HUMAN RESOURCE
MANAGEMENT
PERFORMANCE
MANAGEMENT
CHAPTER NO. 7
AFTER STUDYING THIS CHAPTER YOU SHOULD BE ABLE TO:
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Understand and differentiate between Performance Management
and Performance Appraisal.
Identify the factors that effect Performance.
Narrate Performance Management Cycle.
Describe two major purposes of Performance Management.
Understand three job criteria and information types.
Discuss the pros and cons of using different raters to appraise a
person’s performance .
Develop , evaluate, and administer at least four appraisal
methods to measure performance
Explain several rater errors by giving examples of them.
Perform an effective appraisal interview.
Design Appraisal form to measure employee performance
effectively.
WHAT IS PERFORMANCE
PERFORMANCE
Performance is essentially what an employee does or does
not do.
Common
Elements to
Performance
 Quality of output
 Quantity of output
 Timeliness of output
 Presence at work
 Cooperativeness
FACTORS THAT INFLUENCE
PERFORMANCE
P=f (M,E,A)
1. MOTIVATION
 Career Ambition
 Employee Conflict
 Frustration
 Fairness/Satisfaction
 Goals/Expectations
2.
ENVIRONMENT
Equipment/Materials
Job Design
Economic Conditions
Unions
Rules & Policies
Management Support
Laws & Regulations
3. ABILITY
 Technical Skills
 Interpersonal Skills
 Problem Solving Skills
 Analytical Skills
 Communication Skills
 Physical Skills
PERFORMANCE MANAGEMENT
A Process that Consolidates:
1. Defining Performance
2.Measuring Performance
3. Feedback Performance
Information
Objective of this system is to align employee work
behaviors with the organization’s goals.
PERFORMANCE MANAGEMENT CYCLE
(1)
Set clear
performance
goals & make
developmental
plans
Administrative
Decisions
 Promotion
 Pay raise
 Transfer
(4)
Annual
appraisal
against goals
adjust & plan
for next year
(2)
Monitor goal
progress
(3)
Caching by
supervisor
throughout
the year
PURPOSES FOR PERFORMANCE
MANAGEMENT
1. DEVELOPMENTAL
 Provide Performance Feedback
 Recognize Individual Performance
 Assist in Goal Identification
 Evaluate Goal Achievement
 Identify Individual Training Needs
 Improve Communication
2. ADMINISTRATIVE
Document Personnel Decisions
Determine Promotion Candidates
Identify Poor Performance
Decide Retention or Termination
Decide on Layoffs
Validate Selection Criteria
Make Reward/Compensation Decisions
PERFORMANCE APPRAISAL
DEFINITION
Performance appraisal is the
process of evaluating how well
employees perform their jobs when
compared to a set of standards, and then
communicating that information.
PERFORMANCE MANAGEMENT
VS.
PERFORMANCE APPRAISAL
PERFORMANCE
MANAGEMENT
is used to align employee’s
performance with the organization’s
goals .
PERFORMANCE
APPRAISAL
is the part of performance management
in which an employee’s contribution to
the organization during a specified
period of time is measured.
Defines Performance
Measure Performance
Facilitates Performance
Evaluate Performance
Encourages Performance
Feedback on Performance
WHAT IS IN PERFORMANCE
APPRAISAL SYSTEM
1. What is Measured
2. Who Measure
Performance
3. When is it
Measured
4. How is it Measured
1. WHAT IS MEASURED
INFORMATION TYPE
a. TRAIT BASED INFORMATION
Identifies a subjective character trait—such as pleasant
personality, initiative, or creativity but traits tend to be
ambiguous.
b. BEHAVIOR BASED INFORMATION
Focuses on specific behaviors that lead to job success but more
difficult to identify.
c. RESULT BASED INFORMATION
Considers what the employee has done or accomplished but un
measurable parts of the job may be left out.
2. WHO MEASURE PERFORMANCE
Team
Supervisor
Peers
Customers
Subordinates
Self
360 DEGREE PERFORMANCE APPRAISAL
Multisource feedback recognizes that the manager is no
longer the sole source of performance appraisal
information. Instead, Feed back from various colleagues
and constituencies is obtained and given to the manager,
thus allowing the manager to help shape the feedback
from all sources.
3. WHEN IS IT MEASURED
TASK
ORIENTED
ANNUALLY
MONTHLY
QUARTERLY
4. HOW IS IT MEASURE
•a
•b
Category
Rating
Methods
Narrative
Methods
•c
Comparative
Methods
Behavioral
/Objectives
Methods
•d
a. CATEGORY RATING METHODS
The simplest methods for appraising performance are category
rating methods which require a manager to mark an employee’s
level of performance on a specific form divided into categories of
performance.
i. Adjective/Graphic Rating
Scales
ii. Checklist Appraisal
i. GRAPHIC/ADJECTIVE TRAIT
RATING SCALE
Allows the rater to mark an employee’s performance on a
continuum. Because of its simplicity, this method is the one most
frequently used. One of the oldest and most popular methods of
appraisal is the adjective rating scale in which a rating scale list
traits (such as quality, quantity, job knowledge & integrity etc)
and range of performance values (from unsatisfactory to
outstanding for each traits.
i. GRAPHIC/ADJECTIVE TRAIT RATING SCALE
ii. CHECKLIST APPRAISAL
This method is composed of a list of statements or
words. Raters check statements most representative
of the characteristics and performance of employees.
b. COMPARATIVE METHODS
Comparative methods require that managers directly
compare the performance of their employees against one
another.
i. INDIVIDUAL RANKING
ii. FORCED DISTRIBUTION
iii. PAIRED COMPARISON
i. INDIVIDUAL RANKING
The ranking method consists of listing all
employees from highest to lowest in performance.
ii. FORCED DISTRIBUTION
The group order ranking method or forced distribution
method is similar to grading on a curve and it requires the
evaluator to place employee into a particular classification.
15
High Performers
20
High Average Performer
30
Average Performer
20
Low Average Performer
15
Low Performer
iii. PAIRED COMPARISON
In paired comparison method for every
traits (quality of work, quantity of work,
creativity etc) you pair and compare very
subordinate. This method become unwieldy
when large numbers are being compared.
c. NARRATIVE METHODS
NARRATIVE METHODS
i. Critical
Incident
Appraisal
ii. Essay
Appraisal
iii. Field
Review
i. CRITICAL INCIDENT APPRAISAL
 In the critical incident method, the manager keeps a written
record of both highly favorable and unfavorable actions in an
employee’s performance. A list of critical incidents is kept during
the entire rating period for each employee.
 Critical incidents, with their focus on behaviors, judge
performance rather then personalities.
SAMPLE CRITICAL INCIDENT APPRAISAL
ii. ESSAY APPRAISAL
The essay, or “Free-Form,” appraisal
method requires the manager to write a
short essay describing each employee’s
performance during the rating period. The
rater usually is given a few general
headings under which to categorize
comments.
SAMPLE ESSAY APPRAISAL
Name:
Position:
Department:
Date started on job:
Date of last rating:
Date of this rating:
Appraisal of Performance:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________
Suggestions for Development:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________
Prepared By:
Position:
Manager’s Signature:
Employee’s Signature:
iii. FIELD REVIEW
In the field review, the outside reviewer
becomes an active partner in the rating
process. The outsider interviews the
manager about each employee’s
performance, then compiles the notes
from each interview into a rating for each
employee. Then the rating is reviewed by
the supervisor for needed changes. This
method assumes that the outsider knows
enough about the job setting to help
supervisors give more accurate and
thorough appraisals.
d. BEHAVIORAL/OBJECTIVES METHODS
Behavioral approaches hold promise for some situations in
overcoming some of the problems with other methods.
i. Behaviorally
Anchored Rating Scales
(BARS)
ii. Management by
Objective (MBO)
i. BEHAVIORALLY ANCHORED
RATING SCALES (BARS)
Assess an employee’s behaviors instead of other
characteristics. BARS match descriptions of
possible behaviors with what the employee most
commonly exhibits i.e., Behavioral rating
approaches describe examples of employee job
behaviors.
Effective
BARS Dimensions (Sample)
Quality of Group member input
5
4
3
Group Member has read all agreed
upon material
Group Member participate in
discussion, through not always
prepare
2
Ineffective
1
Group members does little work &
offer no valuable ideas or feedback
BARS for Supervision (Sample)
Effective
Ineffective
5
Can train and develop subordinates
4
Exhibits respect towards subordinates
3
Criticize of personnel in front of
others.
2
Sets a poor example.
1
Does not lead by example.
ii. MANAGEMENT BY OBJECTIVE (MBO)
MBO involves setting specific measurable goals
with each employee and then periodically
reviewing the progress made.
THE MBO PROCESS
d. Continuing
Discussion of
c. Guided Settings Performance
of Objectives
b. Development Of
Performance
Standards
a. Job review and
Agreement
BENEFITS OF PERFORMANCE APPRAISAL
For the
Appraisee
For the
Organization
For the
Management
BENEFITS OF PERFORMANCE
APPRAISAL Cont . . .
For the Appraisee
 Better understanding of his
role.
 Clear understanding of
strengths and weaknesses by
employees.
 Increased motivation, job
satisfaction, and self-esteem.
 Opportunity of open
discussion regarding work
problems & how to overcome
them.
 Improved working relationships
with the superiors.
For the Organization
 Improved performance
throughout the organization.
 Creation of a culture of
continuous improvement and
success.
 Conveyance of message that
people are valued.
BENEFITS OF PERFORMANCE
APPRAISAL Cont . . .
For the Management
 Identification of performers and nonperformers and their development.
 Opportunity to prepare employees for
assuming higher responsibilities.
 Opportunity to improve communication
between the employees and
the management.
 Identification of training an development
needs.
 Generation of ideas for improvements.
 Better identification of potential and
formulation of career plans.
RATERS ERRORS
1. Problems of
Varying Standards
2. Recency
Effect
4. Leniency and
Strictness Errors
RATERS
ERRORS
3. Central
Tendency
5. Rater Bias
6. Halo Effect
7. Contrast
Error
RATERS ERRORS Cont . . .
1. Problems of
Varying
Standards
When appraising employees, a manager
should avoid using different standards and
expectations for employees performing
similar jobs.
2. Recency
Effect
Error in which the rater gives greater
weight to recent events when appraising
an individual’s performance.
3. Central
Tendency
Central tendency error Rating all
employees in a narrow band in the middle
of the rating scale.
RATERS ERRORS Cont . . .
4. Leniency, and
Strictness Errors
 The leniency error occurs when ratings of
all employees are at the high end of the scale.
 The strictness error occurs when a
manager uses only the lower part of the scale
to rate employees.
5. Rater Bias
Rater bias occurs when a rater’s values or
prejudices distort the rating.
6. Halo Effect
The halo effect occurs when a manager
rates an employee high or low on all items
because of one characteristic.
RATERS ERRORS Cont . . .
6.Contrast
Error
The tendency to rate people relative
to other people rather than to
performance standards.
APPRAISAL FEEDBACK INTERVIEW
After appraisals, interview is
conducted in which the
supervisor and subordinate
review the appraisal and
manager provide
constructive feed back and
mutually make
developmental plans.
Factors that
Influence
Performance
Performance
Management
Cycle
Performance
management
1. Motivation
2. Environment
1. Set clear performance goals
& make developmental plans
3. Caching by supervisor
throughout the year
2. Monitor Goal Progress
adjust & plan for next year
1. Developmental
Performance
Management Vs.
Performance
Appraisal
Performance
Management
Performance
Appraisal
What is in
Performance
Appraisal System
1. What is Measured
2. Who Measure
Performance
a. Trait Based
Information
b. Behavior Based
Information
c. Result Based
Information
Supervisor
Customers
Subordinates
Peers
Team
Self
CHAPTER 7
d. Behavioral
Methods
Administrative
Decisions
4. Annual appraisal against goals
Purposes for
Performance
Management
Management Quality
Circle
3. Ability
2. Administrative
Defines
Performance
Measure
Performance
Facilitates
Performance
Evaluate
Performance
c. Narrative Methods
i. Behaviorally
Anchored Rating Scales
ii. Management by
Objective (MBO)
i. Critical Incident
Appraisal
ii. Essay
Appraisal
MBO Process
iii. Field Review
3. When is it
Measured
Encourages
Performance
Feedback on
Performance
4. How is it Measured
Task Oriented
Monthly
Quarterly
Annually
b. Comparative
Methods
a. Category Rating
Methods
i. Individual
Ranking
ii. Forced
Distribution
iii. Paired
Comparison
i. Adjective Rating
Scales
ii. Checklist
Appraisal
a. Job review and
Agreement
b. Development Of
Performance Standards
c. Guided Settings of
Objectives
BENEFITS OF
PERFORMANCE
APPRAISAL
a. For the
Appraisee
b. For the
Organization
c. For the
Management
RATERS
ERRORS
1. Problems of
Varying Standards
4. Leniency and
Strictness Errors
2. Recency Effect
3. Central
Tendency
5. Rater Bias
6. Halo Effect
d. Continuing Discussion
of Performance
7. Contrast Error
THOUGHT OF THE DAY
The greater danger for most of us lies not
in setting our aim too high and falling
short; but in setting our aim too low, and
achieving our mark.
“Michelangelo”