Chapter 7
PERFORMANCE
MANAGEMENT
Chapter 10 & 11 in Ab. Aziz & Tan (2014)
Copyright [2014] Pearson Education
Learning Objectives
At the end of this chapter, students should be able to:
Define performance management & appraisal.
Discuss the stages in performance management.
Describe the human factors in performance management.
Identify the objectives of performance appraisal.
Describe the criteria of an effective performance appraisal.
Identify who may be responsible for employees
performance appraisal.
Describe the various performance appraisal methods.
Identify the problems that might occur in performance
appraisal.
Copyright [2014] Pearson Education
Definitions
Performance management: A process that binds
goal-setting, performance evaluation, and
development into a single common system that
aims to ensure that the employees performance
supports the companys strategic plan.
Performance appraisal: is a formal process of
evaluating and reviewing an employees job
performance against a set of predetermined
standards.
Copyright [2014] Pearson Education
Stages of Performance
Management
Planning
Monitoring
Developing
Rating
Rewarding
Copyright [2014] Pearson Education
Human Factors in
Performance Management
a) Knowledge
b) Skills
c) Abilities
d) Personality
e) Attitude
f) Talent
Copyright [2014] Pearson Education
Objectives of Performance Appraisal
The two primary objectives of performance appraisal:
a) Evaluative
b) Developmental
Copyright [2014] Pearson Education
Criteria of Effective Performance
Appraisal
An effective performance appraisal system must be
able to consistently produce the results that meet
the criteria of:
a) Reliability
b) Validity
Copyright [2014] Pearson Education
What to Evaluate?
The most frequently used appraisal criteria:
a) Traits
b) Behaviours
c) Task outcomes
Copyright [2014] Pearson Education
Who Evaluates?
Immediate supervisor
Subordinates
Peers / colleagues
Customers
Self
Copyright [2014] Pearson Education
Methods of Performance Appraisal
1) Rating Scale
Requires the appraiser to list the factors to be
evaluated and rate the factors based on a
predetermined scale.
2) Essay Method
Requires the appraiser to write few statements or
report describing employees actual performance.
Copyright [2014] Pearson Education
10
3) Ranking Method
Allows appraiser to compare one employee to
another.
4) Result-Based Method
A quantifiable method, which depicts indexes such as
sales volume, and quantity of work produced.
5) Behavioural Checklist
Is a form that contains statements describing the
necessary job behaviours that should be performed
by the employee and the appraiser has to check
whether the employee has been performing the
behaviour or not.
Copyright [2014] Pearson Education
11
6) Management by Objective
Requires employees to set measurable objectives
that are agreed by both management and self and the
appraiser will evaluate the employees progress
towards the predetermined objectives periodically.
Copyright [2014] Pearson Education
12
Problems in Performance
Appraisal
Fear of failure
Halo effects
Political motives
Recency / primary effect
Leniency
Central tendency
Contrast error
Inconsistency standard
Copyright [2014] Pearson Education
13
Consequences of Performance
Appraisal
Positive results of performance appraisal are:
An increased motivation to perform effectively and
increase employees self-esteem.
The job of the appraisees may be clarified and better
defined.
Rewards such as pay and promotion can be distributed
on a fair and credible basis.
Valuable appraisal information can allow the organisation
to do better manpower planning.
Appraisees become more accountable for their actions.
Copyright [2014] Pearson Education
14
Negative results of performance appraisal are:
The self-esteem of the appraisees may be damaged
due to poor performance score.
Large amount of money and time may be wasted on
forms, training, and a host of support services.
The relationship among the individual involved may be
permanently worsened, thereby creating organisational
conflicts.
Performance motivation may be lowered due to bias
evaluation.
Copyright [2014] Pearson Education
15