Chapter 8 – Appraising and Improving Performance
Performance Appraisal Programs
- Performance appraisal: A process performed annually (sometimes biannually or quarterly)
by a supervisor for a subordinate, designed to help employees understand their roles,
objectives, expectations, and performance success.
- Performance management: The process of creating a work environment in which people
can perform to the best of their abilities.
Purpose of Performance Appraisal
- It might seem performance appraisals are used for a rather narrow purpose – to evaluate
who is doing a good job or not. But it is far more than that. The use of performance
appraisals can be classified as Administrative or Developmental.
Used as a basis for compensation decisions (pay-for-performance)
Promotions, transfers, and layoff decisions
Determining the relative worth of jobs under a job evaluation program
Performance appraisal also provides “paper trail” for documenting HRM actions that can
result in legal actions.
Recognize the success of the entire HR program depends on knowing how the
performance of employees compares with the goals established for them.
From the stand point of individual development, appraisal provides the feedback
essential for discussing an employee’s strengths and weaknesses as well as improving
his or her performance.
Used to develop training and developmental plans for employees
Not used to judge employee’s current stand point but to improve overall.
- Reasons why sometimes performance appraisals yield disappointing results:
1. Lack of managerial support
2. Little face-to-face discussion between manager and employee being
3. The appraisal is annually and there is little follow up afterwards
4. Unclear performance standards
5. Time consuming with forms and paper-work Developing an Effective Appraisal Program
- HR department’s responsibility for overseeing and coordinating a firms appraisal program.
However managers also help establish the objectives
- Before any appraisal is conducted, the standards by which performance is to be evaluated
should be clearly defined and communicated to employee. These standards should be
based on job-related requirements derived from job analysis.
- There are 4 basic considerations in establishing performance standards: Strategic relevance,
criterion deficiency, criterion contamination, and reliability.
Refers to the extent to which the standards of an appraisal relate to the strategic
objectives of the organization in which they are applied.
The extent to which the standards capture the entire range of an employee’s
When a performance standard focuses on a single criterion to the exclusion of other
important ones, then the appraisal system is said to suffer from criterion deficiency.
There are factors outside an employee’s control that can influence his or her
A comparison of performance of production workers should not be contaminated by the
fact that some work with newer machines than others do.
A comparison of the performance of travelling salespeople should not be contaminated
by the fact that territories differ in sales potential.
Refers to the stability or consistency of a standard OR the extent to which individuals
tend to maintain a certain level of performance over time.
Reliability can be measured by correlating two sets of rating.
Calibration: Managers meet to discuss the performance of individual employees to
ensure their appraisals are in line with one another. The managers begin by rating those
employees whose performance rating are especially good or especially poor.
Legal Guidelines for Performance Appraisals
- Ratings must be job related with performance standards developed through a job analysis
- Employees much be given a written copy of their job standards in advance of their
- Managers who conduct the appraisal must be able to observe the behaviour they are rating.
This implies having measurable standards which could be compared later. - Supervisors should be trained to use the appraisal form correctly.
- The appraisal should be discussed openly with employees to help poor performers improve
- An appeals procedure should be established for employee disagreements
Who Should Appraise Performance?
The traditional approach to evaluating employees performance. Most instances,
supervisors are in the best position to perform this function.
Often conducted by a manager and supervisor (one level higher) to reduce biased