Performance Appraisal
The identification, measurement,
and management of human
performance in organizations.
Performance Evaluation
and Management
8-5
Performance Management: efforts to align
employee performance with the firm’s goals
Performance Evaluation: efforts to determine
the extent to which an employee performs
work effectively. Also known as:
Performance review Performance appraisal
Personnel rating
Employee appraisal
Merit rating
Employee evaluation
2
Potential Purposes of
Evaluation
9-3
Development
Motivation
Communications
HR and
Employment
Planning
Legal
Compliance
HRM
Research
3
A Model of Performance
Appraisal
Identification
Measurement
Management
Performance
Evaluation:
9-5
Criteria of Evaluation
Reliability
Relevance
Sensitivity
Practicality
Combination of criteria using activities
and results is desirable
5
Who Should Evaluate
the Employee?
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MANY POSSIBILITIES
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Immediate supervisor only (typical)
Committee of several supervisors
Employees’ peers (coworkers)
Employees’ subordinates
Someone outside the immediate work
situation
Self-evaluation
6
Management By
Objectives
(MBO)
Some Potential
9-11
Some Potential
Pitfalls
Benefits

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Encourages employee
participation
Enables subordinates to
exercise self-control
and manage own
performance
Useful for training and
career development
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Managers may not be
adequately prepared
for MBO
Demands active
employee and manager
involvement
Too much emphasis on
the short run and
Potential Evaluation
Problems
9-12

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Opposition to evaluation
System design and operating
problems
with Central tendency
RaterProblems
problems
include:
standards
errors
of evaluation
“Recency of events”
Halo effects
errors
Leniency
or exist
Contrast
effects
Major
problems
more with
harshness
Personalused.
the rater
than the technique
bias/stereotyping
9-13
Solutions to Evaluation
Problem
AVOIDING
ELIMINATING
PROBLEMS
RATER
WITH EMPLOYEES
ERRORS
Train raters on  Train employees in
performance evaluation
how to evaluate
methods
others well
 Simplify reporting forms
 Grant ample
 Communicate how
opportunities to evaluation information is

The Benefits of
Performance Appraisal
Employer Perspective:

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Despite imperfect measurement techniques, individual
differences in performance can make a difference to company
performance.
Documentation of performance appraisal and feedback may
be needed for legal defense.
Appraisal provides a rational basis for constructing a bonus or
merit system.
Appraisal dimensions and standards can help to implement
strategic goals and clarify performance expectations.
Providing individual feedback is part of the performance
management process.
Despite the traditional focus on the individual, appraisal
criteria can include teamwork and the teams can be the focus
of the appraisal.
Trait Appraisal, Behavioral
Appraisal, and Outcome Appraisal
Instruments
Trait Appraisal
An appraisal tool that asks a supervisor to make judgments
about worker characteristics that tend to be consistent and
enduring.
Behavioral Appraisal
An appraisal tool that asks managers to assess a worker’s
behaviors.
Outcome Appraisal
An appraisal tool that asks managers to assess the results
achieved by workers.
Sample Trait Scales
Rate each worker using the scales below.
Decisiveness:
1
2
Very low
3
4
Moderate
5
6
7
Very high
Reliability:
1
2
Very low
3
4
Moderate
5
6
7
Very high
Energy:
1
2
Very low
3
4
Moderate
5
6
7
Very high
Loyalty:
1
2
Very low
3
4
Moderate
5
6
7
Very high
Evaluation of Major
Appraisal Formats
Appraisal
Format
Administrative
Use
Legal
Developmental
Defensibility
Use
Absolute
0
+
0
Relative
++
-
-
Trait
+
-
--
Behavior
0
+
++
Outcome
0
0
+
-- Very Poor
- Poor
0 Unclear or mixed
+ Good
++ Very good
Who Should Evaluate
the Employee?
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360-DEGREE FEEDBACK
Alternative to
traditional
supervisor-only
approaches
Peers
 Uses multiple
appraisers
 Not a panacea

Supervisors
Selfappraisal
Subordinates
Challenges to Effective
Performance Measurement
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Rater errors and bias
The influence of liking
Organizational politics
Whether to focus on the
individual or the group
Legal issues
Legal Issues
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A recent analysis of 295 court cases involving
performance appraisal found judges’ decisions to be
favorably influenced by the following additional factors:

Use of job analysis

Providing written instructions
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Allowing employees to review appraisal results
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Agreement among multiple raters (if more than one
was used)
The presence of rater training
Communication Skills for the
Appraisal Interview
Skills
Benefit
Description
Example
Nonverbal
Attending
Suggests interest
and active listening.
Rater sits with a slight
forward, comfortable
lean of the upper body,
maintains eye contact,
and speaks in a steady
and soothing voice.
While the ratee is
speaking, the rater
looks at the person
and gently nods head
to signal interest.
Open and
Closed
Questions
Appropriate use of
open and closed
questions can
ensure an effective
flow of
communication
during an interview.
—Open questions
encourage information
sharing and are most
appropriate early in an
interview or in complex,
ambiguous situations.
— Open questions
start with words like
“Could,” “Would,”
“How,” “What,” or
“Why”.
—Closed question evoke
short responses and are
useful for focusing and
clarifying.
— Closed questions
start with words like
“Did,” “Is,” or “Are.”
Communication Skills for the
Appraisal Interview (Cont.)
Skills
Cultural
Sensitivity
Benefit
Communication is more
effective when you are
sensitive to the possible
influence of cultural
differences.
Description
Pay attention to cultural
differences that may
influence how another
person communicates
and how you might
communicate with
others.
Example
When dealing with
employees from a
culture that is highly
formal, avoid
addressing them in the
workplace by their first
names. Doing so may
signal disrespect.
Key Steps in Implementing
360° Appraisal
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Top management communicates the goals of and need for
360° appraisal.
Employees and managers are involved in the development of
the appraisal criteria and appraisal process.
Employees are trained in how to give and receive feedback.
Employees are informed of the nature of the 360° appraisal
instrument and process.
The 360° system undergoes pilot testing in one part of the
organization.
Management continuously reinforces the goals of the 360°
appraisal and is ready to change the process when necessary.