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MGHB12H3 (73)
Chapter 008

Human Resource Management - Chapter 008

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Management (MGH)
Joanna Heathcote

CHAPTER8:PERFORMANCE MANAGEMENT ANDTHEEMPLOYEE APPRAISAL PROCESS 13 November 2013 PERFORMANCE MANAGEMENT SYSTEMS PERFORMANCE M ANAGEMENT is the process of creating a work environment in which people can perform to the best of their abilities. STEP 1: Goals set to align with higher level goals STEP 2: Behavioural expectations and STEP 6: HR decision standards set and promotion, etc) themployee andith orgnaizational goals STEP 5: Formal Sperformanceing review session feedback porvided conducted during cycle STEP 4: appraised by manager PERFORMANCE APPRAISALSis the result of an annual or biannual process in which a manager evaluates an employee’s performance relative to the requirements of his or her job and uses the information to show the person where improvements are needed and why. ONGOING PERFORMANCE FEEDBACK Because feedback is most useful when it is immediate and specific to a particular situation, it should be a regularly occurring activity. Managers need to constantly engage in a dialogue with their subordinates. Once the manager and employees have a series of discussions, there is an ebb and flow of ideas, some with the potential to serve as catalysts for improvement within the company. The ultimate purpose is to better both parties. Providing employees with feedback on a continual basis also helps them know where they stand when they receive formal appraisals. Anxiety they experience during formal appraisals is often alleviated,andamoremeaningfulconversationwiththemandtheirsupervisorscantakeplace.Sevenkey points to address during feedback sessions:  Give specific examples of desirable and undesirable behaviors  Focus feedback on behavior, not the person  Frame the feedback in turns of helping the employee be successful  Direct the feedback toward behavior the employee can control  The feedback should be timely  Limit feedback to the amount the employee can process  Use active communication skills and confirm that the employee is engaged in the conversation PERFORMANCE APPRAISAL PROGRAMS FOCAL P ERFORMANCE APPRAISAL is an appraisal system in which all of an organization’s employees are reviewed at the same time of the year rather than on the anniversaries of the individual hire dates. Advantages: Helpful if a company is experiencing change and must quickly alter its strategy, after goals of firm established, they can be translated to individual goals employees receive all at the same time. It also enables managers to compare performance of different employees simultaneously. THE PURPOSES OF PERFORMANCE APPRAISAL Goodappraisalsystemshavethecapabilitytoinfluenceemployeebehaviorandimproveanorganization’s performance. Strong performance management systems are 40-50% more likely to outperform their competitors in areas of revenue growth, productivity, profitability, and market value. Formal appraisals ensure employees receive at least some feedback from their supervisors. Negative feedback at least lets people know that they matter. Two most common purposes of performance appraisals: administrative and developmental. Administrative Purposes Developmental Purposes •Document personnel decisions •Provide performance feedback •Promote employees •Identify individual strengths and weaknesses •Determine transfers and assignments •Recognize indiivdidual performance •Identify performance problems and develop achievements ways to correct them •Help employees identify goals •Make retention, termination, and layoff •Evaluate goal achievement of employees decisions •Identify individual training needs •Validate selection criteria •Determine organizational training needs •Meet legal requirements •Reinforce authority structure •Evaluate training programs or progress •Allow employees to discuss concerns •Assist with human resources planning •Improve communciation •Make reward and compensation decisions •Provide a forum for leaders to help employees Administrative purposes are appraisal programs (promotions, transfers, layoffs, pay decisions) that pay forperformance.Employeeswho earnperformancebasedpayaremoresatisfied.Italsoprovidesapaper trail for documenting HRM actions that can result in legal action. Performance appraisals are used to develop training and development plans for employees. Developmental purposes, appraisal provides feedback essential for discussing employee and organizational goal alignment. It provides an opportunity to build strengths, eliminate potential weaknesses,identifyproblems,andsetnewgoalsforachievinghighperformance.Developmentapproach helps employees understand that appraisals are being conducted to improve their future competencies and further careers and not just to judge them on past performance. W HY APPRAISALPROGRAMS SOMETIMES F AIL  Some people believed performance appraisals discourage teamwork because they focus on individual achievements versus what firms accomplish  Others contend appraisals are only useful at extremes, for highly effective or highly ineffective employees, and are not useful for the majority of employees in the middle  Otherspointoutappraisalsfocusonshorttermachievementsratherthanlongtermimprovement and learning Why performance appraisal systems might not be effective, common problems:  Inadequate preparation on the part of the manager  Employee not given clear objectives at the beginning of performance period  Manager may not be able to observe performance or have all the information  Performance standards not clear  Inconsistency in ratings among supervisors or other raters  Manager rating personality rather than performance  The halo effect, contrast effect, or other perceptual bias  Inappropriate time span  Overemphasis on uncharacteristic performance  Inflated ratings because managers do not want to deal with “bad news”  Subjective or vague language in written appraisals  Organizational politics or personal relationships cloud judgments  No thorough discussion of causes of performance problems  Manager not trained at evaluation or giving feedback no follow-up and coaching after the evaluation SUMMARY OF PROBLEMS: Lack of top-management information and support, unclear performance standards, biased ratings because managers lack training, too many time-consuming forms to complete, use of program for conflicting purposes. A main concern employees have relates to the fairness of performance appraisal systems. The managers may sometimes inflate evaluations to get better ratings, to get rid of troublesome employees, to get higher salaries for employees. Employees who believe system as unfair will find appraisal a waste of time and leave interview. By addressing this issue, it is more likely to be successful. DEVELOPING AN EFFECTIVE APPRAISAL PROGRAM Employees are more likely to accept and be satisfied with the performance appraisal program when they have the chance to participate in its development. W HAT ARE THEPERFORMANCE STANDARDS ? Standards should be based on job related requirements. There are four basic considerations in establishing performance standards: strategic relevance, criterion, deficiency, criterion contamination, and reliability. STRATEGICR ELEVANCEis theextentto whichthe standards of an appraisal relate to the strategicobjectives of the organization (IE: Standard that 95% of customer complaints resolved in one day, customer service representatives will be held to this standard when evaluated). These strategic objectives are translated into performance standards for employees. A strategy-driven performance appraisal process provides documentation HR managers need to justify various training expenses to close any gaps between employees’ current skills and those they need in the future to execute the firm’s strategy. CRITERION DEFICIENCY is the extent to which the standards capture the entire range of employee’s responsibilities (IE: Focus on single criteria (revenue) and exclude important but less quantifiable dimensions (customer service), then appraisal system is suffering from criterion deficiency). CRITERION CONTAMINATION are the factors outside an employee’s control that influence his or her performance (IE: Comparison of performance of production workers should not be contaminated by fact some work with newer machines). RELIABILITis the stability or consistency of a standard, the extent to which individuals tend to maintain a certain level of performance over time. In terms of appraisal ratings, reliability can be measured by correlatingtwo setsofratingsmadebyasingleraterorbytwo differentraters. C ALIBRATIONistheprocess whereby managers meet to discuss the performance of individual employees to ensure their employee appraisals are in line with one another. LEGALISSUES Legal challenges may occur when appraisals indicate an employee’s performance is acceptable or above average, but person is later passed over for promotion, disciplined for poor performance, discharged, or laid off from organization (discriminatory). Legal guidelines:  Performance ratings must be job related, performance standards developed through job analysis  Employees must be given a written copy of job standards  Managers who conduct appraisals must be able to observe behavior they are rating  Do not allow performance problems to continue unchecked  Supervisors should be trained to use appraisal form correctly  Appraisals should be discussed openly with employees and counselling offered to help improve  Appeals procedure should be established to enable employees to express disagreement W HO SHOULD APPRAISEPERFORMANCE Raters may include supervisors, peers, team members, self, subordinates, customers, vendors, and suppliers. M ANAGER AND /OR SUPERVISOR A PPRAISALis the performance appraisal done by an employee’s manager and often reviewed by a manager one level higher (traditional). Managers often complain they do not have time to fully observe the performance of employees, these managers must rely on performance records. When supervisor appraises employees independently, provision is often made for a review of appraisal by supervisors superior to reduce chance of superficial or biased evaluations. SELF-APPRAISAL is the performance appraisal done by the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview. This gets employee thinking about his or her strengths and weaknesses and lead to discussions about barriers to effective performance. During performance interview, manager and employee discuss job performance and agree on final appraisal. Critics say employees are more lenient than managers in assessments and tend to present themselves in a favorable light and can lead employees to become frustrated when expectations not met. This approach is best for developmental purposes rather than administrative. SUBORDINATE APPRAISAL is the performance appraisal of a superior by an employee, which is more appropriate for developmental than for administrative purposes. To give managers feedback on how subordinates view them because they are in frequent contact. To avoid potential problems, subordinate appraisals should be submitted anonymously. PEER APPRAISAL is the performance appraisal done by fellow employees, generally on forms that are compiledintoasingleprofileforuseintheperformanceinterviewconductedbytheemployee’smanager. Advantageisthebeliefthattheyfurnishmoreaccurateandvalidinformationthanappraisalsbysuperiors (realistic picture). Reasons they are not used frequently:  Peer ratings are popularity contest  Managers are reluctant to give up control over appraisal process  Those receiving low ratings might retaliate against peers  Peers rely on stereotypes in ratings Whenpeersareincompetitioninoneanother,peerappraisalsshouldnotbeusedtomakeadministrative decisions. TEAM A PPRAISAListheperformanceappraisal,basedontotalqualitymanagementconceptsthatrecognize team accomplishment rather than individual performance. CUSTOMER A PPRAISALis the performance appraisal that, like team appraisals, is based on total quality management concepts and seeks evaluation from both external and internal customers. PUTTING IT ALTOGETHER:360-D EGREEAPPRAISAL 360-degree feedback is intended to provide employees with as accurate a view of their performance as possible by getting inputfrom allangles. Becauseitcombinesmoreinformationthan typicalperformance appraisal, it can become administratively complex. They developed Workstream 7.0 to give mangers single view of all talent manager information. It observed the following safeguards to ensure maximum quality and acceptance:  Ensure anonymity  Make respondents accountable (make sure they used scales appropriately)  Prevent “gaming” of the system (check for invalid responses)  Use statistical procedures (weighted averages)  Identify and quantify biases (check for prejudice related to groups) Pros Cons •System is more comprehensive in that •System is complex in combining all responses responses are gathered from multiple •Feedback can be intimidating and cause perspectives resentment if an employee feels the •Quality of information is better respondents have "ganged up" •Complements TQM initiatves by emphasizing •Conflicting opinions, although they may be all internal/external customers and teams accurate from respective standpoints •May lessen bias or prejudice because •System requires training to work effectively feedback comes from more people •Employees may collude or "game" the system •Feedback from peers and others may by giving invalid evaluations to one another increase employees self-development •Appraisers may not be accountable if evaluations are anonymous TRAININGA PPRAISERS Aweaknessofmanyperformanceappraisalprogramsithatmanagersandsupervisorsarenotadequately trained for the appraisal task, so the feedback they provide to their subordinates is not as useful as it might be and can often be meaningless, if not destructive. Establishing an appraisal plan, a training program is most effective when it follows a systematic process that begins with an explanation of the objectives of the firm’s performance appraisal system. It is also important for rater to know the purpose for which the appraisal is to be used (compensation vs. development purposes). Weaknesses and problems of appraisals should be alerted to be avoided. Eliminating rater error, subjective errors should be eliminated:  HALO ERROR , sol’n: comments tend to reduce halo error  HORN E RROR, the opposite of halo effect, occurs when a manager focuses on one negative aspect about an employee and generalizes it into an overall poor appraisal rating, personality conflict between manager and employee increases probability of horn effect  DISTRIBUTIONALE RROR, a group of ratings given across various employees o ERROR OF CENTRAL TENDENCY ,iswhereemployeesareratedaboutaverage,raterswho are reluctant to assign extremely high or low rating, sol’n: one should find significant differences in behavior, productivity, and other characteristics o LENIENCY OR STRICTNESS ERROR , is when appraisers give employees unusually high or low ratings, sol’n: define the characteristics or dimensions of performance and to provide meaningful descriptions of behavior  FORCED D ISTRIBUTIO, what some managers require, to place certain percentage of employees to various performance categories (solve leniency and strictness error)  PEER RANKING , whereby employees are ranked against one another from best to worst (solve leniency and strictness error)  RECENCY ERROR , based on employee’s most recent behavior rather than on behavior throughout the appraisal period (temporal), managers who give higher ratings because employees are “showin
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