Human Resource Management: Performance Management and Appraisal

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Human Resource

Management
TWELFTH EDITION

GARY DESSLER
BIJU VARKKEY

Part 3 | Training and Development

Chapter 9

Performance Management and Appraisal


Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd
Authorized adaptation from the United States edition of Human
Resource Management, 12/e
Basic Concepts in Performance
Management and Appraisal

Comparing
Performance Appraisal
and
Performance Management

Performance Appraisal: Performance Management:


Setting work standards, assessing An integrated approach to
performance, and providing ensuring that an employee’s
feedback to employees to motivate, performance supports and
correct, and continue their contributes to the organization’s
performance. strategic aims.
Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd
Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–2
FIGURE 9–1
Classroom
Teaching
Appraisal by
Students

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–3
FIGURE 9-1 (Continued)

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–4
Why Performance Management?

Total Quality

The
Performance
Appraisal Issues
Management
Approach
Strategic Focus

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–5
STEPS IN PERFORMANCE MANAGEMENT

Set company’s strategic goals


Assign goals to departments, teams and
individuals
Continuously assess goal attainment
Report goal attainment to management and
teams and individuals
Take corrective action as required in real time.

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–6
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


Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd
Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–7
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

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–8
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.

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–9
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.
Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd
Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–10
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.

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–11
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.

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–12
An Introduction to Appraising Performance

Steps in Appraising Performance

1 Defining the job

2 Appraising performance

3 Providing feedback

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–13
1. Defining the job and what to measure -
• What to Measure?
 Work output (quality and quantity) – KEY
PERFORMANCE INDICATORS
 Personal competencies – KSA (O)
 Goal (objective) achievement – ACHIEVED VS
EXPECTED

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–14
FIGURE 9–3
Sample
Performance
Rating Form

Source: Elaine Pulakos,


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

Reprinted by permission of
Society for Human
Resource
Management via Copyright
Clearance Center.
Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd
Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–15
FIGURE 9–3
Sample
Performance
Rating Form
(continued)

Source: Elaine Pulakos,


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

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–16
FIGURE 9–4 One Item from an Appraisal Form Assessing Employee Performance
on Specific Job-Related Duties

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–17
2. 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


Annual Confidential Report (ACR)

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–18
TABLE 9–1 Examples of Critical Incidents for Assistant Plant Manager

Continuing Duties Targets Critical Incidents

Schedule production 90% utilization of Instituted new production


for plant personnel and scheduling system; decreased late
machinery in plant; orders by 10% last month; increased
orders delivered on machine utilization in plant by 20%
time last month

Supervise Minimize inventory Let inventory storage costs rise 15%


procurement of raw costs while keeping last month; overordered parts “A”
materials and adequate supplies on and “B” by 20%; underordered part
inventory control hand “C” by 30%

Supervise machinery No shutdowns due to Instituted new preventative


maintenance faulty machinery maintenance system for plant;
prevented a machine breakdown by
discovering faulty part

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–19
FIGURE 9–7
Appraisal-
Coaching
Worksheet

Source: Reprinted from www.HR.BLR.com


with permission of the publisher Business
and Legal Reports, Inc. 141 Mill Rock Road
East, Old Saybrook, CT © 2004.

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–20
Behaviorally Anchored Rating Scale (BARS)
Developing a BARS Advantages of BARS
1. Generate critical  A more accurate
incidents gauge
2. Develop performance  Clearer standards
dimensions  Feedback
3. Reallocate incidents  Independent
4. Scale the incidents dimensions
5. Develop a final  Consistency
instrument

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–21
FIGURE 9–8
Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship
Skills

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–22
Management by Objectives (MBO)
• A comprehensive and formal organizationwide
goal-setting and appraisal program requiring:
1. Setting of organization’s goals.

2. Setting of departmental goals.

3. Discussion of departmental goals.

4. Defining expected results (setting individual


goals).
5. Conducting periodic performance reviews.

6. Providing performance feedback.

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–23
Using MBO

Setting unclear Time-consuming


objectives appraisal process

Problems with
MBO

Conflict with
subordinates over
objectives
Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd
Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–24
Appraising Performance:
Problems and Solutions

Potential Rating
Scale Appraisal
Problems

Halo
Unclear Central Leniency or Recency
Effect/
Standards Tendency Strictness effect
Contrast effect

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–25
TABLE 9–2 A Graphic Rating Scale with Unclear Standards

Excellent Good Fair Poor

Quality of work

Quantity of work

Creativity

Integrity

Note: For example, what exactly is meant by “good,” “quantity of work,” and so forth?

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–26
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

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–27
TABLE 9–3 Important Advantages and Disadvantages of Appraisal Tools

Tool Advantages Disadvantages


Graphic rating Simple to use; provides a Standards may be unclear; halo
scale quantitative rating for each effect, central tendency, leniency,
employee. bias can also be problems.

BARS Provides behavioral “anchors.” Difficult to develop.


BARS is very accurate.

Alternation ranking Simple to use (but not as simple as Can cause disagreements among
graphic rating scales). Avoids central employees and may be unfair if all
tendency and other problems of employees are, in fact, excellent.
rating scales.

Forced distribution End up with a predetermined Employees’ appraisal results depend


method number or % of people in each on your choice of cutoff points.
group.

Critical incident Helps specify what is “right” and Difficult to rate or rank employees
method “wrong” about the employee’s relative to one another.
performance; forces supervisor to
evaluate subordinates on an ongoing
basis.

MBO Tied to jointly agreed-upon Time-consuming.


Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd
performance objectives.
Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–28
Who Should Do the Appraising?

Immediate
Self-Rating
Supervisor

Peers
Potential Subordinates
Appraisers

Rating 360-Degree
Committee Feedback

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–29
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.

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–30
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.

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–31
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.


Give daily feedback so that the review has no
3
surprises.
4 Never say the person is “always” wrong.

5 Criticism should be objective and free of biases.

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–32
FIGURE 9–13
Checklist
During the
Appraisal
Interview

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–33
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.

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd


Authorized adaptation from the United States edition of Human
Resource Management, 12/e
9–34

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