CHAPTER 3

Performance Appraisal and strategic choices in

performance management system

Introduction
An organizations long term success in

meeting its strategic objectives rests with its

ability to manage employee performance and
ensure that performance measures are
consistent with the organizations needs.
Performance management system need not
to be formal in order to be effective
An effective performance management
system connects three time periods

Past

Present

Future
Data related to past performance
Allows work plans,
in the
Goals and development
achievement of
Opportunities to be set
objectives

resulting

strategic

Performance management: the process

through which managers ensure that

employees activities and outputs contribute
to the organizations goals.
This process requires:
Knowing what activities and outputs are

desired
Observing whether they occur
Providing feedback to help employees meet
expectations

Test Your Knowledge

If the performance management system

created competition among team members, I

would
Make collaboration a criterion to be
evaluated.
B. Nothing, competition is good.
C. Increase the specificity of the feedback.
D. Focus on personal traits rather than
behaviors.
A.

Stages of the Performance

Management Process

Purposes of Performance
Management
Strategic Purpose means effective

performance management helps the

organization achieve its business
objectives.
Administrative Purpose refers to the
ways in which organizations use the
system to provide information for day-today decisions about salary, benefits, and
recognition programs.
Developmental Purpose means that it
serves as a basis for developing
employees knowledge and skills.

Use of the system

Link with training
Link with compensation
Employee motivation
Legal compliance
HR planning process

STRATEGIC CHOICES IN
PMS
Who evaluates
What to evaluate
How to evaluate
Means of evaluation

Who Evaluates
Peers
Subordinates
Customers
Self evaluation
360 degree feedback system

What to Evaluate
Traits
Behavior
Results

Traits
Trait based measures focus on the general abilities

and characteristics of employees

Including dimensions like:
Loyalty
Industriousness
Gregariousness
Finds individuals fit with culture
Subjective
Does not take in to account what an employee
actually does
Not hold up well in a discriminatory complaint

Behavior based measure

Focus on what an employee does by examining

specific behaviors of the employee

Factors including:
Employees ability to get along with others
Punctuality
Ability to meet deadlines
Willingness to take initiative
It specify what exactly the employee does
However it is possible for employees to engage in
appropriate behaviors but not achieve results for the
organization, How?

Results based measure

It focus on specific accomplishments or direct

outcomes of an employees work

It includes:
Measure of number of units sold
Divisional profitability
Cost reduction
Efficiency or quality

Result based measures offers criterion that can be

measured objectively.
Limitations:
Difficult to obtain results for jobs that involve dealing
with future
Results are sometimes beyond an individual
employees control
Results focus on ends than means
Results fail to tap some critical areas of performance
such as team work, initiative and openness to
change.

Performance
Measurement
Issues to address for performance
measurement:
Validity
Criterion deficiency
Criterion contamination

Validity
To be effective, the form must be relevant and the

rating standards must be clear.

Relevance refers to the degree to which the rating
form includes necessary information, that is,
information that indicates the level or merit of a
person's job performance.
To be relevant, the form must include all the
pertinent criteria for evaluating performance and
exclude criteria that are irrelevant to job
performance.

Criterion Deficiency
The omission of pertinent performance criteria is referred to

as criterion deficiency.
For example, an appraisal form that rates the performance
of police officers solely on the basis of the number of
arrests made is deficient because it fails to include other
aspects of job performance, such as conviction record,
court performance, number of commendations, and so on.
Such a deficient form may steer employee behavior away
from organizational goals; imagine if police officers focused
only on arrests and neglected their other important duties.

Criterion contamination
When irrelevant criteria are included on the

rating form, criterion contamination occurs,

causing employees to be unfairly evaluated on
factors that are irrelevant to the job.
For example, criterion contamination would
occur if an auto mechanic were evaluated on
the basis of personal cleanliness, despite the
fact that this characteristic has nothing to do
with effective job performance.

Contamination and Deficiency of a

Job Performance Measure

Test Your Knowledge

Sarah is a computer programmer whose job

mainly consists of independently coding

software. Interpersonal and teamwork skills
are included on performance appraisal.
Measuring these skills most closely
represents:
Criterion contamination
B. Criterion deficiency
C. Unreliability
A.

How to Evaluate
Absolute standards
Relative Standards

Absolute Versus Relative standards

Absolute measures evaluate employees

strictly according to the performance

requirements or standards f the job.
Relative ranking however evaluate
employees, in comparison to co workers.

Means of Evaluation
Graphic rating scale
Critical incident measure
BARS
BOS

Graphic Rating Scale

Lists traits and provides a rating scale for each

trait.
The employer uses the scale to indicate the
extent to which an employee displays each trait.
One of the most widely used assessment and
feed back devices.
Relatively easy to design use and update as the
job requirements change
It gives evaluator the performance measure for
traits, behaviors or results.

Example of a Graphic Rating Scale

An employees performance
measurement differs from job to job. For
example, a car dealers performance is
measured by the dollar amount of sales,
the number of new customers, and
customer satisfaction surveys.

Behaviorally anchored rating scale

BARS provide evaluator a specific descriptions

of behaviors along a numerically rated scale

and is asked to select the behavior that most
corresponds to the employees performance
for the time period being evaluated.

Example of
Task- BARS
Rating
Dimension
for a Patrol
Officer

Behavioral observation
Scale
A variation of a BARS which uses all behaviors

necessary for effective performance to rate

performance at a task.
A BOS also asks the manager to rate the
frequency with which the employee has
exhibited the behavior during the rating
period.

Example of a Behavioral
Observation Scale (BOS)

Critical incident measure

Critical incident measure do not generally

utilize scale
The evaluator provides specific examples of
the employees critical behaviors or results,
either out standing or problematic, during the
performance period
The evaluator maintain a record, for each
employee and make periodic notation of
noteworthy behaviors or results, that were
particularly effective or ineffective

Factors that can distort Appraisals

Halo effect
Horn error
Stereotyping
Recency error
Central tendency error
Leniency or strictness
Clone error
Personal biases or organizational politics

Test Your Knowledge

Bill rates all of his employees very low except

for Jan. Jan gets above average ratings

because she consistently comes to work on
time. The rating errors Bill makes are _______
and _______, respectively.
Leniency; Horn
B. Strictness; Halo
C. Similar-to-me; Central Tendency
D. Horn; Strictness
A.

Giving Performance
Feedback
Scheduling Performance Feedback
Performance feedback should be a regular, expected management

activity.
Annual feedback is not enough.
Employees should receive feedback so often that they know what
the manager will say during their annual performance review.

Preparing for a Feedback Session

Managers should be prepared for each formal feedback session.

 When giving

performance
feedback, do it in
an appropriate
meeting place.
Meet in a setting
that is neutral and
free of
distractions.
What other
factors are
important for a
feedback session?