Management exit exam | HRM Performance appraisal

Chapter six

 Management exit exam | HRM Performance appraisal

Performance appraisal terminology

·         Performance: means the extent of completion of the tasks that make up an individual's job.

·         Effort: refers to the amount of energy, whether physical or mental, exerted by an individual in performing task.

·         Role Perception: relates to the direction in which individuals perceive they should channel their efforts in their jobs, i.e., their own way of understanding their job.

Performance appraisal is a formal system involving periodic review and evaluation of an individual’s job performance. Properly conducted, it offers feedback to employees for performance improvement and benefits organizations by ensuring that employees contribute to organizational success.

Uses of Performance Appraisal:

The main purposes of performance appraisal include:

·         Performance improvement: Performance feedback allows the employee, the manager, and personnel specialists to intervene with appropriate actions to improve performance.

·         Compensation Adjustments: Aids in determining pay raises and bonuses based on merit assessed through performance appraisals.

·         Placement Decisions: Influences promotions, transfers, and demotions based on past or anticipated performance.

·         Training and Development Needs: Identifies areas for retraining or development based on performance.

·         Career Planning and Development: Guides career decisions by providing performance feedback.

·         Staffing Process Deficiencies: Highlights strengths or weaknesses in the personnel department's staffing procedures.

·         Informational Inaccuracies: Indicates errors in job analysis information or human resource plans.

·         Job-Design Errors: Diagnoses errors in job designs that may lead to poor performance.

·         Equal Employment Opportunity: Ensures that internal placement decisions are not discriminatory.

·         Creating Healthy Competition through Performance Appraisal:

·         Feedback to Human Resources: Indicates how well the human resource function is performing throughout the organization.

The Performance Appraisal Process:

1.   Establishing Performance Standards:

2.      Communicating Standards to Employees:

3.      Measuring Performance:

4.      Comparing Performance with Standard:

5.      Discussing Appraisal with Employees:

6.      Initiating Corrective Action:

Responsibility for appraisal

A.      Immediate Supervisor: The person directly overseeing an employee's work, often the one most familiar with the employee's performance and best positioned to link it to organizational goals.

B.      Peer Evaluation: Assessment of an employee's performance by co-workers at the same level based on trust and aimed at improving work performance rather than seeking promotions or pay raises.

C.      Self-Appraisal: Employees evaluating their own performance, effective when they understand objectives and standards, serving as input into supervisory appraisals or for development purposes.

D.      Subordinate Evaluation: Employees assessing the managerial effectiveness of their immediate bosses, common in academic settings where students appraise instructors or faculty evaluate department heads.

E.       Group Appraisal:  Evaluation of an employee's performance by two or more managers who are familiar with the individual's work, often involving a joint assessment.

F.       Combinations: The use of multiple appraisal approaches together to gain a more comprehensive understanding of an employee's job performance.

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Performance Appraisal Methods:

Performance appraisal methods can be categorized into three approaches:

1.     Evaluating Absolute Standards:

In this approach, employees are assessed against predetermined standards that are independent of other employees. Several methods fall under this category:

A.    Critical Incident Appraisal Method: This method requires the rater to record specific critical behaviors of an employee that distinguish between satisfactory and unsatisfactory job performance. It focuses on job-related behaviors rather than personality traits. However, it requires close supervision and may be subject to different interpretations by raters.

B.     Checklist Appraisal Method: Raters use a checklist of behavioral descriptions relevant to the job and mark the ones that apply to the employee. This method can be simple or weighted based on the importance of each behavior. While it minimizes bias, it can be time-consuming and costly to develop questions for each job category.

C.     Graphic Rating Scale Method: This method involves listing traits and a performance range for each trait. Raters rate employees by selecting the score that best describes their performance for each trait. It is simple to administer and allows for quantitative analysis and comparison. However, it is subjective and may have different interpretations among raters. 

D.    Forced-Choice Rating: Raters rank a set of statements describing how an employee carries out job duties and responsibilities. The rankings are based on the most to least descriptive statement. This method reduces bias but can be challenging for raters when choosing between equally descriptive statements.

2.     Relative Standards Methods:

These methods compare employees against each other rather than against absolute standards. The popular methods in this category are:

A.    Group Order Ranking: Raters classify employees into specific categories, such as the top 20 percent. This method prevents inflated evaluations or forced average ratings but may be challenging when comparing a small number of employees.

B.     Individual Ranking: Raters list employees from highest to lowest based on performance. This method assumes equal differences between ranks and allows for no ties. It shares advantages and disadvantages with group order ranking.

C.     Paired Comparison: This method compares employees on specific job traits by pairing them with each other. Scores are obtained based on the number of pairs in which an individual is superior. It provides a one-on-one ranking but can be time-consuming for large groups.

3.     Using Achieved Outcomes to Evaluate Employees:

This approach focuses on evaluating employees based on the accomplishment of specific objectives. It is commonly known as Management by Objectives (MBO) or goal setting. The process involves setting objectives, developing action plans, implementation, measuring achievement, taking corrective action if needed, and establishing new objectives. MBO requires quantifiable objectives, active employee participation, ongoing communication, and appraisal interviews.

360-Degree Feedback:

This method involves gathering performance data from multiple sources, including supervisors, subordinates, peers, and customers. It provides a more comprehensive and less biased view of individuals and is often used for self-development or management development programs.

It's important to note that the choice of appraisal method depends on various factors such as organizational culture, job requirements, and available resources.

Problems in Performance Appraisal

The most common problems seen in performance appraisal include the following.

·         Lack of Objectivity: Some traits used for evaluating performance are difficult to measure and thus lack objectivity. These factors may include loyalty, attitude, personality, etc.

·         Halo Error: raters may perceive one factor as having significant importance and give a good or back overall rating to an employee based on this one factor.

·         Leniency: rating consistently higher than the expected norm or average.

·         Strictness: being unduly critical of employees performance and thus result in consistently lower rating than the expected norm.

·         Central tendency: Consistently rating employees near the average. In such cases, it would be very difficult to differentiate good performers from poor performers.

·         Recent Behavior bias: raters basing their evaluation on the employees‘ recent behavior. This may not be a representative of the overall performance of the employee throughout the evaluation period.

·         Personal bias: raters having biases related employees ‘personal characteristics, race religion, gender, or age.

Characteristics of an Effective Appraisal System:

An effective appraisal system should possess certain essential characteristics to contribute to its success:

Ø  Reliability and Validity:

·         The system should provide consistent, reliable, and valid information.

·         Ratings from equally qualified appraisers using the same technique should agree.

·         The appraisal technique should measure what it is intended to measure, aligning with job-related factors.

Ø  Job Relatedness:

·         Criteria for appraising employee performance should be job-related.

·         Information for criteria should be determined through job analysis.

Ø  Performance Expectations:

·         Managers should clearly communicate performance expectations to subordinates in advance of the appraisal period.

·         Clear expectations guide employees in directing their efforts towards achieving the desired performance level.

Ø  Standardization:

·         Employees in the same job category should be appraised using the same technique.

·         Appraisal forms, procedures, and administration should be standardized to ensure consistency across the group.

Ø  Qualified Appraisers:

·         Individuals responsible for evaluating employee performance should directly observe a representative sample of job performance.

·         Appraisers should be well-trained to maintain consistency, provide insights, document appraisals, and conduct appraisal interviews.

Ø  Employee Access to Results:

·         The appraisal system should offer feedback to employees, informing them of their performance levels.

·         Providing employees with access to results enhances transparency and fosters continuous improvement.

Ø  Due Process:

·         A formal procedure should be in place to allow employees to appeal appraisal results that they perceive as inaccurate or unfair.

·         This ensures fairness and provides employees with an avenue to address concerns about their appraisal outcomes.

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