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Chapter 10 – Performance Management + Appraisal

Performance Management
A series of activities designed to ensure that the organization gets the performance that it needs from its employees.
Difference between Performance Management + Performance Appraisal
Performance Management is the entire system; Performance Appraisal is one facet of PM
Tasks of a performance management system
1) Make clear what the organization expects
2) Document performance for personal records
3) Identify areas of success + needed development
4) Provide performance information to employees
Job Duty
1) Identify the most important elements of the job. Most simply put – what employees are paid to do.
Performance Standards
1) Def
2) Characteristics of good ones
1) Define the expected levels of employee performance
2) Should be realistic, measurable, and clearly understood
Types of Performance Information (TEST)
1) Trait Based – Character traits like attitude, initiative, values, teamwork, etc
2) Behavior Based – Focuses on specific behaviors – communication, customer satisfaction, ethics
3) Results-Based Information – Employee Accomplishments – Sales volume, cost reduction, etc

Note: Performance measures can be objective (observed) or subjective (require judgment on the part of the evaluator)

Performance Appraisal
The process of determining how well employees do their jobs relative to a standard and communicating that information to them.
Common measures in Performance Appraisals (6)
1) Quantity of output
2) Quality of output
3) Timeliness of output
4) Efficiency of work completed
5) Effectiveness of work completed
6) Presence / attendance on the job (not just present, but engaged)
Uses of Performance Appraisals
1) Administrative – Disciplinary action, compensation adjustments, promotions/demotions
2) Developmental – Career progression, training, coaching, mentoring
Responsibilities of HR + Management (respectively) when conducting Performance Appraisals
1) HR Unit
A) Design the system
B) Train the evaluators
C) Review for consistency

A) Rate employee performance + prepare official documents
B) Review appraisals with employees
C) Identify development areas

Types of Performance Appraisals
1) Informal – whenever necessary
2) Systematic – more formal, uses a system
Main Legal Concern with Performance Appraisals
The legality of performance appraisals all comes with having an accurate, up-to-date job description
Characteristics of Performance Appraisals to avoid legal issues
1) Performance criteria based on job analysis
2) Absence of disparate impact
3) Documentation
4) Training of supervisors
5) Review process (review the performance appraisals to ensure fairness)
Who conducts performance appraisals?
1) Supervisors rating employees
2) Employees rating supervisors
3) Team members rating each other
4) Employees rating themselves
5) Outside sources rating employees (customers, etc)
6) Variety of parties provide multi-source 360 degree feedback
Multi-source / 360 Degree rating
1) Definition
2) Goal
3) Popularity?
1) Information is collected from a variety of sources (manager, customer, self, subordinates, peers, etc) to evaluate an employee’s performance.
2) Get richer feedback from diverse parties
3) Increasing in popularity – Larry likes them + recommends using them.
Reasons employees + managers dislike performance appraisals
1) Time consuming
2) Sometimes inaccurate
3) People don’t want to hear negative feedback
Graphic Rating Scale
Scale that allows the rater to mark an employee’s performance on a continuum such as 0 to 10
Behaviorally Anchored Rating Scale [BARS] (TEST)
1) Scales describe specific examples of job behavior, which are then measured against a performance scale.
2) It’s important to identify job dimensions, then provide short descriptive statements of both desirable and undesirable behaviors that serve as anchors
Comparative Methods of performance
1) Ranking – List of employees from highest to lowest. Drawbacks – don’t know size difference (might be tight/loose curve). Also, everyone might be really good, then someone good finishes last
2) Bell Curve Positives – increases competition. Negatives – Might not be fair
3) Narrative Methods –
Critical Incident – mgr keeps a written record of good / bad actions. Essay – Mgr writes a short essay describing employee’s performance
4) Combinations
Management by Objectives (aka MBO)
Specify performance goals that an individuals agrees upon and then tries to attain it within an appropriate amount of time
Steps of Management by Objective
1) Job review + agreement
2) Development of performance standards
3) Setting of objectives
4) Continuing performance discussions
Rater Errors (TEST)
1) Varying standards –
2) Recency effect – giving greater weight to recent events
3) Primacy Effect – giving greater weight to info received first.
4) Central tendency – gives everyone average
5) Leniency error – rates everyone highly
6) Strictness error – rates everyone low
7) Rater bias
8) Halo Effect – rates highly in all areas bc good performance in one
9) Horns effect – 1 bad characteristic leads to overall low rating
10) Contrast error – rate people against each other rather than against the performance standards
11) Similar / different to me –
12) Sampling Error – rater only has a small sample of work
Characteristics of Performance Management Systems (TEST)
1) Consistent with mission
2) Developmental tool
3) Administrative tool (keep documentation for this)
4) Legal + job related
5) Viewed as fair by employees (transparency to employees is big for this)
6) Effectively documents performance

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