CMS1 Assignment 7: Performance Appraisal

calibration

A process whereby managers meet to discuss the performance of individual employees to ensure their employee appraisals are in line with one another

essay method

A trait approach to performance appraisal that requires the rater to compose a statement describing employee behavior

Safeguards to ensure maximum quality and acceptance of 360-degree appraisal:

Assure anonymity Make respondents accountable Prevent "gaming" of the system Use statistical procedures Identify and quantify biases

Alternative sources of appraisal

Superior Peers Suppliers Customers Subordinates Self Vendors Team members Superior

What is the critical incident method of performance appraisal? Explain.

The critical incident method of performance appraisal is structured to focus on occasions when the behavior of an employee results in unusual success or unusual failure. The reports and documentation of these critical incidents are used to provide the involved employees with feedback and facilitate behavioral changes. Moreover, it avoids the recency error since the incident method covers the entire appraisal period.

total quality management (TQM)

a control system that involves setting standards (based on customer requirements), measuring a firm's performance against those standards, and identifying opportunities for continuous improvement

The _____________ method of performance appraisal consists of having the rating manager review a list of statements and check those that are characteristic of an employee's behavior or performance.

behavioral checklist

The choice of which performance appraisal method to use should be based largely on the _________ of the appraisal. The easiest and least expensive appraisal techniques often are the _______ accurate. However, research has not always supported a clear choice among appraisal methods.

purpose least

Strategic relevance

refers to the extent to which the standards of an appraisal relate to the strategic objectives of the organization in which they are applied.

Since performance appraisals are used as one basis for human resources and compensation administration actions, they must meet certain legal requirements. For example, courts have held that performance ______ must be carefully defined and measurable. Also, an employer might face a ______ challenge to its appraisal system when it disciplines an employee for poor performance, while under the existing _______ system the employee's performance has been found to be acceptable or above average.

standards legal rating

The ___________ is the opposite of the halo effect. It occurs when a manager focuses on one negative aspect about an employee and generalizes it into an overall poor appraisal rating.

"horn error"

Three types of Appraisal Interviews:

(1) Tell-and-Sell Interview (2) Tell-and-Listen Interview (3) Problem-Solving Interview

What are (a) the characteristics of the balanced scorecard (BSC) performance appraisal system and (b) some recommendations for ensuring its successful application?

(a) The BSC is a measurement framework that helps managers translate strategic goals into operational objectives. The generic model has four related categories: (1) financial, (2) customer, (3) processes and (4) learning. The BSC enables managers to translate broad corporate goals into divisional, departmental and team goals in a cascading fashion. The value of this is that each individual can see more clearly how his or her performance ties into the overall performance of the firm. (b) Some recommendations for ensuring the successful application of the BSC include: — Translate the strategy into a scorecard of clear objectives. — Attach measures to each objective. — Cascade scorecards to the front line. — Provide performance feedback based on measures. — Empower employees to make performance improvements. — Reassess strategy.

Some tips for using criticism constructively include the following:

- Consider whether it is really necessary - Consider the person - Be specific and do not exaggerate - Watch your timing - Make improvement your goal

behaviorally anchored rating scale (BARS)

A behavioral approach to performance appraisal that consists of a series of vertical scales, one for each important dimension of job performance.

behavior observation scale (BOS)

A behavioral approach to performance appraisal that measures the frequency of observed behavior

What should be the focus of an appraisal interview?

A major purpose of the appraisal interview is to make plans for improvement. Thus, it is important to focus the individual employee's attention upon the future rather than the past. The manager or supervisor should ask the interviewee to do a self-assessment prior to the appraisal interview, and invite the employee to participate in a dialogue that will help the employee to improve performance. It also is desirable to express appreciation and provide positive feedback to the employee. The focus should be on changing behavior not the person through mutual problem solving, goal setting and supportive follow up.

focal performance appraisal

An appraisal system in which all of an organization's employees are reviewed at the same time of year rather than on the anniversaries of their individual hire dates.

_______________ are part of an organization's measurement process. Those that are well executed have the capabilities to ____________ and improve an _________________, specifically—according to one study—in the areas of revenue growth, productivity, profitability and market value.

Performance appraisals influence employee behavior organization's performance

Describe the essay technique of performance evaluation.

The essay technique of evaluation requires the appraiser to describe the strong and weak aspects of an employee's behavior. In some organizations, the essay technique is the only one used. Often, however, the essay method is combined with another appraisal method such as a graphic rating scale. The essay can summarize the scale, elaborate on some of the ratings or discuss added dimensions not on the scale. A limitation of this method is that the quality of the performance appraisal may be influenced by the writing skills of the rater.

State the nature of the mixed standard scale method of performance appraisal.

The mixed standard scale method of performance appraisal is a modification of the basic rating scale method. Rather than evaluating traits according to a single scale, the rater is given three descriptions of each trait, reflecting superior, average and inferior performance.

performance management

The process of creating a work environment in which people can perform to the best of their abilities

State the nature of each of the following types of rater bias that can occur in conducting performance assessments:

a. error of central tendency Some managers have a tendency to evaluate everyone the same and in the middle. This type of bias is called central tendency. For example, a manager might assess all employees as having average performance regardless of their actual performance levels. b. excessive strictness or leniency Some evaluators have a tendency to rate all employees either too leniently or too strictly. A manager who rates all employees leniently might rate all employees as above average in performance. Conversely, a manager who evaluates all employees too strictly might rate their performances as below average.

Criterion deficiency

is the extent to which the standards capture the entire range of an employee's responsibilities.

Performance appraisal methods can be broadly classified as measuring traits, behaviors or ______. Trait appraisals are popular despite their inherent ________. Behavioral approaches provide _______information and may be best for development. Results-oriented approaches focus on the measurable _________ that employees make to an organization.

results subjectivity action-oriented contributions

Research shows that users prefer BOS over BARS for:

(1) maintaining objectivity (2) distinguishing good performers from poor performers (3) providing feedback (4) identifying training needs

A host of organizations have developed formal training programs to reduce the subjective errors commonly made during the rating process. This training can pay off, particularly when participants have the opportunity to:

(1) observe other managers making errors (2) actively participate in discovering their own errors (3) practice job-related tasks to reduce the errors they tend to make

Feedback training should cover at least three basic areas:

(1) communicating effectively (2) diagnosing the root causes of performance problems (3) setting goals and objectives

What are (a) the essential characteristics of a management by objectives (MBO) performance appraisal system and (b) the guidelines for a successful management by objectives (MBO) system?

(a) MBO is an individual type of performance appraisal method. In this system, the supervisor and the employee being evaluated jointly set objectives in advance for the employee to try to achieve during a specified period. The evaluation consists of a joint review of the degree of achievement of the objectives. This approach combines the supervisor-oriented and the self-evaluation systems. (b) The following guidelines are helpful in developing a successful MBO system: — Managers and employees must be willing to establish goals and objectives together. — Objectives should be quantifiable and measurable for the long and short terms. Also, a goal statement should have a description of how it will be accomplished. — Expected results must be under the employee's control. — Goals and objectives must be consistent for each level of the organization (top executive, manager and employee). — Managers and employees must establish specific times when goals are to be reviewed and evaluated.

A BSC appraisal takes into account four related categories: (1) financial, (2) customer, (3) processes, and (4) learning. Some recommendations for ensuring the method's success include the following:

- Translate the strategy into a scorecard of clear objectives - Attach measures to each objective - Cascade scorecards to the front line - Provide performance feedback based on measures - Empower employees to make performance improvements - Reassess the strategy

Eight key points to address during feedback sessions:

1. Give specific examples of desirable and undesirable behaviors 2. Focus feedback on behavior, not the person 3. Frame the feedback in turns of helping the employee be successful 4. Direct the feedback towards behavior the employee can control 5. The feedback should be timely 6. Limit feedback to the amount the employee can process 7. Use active communication skills and confirm the employee is engaged in the conversation 8. Providing employees with feedback on a continual basis also helps them know where they stand when they receive their formal appraisals.

The following guidelines can help an MBO program succeed:

1. Managers and employees must be willing to establish goals and objectives together. 2. The objectives should be quantifiable and measurable for the long and short terms 3. The results that are expected must be under the employee's control 4. The goals and objectives must be consistent for each employee level (top executive, manager, and employee). 5. Managers and employees must establish specific times when the goals are to be reviewed and evaluated.

There are four basic elements that must be considered when establishing performance standards:

1. strategic relevance 2. criterion deficiency 3. criterion contamination 4. reliability

manager and/or supervisor appraisal

A performance appraisal done by an employee's manager and often reviewed by a manager one level higher

peer appraisal

A performance appraisal done by one's fellow employees, generally on forms that are compiled into a single profile for use in the performance interview conducted by the employee's manager

self-appraisal

A performance appraisal done by the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview

subordinate appraisal

A performance appraisal of a superior by an employee, with is more appropriate for developmental than for administrative purposes

forced distribution

A performance appraisal ranking system whereby raters are required to place a certain percentage of employees into various performance categories

error of central tendency

A performance rating error in which all employees are rated about average

Identify primary reasons why performance appraisal systems may not be effective.

Among the primary reasons why performance appraisal systems might not be effective are: (a) Managers nervous about administering appraisals and want them to be over. (b) Managers not engaging employees in much conversation. (c) Managers sometimes reluctant to evaluate an employee's performance. (d) Managers lacking the skills to execute an effective performance review session. (e) Insufficient money in some situations to differentiate levels of performance.

critical incident

An unusual event that denotes superior or inferior employee performance in some part of the job

Explain the nature of the forced-choice performance appraisal method.

The forced-choice method of performance appraisal requires the rater to choose from statements (often in pairs) that appear to be equally favorable or unfavorable. The statements are designed to distinguish between successful and unsuccessful performance. However, the rater selects statements that correctly describe job behavior without knowing which relate to successful job behavior. Some limitations exist for the forced-choice method. It is costly to maintain the validity of a system. Also, it often is a frustrating procedure for raters and it is not very useful as an employee development tool.

There are many variations of the graphic rating scale. The differences are to be found in:

(1) the characteristics or dimensions on which individuals are rated (2) the degree to which the performance dimension is defined for the rater (3) how clearly the points on the scale are defined

recency error

A performance rating error in which the appraisal is based largely on the employee's most recent behavior rather than on behavior throughout the appraisal period

Who typically conducts the performance appraisals of employees in a firm? Explain.

Traditionally, an employee has been evaluated by his or her operating manager or supervisor. He or she is considered to be the person closest to the employee's activities and, therefore, the one most capable to make performance judgments. (Often, when this approach is used, provision typically is made for a review of such appraisal by the supervisor's superior.) Systems of self-appraisal are used in some instances too. In this approach an employee evaluates himself or herself with the techniques used by other evaluators. This approach often is more applicable for the developmental, as opposed to evaluative, aspects of performance evaluation. Subordinate appraisal systems are used in some organizations even though this approach involves many problems. They are useful for management developmental purposes rather than compensation. Also, they must provide anonymity to the raters. A few organizations use systems of rating employees by peers or co-workers of employees. In the peer evaluation system, the co-workers must know the level of performance of the employee being evaluated. Also, it is preferable for the evaluating peers to trust one another and not be competitive for raises and promotions. This approach tends to be useful when the tasks of the work unit require frequent working contacts among peers who then gain knowledge about each other's qualities of performance which supervisors generally could not observe. Team appraisal is an extension of the peer appraisal approach and focuses on team accomplishment rather than individual performance. External customer appraisals have been used for some time by organizations. Another approach has been to use internal customer appraisals where anyone who depends on the output of another's work becomes an appraiser.

A performance interview, in many instances, provides a basis for __________ in an employee's performance and for making plans for__________. Sometimes, underperformers may not understand exactly what is expected of them. It is recommended that a diagnosis of poor employee performance focus on three interactive elements: _______, ________ and the ________. If any one of these three elements is deficient or unfavorable, performance will suffer. Once the source of ineffective performance is known, a course of action can be planned. The _________ action may involve increasing an employee's knowledge and/or skills or a transfer to another job or department. If ineffective performance _________, it may be necessary to demote an employee, take disciplinary action or discharge the person.

noting deficiencies improvement ability motivation environment remedial persists

customer appraisal

A performance appraisal that, like team appraisal, is based on TQM concepts and includes evaluation from both a firm's external and internal customers

team appraisal

A performance appraisal, based on TQM concepts, that recognizes team accomplishment rather than individual performance

similar-to-me error

A performance rating error in which an appraiser inflates the evaluation of an employee because of a mutual personal connection

contrast error

A performance rating error in which an employee's evaluation is biased either upward or downward because of comparison with another employee just previously evaluated

leniency or strictness error

A performance rating error in which the appraiser tends to give employees either unusually high or unusually low ratings

management by objectives (MBO)

A philosophy of management that rates performance on the basis of employee achievement of goals set by mutual agreement of employee and manager

mixed-standard scale method

A trait approach to performance appraisal similar to other scale methods but based on comparison with (better than, equal to, or worse than) a standard

forced-choice method

A trait approach to performance appraisal that requires the rater to choose from statements designed to distinguish between successful and unsuccessful performance

graphic rating scale method

A trait approach to performance appraisal whereby each employee is rated according to a scale of characteristics

Describe how appraisal programs serve administrative and developmental purposes.

Appraisal programs serve administrative purposes by providing input that can be used for the entire range of human resource (HR) management activities, such as promotions, transfers, layoffs and pay decisions. The practice of "pay for performance"—basing employees' pay on their achievements—is found in all types of organizations. Studies have shown employees who earn performance-based pay are more satisfied. Performance appraisal data can also be used for HR planning to determine the relative worth of jobs, and as criteria for recruiting particular types of employees and validating selection tests. Yet another purpose of conducting performance appraisals is to document HR management actions that can result in legal challenges. With regards to the developmental purposes, the appraisal provides the feedback essential for discussing an employee's goals and how they align with those of the organization. As with the ongoing feedback, the appraisal process provides managers and employees the opportunity to discuss ways to build on their strengths, eliminate potential weakness, identify problems and set new goals for achieving high performance. Performance appraisals are also used to develop training and development plans for employees.

Distinguish among recency error, contrast error and similar-to-me error types of performance assessment bias.

One difficulty with many evaluation systems is the time frame of the behavior being evaluated. Evaluators forget more about past behavior than current behavior. Thus, many persons are evaluated more on the results of the past several weeks rather than on the basis of average behavior over the relevant appraisal period. This phenomenon is known as the recency error. Contrast error occurs when an evaluation of an employee is biased upward or downward because of the evaluation of another employee who was just evaluated previously. For example, an average employee may appear especially productive when compared with a poor performer. Similar-to-me error occurs when an appraiser inflates the evaluation of an employee with whom the appraiser has something in common. When the similarity is based on race, religion, gender or some other protected category, it may result in discrimination.

Explain the general factors that should be considered in the development of performance appraisal standards.

Performance appraisal standards, or criteria, must be based on job-related requirements and must be clearly defined and communicated. When established properly, they will translate job requirements into levels of acceptable/unacceptable employee performance. In selecting performance standards, there are four basic considerations: (1) Strategic relevance: Standards should be related to the strategic objectives of the organization and job. For example, if a standard that 95% of all customer complaints will be resolved in one day is appropriate to the job of customer service representative, then the standard is said to be relevant to job success. (2) Criterion deficiency: Standards should cover the entire range of employees' responsibilities. When they are focused on a single criterion such as sales revenues to the exclusion of other important performance dimensions, the system suffers from criterion deficiency. (3) Criterion contamination: Standards should be capable of being objectively applied. For example, comparison of performance among production workers should not be contaminated by the fact that some have newer machines than others. (4) Reliability: The reliability of a standard refers to its stability or consistency, that is, the extent to which individuals tend to maintain a certain level of performance over time. In ratings, reliability may be measured by correlating two sets of ratings made by a single rater or by two different raters. For example, two employment interviewers may interview the same group of job applicants and predict job success. The interviewer ratings could be compared to determine an indication of interrater reliability.

Describe the behaviorally anchored rating scale (BARS) and the behavior observation scale (BOS) methods of performance appraisal.

The behaviorally anchored rating scale (BARS) technique is based on the critical incident approach. Supervisors give descriptions of actual good and bad performances for each of five to ten rating scales, and committees of managers and employees rework and approve a set of critical incidents for each scale and anchor them quantitatively along each scale. This facilitates the assignment of points when employees are evaluated on each of the job characteristics incorporated within the rating scales. The behavior observation scale (BOS) method is similar to BARS. Both are based on critical incidents. However, under BOS the evaluators are asked to indicate how frequently each behavior has been observed rather than to choose the most representative anchor. Thus, the rater is asked to be an observer rather than a judge, thereby enabling more constructive feedback to an employee.

State the nature of the graphic rating scale method of performance appraisal.

The graphic rating scale method of performance appraisal requires the evaluator to rate employees on each of a set of characteristics listed on a scale. The number of characteristics rated varies from a few to several dozen, for example, quality of work, productivity, initiative and the like. (Sometimes these ratings are then assigned points. For example, outstanding may be assigned a score of four and unsatisfactory a score of zero. Total scores can then be computed. In some plans, greater weights may be assigned to more important traits.) Evaluators often are required to explain each rating with a sentence or two. These comments improve the accuracy of the appraisal because they require the rater to think in terms of observable employee behaviors while providing specific examples to discuss with the employee during the appraisal meeting.

performance appraisal

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. - Appraisals are simply a logical extension of the day-today- performance management process.

Identify and describe three basic types of performance appraisal interviews.

Three classic types of performance appraisal interviews are the tell-and-sell, tell-and-listen and problem-solving interviewing methods. A tell-and-sell interview is designed to persuade an employee to change in a prescribed manner. This may require the development of new behaviors in the employee, as well as a knowledge of how to make use of the kinds of incentives that motivate each individual employee. A tell-and-listen interview is structured to communicate the strong and weak points of an employee's job performance during the first part of the interview. The second part of the interview is used to allow the employee to express his or her feelings about the appraisal, and these feelings are thoroughly explored. The tell-and-listen method gives both managers and employees the opportunity to release and resolve any frustrating feelings they might have. A problem-solving interview is consistent with the nondirective procedures of the tell-and-listen method in that listening, accepting and responding to feelings are essential. However, the objective of a problem-solving interview is to go beyond an interest in the employee's feelings. It thus seeks to stimulate growth and development in the employee by discussing the problems, needs, innovations, satisfactions and dissatisfactions encountered in the performance of the job since the last appraisal interview.

What types of legal standards and guidelines apply to performance appraisal criteria? Explain.

Various court and regulatory agency rulings suggest that performance appraisals should meet the following guidelines: (a) Performance ratings must be job related with performance standards developed through a job analysis. (b) Employees must be given a written copy of their job standards in advance of appraisals. (c) Managers who conduct appraisals must be able to observe the behavior they are rating. This implies having measurable standards by which to compare employee behavior. (d) Performance problems should not be allowed to continue unchecked. Problems should be documented when they occur and should be referred to in employees' appraisals. (e) Supervisors should be trained to use the appraisal form correctly, including how to apply appraisal standards when making judgments. (f) Appraisals should be discussed openly with employees, and counseling or corrective guidance offered to help substandard performers to improve. (g) An appeals procedure should be established for employees to use.