Comments

Figure 9–3
9–18
 Portion of an Administrative Secretary’s
Sample Performance Appraisal Form

Source: James Buford Jr., Bettye Burkhalter, and Grover Jacobs, “Link Job Description
to Performance Appraisals,” Personnel Journal, June 1988, pp. 135–136.
Figure 9–4
© 2008 Prentice Hall, Inc. All rights
9–19
reserved.
Performance Appraisal Methods (cont’d)
• Alternation ranking method
 Ranking employees from best to worst on a
particular trait, choosing highest, then lowest, until
all are ranked.

9–20
 Alternation Ranking Scale

Figure 9–6
© 2008 Prentice Hall, Inc. All rights
9–21
reserved.
 Alternation Ranking Scale (contd.)
Productivity Quality Job Knowledge

1 6 5
Overall Ranking = (1 + 6 + 5) /3 = 4

© 2008 Prentice Hall, Inc. All rights

9–22
reserved.
PERFORMANCE APPRAISAL METHODS
(CONT’D)
• Paired comparison method
– Ranking employees by making a chart of all possible pairs of the employees
for each trait and indicating which is the better employee of the pair.

© 2008 Prentice Hall, Inc. All rights

9–23
reserved.
FIGURE 9–6 R A N K I N G E M P LO Y E E S B Y T H E PA I R E D C O M PA R I S O N M E T H O D

Note: + means “better than.” – means “worse than.” For each chart, add
up the number of +’s in each column to get the highest-ranked employee.

©Adapted by Sameia Farhat 11–24

 Performance Appraisal Methods (cont’d)

• Forced distribution method

 Similar to grading on a curve; predetermined
percentages of ratees are placed in various
performance categories.
40 students in
 Example:
MGT 301
 15% high performers
 20% high-average performers
15% * 40 = 6 A
 30% average performers 20% * 40 = 8 B
 20% low-average performers 30% * 40 = 12 C
 15% low performers
20% * 40 = 8 D
15% * 40 = 6 F

© 2008 Prentice Hall, Inc. All rights

9–25
reserved.
PERFORMANCE APPRAISAL METHODS
(CONT’D)
• Critical Incident Method
– Keeping record of uncommonly good or undesirable examples of an
employee’s work-related behavior and reviewing it with the employee at
predetermined times.

© 2008 Prentice Hall, Inc. All rights

9–26
reserved.
Examples of Critical Incidents for
an Assistant Plant Manager

9–27
 Narrative
Forms

Source: Reprinted with permission of

the publisher, HRnext.com; copyright
HRnext.com, 2003.
Figure 9–8
9–28
 Performance Appraisal Methods (cont’d)
• Behaviorally Anchored Rating Scale (BARS)
 An appraisal method that uses quantified scale
with specific narrative examples of good and poor
performance.

© 2008 Prentice Hall, Inc. All rights

9–29
reserved.
BEHAVIORALLY ANCHORED RATING
SCALE (BARS)
Developing a BARS Advantages of BARS
1. Generate critical incidents – A more accurate gauge
2. Develop performance – Clearer standards
dimensions – Feedback
3. Reallocate incidents – Independent dimensions
4. Scale the incidents – Consistency
5. Develop a final instrument

©Adapted by Sameia Farhat 11–30

FIGURE 9–8
EX AMPL E OF A
B E H AV I O R A L LY
A N C H O R E D R AT I N G
SCALE FOR THE
DIMENSION
SALESM A NS HIP
SKILLS

©Adapted by Sameia Farhat 11–31

 Job: Call Centre Agent
Factors can be:
 Promptness of service - Includes receiving calls within a
stipulated number of rings

7 Picks up phone in 1 ring.

6 Picks up phone in 2 rings.

5 Picks up phone in 3 rings.

4 Picks up phone in 4 rings.

3 Picks up phone in 5 rings.

2 Picks up phone most of the time.

1 Does not pick up phone.

© 2008 Prentice Hall, Inc. All rights

9–32
reserved.
 Factor 2 –
 Customer Complaint Management: The time spent on resolving
customer complaint

7 Resolves issue in under 1 minute.

6 Resolves issue in under 2 minutes.

5 Resolves issue in under 3 minutes.

4 Resolves issue in under 4 minutes.

3 Resolves issue in over 5 minutes.

2 Resolve issue most of the time.

1 Does not resolve any customer complaint.

© 2008 Prentice Hall, Inc. All rights

9–33
reserved.
 Factor 3 –
 Ability to sell new features: Is the person persuasive enough to
sell new features of the company to customers.

7 Is able to sell a new feature in every call.

6 Is able to sell a new feature in every 2/3 calls.

5 Is able to sell a new feature in every 4/5 calls.

4 Is able to sell a new feature in every hour.

3 Is able to sell some new features in a day.

2 Is able to sell some new features in a week.

1 Is not able to sell any new features in a week.

© 2008 Prentice Hall, Inc. All rights

9–34
reserved.
 Management By Objectives (MBO)
• Involves setting specific measurable goals with
each employee and then periodically reviewing
the progress made.
1. Set the organization’s goals. No. 1 in terms of service
quality

2. Set departmental goals. All depts. (consumer banking,

corporate banking etc.) to focus on quality customer service

3. Discuss departmental goals.

4. Define expected results (set individual goals).
Attend service seminars, achieve 90% customer satisfaction scores etc.

5. Performance reviews.
6. Provide feedback.

9–35
 USING MBO
Time-consuming appraisal
Setting unclear objectives
process

Problems with MBO

Conflict with subordinates

over objectives

©Adapted by Sameia Farhat 11–36

Advantages and Disadvantages of Appraisal Tools

Table 9–3
9–37
 APPRAISING PERFORMANCE:
PROBLEMS AND SOLUTIONS
Potential Rating
Scale Appraisal
Problems

Leniency
Unclear Halo Central
or Bias
Standards Effect Tendency
Strictness

©Adapted by Sameia Farhat 11–38

 APPRAISING PERFORMANCE:
PROBLEMS AND SOLUTIONS (CONTINUED)
How to Avoid
Appraisal Problems

Control
Know Use the Train Keep
Outside
Problems Right Tool Supervisors a Diary
Influences

©Adapted by Sameia Farhat 11–39

 WHO SHOULD DO THE APPRAISING?

Immediate
Self-Rating
Supervisor

Potential
Peers Subordinates
Appraisers

Rating 360-Degree
Committee Feedback

©Adapted by Sameia Farhat 11–40

 THE APPRAISAL INTERVIEW
Satisfactory—Promotable

Satisfactory—Not Promotable

Types of Appraisal
Interviews

Unsatisfactory—Correctable

Unsatisfactory—Uncorrectable
©Adapted by Sameia Farhat 11–41
 THE APPRAISAL INTERVIEW
(CONTINUED)
Guidelines for
Conducting an Interview

Talk in terms Encourage

Don’t get Don’t tiptoe
of objective the person to
personal. around.
work data. talk.

©Adapted by Sameia Farhat 11–42

 THE APPRAISAL INTERVIEW
(CONTINUED)
How to Handle a Defensive Subordinate

1 Recognize that defensive behavior is normal.

2 Never attack a person’s defenses.

3 Postpone action.

4 Recognize your own limitations.

©Adapted by Sameia Farhat 11–43

 THE APPRAISAL INTERVIEW
(CONTINUED)
How to Criticize a Subordinate

1
Do it in a manner that lets the person maintain his or her
dignity and sense of worth.

2 Criticize in private, and do it constructively.

3 Give daily feedback so that the review has no surprises.

4 Never say the person is “always” wrong.

5 Criticism should be objective and free of biases.

©Adapted by Sameia Farhat 11–44

FIGURE 9–13
CHECKLIST
DURING THE
APPRAISAL
INTERVIEW

©Adapted by Sameia Farhat 11–45

FORMAL WRITTEN WARNINGS
• Purposes of a Written Warning
– To shake your employee out of bad habits.
– To help you defend your rating, both to your own boss and (if needed) to
the courts.
• A Written Warning Should:
– Identify standards by which employee is judged.
– Make clear that employee was aware of the standard.
– Specify deficiencies relative to the standard.
– Indicate employee’s prior opportunity for correction.

©Adapted by Sameia Farhat 11–46

CREATING THE TOTAL
PERFORMANCE
MANAGEMENT PROCESS
• “What is our strategy and what are our goals?”
• “What does this mean for the goals we set for our employees,
and for how we train, appraise, promote, and reward them?”

©Adapted by Sameia Farhat 11–47