Module 4

Performance Appraisal
Used to assess an employee’s
performance about past, current,
and future performance
expectations, and searching for
ways to improve their
performance.

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Must be carefully developed to
fully capitalize on the talents of
employees and to minimize the
gap between actual job
performance and the ratings of the
work.

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 Often the link
between
additional pay
and rewards and
their job
performance.
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 Employe
e rating

OTHE
R Performanc
Performanc
e
e review TERM evaluation
S

Result
appraisal

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Benefits

Increased
operational Legal
competenc compliance
e

Heightened
Enhanced
transfor-
corporate
mational
growth
processes

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Conflicting uses of performance appraisal

USES OF
PERFORMANCE
APPRAISAL

ADMINISTRATIVE ACTIONS DEVELOPMENTAL ACTIONS

• Compensation rewards • Identify strengths and
• Dismissal from work areas for growth
• Disciplinary procedures • Coaching/ mentoring
• Promotions/ demotions/ • Training opportunities
transfer • Career planning

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Decisions about the performance appraisal
process
APPRAISAL RESPONSIBILITIES

HR UNIT MANAGERS/
SUPERVISORS
• Designs and maintains • Typically rate
appraisal system performance of
• Trains raters employees
• Tracks timely receipt • Prepare formal
of appraisals appraisal documents
• Review completed • Review appraisals
appraisals for with employees
consistency • Identify development
areas 8
Decisions about the performance appraisal
process

INFORMAL VS. SYSTEMATIC

APPRAISAL PROCESSES
INFORMAL SYSTEMATIC

Day-to- day contacts, Formal contact at

largely undocumented regular intervals,
usually documented

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Decisions about the performance appraisal
process

TIMING OF APPRAISALS

Regular employees
• Once or twice a year
Probationary or introductory
employees
• Weekly for the first month, and monthly
thereafter

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Decisions about the performance appraisal
process

Meeting more frequently with

employees can enhance
individual performance

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Who
conducts
appraisals
?
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“ Can be conducted
by anyone familiar
with the
performance of
individual
employees.
Traditional performance
appraisal process

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1. Superior rating
subordinates

In excellent position to
observe employee’s
job performance

Has responsibility for

managing a particular
unit

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2. Subordinates rating
superior

make superiors more

responsive to
employees

contribute to career
development efforts by
identifying areas for
growth

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2. Subordinates rating
superior

negative reaction to
being evaluated by
subordinates
Failure to give
realistic appraisal
for fear of
retaliation
Tendency of
superiors to act
too nicely
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2. Subordinates rating
superior

Generally used for

management
developmental purpose
only

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3. Self- rating

requires employees to
think about their
strengths and
weaknesses and set
goals for improvement
Employees working in
isolation or possessing
unique skills may be
suited for this
employees may use
different standards and
not rate themselves in
the same manner as
superiors

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4. Team/ Peer Rating

Useful when superiors do not

have
the opportunity to observe each
employee’s performance but
other
work group members do

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4. Team/ Peer Rating

can negatively affect

teamwork and
participative
management efforts

Peers may not

honestly appraise to
spare feelings

may unfairly
attack other
group members
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5. Outsider rating

Pertains to people
outside the
immediate work
group

HR department,
independent reviewers,
customers

may not know the

important demands
within the work group
or organization

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6. Multisource/ 360- degree
feedback

Employee performance is
multi-dimensional and
crosses departmental,
organizational, and even
global boundaries

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6. Multisource/ 360- degree
feedback

Designed to capture
evaluations of the
employee’s different roles
to provide richer feedback

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6. Multi- source/ 360
degree feedback

Variability and potential

rate inflation

“Back scratching”
tendencies

Requires more time

and investment

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Tools for
appraising
performanc
e
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1. Graphic rating scales

Rater marks employee’s performance on a

continuum indicating low to high levels of
a particular characteristic

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1. Graphic rating scales

PROS CONS

Might not accurately

Easy to reflect importance of
develop certain job
characteristics
Provide a Descriptive words
may have different
uniform set of meaning to different
criteria raters
Separate traits or factors
are grouped together, and
the rater is given only one
box to check

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2. Behaviorally- anchored rating scale (BARS)

uses quantified scale with specific

narrative examples of good and poor
performance

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2. Behaviorally- anchored rating scale (BARS)

PROS CONS

Provides a more Requires extensive time and

accurate gauge effort

Various forms are needed

Promotes
to accommodate different
consistency
types of job

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3. Comparative method- Ranking

Lists the individuals being rated from

highest to lowest based on their
performance levels and relative
contributions

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3. Comparative method- Ranking

PROS CONS

Sizes of the performance

Simple to differences between
use employees are often not
investigated

Avoids central Ranking means

tendency someone must be last

Task becomes unwieldy

when done to a large group

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4. Comparative method- Forced distribution

The ratings of employees’ performance

are distributed along a bell- shaped curve

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4. Comparative method- Forced distribution

PROS CONS

Difficulty in explaining to
deal with “rater employees why they’re placed
inflation” in the lowest group
Superiors may make false
Forces superiors to identify
distinctions between employees by
high, average, and low
comparing people against each
performers
other
Ensures that compensation Can increase anxiety in
is differentiated by employees and encourage
performance gaming of the system
Instill high-
performance work
environment
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5. Critical incident method

Superior keeps a written record of both

highly favorable and unfavorable actions
by an employee

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5. Critical incident method

PROS CONS

Helps specify what is right

Difficult to rate or rank employees
and wrong about the
relative to one another
employee
Forces superior to evaluate
employees on an ongoing
basis

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6. Management by objectives (MBO)

Specifies the performance goals that

subordinates and superior identify
together

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MBO process

Development of Continuing
Job review
performance performanc
agreement
standards e discussion

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6. Management by objectives (MBO)

PROS CONS

Tied to jointly agreed-

upon performance Time consuming
objectives

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7. Combination of methods

No single appraisal method is best for all

situations.

Using combinations may offset some of

the advantages and disadvantages of
individual methods.
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