Human Resource

Management

PERFORMANCE APPRAISAL Chapter 8

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Performance appraisal
The process by which organizations evaluate
individual job performance

OR

Process of defining “expectations” for

employee's performance”, measuring,
evaluating against these “expectations” and
providing “feedback”.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Uses of Performance Appraisal

Performance improvement- Performance

feedback allows the employee, the manager & the
HR personnel to intervene with appropriate actions to
improve performance
Compensation adjustments – PA helps decision
makers determine who should receive pay raises
Placement decisions – Promotions, transfers, and
demotions are based on PA
Training & development needs – Poor performance
may indicate a need for retraining. Likewise, good
performance may indicate untapped potential that
should be developed

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Uses of Performance Appraisal continue

Career Planning & Development- Performance

feedback guides career decisions about specific
career paths one should investigate
Staffing Process Deficiencies – Good or bad
performance implies strength or weaknesses in the
personnel dept staffing procedures
Job Design Errors- Poor performance may be a
symptom of improper job design. PA helps diagnose’
these errors.
External Factors- Sometimes performance may be
affected by external factor such as family, financial,
health etc. If these factors are uncovered the HR dept
may be able to provide assistance
Feedback To HR- Good or bad performance shows
the overall function of HR department
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
 Performance Appraisal Challenge

(a) Legal Constraints-

PA must be free of discrimination. Whatever form of
evaluation is used it should be reliable & valid;
otherwise placement decisions which are based on PA
can be challenged in the legal courts
GM example : From book
(b) Rater Biases-
Bias is the inaccurate of a measurement. Human
emotions of evaluators usually cause biasness in
performance evaluation
 (b) Rater Biases

The halo effect/ error

The error of central tendency

Rater Biases
Leniency & strictness bias
Bias is the inaccurate of a
Cross- cultural biases
measurement.
Human emotions of
Personal prejudice (discrimination)
evaluators usually cause
biasness in performance
evaluation The recency error
 Halo effect
error
Error of
Recency error
Central tendency

Distortions

Stereotyping Leniency &

Personal prejudice Strictness bias

Cross-culture biases

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Factors that can Distort
Appraisals
• Leniency & Strictness bias
– Leniency-Raters tend to be easy in evaluating the
performance of the employees
– Strictness bias-opposite, it results when raters
being too harsh in their evaluations
• Halo error
– When the raters personal opinion of the employee
influences the measurement of performance.
– Distort performance evaluation if a supervisor likes or
dislikes a person & rates him good or bad accordingly
– When rater evaluates personality traits (instead of
behaviors)
 Factors that can Distort Appraisals
– Central tendency:
– Raters do not like to rate employees as effective or
ineffective, they distort the ratings to make each employee
appear average
– The reluctance to use the extremes of a rating scale
Cross- cultural biases
– Rater holds expectations about human behavior that are
based on his culture
– When people are expected to evaluate others from different
cultures, they may apply their cultural expectations to
someone who has a diff set of beliefs or behaviors
(“respect & esteem” may bias the rating)
– Due to cultural value of respect a young Asian employee
would rate an elderly employee out of respect good
 Factors that can Distort
Appraisals
– Stereotyping/Personal prejudice (discrimination)
– raters dislike for a group or class of people may
distort the ratings those people receive
– HR dept noticed that male supervisor give
undeserved low ratings to women who hold
“traditionally male jobs”– this form of
discrimination can lead to violation of EEO
– The recency error
– Recent actions are remembered by the rater…
good or bad before evaluation.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
 How to Reduce Rater Bias
When rater uses subjective performance measures, biases
can be reduced through training, feedback & proper
selection of PA techniques……
• Three approaches:

Absolute standards

Relative standards

Future-Oriented Appraisals
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
 Past- oriented Appraisal Methods
Evaluating absolute standards:
• An employee’s performance is
measured against established
standards.
• Evaluation is independent of any other
employee.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Appraisal Methods
Relative standards:
• Employees are evaluated by comparing
their performance to the performance of
other employees.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Past- Oriented Appraisal Methods
Past-oriented approaches measures performance that has already
occurred. The disadvantage of this approach is that past performance
cannot be changed but employees do get feedback, which helps them
in their future performance.

Absolute standards Relative standards

• Rating scales Ranking Methods

• Checklists Forced distribution
• Forced choice method Point allocation method
• Critical incident method Paired comparisons
• Accomplishment Records
• Behaviorally anchored rating scales
• Field review method
• Performance tests and observations

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Appraisal Methods
Relative standards:
– Rating Scale Appraisal: Appraiser rates employee on
a number of job-related factors
– Subjective evaluation of an individuals performance
along a scale from low to high
– Totally based on the opinions of rater
– Criteria often is not directly related to job performance
– Adv : simple, inexpensive
– Dis-adv: specific criteria maybe omitted to make the
form applicable to a variety of jobs
– Example: equipment maintenance-imp part of job, but
omitted b’coz it does not apply to all
“Thus making evaluation ineffective”
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
 Checklist Appraisal
– Appraiser checks off behaviors that apply to the employee
– Rater selects words or statement that describes the
employees performance & characteristics
– With or without the rater knowledge the HR dept assign
weights to different items in the checklist depending on
their importance- weighted checklist
– List contains enough items, it may provide an accurate
picture
– Adv: limited training required
– Dis adv: use of personality criteria instead performance
criteria- improper weights by HR dept
– Does not allow rater to give relative ratings
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
 Appraisal Methods
– Forced-Choice Appraisal: Appraisers choose from
sets of statements which appear to be equally favorable,
the statement which best describes the employee.
– HR specialists code items on the form into
predetermined categories such as learning ability,
performance & interpersonal relations
1. Learns quickly…… works hard
2. Absent too often…. Usually tardy
3. Work is reliable……performance is a good example
for others
Disadvantage: less job related statements
employee may get offended--- one area overlooked

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Appraisal Methods
Critical Incident Appraisal
• Rater record statements that describe extremely
good or bad behavior related to job performance
• Recorded incidents briefly explain of what
happened
• Incidents include both + (Positive)& - (Negative)

– Advantage: provide job related feedback

» Reduces recency bias
– Disadvantage: rater looses interest in recording
incidents after some time
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
 Appraisal Methods
• Accomplishment records:
– Closely related to critical incident method
– Primarily used by professionals
– Employee-produced records of
publications, speeches, leadership roles &
other professional related activities
– Disadvantage: list only includes good
things the person did

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Behaviorally anchored rating scales

• BARS are families of evaluation

approaches that identify & evaluate job
related behaviors
• Specific name behaviors are used to give
the rater reference points in making the
evaluation

BES BOS

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Behavioral expectation scales
• Specific behaviors are ranked along a scale For example
BES for Bartender’s Customers Relations:

• Extremely Out Standing 7 you can expect this bartender

• Performance to help customers in need.

• Good performance 6 you can expect this bartender to

calm down arguments before they erupt into fires

--
--
• Poor performance 2 you can expect this bartender
to check identification of customers on their first time in the
bars.
• Extremely poor 1 you can expect this bartender
Performance to pick up customers drinks
finished or not with little or no warning at close
time.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Field review method
• Skill representative of HR dept goes into field &
assists supervisor with their ratings
• HR specialists obtain information from immediate
supervisor about employee performance
• Expert prepares an evaluation
• Evaluation sent to supervisor for review, changes,
approval and discussion with employee who was
rated
• Reliability and comparability are more likely and
rater biases are less common
• Bias may still exist since primary source of info is
the supervisor

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Performance test & observations

Assignment

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Comparative Evaluation Approaches

Relative standards:
– Individual Ranking: Employees are
ranked from highest to lowest– best to
worst
– HR dept knows that certain employees are
better than others but it doesn’t know by
how much

– Paired Comparison:
• Each individual is compared to every other.
• Final ranking is based on number of times the
individual is preferred member in a pair.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
Employees Tufail Waheed Asif Akmal Arif Sohrab Naeem Latif Farooq

1.Haris 1 1 4 1 1 1 1 9 1

2.Tufail 3 4 2 2 2 2 9 2

3.Waheed 4 3 3 3 3 9 3

4.Asif 4 4 4 4 9 4

5.Akmal 6 5 8 9 10

6.Arif 6 8 9 10

7.Sohrab 8 9 10

8.Naeem 9 10

9.Latif 9

10.Farooq

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Forced distributions
• Raters sort employees into different
classifications, usually with specified
proportions in each category
• Relative differences among employees are
not known
• Overcome biases of Central tendency,
leniency, and strictness errors
• Example from the book or handouts

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
 Point allocation
• Rater allocate a fixed number of points
among employees in the group
• Good performers are given more points
than poor performers
• Rater can recognize the relative differences
between employees
• Halo effect & recency bias remain

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Point allocation method
Points Employees
• 17 A
• 14 B
Allocate all 100 points to all
• 13 C
employees according to their
• 11 D relative worth. The
• 10 E employee with the
• 10 F maximum points is the best
• 9 G employee
• 6 H
• 5 I
• 5 J
• 100
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
 Future oriented appraisals
Future – orientated focus on future performance by
evaluation an employee’s potential & setting future
goals.

• Self-appraisals
• Management by Objectives (MBO’s)
• Psychological appraisals
• Assessment centers

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Self appraisals
• Useful tool for employees who want to develop
themselves
• Means evaluating oneself
• Important dimension of self appraisals is the
employee involvement in & commitment to the
improvement process
• Example: construction CO. supervisor telling
employees what is expected- employees fill a
sheet-understanding of the job before 10-15 days
PA is to be done
– job accomplishment, performance difficulties &
suggestions for improvement– tells supervisor what
they need to do in future to eliminate roadblocks

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Future oriented appraisals
Management by Objectives (MBO)
– includes mutual objective setting and
evaluation based on the attainment of the
specific objectives
– It consists of goals that are objectively measured
and mutually agreed on by employee and the
manager.
Goal setting
Action planning
Self-control
Periodic review
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
 Appraisal Methods
Using Achieved Outcomes to Evaluate
Employees
– Common elements in an MBO program
are:
• goal specificity
• participative decision making
• an explicit time period
• performance feedback
– Effectively increases employee
performance and organizational
productivity.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Psychological appraisals
• Org employs psychologists- to assess individuals future
potential, not that individuals past performance
• In depth interviews, psychological tests, discussions with
supervisors and review of other evaluations
• Raters writes an evaluation of employees intellectual,
emotional, motivational and other work related
characteristics that may predict future performance
• relate to job opening for which the person is being
considered- placement-development decisions can be made
to shape persons career
• Slow and costly– good for young bright managers
• Quality of appraisals depends on skills of psychologist-
some employees object to these evaluation

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance
Management Systems
Combine Absolute and Relative
Standards:
• Absolute standards tend to be positively
lenient; relative standards suffer when
there is little variability.
• Combining the standards tends to offset
the weaknesses of each.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance
Management Systems
Provide Ongoing Feedback:
• Expectations and disappointments
should be shared with employees on a
frequent basis.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance
Management Systems
Use Multiple Raters:
• Increasing the number of raters leads to more
reliable and valid ratings.
– Use peer evaluations: Coworkers offer
constructive insights and more specific
evaluations.
– Upward appraisals allow employees to give their
managers feedback.
– 360-Degree appraisals: Supervisors, peers,
employees, team members, customers and others
with relevant information evaluate the employee.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance
Management Systems
Rate Selectively
– Appraisers only evaluate in those areas
about which they have sufficient
knowledge.
– Appraisers should be organizationally as
close as possible to the individual being
evaluated.
– More effective raters are asked to do the
appraisals.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance
Management Systems
Train Appraisers:
• Untrained appraisers who do poor
appraisals can demoralize employees
and increase legal liabilities.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance
Management Systems

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

 Guidelines for Evaluation Performance Interviews

 Emphasize positive aspects of employee

performance
 Tell each employee that the evaluation session is
to improve performance, not to discipline
 Conduct the performance review session in
private with the minimum interruptions
 Review performance formally at least annually &
more frequently for new employees or those who
are performing poorly
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins
 Guidelines for Evaluation Performance Interviews

 Make criticisms specific, not general & vague

 Focus criticisms on performance, not personality
characteristics
 Stay calm & do not argue with the person being evaluated
 Identify specific actions the employee can take to
improve performance
 Emphasize the evaluator’s willingness to assist the
employee’s efforts & to improve performance
 End the evaluation sessions by stressing the positive
aspects of the employee’s performance
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins