PERFORMANCE MANAGEMENT
MODULE 4.
PERFORMANCE
APPRAISAL
Reference:
Aguinis, Herman (2013). Performance Management, 3e. Pearson
Education, Inc.
Mondy, R. Wayne and Joseph J. Martocchio (2016). Human Resource
Management, 14th ed.
Jaika Almira R. Agena
INSTRUCTOR
MODULE CONTENT
This module is intended for the discussion of the
topic of performance appraisal. Topics include
the definition, process, and methods of
performance appraisal. This module also
discusses the advantages and disadvantages of
using the different sources of performance
information.
LEARNING OBJECTIVES
4-1 Define and understand what performance
appraisal is
4-2 Discuss the process of performance appraisal
4-3 Recognize the advantages and disadvantages
of using supervisors, subordinates, peers, self and
clients as sources of performance information
4-4 Understand various methods being used in
performance appraisal
4-5 Describe an effective performance appraisal
system
PERFORMANCE APPRAISAL
DEFINING PERFORMANCE APPRAISAL
We have previously discussed performance appraisal. Similarly, we have also learned
to differentiate performance appraisal from performance management. Performance
appraisal (PA) is a systematic description of an employee's strengths and weaknesses.
It is also defined as a formal system of review and evaluation of individual or team
task performance. Most managers rely on PA techniques as a basis to provide
feedback, encourage performance improvement, make valid decisions, justify
terminations, identify training and development needs, and defend administrative
decisions for personnel.
We have also talked about the performance management process wherein at the core
is the assessment of performance. That being said, an important component of the
performance assessment stage is the collection of performance information through
the use of appraisal forms. These forms are used to document and evaluate
performance either on paper or electronically.
Regardless of whether electronic or paper, appraisal forms should include the a
combination of the following components:
Basic employee information
Accountabilities, objectives and standards
Competencies and indicators
Major achievements and contributions
Developmental achievements
Developmental needs, plans, and goals
Stakeholder input
Employee comments
Signatures
Before implementing appraisal forms, make
sure that the necessary components are
present. While there is no universally correct
appraisal form (as it largely depends on the
organization, and the purpose of the
appraisal), there are still certain desirable
features that make one appraisal form
effective:
Simplicity
Relevancy
Descriptiveness
Adaptability
Comprehensiveness
Definitional clarity
Communication
Time orientation
PERFORMANCE APPRAISAL
THE PERFORMANCE APPRAISAL PROCESS
Figure 4-1 shows the PA process. The
starting point is to identify specific PA goals.
Management should select the specific goals
it believes to be most important and
realistically achievable as there are varying
uses for PA. For example, firms may rely on
PA for developmental purposes, while some
firms may use it for administrative decisions
such as pay increases or termination. In any
case, PA can be used for both.
The next step is to establish performance
criteria or standards, and communicate the
same to those concerned. The work is then
performed. After which the performance is
appraised by the supervisor (or any other
sources of performance information). The
appraiser reviews the work performance and
evaluates it against the established
standards.
The results are then discussed with the
employee, and new goals, if any, are set for
the next evaluation period. The cycle
repeats.
Figure 4-1 Performance Appraisal Process.
Source: Mondy, R. Wayne and Joseph J.
Martocchio (2016). Human Resource
Management, 14th ed.
ADVANTAGES AND DISADVANTAGES OF THE DIFFERENT SOURCES OF
PERFORMANCE INFORMATION
From our previous lessons, we've learned that supervisors are the most popular
source of performance information. In this chapter, we will discuss the many other
sources of performance information, namely:
1. Supervisor
2. Peers
3. Subordinates
4. Self
5. Customers / Clients
PERFORMANCE APPRAISAL
Supervisor. Supervisors are usually in the best position to evaluate
performance in relation to strategic organizational goals. They are also
responsible for making decisions associated with performance evaluation.
Supervisors are considered to be the most important source of
performance information because they are knowledgeable about strategic
issues, understand performance, and are usually in charge of managing
employee performance. However, for some jobs, the supervisor may not
observe the subordinates' performance on a regular basis.
Peers. Many organizations use performance evaluations provided by peers.
The major strength of using peers to appraise is that they work closely
with the evaluated employee. However, peer evaluations suffer from three
problems: (1) it may not be acceptable to employees if they believe there
is friendship bias at work; (2) peers are less discriminating that
supervisors, and (3) peer evaluations are likely to be affected by context
effects. Because of these weaknesses, it would not be advisable to use peer
evaluation as a sole source of performance evaluation.
Subordinates. Subordinates are a good source of information regarding the
performance of their managers. Some of information gathered from
subordinates may include the manager's ability to (1) remove barriers that
employees face, (2) shield employees from politics, and (3) raise
employees' competence. Because of this, there might be hesitation from
the subordinates. This hesitation can be avoided if managers take the time
to involve employees in the process, or if the collection of performance
information is confidential.
Self. When employees are given the opportunity to participate in the
performance management process, it is easier for them to accept the
results. Similarly, it is less likely that they be defensive during the
appraisal interview. But self-appraisals should not be used solely as these
are more lenient as compared to other sources. The following are
suggested to improve the quality of self-appraisals: (1) use comparative as
opposed to absolute measurement systems; (2) allow employees to
practice their self-rating skills; (3) assure confidentiality; and (4)
emphasize the future.
Customers. Customer behavior determines a firm's degree of success.
Organizations, therefore, believe that it is important to obtain
performance input from this source. However, collecting performance
information from customers can be costly and time-consuming. However,
performance information provided by customers is particularly useful for
jobs that require a high degree of interaction with the public or with
particular job-related individuals.
PERFORMANCE APPRAISAL
If performance information is collected from
more than one source, it is likely there will be
some overlap in the dimensions measured. Each
source is likely to evaluate performance
dimensions that are unique to each source.
Regardless fo the final decision, it is important
that employees take an active role in deciding
which sources will rate which dimensions.
If disagreements are found, a decision must be made regarding the relative
importance of the rating provided by each source. That way, employees can give
attention and effort to the interactions involving the source that has detected
performance deficiencies.
METHODS USED IN PERFORMANCE APPRAISAL
The various methods used in performance appraisal, while they may be presented
separately, can actually be used with one another. The PA methods fall into four
broad categories: (1) trait systems, (2) comparison systems, (3) behavioral systems,
(4) results-based systems.
Trait systems. This is a type of performance appraisal method that
requires raters to evaluate each employee's traits or characteristics.
Appraisals are typically scored using descriptors ranging from
unsatisfactory to outstanding.
This method has its own limitations. (1) It is highly subjective, and (2) it
rates individuals on subjective personality factors rather than on
objective job performance data. This trait system focuses on the
individual rather than on the job performance.
Comparison systems. This is a type of performance appraisal method that
requires raters to evaluate a given employee's performance against other
employees' performance attainments. Employees are ranked from the
best performer to the poorest performer. An alternative approach called
forced distribution method is a PA method in which the rater is required
to assign individuals in a workgroup to a limited number of categories,
similar to a normal frequency distribution. This method is particularly
helpful in avoiding the tendency of supervisors to rate most employees
as excellent performers.
Figure 4-2 shows an example of a forced distribution curve.
PERFORMANCE APPRAISAL
Figure 4-2. An example of a forced distribution curve. Source: Reflective [Link]
This system is, however, not popular with many managers since it
generally promotes competition, paranoia, and even back-stabbing. This
type of appraisal system is obviously not compatible with organizations
that promote teamwork. Another drawback of forced distribution is that
it distorts employee rating since their original rating may not fall into
any predetermined distribution.
Another comparative technique for ranking employees is called paired
comparisons, wherein supervisors compare each employee to every other
employee, identifying the better performer in each pair.
Given all these, comparative systems are best suited in smaller
organizations where employees essentially perform the same or similar
jobs. It may not work for large groups of employees or for employees
who perform different jobs.
In the end, comparison approaches limitations include encouraging
subjective judgments, and the small differences in employee
performance may become exaggerated as supervisors are compelled to
fit in their performance to certain categories.
Behavioral systems. This is a type of performance appraisal method that
focus on distinguishing between successful and unsuccessful behaviors.
When correctly developed and applied, behavioral models provide results
that are relatively free of rater errors and biases. The three main types of
behavioral systems are (1) critical incident technique, (2) behaviorally
anchored rating scales (BARS), and (3) behavioral observation scales.
In critical incident technique (CIT), PA method requires keeping written
records of highly favorable and unfavorable work actions. It tends to be
useful since it requires extensive documentation that identifies job
performance behaviors by both employee and supervisor. However,
implementation of CIT demands continuous and close observation of the
employee. Record keeping can also be overly burdensome.
PERFORMANCE APPRAISAL
Behaviorally anchored rating scale (BARS) is a PA method that combines
elements of the traditional rating scale and the critical incident
methods. Various performance levels are shown along a scale with each
described in terms of an employee's specific job behavior. BARS is
considered the most defensible in court since it is based on actual
observable job behaviors. It also encourages all raters to make
evaluations in the same way. However, the volume of data necessary for
BARS to be effective may be difficult to manage.
Finally, we have the behavioral observation scale (BOS). It is a specific
kind of behavioral system for evaluating job performance by illustrating
positive incidents (or behaviors) of job performance for various job
dimensions. It is similar to BARS except it only uses positive
performance behaviors. Data collection, however, can be difficult and
time-consuming.
Results-based performance appraisal is a PA method in which manager
and subordinate jointly agree on objectives for the next appraisal period.
It focuses on measurable outcomes such as an individual's or team's
sales, customer service ratings, productivity, reduced incidence of
workplace injuries, etc.
In the past, results-based performance appraisal can be considered as
management by objectives (MBO). In MBO, supervisors and employees
determine objectives for employees to meet during the rating period, and
employees appraise how well they have achieved their objectives. With
MBO, performance is evaluated on the basis of progress toward objective
attainment. Under MBO, objectives can be renegotiated downward
without penalty or fear of job loss. One drawback of MBO is the "results
at any cost" mentality.
Another results-oriented practice is called work standards methods. This
PA method compares each employee's performance to a predetermined
standard or expected level of output. An obvious advantage of using work
standards as appraisal criteria is objectivity. However, for employees to
perceive that the standards are objective, they should understand clearly
how the standards were set. This PA method is also normally coupled
with piecework plans, or the rewards employees get based on their
individual hourly production against an objective output standard and are
determined by the pace at which manufacturing equipment operates.
PERFORMANCE APPRAISAL
CHARACTERISTICS OF AN EFFECTIVE APPRAISAL SYSTEM
The basic purpose of PA system is to improve performance of individuals, teams,
and the entire organization. PA systems also assist in administrative decisions and
developmental plans. While there is no perfect system that exists, every system
should possess certain characteristics.
Job-related criteria. This is the most basic
criterion. The evaluation instrument should tie
in closely to the accomplishment of
organizational goals.
Performance Expectations. Employees must understand in
advance what is expected of them. If employees
understand the expectations from them, they can
evaluate their own performance and make adjustments as
they perform the job, without having to wait for the
formal evaluation review.
Standardization. Firms should use the same
instrument for all employees in the same job
category who work for the same supervisor.
Similar periods of appraisals should also be
observed. Regularly scheduled feedback
sessions and appraisal interviews are
necessary.
Trained Appraisers. Unless everyone evaluating
performance receives training in the art of giving and
receiving feedback, the process can lead to uncertainty
and conflict. The training should be an ongoing process
to ensure accuracy and consistency. It should cover how
to rate employees and how to conduct appraisal
interviews.
Continuous Open Communication. Most
employees have a strong need to know how
they are performing. There should be few
surprises in the performance review. Managers
should learn to handle daily performance
problems as they occur.
PERFORMANCE APPRAISAL
CHARACTERISTICS OF AN EFFECTIVE APPRAISAL SYSTEM (continued)
Conduct Performance Reviews. Aside from
continuous communication, a time shoudl be set
for a formal discussion on an employee's
performance. Although the task of constant
performance documentation can be tedious and
boring for managers, maintaining a continuous
record of observed and reported incidents is
essential in building a useful appraisal.
Due Process. Ensuring due process is vital. If the company
does not have a formal grievance procedure, it should
develop one to provide employees an opportunity to
appeal appraisal results that they consider inaccurate or
unfair. They must have a procedure for pursuing their
grievances and having them addressed objectively.
END OF MODULE TEST
CASE ANALYSIS: THESE THINGS ARE A PAIN
Read the situation below, and answer the questions that follow.
“There, at last, it’s finished,” thought Rajiv Chaudhry, as he laid aside the last
of 12 PA forms. It had been a busy week for Rajiv, who supervises a road
maintenance crew for the Georgia Department of Highways.
In passing through Rajiv’s district a few days previously, the governor had
complained to the area superintendent that repairs were needed on several of
the highways. Because of this, the superintendent assigned Rajiv’s crew an
unusually heavy workload. In addition, Rajiv received a call from the HR office
that week reminding him that the PAs were late. Rajiv explained his
predicament, but the HR specialist insisted that the forms be completed right
away.
Looking over the appraisals again, Rajiv thought about several of the workers.
The PA form had places for marking quantity of work, quality of work, and
cooperativeness. For each characteristic, the worker could be graded
outstanding, good, average, below average, or unsatisfactory. As Rajiv’s crew
had completed all of the extra work assigned for that week, he marked every
worker outstanding in the quantity of work. He marked Joe Blum average in
cooperativeness because Joe had questioned one of his decisions that week.
Rajiv had decided to patch a pothole in one of the roads, and Joe thought the
small section of road surface ought to be broken out and replaced. Rajiv didn’t
include this in the remarks section of the form, though. As a matter of fact, he
wrote no remarks on any of the forms.
Rajiv felt a twinge of guilt as he thought about Roger Short. He knew that
Roger had been goofing off, and the other workers had been carrying him for
quite some time. He also knew that Roger would be upset if he found that he
had been marked lower than the other workers. Consequently, he marked Roger
the same to avoid a confrontation. “Anyway,” Rajiv thought, “these things are a
pain, and I really shouldn’t have to bother with them.”
As Rajiv folded up the PAs and put them in the envelope for mailing, he
smiled. He was glad he would not have to think about PAs for another six
months.
1. What weaknesses do you see in Rajiv’s performance appraisals?
2. Should HR have the ability to “insist that the forms be completed right
away”? Discuss.
3. Many managers would agree with Rajiv in saying that “these things are a
pain, and I really shouldn’t have to bother with them.” What are the
disadvantages in doing away with performance appraisal?
