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ROBERT L. MATHISJOHN H. JACKSONChapter 11Performance Managementand AppraisalPresented by:Prof. Dr. Deden Mulyana, SE.,M,Si.http://www.deden08m.comSECTION 3Training and DevelopingHuman Resources

Learning Objectives After you have read this chapter, you should be able to: Identify the components of performance management systems. Distinguish between performance management andperformance appraisal, and between job criteria andperformance standards. Explain the administrative and developmental uses ofperformance appraisal. Describe the advantages and disadvantages of multisource(360 ) appraisals. Discuss the importance of training managers and employeesabout performance appraisal, and give examples of several ratererrors. Identify several concerns about appraisal feedback and ways tomake it more effective.http://www.deden08m.com

Nature of Performance Management Performance Management Processes used to identify, encourage, measure,evaluate, improve, and reward employeeperformance Provide information to employees about their performance. Clarify organizational performance expectations. Identify the development steps that are needed to enhanceemployee performance. Document performance for personnel actions. Provide rewards for achieving performance objectives.http://www.deden08m.com

PerformanceManagementLinkageFigure 11–1http://www.deden08m.com

Difference Between PerformanceManagement and Performance Appraisals PerformanceManagement Processes used toidentify, encourage,measure, evaluate,improve, and rewardemployee performance.http://www.deden08m.com PerformanceAppraisal The process of evaluatinghow well employeesperform their jobs and thencommunicating thatinformation to theemployees.

Components ofEffective PerformanceManagementFigure 11–2http://www.deden08m.com

Identifying and MeasuringEmployee Performance Performance What an employee does and does not do.Quantity of output Quality of output Timeliness of output Presence at work Cooperativeness Job Criteria Important elements in a given jobhttp://www.deden08m.com

Types of Performance InformationFigure 11–3http://www.deden08m.com

Relevance of Performance Overemphasishttp://www.deden08m.com

Performance Standards Performance Standards Expected levels of performance Benchmarks, goals, and targets Characteristics of well-defined standardsRealistic Measurable Clearly understood http://www.deden08m.com

Performance Appraisals and the Law Legally Defensible PA System: Appraisal criteria based on job analysis Absence of disparate impact and evidence of validity Formal evaluation criterion that limit managerialdiscretion Formal rating instrument linked to job duties andresponsibilities Personal knowledge of and contact with ratee Training of supervisors in conducting appraisals Review process to prevent undue control of careers Counseling to help poor performers improvehttp://www.deden08m.com

Uses of Performance Appraisal Performance Appraisal (PA) The process of evaluating how well employeesperform their jobs when compared to a set ofstandards, and then communicating the information toemployees. Informal Appraisal Day-to-day contacts, largely undocumented Systematic Appraisal Formal contact at regular time intervals, usually documentedhttp://www.deden08m.com

Conflicting Uses for Performance AppraisalFigure 11–4http://www.deden08m.com

Developmental Uses ofPerformance AppraisalPerformanceAppraisalAdministering Wagesand Salarieshttp://www.deden08m.comGiving PerformanceFeedbackIdentifying Strengthsand Weaknesses

Uses of Performance Appraisal (cont’d) Criticisms of Performance Appraisal Focus is too much on the individual and does little todevelop employees. Employees and supervisors believe the appraisalprocess is seriously flawed. Appraisals are inconsistent, short-term oriented,subjective, and useful only at the extremes ofperformance.http://www.deden08m.com

Typical Division of HR Responsibilities:Performance AppraisalFigure 11–5http://www.deden08m.com

Who Conducts Appraisals Supervisors who rate their subordinatesEmployees who rate their supervisorsTeam members who rate each otherEmployees’ self-appraisalOutside sources rating employeesMultisource (360 feedback) appraisalhttp://www.deden08m.com

TraditionalPerformanceAppraisal ProcessFigure 11–6http://www.deden08m.com

Employee Rating of Managers Advantages Helps in identifyingcompetent managers Serves to make managersmore responsive toemployees Can contribute to thecareer development ofmanagershttp://www.deden08m.com Disadvantages Negative reactions bymanagers to employeeratings Subordinates’ fear ofreprisals may inhibit themfrom giving realistic(negative) ratings Ratings are useful only forself-improvement purposes

Team/Peer Rating Advantages Helps improve theperformance of lower-ratedindividuals Peers have opportunity toobserve other peers. Peer appraisals focus onindividual contributions toteamwork and teamperformance.http://www.deden08m.com Disadvantages Can negatively affectworking relationships. Can create difficulties formanagers in determiningindividual performance. Organizational use ofindividual performanceappraisals can hinder thedevelopment of teamwork

Multisource AppraisalFigure 11–7http://www.deden08m.com

Category Scaling Methods Graphic Rating Scale A scale that allows the rater to indicate an employee’sperformance on a continuum of job behaviors. Aspects of performance measured:Descriptive categories, job duties, and behavioral dimensions Behavioral rating scales (e.g., BARS) DrawbacksRestrictions on the range of possible rater responses Differences in the interpretations of the meanings of scaleitems and scale ranges by raters Poorly designed scales that encourage rater errors Rating form deficiencies limit effectiveness of the appraisal http://www.deden08m.com

SamplePerformanceAppraisalFormFigure 11–8http://www.deden08m.com

Terms Defining Standards at One CompanyFigure 11–9http://www.deden08m.com

Behavioral/Objective Methods Behavioral Rating Approach Assesses employees’ behaviors instead of othercharacteristics Consists of a series of scales created by:Identifying important job dimensions Creating statements describing a range of desired andundesirable behaviors (anchors) Types of behavioral scalesBehaviorally anchored rating scales (BARS) Behavioral observation scales (BOS) Behavioral expectation scales (BES) http://www.deden08m.com

Behaviorally-Anchored Rating Scalefor Customer Service SkillsFigure 11–10http://www.deden08m.com

Category Rating Methods (cont’d) Checklists A performance appraisal tool that uses a list ofstatements or work behaviors that are checked byraters. Can be quantified by applying weights to individual checklistitems. DrawbacksInterpretation of item meanings by raters Weighting creates problems in appraisal interpretation Assignment of weights to items by persons other than theraters http://www.deden08m.com

Comparative Methods Ranking A listing of all employees from highest to lowest inperformance. DrawbacksDoes not show size of differences in performance betweenemployees Implies that lowest-ranked employees are unsatisfactoryperformers. Becomes an unwieldy process if the group to be ranked islarge. http://www.deden08m.com

Comparative Methods (cont’d) Forced Distribution Performance appraisal method in which ratings ofemployees are distributed along a bell-shaped curve. Drawbacks Assumes a normal distribution of performance. Resistance by managers to placing individuals in the lowestor highest groups. Providing explanation for placement in a higher or lowergrouping can be difficult. Is not readily applicable to small groups of employees.http://www.deden08m.com

Forced Distribution on a Bell-Shaped CurveFigure 11–11http://www.deden08m.com

Narrative Methods Critical Incident Manager keeps a written record of highly favorableand unfavorable employee actions. DrawbacksVariations in how managers define a “critical incident” Time involved in documenting employee actions Most employee actions are not observed and may becomedifferent if observed Employee concerns about manager’s “black books” http://www.deden08m.com

Narrative Methods (cont’d) Essay Manager writes a short essay describing anemployee’s performance. Drawback Depends on the managers’ writing skills and their ability toexpress themselves.http://www.deden08m.com

Management by Objectives (MBO) Management by Objectives Specifying the performance goals that an individualand his or her manager agree the employee will to tryto attain within an appropriate length of time. Key MBO Ideas Employee involvement creates higher levels ofcommitment and performance. Encourages employees to work effectively towardachieving desired results. Performance measures should be measurable andshould define results.http://www.deden08m.com

The MBO ProcessJob Review and AgreementDevelopment of Performance StandardsObjective SettingContinuing Performance Discussionshttp://www.deden08m.com

Training of Managers and Employees Appraisal Training Topics: Appraisal process and timing Performance criteria and job standards that should beconsidered How to communicate positive and negative feedback When and how to discuss training and developmentgoals Conducting and discussing the compensation review How to avoid common rating errorshttp://www.deden08m.com

Common Rater ErrorsFigure 11–12http://www.deden08m.com

Appraisal Interview HintsFigure 11–13http://www.deden08m.com

Feedback as a SystemEvaluationof DataDataFeedbackSystemAction Based onEvaluationhttp://www.deden08m.com

Training of Managers and Employees(cont’d) Effective Performance Management Systems(PMS) are: Consistent with the strategic mission of theorganization Beneficial as development tool Useful as an administrative tool Legal and job-related Viewed as generally fair by employees Effective in documenting employee performancehttp://www.deden08m.com

Difference Between Performance Management and Performance Appraisals Performance Management Processes used to identify, encourage, measure, evaluate, improve, and reward employee performance. Performance Appraisal The process of evaluating how well employees perform their jobs and then communicating that information to the employees.

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