Chapter 9 Appraising Performance

In brief: This chapter gives a good coverage of the performance appraisal process and the different tools and methods available. Interesting issues: Despite lots of attention, money and effort, performance appraisals remain an area with which few managers or employees are satisfied. This may be worth discussing. Is it just that we don't have a good enough system yet, is there an intrinsic problem with performance appraisals, or is it just human nature to dislike them?

Lecture Outline
I. The Appraisal Process
. #. The !upervisor's "ole in ppraisal !teps in ppraising $erformance %. '. (. *. Define the &ob ppraise $erformance $rovide )eedback $erformance ppraisal $roblems a. b. c. +. Didn't Define the &ob Didn't ppraise $erformance Didn't $rovide )eedback

,ow to -larify .hat $erformance /ou 01pect

II.

Appraisal Methods
. #. -. D. 0. ). 2. 2raphic "ating !cale 3ethod lternation "anking 3ethod $aired -omparison 3ethod )orced Distribution 3ethod -ritical Incident 3ethod 4arrative )orms #ehaviorally nchored "ating !cales 5# "!6 %. )ive !teps to Develop

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a. b. c. d. e. '. generate critical incidents develop performance dimensions reallocate incidents scale the incidents develop final instrument

dvantages a. b. c. d. e. more accurate gauge clearer standards feedback independent dimensions consistency

,.

The 3anagement by 9bjectives 53#96 3ethod %. !i1 3ain !teps a. b. c. d. e. f. '. set the organi:ation's goals set departmental goals discuss departmental goals define e1pected results performance reviews provide feedback

$roblems To void a. b. c. setting unclear, unmeasurable objectives time consuming tug of war

I. &.

3i1ing the 3ethods Information Technology and ,"; -omputeri:ed $erformance ppraisals and 0lectronic $erformance 3onitoring. pages ((<=((7 of the te1t; see Discussion #o1es solutions at end of this chapter

III.

Appraising Performance: Problems and Solutions

. Dealing with the "ating !cale ppraisal $roblems %. '. (. *. +. >nclear !tandards ,alo 0ffect -entral Tendency ?eniency or !trictness #ias

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<. 7. #. ,ow to %. '. (. *. -. D. "esearch Insight; $regnancy and $erformance ppraisals Table @=( on page (*% gives important similarities and differences, advantages and disadvantages of different appraisal tools. void ppraisal $roblems #ecome )amiliar with the $roblems -hoose the "ight ppraisal Tool Train !upervisors Diary Aeeping

?egal and 0thical Issues in $erformance ppraisal .ho !hould Do the ppraising? %. '. (. *. +. <. 7. 8. ppraisal b the Immediate !upervisor >sing $eer ppraisals "ating -ommittees !elf="atings ppraisal by !ubordinates "esearch Insight; 0ffectiveness of >pward )eedback (<B=degree )eedback The ,igh=$erformance 9rgani:ation; The (<B=Degree $erformance 3anagement !ystem. page (*< of the te1t; see Discussion #o1es solutions at end of this chapter

I .

The Appraisal Inter!ie"

. Types of Interviews %. '. (. #. !atisfactoryC$romotable !atisfactoryC4ot $romotable >nsatisfactoryC-orrectable

,ow to $repare for the ppraisal Interview %. ssemble the Data

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Chapter 9: Appraising Performance

'. (. -. $repare the 0mployee -hoose the Time and $lace

,ow to -onduct the Interview %. '. (. *. #e Direct and !pecific Don't 2et $ersonal 0ncourage the $erson to Talk Don't Tiptoe round

D. 0. ). 2.

,ow to ,andle a Defensive !ubordinate ,ow to -ritici:e a !ubordinate ,ow to 0nsure That the ppraisal Interview ?eads to Improved $erformance ,ow to ,andle a )ormal .ritten .arning

. I.

Performance Appraisal in Practice The #ole of Appraisals in Managing Performance

. #. Do ppraisals "eally ,elp to Improve $erformance? TD3=#ased ppraisals for 3anaging $erformance

$iscussion %o&es
Information Technolog' and (#: Computeri)ed Performance Appraisals and *lectronic Performance Monitoring
5pages ((<=((76 This bo1 describes new software programs that help the supervisor create the performance appraisal. The programs allow the supervisor to record critical incidents throughout the year, and then use them again as they develop the appraisal.

The (igh+Performance Organi)ation: The ,-.+$egree Performance Management S'stem

5page (*<6 This bo1 describes the implementation of a (<B=degree performance appraisal systems that was implemented by "ock Island rsenal. ,ow the program was developed as well as how it works is outlined.

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Aey Terms
graphic rating scale scale that lists a number of traits and a range of performance for each. The employee is then rated by identifying the score that best describes his or her performance for each trait. 5page ('(6 "anking employees from best to worst on a particular trait. 5page ('+6 "anking employees by making a chart of all possible pairs of the employees for each trait and indicating which is the better employee of the pair. 5page ('76 !imilar to grading on a curveE predetermined percentages of ratees are placed in various categories. 5page ('76 Aeeping a record of uncommonly good or undesirable e1amples of an employee's work=related behavior and reviewing it with the employee at predetermined times. 5page ('@6 n appraisal method that aims at combining the benefits of narrative and Fuantified ratings by anchoring a Fuantified scale with specific narrative e1amples of good and poor performance. 5page ((%6 Involves setting specific measurable goals with each employee and then periodically reviewing the progress made. 5page (((6 n appraisal scale that is too open to interpretationE instead, include descriptive phrases that define each trait and what is meant by standards like GgoodG or Gunsatisfactory.G 5page ((76 In performance appraisal, the problem that occurs when a supervisor's rating of a subordinate on one trait biases the rating of that person on other traits. 5page ((86 tendency to rate all employees the same way, avoiding the high and the low ratings. 5page ((86 The problem that occurs when a supervisor has a tendency to rate all subordinates either high or low. 5page ((86 The tendency to allow individual differences such as age, race, and se1 to affect the appraisal rates these employees receive. 5page ((@6

alternation ran/ing method paired comparison method forced distribution method critical incident method

beha!iorall' anchored rating scale 0%A#S1

management b' ob2ecti!es 0M%O1 unclear performance standards halo effect

central tendenc' strictness 3 lenienc' bias bias

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Chapter 9: Appraising Performance

appraisal inter!ie"s n interview in which the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths. 5page (*76

$iscussion 4uestions:
5. $iscuss the pros and cons of at least four performance appraisal tools. The te1t lists eight different performance appraisal tools. !tudents might discuss the pros and cons of any four of these eight. The tools are described on pages ('( = ((*. 5 n e1ample of some of the pros and cons is; 2raphic "ating !cale method is easy to use, simple, and does not take much time to administer. ,owever, different supervisors may interpret a numerical rating differently and the traits rated may or may not relate to performance.6 6. *&plain ho" 'ou "ould use the alternation ran/ing method7 the paired comparison method7 and the forced distribution method. The alternation method would be used by listing all employees to be rated, deciding who is the best in a trait to be rated, and which is the worst. Then decide who is the second best, and the second worst ... the third best and the third worst ... and so on until all the employees have been ranked for that trait. Then do the same with the ne1t trait to be rated. .ith the paired comparison, for each trait to be rated, the supervisor would have a sheet with employee names in pairs ... every employee name is paired with every other name. )or each pair, the supervisor would circle the one of the two that is better in that trait. )orced Distribution gives the supervisor a set rating scale 5such as % through +6. The supervisor is limited to giving a pre=determined percentage of his or her employees' rating. )or e1ample; %+H can get a %, 'BH can get a ', (B H can get a ( ... and so forth. 5pages ('+='(86 ,. *&plain in 'our o"n "ords ho" 'ou "ould go about de!eloping a beha!iorall' anchored rating scale. 0ach student should e1press the five steps in his or her own words. Those five steps are; %6 generate critical incidentsE '6 develop performance dimensionsE (6 reallocate incidentsE *6 scale the incidentsE and +6 develop final instrument. 5pages ((%=(((6 8. *&plain the problems to be a!oided in appraising performance. The five main rating scale problems listed in the te1t are; %6 unclear standardsE '6 halo effectE (6 central tendencyE *6 leniency or strictnessE and +6 bias. 5pages ((7=((@6 9. $iscuss the pros and cons of using different potential raters to appraise a person:s performance. The advantages of using several raters 5either a rating committee, or a combination of peer, supervisor, and subordinate ratings6 is that the ratings tend to be more valid than those of one individual rater. The negatives might include the time and cost involved as well as problems with the amount of daily contact that some raters may not have with the employee being rated. -. *&plain the four t'pes of appraisal inter!ie" ob2ecti!es and ho" the' affect the "a' 'ou manage the inter!ie". 4ote; There are only three types outlined in the te1tI 0ach interview objective is tied to the type of appraisal being given. .hen the performance is satisfactory and the employee is promotable, the objective is to make development plans. This is the easiest interview to manage. /ou will discuss the person's career plans and develop a specific action plan for the educational and professional development the person

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needs to move to the ne1t job. .hen the performance is satisfactory but the employee is not promotable, the objective is to maintain performance. This can be a more difficult interview to manage. /ou will need to find incentives that are important to the individual to help maintain the satisfactory performance. .hen the person's performance is unsatisfactory but correctable, the objective is to lay out an action plan for correcting the performance. This involves identifying the performance or behaviors that are problematic, informing the employee of the e1pected behavior or performance, and developing a plan for implementing the new performance or behaviors. 5pages (*<=(*76 ;. *&plain ho" to conduct an appraisal inter!ie". There are four things listed in the te1t to keep in mind; %6 be direct and specificE '6 don't get personalE (6 encourage the person to talkE *6 don't tiptoe around. !tudents should e1pound on these basic principles of conducting the interview. These are followed with four Jhow toK items that are important as wellLhow to; handle a defensive subordinate, critici:e a subordinate, ensure that the appraisal interview leads to improved performance, handle a formal written warning. 5pages (*7=(*@6 <. Ans"er the =uestion: >(o" "ould 'ou get the inter!ie"ee to tal/ during an appraisal inter!ie"? There are several techniFues that will help; %6 stop and listen to what the person is saying ... don't be afraid of a little silenceE '6 ask open=ended FuestionsE (6 use prompting statements like Ggo on,G or Gtell me moreEG *6 restate the person's last statement as a Fuestion. 5page (*86

@roup and Indi!idual Acti!ities:

5. Aor/ing indi!iduall' or in groups7 de!elop a graphic rating scale for the follo"ing 2obs: secretar'7 engineer7 director' assistance operator. &ob characteristics may include, but not be limited to; Secretary==Fuantity of work, freFuency of errors, attendance, and initiativeE Engineer==initiative, significance of contribution to the organi:ation, problem solving skills, freFuency of errors, and communication skillsE Directory Assistance Operator==speed, attendance, accuracy, and friendliness. In each case, the students should come up with a defining statement that clarifies what the job characteristic means. 5pages ('( M ('*6 6. Aor/ing indi!iduall' or in groups7 e!aluate the rating scale in Table 9+6. $iscuss "a's to impro!e it. There are many things that might be suggested for improvements. These suggestions might include, but not be limited to; clearer e1planation of the rating scale, provide behavioral anchors for the scale points, and rework the items so that several Fuestions about specific behaviors for each item. 5page (*'6 ,. Aor/ing indi!iduall' or in groups7 de!elop7 o!er the period of a "ee/7 a set of critical incidents co!ering the classroom performance of one of 'our instructors. If you had the class conduct a job analysis and create a job description for an instructor in -hapter (, it would be helpful to refer to that to help identify what kinds of behavior and tasks the instructor should be doing. This will give a good basis for students to observe and watch for critical incidents. If they find critical incidents that are not based in these other documents, it will be a good opportunity to go back and review how all this ties together and that we haven't communicated to the instructor in the job description these behaviors or tasks that they are now wanting to rate them for.

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Chapter 9: Appraising Performance

Cases and *&ercises

*&periential *&ercise: Performance Appraisal 5page (++6
!tudents are asked to review a performance appraisal form and to develop an appraisal form. %. In evaluating the appraisal form in )igure @=%B, there are several issues that students might note for possible improvements; consider reducing the rating scale from seven points to four or five points, be more specific about subjects to be rated 5e.g.; ,ow do you rate the interest of the teacher in the subject?6, and use behavioral anchors to clearly define what behaviors or actions you are rating. '. !tudents should develop their own tool for appraising the performance of an instructor. ?ook for them to apply concepts discussed in this chapter. (. !tudents should present their tools to the class. ,ow similar are the tools? Do they all measure about the same factors? .hich factor appears most often? .hich do you think is the most effective tool? 0ncourage students to reflect on the factors that they chose, or did not choose. !hare your perspective on what makes good teaching.

Case Incident: %ac/ "ith a engeance 5page (+<6

%. Could a compan' "ith an effecti!e appraisal process ha!e missed so man' signals of instabilit' o!er se!eral 'ears? Ah' or "h' not? )or an appraisal process to capture these signals, it would have had to measure some aspect of the employeeNs interpersonal relationships, anger, outbursts, etc. 3any appraisal systems focus e1clusively on job related outcomes. In this case, if an employee were producing standard or higher outcomes, his interpersonal problems might not be noted. '. Ahat safeguards "ould 'ou build into 'our appraisal process to a!oid missing such potentiall' tragic signs of instabilit' and danger? $ersonnel systems need to record any anti=social behaviors that inhibit an employee or his or her colleagues from effectively doing their jobs. In addition to the problem of workplace violence 5which is of course the most serious issue6 there should also be concern on the part of management to not allow a hostile work environment to develop. (. Ahat "ould 'ou do if confronted during an appraisal inter!ie" b' someone "ho began ma/ing threats regarding his or her use of firearms? I would e1cuse myself. Tell the person I want to finish this conversation and that I would be right back. 5I would not want to call security in front of the person as it might further anger them6. I would get to the nearest telephone, call security, and e1plain the situation. I would have security make sure of my safety before I resumed my conversation. I would want the employee to receive professional counseling to assure that the company or the supervisor was not facing the threat of retribution for their actions.

Case Application: Appraising the Secretaries at S"eet"ater B 5page (+76

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%. $o 'ou thin/ that the e&perts: recommendations "ill be sufficient to get most of the administrators to fill out the rating forms properl'? Ah' or Ah' not? Ahat additional actions 0if an'1 do 'ou thin/ "ill be necessar'? .hile controversial, the recommendations would, in fact, encourage administrators to fill the forms out correctly. >sing the more detailed form and not tying the performance ratings to salary increases would allow the managers to feel more free about rating the secretaries accurately. There would, however, need to be some strong training sessions 5both for administrators and secretaries6 to help them understand the new system. !ince all secretaries have traditionally received the same salary increases, and have been pleased with that, it would be advisable to consider lowering the ma1imum increase to an amount that could be given to all secretaries while staying within budget. Then all secretaries with a satisfactory rating or better would receive that increase. '. $o 'ou thin/ that ice President Ainchester "ould be better off dropping graphic rating forms7 substituting instead one of the other techni=ues "e discussed in this chapter such as a ran/ing method? -ertainly other methods could be used. ,e has already had a taste of what would result if he went to a forced distribution or other ranking method. # "! system might be best, but it could be costly to develop if the clerical staff have positions that are significantly different. (. Ahat performance appraisal s'stem "ould 'ou de!elop for the secretaries if 'ou "ere #ob Ainchester? $efend 'our ans"er. If the development costs are not too great, the # "! system would give the strongest solution to the current situation. The behavioral anchors would make it more difficult to just rate everyone at the top. It would also help to eliminate the different interpretations of what the rating scales mean.

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