Performanc

e Appraisal
INSTRUCTOR :
AMMARA AKRAM
Performance Appraisal
Definition:
Evaluating an employee’s current and/or past performance relative
to his or her performance standards.
Performance appraisal plays a big role in managing people.
Problems associated with performance appraisal.
 Employees tend to be overly optimistic about their ratings.
 Many obvious and not-so-obvious problems (such as the
tendency to rate everyone “average”) distort the process.
Performance Appraisal
A three-step appraisal process involving
Process
(1) Setting work standards,
(2) Assessing the employee’s actual performance relative to those
standards, and
(3) Providing feedback to the employee with the aim of helping him
or her to eliminate performance deficiencies or to continue to
perform above par.
Effective appraisals begin before the actual appraisal, with the
manager defining the employee’s job and performance criteria.
Defining the job means making sure that you and your subordinate
agree on his or her duties and job standards and on the appraisal
method you will use.
 Why Performance Appraisal
There are five reasons to appraise subordinates’ performance.
● Employers base pay, promotion, and retention decisions depends on the
employee’s appraisal.
● Appraisals play a central role in the employer’s performance management
process. Performance management means continuously ensuring that each
employee’s performance makes sense in terms of the company’s overall
goals.
● The appraisal lets the manager and subordinate develop plans for
correcting deficiencies, and to reinforce strengths.
● Appraisals provide an opportunity to review the employee’s career plans in
light of his or her strengths and weaknesses.
● Appraisals enable the supervisor to identify if there is a training need, and
the training required.
 Defining the Employee’s Goals and
Performance Standards
The performance appraisal should compare “what should be” with
“what is.”
 Managers use one or more of three bases—goals, job dimensions or
traits, and behaviors or competencies—to establish ahead of time what
the person’s performance standards should be.
 First, the manager can assess to what extent the employee is
attaining his or her numerical goals.
Such goals should derive from the company’s overall profitability, cost
reduction, or efficiency goals.
For example, a company-wide goal of reducing costs by 10% should
translate into goals for how individual employees and/or teams will cut
costs.
Defining Employee Goals &
performance Standards
1st Basis of Performance Appraisal
First, the manager can assess to what extent the employee is attaining his or her numerical goals.
Such goals should derive from the company’s overall profitability, cost reduction, or efficiency
goals. For example, a company-wide goal of reducing costs by 10% should translate into goals for
how individual employees and/or teams will cut costs.
2nd Basis for Performance Evaluation: (Based on basic job dimensions and traits)
is with a form with basic job dimensions or traits such as “communication” or “teamwork.” The
assumption is that “good teamwork” is a useful standard for “what should be
3rd Basis for Performance Evaluation (based on competencies)
A third option is to appraise employees based on their mastery of the competencies (the skills,
knowledge, and/or personal behaviors) the job requires
Setting Performance Goals at Ball
Corporation
(Example)
Ball Corporation supplies metal packaging to customers such as food
processors and paint manufacturers worldwide.
 The management team at one Ball plant concluded that it could improve
plant performance by instituting an improved process for setting goals and for
ensuring that the plant employees’ behaviors were in synch with these goals.
The new program began by training plant leaders on how to improve
performance, and on communicating daily performance goals. They in turn
communicated and tracked daily goal attainment by distributing team
scorecards to the plant’s work teams.
Plant employees received special coaching and training to ensure they had
the skills required for achieving the goals. Within 12 months the plant
increased production by 84 million cans, reduced customer complaints by 50%,
and obtained a return on investment of more than $3 million
SMART Goals
Managers often say that effective goals are “SMART.”
S- Specific, ( clearly state the desired results).
M-Measurable
A- Attainable.
R-Relevant
T-Timely. And they are timely, with deadlines and milestones.
How to set Effective Goals
1. Assign specific goals. Employees who receive specific goals usually perform
better than those who do not. Don’t just say, “do your best.”
2. Assign measurable goals. Put goals in quantitative terms and include target
dates/deadlines. If measurable results will not be available, then “satisfactory
completion”—such as “satisfactorily attended workshop”—is ok.
3. Assign challenging but doable goals. Goals should be challenging, but not so
difficult that they appear unrealistic.
4. Encourage participation. Managers often face this question: Should I tell my
employees what their goals are, or let them participate with me in setting their
goals? The evidence suggests that participatively set goals do not consistently
result in higher performance than assigned goals, nor do assigned goals.
Who should do Appraising
1: By Immediate Supervisor:
The supervisor is usually in the best position to observe and evaluate the subordinate’s
performance and is responsible for that person’s performance.
 The human resources department is advisory. Generally, they provide the advice on
what appraisal tool to use but leave final decisions on procedures to operating
managers.
The human resource team should also train supervisors to improve their appraisal
skills, monitor the appraisal system’s effectiveness, and ensure that it complies with EEO
laws.
 Relying only on supervisors’ appraisals isn’t advisable. For example, the supervisor
may not appreciate how customers and colleagues see the employee’s performance.
There is also always some danger of bias. If so, managers have several options.
 Who should do Appraising
2: By Peers
Examples:
The American military requires generals and admirals to be evaluated by their peers (and subordinates).
Facebook has employees compile peer reviews every 6 months.
Google employees receive annual feedback from their supervisor and their peers.
At one software firm, employees recognize each other with “wins” and “project completions” during monthly
video meetings.
Usefulness of Peer evaluation
Peers see aspects of the person that the boss may never see, so peers’ opinions can be useful.
Knowing your colleagues will appraise you can also change behavior.
In one study, instituting peer appraisals had “an immediate positive impact on [improving] perception of open
communication, task motivation, social loafing, group viability, cohesion, and satisfaction.
Who should do Appraising
3: Crowd Appraisal
Social media tools allow almost everyone in the company (the “crowd,” as in “crowd appraisals”) to
continuously appraise their peers’ work.
 Rypple (owned by [Link]) illustrates one such “social performance management platform.”
 Employees and managers use it to provide feedback and recognition.
 For example, Washington-based LivingSocial employees use Rypple to comment on each other’s
work.
LivingSocial then uses these comments as input to its formal employee appraisals.
 Employers often combine such reviews with Globoforce ([Link] .com)–type rewards sites,
to automate the rewarding and recognizing of colleagues.17 M09_DESS2780_16_SE_C09.indd 281
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 4: Virtual Games
 Many employers conduct peer appraisals by using virtual appraisal games.
For example, one company created a virtual game that helps employees evaluate and reward each other.
Each employee has an avatar. They use these to give real-time feedback to each other, along with virtual
gifts and points.
5: RATING COMMITTEES
A rating committee typically consists of the employee’s immediate supervisor and three or four other
supervisors.
Using multiple raters is advantageous. It helps cancel out problems such as bias on the part of individual
raters.
 It can also help pick up the different facets of an employee’s performance observed by different
appraisers.
 It’s thus advantageous to obtain ratings from the supervisor, his or her boss, and at least one other
manager who is familiar with the employee’s work.
 At a minimum, require that the supervisor’s boss sign off on any appraisals the supervisor does.
6: SELF-RATINGS
Some employers obtain employees’ self-ratings, usually along with supervisors’
ratings.
The problem, of course, is that employees usually rate themselves higher than do
their supervisors or peers.
One older study found that, when asked to rate their own job performances, 40%
of employees in jobs of all types placed themselves in the top 10%, and virtually all
remaining employees rated themselves in the top 50%; some believe incompetent
performers aren’t capable of objectively assessing themselves.
It’s probably best to just ask subordinates to list their accomplishments for the
period, before the manager does the appraisal.
7: APPRAISAL BY SUBORDINATES
Many employers have subordinates rate their managers, usually for developmental rather than
for pay purposes.
 Google, for example, has subordinates assess their managers twice a year with questions such
as “my manager shows consideration for me as a person.”
 Not surprisingly, anonymity affects the feedback. Managers who receive feedback from
subordinates who identify themselves view the upward feedback process more positively.
However, subordinates who identify themselves tend to give inflated ratings.
8: 360-DEGREE FEEDBACK
 With 360-degree feedback, the employer collects performance information all around an employee—
from supervisors, subordinates, peers, and internal or external customers—generally for developmental
rather than pay purposes.
The usual process is to have all raters complete online appraisal surveys. Computerized systems then
compile this into individualized reports to ratees.
Results are mixed. An older study found that multisource feedback led to “generally small”
improvements in subsequent ratings by supervisors, peers, and subordinates.
On the other hand, such feedback can wake someone up.
It is to make sure the feedback the person receives is productive, unbiased, and development oriented.
 collect multisource feedback by using an online system such as SumTotal's 360 Degree Feedback.
 Traditional
tools for
Appraising
Performance
Graphic rating scale
Alternation ranking method
Paired comparison method
Forced Distribution Method
Critical incident method
Narrative Form
Behaviorally anchored rating
scale (BARS)
Management by Objectives
Graphic rating scale

A scale that lists a number of traits and a range of performance for each. The
employee is then rated by identifying the score that best describes his or her level
of performance for each tr
The graphic rating scale is the simplest and most popular method for appraising
performance. You’ll find several varieties.
 As in the one in scale may list several job dimensions or traits (such as
“communication” or “teamwork”) and a range of performance values (from
“below expectations” to “role model” or “unsatisfactory” to “outstanding”) for
each trait. (figure 9-2)
The supervisor rates each subordinate by circling or checking the score that best
describes the subordinate’s performance for each trait and totals the ratings.
 Graphic rating scale (contd..)
A competency- (or skill- or behavior-) based graphic rating scale is another option.
Example of a Pizza chef:
 Figure 9-3 (page 285) shows a partial form for a pizza chef.
This rating form assesses the person’s competencies and skills.
 Here the employer wants to appraise a pizza chef’s job-related skills, one of which is: “Be able to maintain
adequate inventory of pizza dough.”
As another example, Section I of Figure 9-4 (page 286) focuses on behavioral competencies. Here “Effectively
leads and motivates nurses” is a required behavioral competency for a nurse supervisor.
 Some employers use competency-based self-appraisals, which the employee then discusses with his or her
supervisor.
 Finally, the scale might rate (as in Section II of Figure 9-4) how well the employee did with respect to achieving
specific profit, cost, or efficiency goals. “Nursing unit experienced zero patient medication errors in period” is one
example.
FIGURE 9–2
Sample Graphic
Rating Performance
Rating Form

COPYRIGHT © 2011 PEARSON EDUCATION 9–20

FIGURE 9-3 One Item from an Appraisal
Form Assessing Employee Performance on
Specific Job-Related Skill
Position: Pizza Chef
Competency/Skill 1: Be able to Rating
maintain adequate inventory of
pizza dough
Each round pizza dough must be Needs improvement Satisfactory Excellent
between 12 and 14 ounces each,
kneaded at least 2 minutes before
being placed in the temperature-
and humidity-controlled cooler, and
kept there for at least 5 hours prior
to use. There should be enough, but
no more, for each day’s demand.
The paired comparison
method
The paired comparison method makes the ranking method more
precise.
 For every trait (quantity of work, quality of work, and so on), you
compare every employee with every other employee.
With, say, five employees to rate, you use a chart as in Figure 9-6
(page 287) of all possible pairs of employees for each trait.
Then choose who the better employee of the pair is.
 In Figure 9-6, Maria ranked highest (has the most + marks) for
quality of work, whereas Art was ranked highest for creativity.
FIGURE 9–6 Ranking Employees by the Paired Comparison Method

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.

COPYRIGHT © 2011 PEARSON EDUCATION 9–23

The forced distribution
method
This method is similar to grading on a curve.
 Here, the manager places predetermined percentages of ratees into performance categories.
EXAMPLE: In an organization 10 % employees are considered as poor performer,20 % below
average, 40 % average, 20 % good and 10 % excellent.
Their current system is reportedly more informal and less stressful.
Disadvantage: Forced distribution’s big advantage is in preventing supervisors from simply
rating all or most employees “satisfactory” or “high.”
But as students know, with this method you’re either in the top 5% or 10% (and get that “A”),
or you’re not. Forced distribution systems may also increase the risk of discriminatory adverse
impact.
One survey found that 77% of employers were at least “somewhat satisfied” with forced
ranking, while the remaining 23% were dissatisfied.
Alternate Ranking Form
Ranking employees from best to worst on a trait or traits is another option.
Since it’s usually easier to distinguish between the worst and best employees, an alternation
ranking method is most popular.
First, list all subordinates to be rated, and then cross out the names of any not known well
enough to rank.
Then, on a form like that in Figure 9-5 (page 287), indicate the employee who is the highest on
the performance dimension being measured and the one who is the lowest.
Then choose the next highest and the next lowest, alternating between highest and lowest
until all employees have been ranked.
FIGURE 9–5 Scale for Alternate Ranking of Appraisee

COPYRIGHT © 2011 PEARSON EDUCATION 9–27

Critical Incident Method
With the critical incident method, the supervisor keeps a log of positive and negative examples
(critical incidents) of a subordinate’s work-related behaviors.
 Every 6 months or so, supervisor and subordinate meet to discuss the latter’s performance, using
the incidents as examples.
 One study involved 112 first-line supervisors. The conclusion of this and similar studies is that
compiling critical incidents as they occur anchors the eventual appraisal in reality and thus
improves appraisal outcomes.
 It’s thus advisable to keep a diary of such incidents.
Advantage: This provides examples the supervisor can use to explain the person’s rating. It makes
the supervisor think about the subordinate’s appraisal all during the year (so the rating doesn’t just
reflect the employee’s most recent performance).
Disadvantage: The downside is that such incidents don’t produce relative ratings for pay raise
purposes.
Examples of Critical Incidents for Assistant Plant Manager
Continuing Duties Target Critical Incidents

Schedule production for plant 90% utilization of personnel and Instituted new production
machinery in plant; orders scheduling system; decreased late
delivered on time orders by 10% last month;
increased machine utilization in
plant by 20% last month
Supervise procurement of raw Minimize inventory costs while Let inventory storage costs rise
materials and inventory control keeping adequate supplies on 15% last month; overordered
hand parts “A” and “B” by 20%;
underordered part “C” by 30%

Supervise machinery maintenance No shutdowns due to faulty Instituted new preventative

machinery maintenance system for plant;
prevented a machine breakdown
by discovering faulty par
Narrative form
All or part of the written appraisal may be in narrative form, as in
Figure 9-7.
Here the person’s supervisor assesses the employee’s past
performance and required areas of improvement.
 The supervisor’s narrative assessment helps the employee
understand where his or her performance was good or bad, and how
to improve that performance.
 Developing a BARS Advantages of BARS
1. Write critical incidents ◦ A more accurate gauge
2. Develop performance ◦ Clearer standards
dimensions ◦ Feedback
Behaviorally 3. Reallocate incidents ◦ Independent
Anchored 4. Scale the incidents dimensions
Rating Scale 5. Develop a final ◦ Consistency
instrument
(BARS)
FIGURE 9–8
Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship Skills

COPYRIGHT © 2011 PEARSON EDUCATION 9–32

 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 PEARSON EDUCATION 9–33

Computer Based Appraisal

1. Electronic Performance Monitoring

2. Conversation days

3. Using Multiple Methods

Electronic Performance Monitoring

Electronic performance monitoring (EPM) systems allow managers to monitor

the employees’ rate, accuracy, and time spent working online.
For Example:-
A company might use software that tracks the amount of time an employee
spends on particular tasks or project task or the amount of time spent on social
media or other non related websites.
GPS tracking devices to monitor the location and movement of employees.
Conversation Days
It means the conversation duration between
employee and manager.
For example:-
When employees at Juniper Networks Inc. expressed
concerns about their annual performance reviews and the
lack of positive feedback, Juniper changed the process.
Instead of once-a-year performance reviews, there are
now semiannual “conversation days.”
Using Multiple Methods
Which appraisal tool to use? In practice, most use a
rating form that merges several approaches. For
example, Figure 9-2 has a numerical graphic rating
scale anchored with behavioral incidents.
Managing the Appraisal
Interview
An interview in which the supervisor and subordinate review the appraisal and make plans to
remedy deficiencies and reinforce strengths.
 How to Conduct an Appraisal
Interview
1. Talk in terms of objective work data. Use examples such as
absences, tardiness, and productivity.
2. Don’t get personal. Don’t say, “You’re too slow producing those
reports.” Instead, compare the person’s performance to a standard.
(“These reports should normally be done within 10 days.”) Similarly,
don’t compare the person’s performance to that of other people.
(“He’s quicker than you are.”)
3. Encourage the person to talk. Stop and listen to what the person
is saying; ask open-ended questions (such as, “What do you think we
can do to improve the situation?”). Use a command such as “Go on.”
Restate the person’s last point as a question, as in, “You don’t think
you can get the job done?”
4. Get agreement. Make sure the person leaves knowing specifically
what he or she is doing right and doing wrong, and with agreement
on how things will be improved, and has an action plan with targets
and dates
 1. Recognize that defensive behavior is normal.

2. Never attack a person’s defenses. Don’t try to “explain

someone to themselves” (as in, “You know the reason you’re
How to using that excuse is that you can’t bear to be blamed.”).
handel a Instead, concentrate on the fact (“sales are down”).

defensive 3. Postpone action. Sometimes it’s best to do nothing.

Employees may react to sudden threats by hiding behind
subordinate their defenses. Given sufficient time, a more rational reaction
takes over.

4. Recognize your limitations. The supervisor is (probably)

not a psychologist. Offering understanding is one thing;
trying to deal with psychological problems is another
How to criticize an employee
When necessary, criticize in a manner that lets the person maintain
his or her dignity— in private, and constructively.
Provide examples of critical incidents and specific suggestions.
 Avoid once-a-year “critical broadsides” by giving feedback
periodically, so that the formal review contains no surprises.
 Never say the person is “always” wrong.
 Criticism should be objective and free of personal bias
How to handle a written warning
The employee’s performance may be so weak that it requires a written
warning.
Such warnings serve two purposes:
(1) to shake your employee out of his or her bad habits, and
(2) to help you defend your rating to your own boss and (if needed) to the
courts
Caution: Written warnings should list the employee’s standards, make it clear
that the employee was aware of the standard, specify any deficiencies relative
to the standard, and show that the employee had an opportunity to correct his
or her performance
Use Performance Appraisal to
Build Engagement
Managers can use the appraisal interview to improve their employees’ engagement. Here are relevant
findings and implications.
1. Employees who understand how they and their departments contribute to the company’s success are
more engaged. Therefore, take the opportunity to show the employee how his or her efforts contribute to
the “big picture”—to his or her team’s and the company’s success.
2. Another study found that employees’ engagement rose when they experienced what the researchers
called “psychological meaningfulness” (namely, the perception that one’s role in the organization is
worthwhile and valuable).Use the interview to emphasize the meaningfulness to the company of what the
employee is doing.
3. Employees who experience “psychological safety” (the perception that it’s safe to bring oneself to a
role without fear of damage to self-image, status, or career) were more engaged. Therefore, be candid and
objective but do so supportively and without unnecessarily undermining the employee’s self-image.
4. Efficacy drives engagement, so use the interview to make sure your employee has what he or she needs
to do a good job
5. Managers should be candid and honest, but don’t unnecessarily emphasize the negatives.
Doing so undermines employee engagement.
6. Involvement in decision making and letting employees voice their opinions improve
employee engagement.
7. Engagement rises when employees have an opportunity to improve their careers. During
the interview discuss the person’s evaluation in the context of where he or she sees himself or
herself heading career-wise.
8. Research shows “a significant positive association between (1) distributive [what rewards
people get] and informational [what information they get] justice dimensions, and (2)
employee engagement.”