HUMAN RESOURCE

MANAGEMENT
Course Leader: Dr. Abera Demsis

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 CHAPTER
SEVEN
PERFORMANCE APPRAISAL

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PERFORMANCE MANAGEMENT
● Performance management - can be defined as a systematic process for
improving organizational performance by developing the performance of
individuals and teams.
● Performance management - is the process of creating a work environment
in which people can perform to the best of their abilities in order to meet a
company’s goals.

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PERFORMANCE
● Performance is not only the matter of achievement of quantified
objectives/outputs. It is also concerned with how the results are
achieved.
● Highperformance results from appropriate behavior, and the effective use
of the
● required knowledge, skills and competencies.
● Performance is a cumulative effect of understanding task
requirement, ability to do it , motivation to do it and having
the right environment.
● When managing performance, both inputs (behavior) and
outputs (results) need to be considered.

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 QUESTION TIME
_________________is a trait approach to performance
appraisal that requires the rater to choose from
statements designed to distinguish between
successful and unsuccessful performance.

a. Forced-choice Method
b. Critical
CREDITS:Incident Method template was created by
This presentation
c. Essay Method
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d. images
Graphic Rating Scale by Freepik
Method

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THE PROCESSES OF PERFORMANCE MANAGEMENT

● Planning: agreeing objectives and competence requirements and

producing performance agreements and performance improvement and
personal development plans.
● Acting: carrying out the activities required to achieve objectives and plans.

● Monitoring: checking on progress in achieving objectives.

● Reviewing: assessing progress and achievements so that action plans can
be prepared and agreed.

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Performance Appraisal (PA)
● Performance appraisal - is a tool organizations can use to maintain and
enhance their productivity and facilitate progress toward their strategic
goals.
● Performance appraisal - the result of an annual or biannual process in
which a manager evaluates an employee’s performance relative to the
requirements of his or her job and uses the information to show the
person where improvements are needed and why.

● Performance appraisal – is the formal assessment and rating

of individuals.

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 QUESTION TIME
________is a performance rating error in which an
employee’s evaluation is biased either upward or
downward because of comparison with another
employee just previously evaluated

A. Contrast error
B. Halo effect
CREDITS: This presentation template was created by
C. Forced distribution
Slidesgo, including icons by Flaticon, infographics &
D. images by Freepik
Error of central tendency
E. None of the above

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PURPOSE OF PERFORMANCE APPRAISAL
● Developmental ● Administration
● Ensures employees get ● Maintain accurate, objective
regular feedback employee performance
● Identify individual strengths records.
and weaknesses ● Provide input for promotions,
● Evaluate goal achievement transfers,
of employees ● termination and
● Identify individual training compensation decisions.
needs ● Identify performance
● Provides managers problems and ways to
opportunity to help their correct them.
employees. ● Validate selection criteria
● Evaluate training and
development programs.
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PERFORMANCE STANDARD
● Performance standards – helps to translate an organization’s goals and
objectives into job requirements that communicate to employees the
definitions of acceptable and unacceptable performance levels.
● Performance standards - yardstick used to evaluate how well employees
have achieved objectives. Such as quality, quantity(how much, how many,
how often, at what cost) and time (delivery time, cycle times, how
quickly...)

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THE BASIC ELEMENTS OF PERFORMANCE STANDARD

● There are four basic elements that must be considered when establishing
performance standards:

1. Strategic relevancee – refers to the extent to which the standards of an

appraisal relate to the strategic objectives of the organization in which
they are applied.

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THE BASIC ELEMENTS OF PERFORMANCE STANDARD

2. Avoid criterion deficiency - a performance standard will have criterion

deficiency
● when it only focus on a single criterion (e.g., increased sales volume to the
exclusion of other important performance dimensions such as, increased
customer experience.
● A good performance standard captures the entire range of an employee’s
responsibilities.

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THE BASIC ELEMENTS OF PERFORMANCE STANDARD

3. Avoid Criterion contamination - a performance standard will be

contaminated when it contains elements that affect the appraisal
measures that are not part of the actual performance. I.e., a good
performance standard contains criteria's that a jobholder can influence.

4. Reliability - refers to the stability or consistency of a standard.

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WHO SHOULD APPRAISE AN EMPLOYEE’S PERFORMANCE

1. Manager and/or supervisor appraisal - a performance appraisal done by

an employee’s manager.
2. Self-appraisal - a performance appraisal done by the employee being
evaluated, generally on an appraisal form completed by the employee
prior to the performance discussion session.

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WHO SHOULD APPRAISE AN EMPLOYEE’S PERFORMANCE
3. Subordinate appraisal - a performance appraisal of a superior by an
employee.
4. Peer appraisal - a performance appraisal of an employee done by
co-workers, generally on forms that are compiled into a single form for
use in the performance review discussion conducted by the employee’s
manager.
● For peer appraisal to be effective:
o The peer must trust each other
o Work group needs to be stable over a long period of time
o Co-workers must know the performance level of the employee
being evaluated.

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WHO SHOULD APPRAISE AN EMPLOYEE’S PERFORMANCE
5. Customer appraisal-a performance appraisal includes evaluation from
botha firm’s external and internal customers.

6. Combination of the above appraisal approaches which is called 360

appraisal.

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PERFORMANCE APPRAISAL METHODS
1. Graphic Rating Scale Method - each trait or characteristic to be rated is
represented by a scale on which a rater indicates the degree to which an
employee possesses that trait or characteristic.

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PERFORMANCE APPRAISAL METHODS
2. Forced-choice Method - a trait approach to performance appraisal that
requires the rater to choose from statements designed to distinguish
between successful and unsuccessful performance.
● Example:
a) Works slowly b) Works quickly
a) Produces poor quality b) Produce high quality

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PERFORMANCE APPRAISAL METHODS
3. Essay Method -requires the rater to write a brief narrative description of
● employee's performance and characteristics.
● Essay method requires the appraiser to describe the strength, weakness
and to make recommendations for his or her development.

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PERFORMANCE APPRAISAL METHODS
4. Critical Incident Method - an unusual event that denotes superior or
inferior
● employee performance in some part of the job.
● Critical incident occurs when employee behavior results in unusual
success or unusual failure in some part of the job.
● Critical incident methodrequires manager to keep a log or diary to note
specific critical incidents for each employee throughout the appraisal
period.

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PERFORMANCE APPRAISAL METHODS
● An example of a favorable critical incident:
o A janitor observes that a file cabinet containing classified documents
has been left unlocked at the close of business and calls the firm’s
security officer to correct the problem.
● An example of an unfavorable incident:
o Occurs when a mail clerk fails to deliver urgent Mail package
immediately, instead putting it in with regular mail to be routed two
hours later.

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PERFORMANCE APPRAISAL METHODS
5. Management by objectives (MBO) - a philosophy of management that
rates performance on the basis of employee achievement of goals set by
mutual agreement of employee and manager.

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PERFORMANCE APPRAISAL METHODS
● Steps of management by objectives(MBO):
1. Objectives and measurements are established for the organization
2. Objectives and measurements are established for the department
3. Both the supervisor and the employee propose goals and
measurements and they will discuss to reach on mutual agreement.
4. Periodically assessment of progress
5. Final review
6. Review of the connection between the employees’
performance and the organization’s.

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RATING ERRORS
1. Error of central tendency - a performance rating error in which all
employees are rated about average. Raters who are reluctant to assign
either extremely high or extremely low ratings commit the error of central
tendency.
● To reduce this error:
o Raters need to recognize its normal to expect significant difference
among employees in terms of productivity, behavior and other
characteristics.

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RATING ERRORS
2. Leniency or strictness error - a performance rating error in which the
appraiser tends to give employees either unusually high or unusually low
ratings.
● To reduce this error:
o Defining clear measurement criteria is important.

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RATING ERRORS
3. Forced distribution - a performance appraisal ranking system whereby
raters are required to place a certain percentage of employees into
various performance categories. E.g., 15% high performers, 20%
high-average performers, 30% average performers, 20% low-average
performers &15% low performers.
● To reduce this error:
o Defining clear measurement criteria is important.

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RATING ERRORS
4. Recency error – a performance rating error in which the appraisal is based
largely on the employee’s most recent behavior rather than on behavior
throughout the appraisal period.

● To reduce this error:

o Documenting employee accomplishments and failures throughout
the whole appraisal
o period can minimize the recency error.

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RATING ERRORS
5. Contrast error - a performance rating error in which an employee’s
evaluation is biased either upward or downward because of comparison
with another employee just previously evaluated.

● To reduce this error:

o Using objective standards or measurement criteria is important.

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RATING ERRORS
6. Similar to me error – occurs when appraisers inflate the evaluations of
people with whom they have something in common.
7. Halo effect - refers to the tendency to generalize one positive or negative
aspect of a person to the person’s entire performance, resulting in either a
higher or lower rating than the employee deserves.
● To reduce this error:
o Training raters on purpose of performance appraisal is important to
reduce the error.

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 THE PERFORMANCE APPRAISAL PROCESS

Discuss
Establish Take corrective Appraisal
Performance actions With
standard Employees

Communicate Compare
Standards Measure Actual Performance
To Performance With
Employees Standard

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RATING ERRORS
● To reduce this error:
o Training raters on purpose of performance appraisal is important to
reduce the error.

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DISCUSSION POINT
● DISCUSS THE COMMON CHALLENGES FROM THE
PERFORMANCE APPRAISAL PROCESS

● WHAT COULD BE THE POSSIBLE INTERVENTION?

CREDITS: This presentation template was created by

Slidesgo, including icons by Flaticon, infographics &
images by Freepik

(Please discuss your thoughts on the LMS discussion board) 34

Any Questions

?
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THANK YOU!

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