MGTO 231
Human Resources
Management
Performance appraisal I
Dr. Kin Fai Ellick WONG
Prologue
• Performance appraisal for employees
= academic report for students
• Normally, firms perform 1 to 2
appraisal per year
• Performance appraisal could be more
“terrible” than academic report,
because ….
• Normally, there are appraisal
interviews
Questions for you
• What objectives does an HR manager
want to achieve from performance
appraisal?
• Why and how these objectives are
important?
• What will the consequences be if the
HR manager fails to achieve these
objectives?
Outline
• Some basic concepts of performance
appraisal
• Identifying performance dimensions
• Measuring performance (next lesson)
• Managing performance (next lesson)
Outline
• Some basic concept of performance
appraisal
• Identifying performance dimensions
• Measuring performance (next lesson)
• Managing performance (next lesson)
What is performance appraisal?
• Evaluation for improvement, not just
for criticism
• Future-oriented activity (useful
feedback) based on past performance
– Training and development
• The basic three-stage model
– Identification  measurement 
management
A Model of Performance Appraisal
Identification
Measurement
Management
Source: Managing Human Resources, 4th Edition, p.223
• Identification
– What areas should be examined?
– Examining the relevance instead of
irrelevance (e.g., sex, gender, religion)
• Measurement
– The development of standard and
measure
– Again, the issues of reliability and validity
• Management
– Providing feedback
– Coaching the ways to achieve higher
level of performance
The uses of PA 1
• Administrative purpose
– Used as the basis for determining
employees’ work conditions, promotions,
termination, and rewards
– It helps manager “justify” his/her HR
decisions
– A clear-cut criterion is usually mentioned
• “但為何一畢業才知 一世我也要考試”
– 小星星（唱：楊千嬅；詞：林夕）
• But why don’t I
• Not Realize
• There are examinations in my whole
life
”Small stars (Singer: Miriam Yeung;
Lyrics: Lam Jik)
The uses of PA 2
• Developmental purpose
– Used as the basis for improving
employees’ performance
– Providing feedback for improvement
• Do you remember goal-setting theory?
Benefits of PA (Employer)
• Assessing individual differences after
selection
• Documentation of employees’ performance
(legal defense)
• Rational basis for bonus and merit system
• Set appraisal dimensions that fit the
strategic goals
• Create appropriate expectation to
employees
• Management process
• Validation of selection tools
Benefits of PA (employees)
• Performance feedback and
assessment for improving
performance
• Fairness, effects (rewards and
punishments) based on relatively
standardized measures
• Goal-setting
• Increasing motivation
Questions for you
• What objectives does an HR manager
want to achieve from performance
appraisal?
• Why and how these objectives are
important?
• What will the consequences be if the
HR manager fails to achieve these
objectives?
Outline
• Some basic concept of performance
appraisal
• Identifying performance dimensions
• Measuring performance (next lesson)
• Managing performance (next lesson)
A Model of Performance Appraisal
Identification
Measurement
Management
Source: Managing Human Resources, 4th Edition, p.223
What are to be measured?
• Dimension
– An aspect of performance that
determines effective job performance
• The very first step
– The development of dimension can be
quite complicated
• What constitute a good computer
programmer?
–
–
–
–
–
–
Quality of programs
Quantity of programs
Interpersonal effectiveness
Hardworking
Good writing skills
Being familiar with updated computer
knowledge
– Good typing skills
– Etc.
What are the “REAL” dimensions
• Job analysis
– The dimensions can be defined through
job analysis
– Critical incident technique, task inventory
analysis, position analysis questionnaire,
etc.
Outline
• Some basic concept of performance
appraisal
• Identifying performance dimensions
• Measuring performance (next lesson)
• Managing performance (next lesson)
A Model of Performance Appraisal
Identification
Measurement
Management
Source: Managing Human Resources, 4th Edition, p.223
What are to be measured?
• The dimensions derived in the first step
• Through the measurement tools (analogous
to selection tools), the employee’s
performance on a specific dimension is
usually quantified
• Thus, similar to selection tools, the
reliability and validity of the measures
should be well established before
conducting performance appraisal.
Appraisal formats
• Type of judgment
– Relative or absolute
• Scale format
– Nominal, ordinal, interval, or ratio
• Focus of the measure
– Trait, behavior, outcome
Relative vs. absolute judgment
• Relative judgment
– Rating based on comparing an employee’s
performance to the performance of other
employees doing the same job
– “Your performance is 1.2 SDs below mean”
– Emphasis on individual differences, but
somehow may be artificial (e.g., when all are
excellent or poor employees)
– Used mainly for administrative need
– E.g., attention ranking scale, paired comparison
method
Alternation Ranking Scale
Source: Human Resource Management, 10th Edition, p.321
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.
Source: Human Resource Management, 10th Edition, p.321
• Absolute judgment
– Rating based on performance standards
– A score of 70 out of 100 reveals that the
performance is acceptable, but it does
not reveal how well this rating is when
being compared with others’
– Different raters may have different
standards
Relative performance assessment
of your grade
For Required Core Courses:
Grades
A-, A, A+
B-, B and B+
C-, C and C+
D
F
Senate Guidelines
15.0%
32.5%
40.0%
7.5%
0-5%
Scale formats
• Nominal scales
– Name or category
•
•
•
•
Country (e.g. China, U.S.A., Japan)
Department (MGTO, ECON, ACCT, etc.)
Categorical
Not so popular in PA
• Ordinal scales
– Order
– Distances between levels may not be equal
• Rank (e.g., 1st , 2nd, 5th)
– Useful for relative or absolute judgment?
• Interval scales
– Equal distances
– Did not have absolute zero
• Degree Celsius (20ºC  double of 10 ºC)
• Ratio scales
– Equal distances
– Have absolute zero
• Length (1000m = double of 500m)
To be continued…