Maria Aleni B.

Verallo MBM I

HRM 101 Atty. Luciano Malapitan

Appraising and Improving Performance

Management is doing things right; leadership is doing the right things. Peter F. Drucker, American Management Guru

Performance Appraisal Program: Performance appraisal program is defined by Gomez-Mejia et al as a system that comprises the identification, measurement and management of human performance in organization. Identification includes defining the areas of work the manager should examine when measuring performance. Measurement entails making managerial judgments of how good or bad employee performance was. Performance measurement must be consistent throughout the organization. That is, all managers in the organization must maintain comparable rating standards. Management is the overriding goal of any appraisal system. Appraisal should be more than a past-oriented activity that criticizes or praises workers for their performance in the preceding year. Various terms are used to evaluate employee performance namely performance rating, merit rating, efficiency rating, employee evaluation, service rating, personnel rating, performance review and performance appraisal. According to Perfecto Sison, a reputable author and founder of People Management Association of the Philippines (PMAP), the performance of an employee on his job is judged in the terms of two factors namely: 1. The dimension of the job which includes the requirements, duties, and responsibilities and their standards of satisfactory performance. 2. The dimension of the man and his performance. As per Sison, performance should be distinguished from duties. Duties and responsibilities refer to what is should be done, the rendering of what is due to any person or organization and the fulfillment of moral obligation. Performance tells how much should be done or accomplished, its quality, and the manner in which it is done. Performance appraisal program aids the organization and its subordinates whose performance are being evaluated. The performance appraisal provides information and input in all aspects of human resource management such as recruitment, selection, training and development, compensation and labor relation for the organization to utilize in in corporate planning and decisions. For the employee, it provides feedback about work performance and promotes fair relationships in group. Assuming that the performance is acceptable, it boosts an individuals self-image and feeling of competence, consequently improving ones performance and work attitude. Development of an Appraisal Program: Arthur Sherman et al quoted Bernardin and Beatty discussing the four recent developments that apply to the increased interest in employee appraisal system namely: 1. There is an increased regulation of Human Resource functions. It is deemed necessary for employers to uphold truthful and impartial records of performance of employees to protect themselves from possible charges of discrimination when it comes to discharge, promotions and/or compensation practices. 2. The second development focuses on the attitudes of workers that have increased influence on the work related decisions. These decisions may concern compensation and performance based promotions. 3. The third development centers on the underutilization or mismanagement of human resources resulting in increased cost and diminished organizational performance. Organizations must appraise the performance of employees against objectively set job- related standards. 4. The fourth development concerns the low productivity growth of the countries. Improved appraisal systems linking individual performance and rewards to measurable organizational goals are championed as on was to beat the productivity dilemma. Generally, the main responsibility of administration and coordinating the appraisal program rests upon Human Resources Department. Managers from various departments should be actively involved in it, especially in the establishment of objectives for the appraisal program.

Objectives of Performance Appraisal: As per Sison, the following are the objectives of an employee performance rating system: 1. Providing feedback on employee performance. The performance rating can help raise employee efficiency because it provides a feedback of the employees weak and strong points. Supervisors and managers can pinpoint trouble spots and correct poor work habits when necessary. Performance standards must be made clear to the employee, so he will know whether or not he is meeting them. 2. Basis for personnel action. Performance rating provides an objective and systematic basis for the various personnel action such as promotion, transfer, demotion, layoff, discharge, and increase in pay. a. Potentials and Promotions. Performance rating aid the management in identifying and selecting employees for promotion to supervisory or administrative positions. They aid in discovering hidden talents and potential abilities. With an effective rating program, leadership potential for supervisory position can be identified. b. Transfer, Demotion, Layoff and Discharge. They serve as a guide to determine priorities in layoffs or reinstatement. They also provide basis for determining if the employee is better suited for another job or could not perform his present job satisfactorily. c. Salary Increases. They serve as a basis for granting salary increases within the limits of the salary range, as a reward for an exceptional performance. 3. Management guide in employee counseling and discipline. Performance ratings may reveal weak points that the employee is unaware of and which he can and will be glad to work out. A periodic review of an employees performance can serve as a basis for supervisory counseling and guidance. This may also motivate the employee to improve himself. 4. Promotion of better employee - employer relations. By informing the employee of what is expected of him by his superior, his performance to tasks and job requirements, what needs improving when it comes to his shortcomings and increase his value to the company. 5. Improvement of supervision by making the supervisor better aware of his duties Evaluation of the employees performance makes the supervisor do his job more effectively. 6. Development of employees and supervisor. Since the supervisor must know the strong and weak points of a worker, he must improve his methods of instruction and supervision. This means integrating the appraisal program with the supervisors basic management job of improving operating results by utilizing the talents of the supervisor and his subordinates. It guides him in assigning work best suited to each workers ability and to exert efforts in helping the employee overcome his weaknesses. By reviewing the ratings, the higher level supervisors or executives can evaluate whether or not their supervisors know judge their subordinates fairly. On the other hand, since the supervisor knows that these ratings are reviewed by his superiors, he makes it a point to be as fair as possible when he rates his men. The rating system in this way also helps in developing supervisors. 7. As an Agent of Change Periodic employee performance evaluation may reveal the existence of certain factors preventing efficient performance of the employee such as physical or interpersonal and social restraints. The review will therefore enable management to remove such restraints or restructure the job to make it more meaningful and thus motivate the employee for better achievement. Whenever some changes are made on the job, however, he should make the employee understand why the changes are made. 8. Identification of training needs and management development Performance appraisal may reveal the employees weaknesses and thereby help identify his specific training needs. It also enables management to identify the supervisors who have leadership potential and who may be recommended for higher management positions. A sound rating can also reveal weaknesses or errors in the selection, hiring, placement, training, and other personnel actions. 9. Facilitate organizational diagnosis and development The primary purpose of performance appraisal is to encourage employees to put forth their best efforts in their work toward the attainment of organizational goals. Performance appraisal points out the relative strengths and weaknesses of people in the organization as well as the effectiveness of systems and procedures used by workers in doing their jobs. Poor performance might be a result of a faulty communication system. Or it could be a function of a reward system which does not sufficiently motivate employees to reach higher productivity levels. Performance appraisal thus contributes to the identification of

organizational problems and the appropriate interventions needed to respond to such problems. Qualifications of Appraisers: According to Arthur Sherman et al, managers and supervisors traditionally served as appraisers of their subordinates. In most instances they are in the best position to perform this function but are not necessarily qualified to do so. The following are criteria that should be met by appraisers: 1. Opportunity to observe. The appraiser must be in a position to collect relevant information about the person being evaluated, through personal observation, reviewing records, or talking with others who have direct knowledge of the person. 2. Understanding of job requirements. A clear understanding of job requirements and standards of satisfactory performance is required. 3. Having an appropriate point of view Ones point of view influences which observed performance is considered desirable or undesirable. Other Sources of Appraisals: Managers and supervisors are traditionally the primary sources of appraisals. Occasionally, appraisals are made by persons other than their immediate superiors. Other sources of appraisals are as follows: 1. Peer appraisals: The evaluation came from individuals of equal rank who work together. Peer appraisals provide information which differs to some degree from ratings by a superior. Peers can readily identify leadership and interpersonal skills along with other strengths or weaknesses of their co-workers. Research shows that peer reviews may not accurately assess workplace performance. The cause of this problem is that co-workers tend to evaluate jobs and employee performance differently that the managers of those jobs or employees. Employers using peer appraisals must exercise confidentiality over the review forms. Any loss of confidentiality can cause interpersonal rivalries or hurt feelings and encourage hostility toward fellow employees. 2. Self- appraisals Seldom times employees are asked to evaluate themselves. Self-appraisals are beneficial when managers seek to increase the employees involvement in the review process. A self- appraisal system requires an employee to complete the appraisal form prior to the performance review. During the performance interview, the supervisor and the employee jointly discuss job performance and mutually agree upon a final appraisal of the employee. This approach also works well when the supervisor and the employee mutually establish future performance goals or employee development plans. 3. Appraisal by subordinates This kind of appraisal has been used in some instances to provide superiors with feedback on how their subordinates view them. Colleges and universities use this appraisal technique to obtain student feedback on teachers classroom performance. 4. Team Appraisal This is an extension of the peer appraisal. In a team setting, it might be impossible to separate out an individuals contribution. In such cases, doing individual appraisals might detract from the critical mission of the team. Team appraisals are designed to evaluate the performance of the team as a whole. 5. Customer Appraisal Internal and external customers are increasingly used as sources of performance appraisal information. The opinions of vendors and suppliers are also sometimes utilized in the appraisal process. Internal customers can include anyone within the organization who depends on the employees work output.

360 Degree Appraisal A 360 Degree Appraisal is an appraisal device that seeks performance feedback from such sources as the person being rated, bosses, peers, team members, customers and suppliers. Downsizing has giver supervisors greater responsibility and more employees who report directly to them. Accordingly, in some instances it is almost impossible for supervisors to have extensive job knowledge of each of their employees. The growth of project teams and employee involvement in todays companies places responsibility for evaluation at points at which people are better able to make accurate assessment. This process also has positive benefits for development concerns. Many managers simply do not know how their employees view them and their work. Research studies into the effectiveness of 360degree performance appraisals are generally reporting positive results from more accurate feedback, empowering employees, reducing subjective factors in the evaluation process, and developing leadership in an organization. But 360 degree systems are not without problems if used improperly. They are difficult to develop and complex to analyze. Rater can game the system by artificially inflating or penalizing co-workers to help their own ratings. Anonymity of raters and rater training is necessary. Training of Appraisers Arthur Sherman et al quoted Latham and Wexley on the importance of performance appraisal training: Observer bias in performance appraisals can be largely attributed to well-known rating errors.. that occur in a systematic manner when an individual observes and evaluates another. In order to minimize the occurrence of rating error and costly litigation battles, organizations, regardless of the appraisal instrument they use, are well advised to expose people who evaluate employees to a training program to minimize rating errors. In training of appraisers we should focus on the following: 1. Establishing an Appraisal Plan This systematic process covers (1) the objectives of the performance appraisal system, and (2) the mechanics of the rating system (including the method, frequency, and strengths and weaknesses of the system). Training programs are most effective when they follow a systematic process that begins with an explanation of the objectives of the performance-appraisal system. The rating mechanics used by the organization are explained, including how frequently the appraisals are to be conducted, who will conduct the appraisal, and what the standards of performance are. Also, appraisal training should alert the rater to the weaknesses and problems of appraisal systems so supervisors can avoid the problems. 2. Eliminating Rater Error Appraisal training should focus on the subjective errors made by managers in the rating process. Organizations like Sears and Allied Chemical have developed formal training programs, complete with workbooks, to reduce the subjective rating errors commonly made during the review process. Research has shown that appraisers are prone to make several different types of rating errors. Distributional errors (e.g., central tendency, leniency, and strictness errors) involve the arrangement of a group of ratings across several employees. Forced distribution and peer rankings are techniques that some organizations use to eliminate these types of errors. However, not all corporate cultures are conducive to forced rankings systems. Firms that place a high-priority on teamwork would probably find forced ranking to be counterproductive. In addition, these ranking systems can sometimes adversely affect employee morale and lead to lawsuits. Behavioral anchors may be a more effective approach to minimizing distributional errors. Temporal errors (e.g., recency) are the result of how a person evaluates information over time. Contrast error occurs when an employees evaluation is biased either favorably or unfavorably because of a previous employees performance evaluation. Similar-to-me error occurs when an appraiser inflates the evaluation of a person with whom they have something in common. 3. Development of interviewing skills. Managers at Mattel Inc. participate in videotaped role-playing appraisal sessions designed to increase their skills as constructive evaluators. Video-taping the role playing permits the

managers and supervisors to view and critique their own performance and progress and to experiment with different interview techniques. 4. Feedback Training Feedback not only provides employees with knowledge of results, but it also allows the manager and employee to discuss current problems and set future goals. Managers need to realize that employees want feedback. That is, they want know how they are doing and how they can improve. They are less eager to be appraised or judged. A training program for raters should provide some general points to consider before the appraisal interview begins. A checklist of activities is shown below to assist supervisors in preparing for the appraisal interview. Check list of supervisors activities before the review: Scheduling: 1. Schedule the review and notify the employee ten days or two weeks in advance. 2. Ask the employee to prepare for the session by reviewing his or her performance, job objectives and development goals. 3. Answer any preliminary employee questions. 4. Discuss the meeting agenda with the employee Prepare for the review: 1. Plan for what is to be discussed, including specific facts and examples. 2. Establish session objectives and agenda. 3. Include time to discuss the employees concerns and questions. 4. Allow at least one uninterrupted hour for the session. Create a proper setting and climate: 1. Select a location that is comfortable and free from distractions. 2. Take action to eliminate unannounced visitors and telephone calls. 3. Ensure that the selected location will encourage a frank and candid conversation. 4. Avoid a lets get this over with attitude. Selection of Performance Standards: The standards against which the employees are to be evaluated should be clearly defined and communicated to the employee. These standards, or criteria, must be based on job-related requirements. When performance standards are established properly, they will translate job requirements into levels of acceptable/ unacceptable employee performance. In selecting performance standards, the following are to be considered: 1. Strategic Relevancethis refers to how the appraisal standards relate to the strategic objectives of the organization. A strategy-driven performance appraisal process results in the documentation HR managers need to justify various training expenses in order to close any gaps between, employees current skills and those they will need in the future to execute the firms strategy. 2. Criterion Deficiency- Performance standards must capture the full range of a persons job. When standards focus on only one element of the job (e.g., sales), they are likely leave out important evaluation criteria. 3. Criterion Contamination- Performance standards should not be influenced by factors outside the employees control. For example, if bad materials or poor equipment affects an employees performance, his or her performance standards may be contaminated. 4. Reliability - This 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. Performance standards should be written and that they should be defined in quantifiable and measurable terms. A new process some companies are using to make sure managers are rating employees consistently is called calibration. During calibration meetings, a group of supervisors, led by their managers and facilitated by an HR professional, discuss the performance of individual employees to ensure all managers apply similar standards to all of the firms employees.

Calibration meetings can be particularly helpful after a merger or acquisition, especially one thats global. Performance standards will permit managers to specify and communicate precise information to employee regarding quality and quantity levels and output. Therefore, when performance standards are written they should be defined in quantifiable and measurable terms. Performance Appraisal and the Law: Since performance appraisals are used as one basis for HRM actions, they must meet certain legal requirements. As defines by the courts, a central issue is to have carefully defined and measurable performance standards. While the acceptable method for measuring the validity of a performance appraisal procedure has not been clearly established the emphasis on such validation has had some effect. It has resulted in the elimination of vague descriptions of behavior such as attitude, cooperation, dependability, initiative and leadership. Generally, the elimination of these vague performance traits or characteristics will improve the appraisal progress. Recent court rulings suggest that performance appraisal should meet these guidelines: 1. Performance rating must be job-related. 2. Managers who conduct the appraisal must be able to observe the behavior they are rating. This implies having a measurable standard by which to compare employee behavior. 3. Measurements may not be based upon constructs or upon vague or subjective factors. 4. Rater bias toward race, sex, religion, schooling, past work experience, physical appearance of handicaps must be avoided. 5. Collection and retention of performance data must protect the employees right to privacy. Data collected must serve a mutual need and the employee must consent to its use and/or disclosure. Employers who wish to comply with the legalities surrounding appraisals should ensure that performance standards are clearly communicated to employees before performance is appraised and that supervisors are fully trained in the organizations rating instrument. Managers and supervisors must document appraisals and reasons for subsequent HRM actions. Why Performance Appraisal Fail: According to Sherman et al the following are reasons why performance appraisal may yield disappointing results. 1. 2. 3. 4. 5. 6. Multiple uses of the program. Lack of top-management support, Lack of job-relatedness standards Rater bias Too many appraisal forms to complete on each individual. Lack of support from the top management.

There are also managerial issues that affect performance appraisal results. These are as follows: 1. There is little face-to-face discussion between the manager and the employee being appraised. 2. The relationship between the employees job description and the criteria on the appraisal form isnt clear. 3. Managers feel that little or no benefit will be derived from the time and energy spent in the process, or they are concerned only with bad performances. 4. Managers dislike the face-to-face confrontation of appraisal interviews. 5. Managers are not sufficiently adept at rating employees or providing them with appraisal feedback. 6. The judgmental role of appraisal conflicts with the helping role of developing employees. 7. The appraisal is just a once-a-year event, and there is little follow-up afterward.

An important principle of performance appraisal is that continuous feedback and employee coaching must be a positive daily activity. The annual or semi-annual performance review should simply be a logical extension of the day-to-day supervision process. Administrative Concerns: The cost of establishing and maintaining a performance-appraisal program should be considered. The time spent in preparing reports and in conducting interviews will constitute the bulk of the costs. The salaries or fee of professional persons who develop the program, analyze the reports, and prepare various summaries for use by management are also chargeable to the program. The salaries of personnel who maintain the files of appraisal reports must also be considered. Having a sound basis for improving performances is one of the major benefits of an appraisal program. Performance-appraisal data may also be used to assess the effectiveness of other aspects of the HR program and thus provide information that may reveal the need for improvements. It is important to recognize that the success of the entire HR program depends upon knowing how the performance of employee compares with the goals established for them. This knowledge can best be obtained from a carefully planned and administered HR appraisal program. Performance Appraisal Methods: Performance appraisal systems can be broadly classified as trait methods, behavioral methods, or results-oriented methods. A. Trait Methods Trait approaches to performance appraisal are assigned to measure the extent to which an employee possesses certain characteristicssuch as dependability, creativity, initiative, and leadershipthat are viewed as important for the job and the organization in general. The fact that trait methods are the most popular method is due in large part to the ease with which they are developed. However, if not designed carefully on the basis of job analysis, trait appraisals can be notoriously biased and subjective. 1. Graphic Rating Scales -- In the graphic rating-scale method, traits or characteristics are rated on a line or scale. Rating scale forms may differ between organizations based on the dimensions to be appraised, the degree to which the performance dimensions are defined, and the degree to which the points on the scale are defined. 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, and (3) how clearly the points on the scale are defined. Subjectivity bias is reduced somewhat when the dimensions on the scale and the scale points are defined as precisely as possible. This can be achieved by training raters and by including descriptive appraisal guidelines in a performance appraisal reference book developed by the organization. Also, the rating form should provide sufficient space for comments on the behavior associated with each scale. These comments improve the accuracy of the appraisal since they require the rater to think in terms of observable employee behaviors while providing specific examples to discuss with the employee during the appraisal interview.

2. Mixed-Standard Scales The mixed standard scale method is a modification of the basic rating scale method. Rather than evaluating traits according to a single scale, the rater is given three specific descriptions of each trait. These descriptions reflect three levels of performance: superior, average, and inferior. After the three descriptions for each trait are written, they are randomly sequenced to form the mixed standard scale. Supervisors evaluate employees by indicating whether their performance is better than, equal to, or worse than the standard for each behavior. 3. Forced-Choice Method The forced-choice method requires the rater to choose from statements, often in pairs, that appear equally favorable or equally unfavorable. The statements, however, are designed to distinguish between successful and unsuccessful performance. The rater selects one statement from the pair without knowing which statement correctly describes successful job behavior. For example, forced-choice pairs might include the following:

1a. Works hard 1b. Works quickly 2a. Is responsive to customers 2b. Shows initiative 3a. Produces poor quality 3b. Lacks good work habits. The forced-choice method is not without limitations, the primary one being the cost of establishing and maintaining its validity. The fact that it has been a source of frustration to many raters has sometimes caused the method to be eliminated from appraisal programs. In addition, it cannot be used as effectively as some of the other methods to help achieve the commonly held objective of using appraisals as a tool for developing employees by such means as the appraisal interview.

4. Essay Method -- Unlike rating scales, which provide a structured form of appraisal, the essay method requires the appraiser to compose a statement that best describes the employee being appraised. The appraiser is usually instructed to describe the employees strengths and weaknesses and to make recommendations for his or her development. Often the essay method is combined with other rating methods. Essays may provide additional descriptive information on performance that is not obtained with a structured rating scale. The essay method provides an excellent opportunity to point out the unique characteristics of the employee being appraised. This aspect of the method is heightened when a supervisor is instructed to describe specific points about the employees promotability, special talents, skills, strengths, and weaknesses. A major limitation of the essay method is that composing an essay that attempts to cover all of an employees essential characteristics is a very time-consuming task (though when combined with other methods, this method does not require a lengthy statement). Another disadvantage of the essay method is that the quality of the performance appraisal may be influenced by the supervisors writing skills and composition style. Good writers may simply be able to produce more-favorable appraisals. A final drawback of this appraisal method is that it tends to be subjective and may not focus on relevant aspects of job performance. B. Behavioral Methods Behavioral methods have been developed to specifically describe which actions should (or should not) be exhibited on the job. They are frequently more useful for providing employees with developmental feedback. 1. Critical Incident Method The critical incident method is also used as a method of appraisal. Recall, a critical incident occurs when employee behavior results in unusual success or unusual failure on some part of the job. A favorable critical incident is illustrated by the janitor who observed that a file cabinet containing classified documents had been left unlocked at the close of business. The janitor called the security officer, who took the necessary action to correct the problem. An unfavorable incident is illustrated by the mail clerk who failed to deliver an Express Mail package immediately, instead putting it in with regular mail to be routed two hours later. One advantage of the critical incident method is that it covers the entire appraisal period (and therefore may guard against recency error). And because the behavioral incidents are specific, they can facilitate employee feedback and development. However, unless both favorable and unfavorable incidents are discussed, employees who are appraised may have negative feelings about this method. Some employees have been known to refer to it as the little black book approach. Perhaps its greatest contribution is in developing job specifications and in constructing other types of appraisal procedures. 2. Behavioral Checklist Method One of the oldest appraisal techniques is the behavioral checklist method. It consists of having the rater check those statements on a list that the rater believes are characteristic of the employees performance or behavior. A checklist developed for computer salespersons might include a number of statements like the following:

_________ Is able to explain equipment clearly _________ Keeps abreast of new developments in technology _________ Tends to be a steady worker _________ Reacts quickly to customer needs _________ Processes orders correctly

3. Behaviorally Anchored Rating Scale (BARS) A behaviorally anchored rating scale (BARS) consists of a series of five to ten vertical scales--one for each important dimension of performance identified through job analysis. These dimensions are anchored by behaviors identified through a critical incidents job analysis. The critical incidents are placed along the scale and are assigned point values according to the opinions of experts. A BARS is typically developed by a committee that includes both subordinates and managers. The committees task is to identify all the relevant characteristics or dimensions of the job. Behavioral anchors in the form of statements are then established for each of the job dimensions. Several participants are asked to review the anchor statements and indicate which job dimension each anchor illustrates. The only anchors retained are those which at least 70 percent of the group agrees belong with a particular dimension. Finally, anchors are attached to their job dimensions and placed on the appropriate scales according to values that the group assigns to them. At present there is no strong evidence that a BARS reduces all of the rating errors mentioned previously. However, some studies have shown that scales of this type can yield more-accurate ratings. One major advantage of a BARS is that personnel outside of the HR department participate with HR staff in its development. Employee participation can lead to greater acceptance of the performance appraisal process and of the performance measures that it uses 4. Behavior Observation Scales (BOS) The research into BARS has led in turn to at least two other types of rating scales, the behavioral observational scale (BOS) and the behavioral discrimination scale (BDS). These scales are developed like the BARS but are themselves different. A BOS states a behavior and asks the rater to indicate where on a scale the employee's performance falls. The BDS is more complex: for each of the behaviors generic ones in this case the rater is asked to judge three areas: (1) opportunity to exhibit the behavior, (2) satisfactoriness of exhibiting the behavior, and (3) level of performance of the behavior. C. Results Methods 1. Productivity Measures - A number of measures can be used to assess results achieved. Salespeople, for example, are evaluated based on sales volume. Production workers can be evaluated based on output produced, scrap rate, defects, and the like. 2. Management by Objectives - Developed by Peter Drucker in 1954, management by objectives (MBO) is a philosophy of management as well as a goal-setting and performance appraisal system. At periodic time intervals, employees set goals with their supervisors and are evaluated against those goals on specified review dates. a. Requirements for a Successful MBO Program To be successful, MBO programs must meet several characteristics. Established goals should be quantifiable and set for both the long run and the short run. Goals must be realistically set and under the employees control. Managers and employees must establish specific times when goals are to be reviewed and accompanying the goals should be a detailed description of how the goals will be achieved. The success of an MBO program depends heavily on a behavioral change by both the supervisor and the subordinate. Both individuals must be willing to mutually establish goals and measurable standards for employee performance. Furthermore, MBO must be viewed as part of a system of managing, not as merely an addition to the managers job. Managers who adopt MBO as a system of managing must be willing to delegate responsibility for reaching goals to their subordinates.

b. Advantages of MBO A major advantage of MBO is that it requires the setting of employee-established goals. Goal setting has been shown to improve employee performance, thereby leading to increased productivity. Measurable increases in job performance typically range from 10 to 25 percent, and in some cases they have been even higher. Goal setting works because it allows employees to focus their efforts on important job tasks and makes them accountable for completing these tasks. Furthermore, goal setting establishes an automatic feedback system, since employees can regularly evaluate their performance against their goals. Goal setting has been of benefit to groups as diverse as clerical personnel, scientists, maintenance employees, computer analysts, and engineers. b. Criticisms of MBO. The MBO system is not without its critics. MBO is a lengthy and costly appraisal system. Another criticism of MBO is that since performance data are designed to measure results, they may be affected by factors out of an individuals control. This raises the issue of criterion contamination. MBO systems may inadvertently encourage employees to look good on a shortterm basis, while ignoring the long-term ramifications. Line supervisors, for example, may let their equipment suffer to reduce maintenance costs. If the MBO program focuses on a narrow set of results criteria to the exclusion of other important process issues, the system may suffer from criterion deficiency and may unintentionally foster the attitude that what gets measured gets done. In fact, in any job involving interaction with others, it is not enough to meet certain production or sales objectives. Factors such as cooperation, adaptability, initiative, and concern for human relations may be important to job success. If these factors are important job standards, they should be added to the appraisal review. Thus, to be realistic, both the results and the method used to achieve them should be considered. 3. The Balanced Scorecard Developed by Harvard professors Robert Kaplan and David Norton, the Balanced Scorecard (BSC), is a measurement framework that helps managers translate strategic goals into operational objectives. The logic of the BSC is that learning and people management help organizations improve their internal processes. Similar in some ways to MBO, the BSC enables managers to translate broad corporate goals into divisional, departmental and team goals.

D. Which Performance Appraisal Method to Use? The choice of method should be based largely on the purpose of the appraisal. The comparison below lists some of the strengths and weaknesses of trait, behavior, and results approaches to appraisal. Note that the simplest and least expensive techniques often yield the least-accurate information. SUMMARY OF VARIOUS APPRAISAL METHODS

Trait Methods Behavioral Methods Results Method

ADVANTAGES 1. Are inexpensive to develop 2. Use meaningful dimensions 3. Are easy to use 1. 2. 3. 4. 1. 2. 3. Use specific performance dimensions Are acceptable to employees and superiors Are useful for providing feedback Are fair for reward and promotion decisions Has less subjectivity bias Is acceptable to employees and superiors Links individual performance to organizational performance 4. Encourages mutual goal setting 5. Is good for reward and promotion decisions

DISADVANTAGES 1. Have high potential for rating errors 2. Are not useful for employee counseling 3. Are not useful for allocating rewards 4. Are not useful for promotion decisions 1. Can be time-consuming to develop/use 2. Can be costly to develop 3. Have some potential for rating error 1. 2. 3. 4. Is time-consuming to develop/use May encourage short-term perspective May use contaminated criteria May use deficient criteria

However, research has not always supported a clear choice among appraisal methods. While researchers and HR managers generally believe that the more sophisticated and more time-consuming methods offer more useful information, this may not always be the case. Managers must make costbenefit decisions about which methods to use. Review of an Evaluators Appraisal Most of the performance appraisal programs, the employees immediate supervisor has the responsibility to appraise the employees performance. Where a supervisor appraises employees independently, provision is often made for a review of the appraisals by the supervisors superior. Having appraisals reviewed by a supervisors superior reduces the chance of superficial or biased appraisals. Reviews by the superiors generally are more objective and provide a broader perspective of employee performance by immediate supervisors. In some organizations, a review system that requires supervisors to substantiate their appraisal before a committee composed of peer supervisors also is used. The reviewer who is typically required to make comments that will be meaningful to both the rater and the rate has a more difficult role than the rater. It involves communicating with the two individuals rather than one. In the process, the reviewer should become aware of the types of errors and biases that can enter the process. Feedback of Appraisals The success of a performance appraisal program is ultimately dependent upon the effective utilization of the information that results from the appraisal process. Such information may be used as the basis for various types of HRM actions. The information should also be communicated by a supervisor to an individual employee during a well-planned appraisal interview.

Appraisal Interviews The appraisal interview is perhaps the most important part of the entire performance appraisal process. The appraisal interview gives a manager the opportunity to discuss a subordinates performance record and to explore areas of possible improvement and growth. It also provides an opportunity to identify the subordinates attitudes and feelings more thoroughly and thus to improve communication. Unfortunately, the interviewer can become overburdened by attempting to discuss too much, such as the employees past performance and future development goals. Dividing the appraisal interview into

two sessions, one for the performance review and the other for the employee's growth plans, can alleviate time pressures. Moreover, by separating the interview into two sessions, the interviewer can give each session the proper attention it deserves. It can be difficult for a supervisor to perform the role of both evaluator and counselor in the same review period. Dividing the sessions may also improve communication between the parties, thereby reducing stress and defensiveness. The format for the appraisal interview will be determined in large part by the purpose of the interview, the type of appraisal system used, and the organization of the interview form. Most appraisal interviews attempt to give feedback to employees on how well they are performing their jobs and on planning for their future development. Interviews should be scheduled far enough in advance to allow the interviewee, as well as the interviewer, to prepare for the discussion. Usually ten days to two weeks is a sufficient amount of lead time. Areas of Emphasis Since the major purpose of the appraisal interview is to make plans for improvement. The following are the areas of emphasis in which the interviewee should focus on: 1. Emphasize strength on which the interviewee can build rather than stress weaknesses to be overcome. 2. Avoid suggestions involving the changing of traits, but rather suggest more acceptable ways of performing. 3. Concentrate on opportunities for growth that exist with the framework of the individuals present position. 4. Limit plans for growth to a few important items that can be accomplished within a reasonable period of time. Three Types of Appraisal Interviews The individual who has probably studied different approaches to performance appraisal interviews most thoroughly is Norman R. F. Maier. In his classic book The Appraisal Interview, he analyzes the cause-andeffect relationships in three types of appraisal interviews: tell-and - sell, tell -and-listen, and problem solving. Tell-and-sell interview. The skills required in the tell-and-sell interview include the ability to persuade an employee to change in a prescribed manner. This may require the development of new behaviors on the part of the employee and skillful use of motivational incentives on the part of the appraiser/supervisor. Tell-and-listen interview. In the tell-and-listen interview the skills required include the ability to communicate the strong and weak points of an employee's job performance during the first part of the interview. During the second part of the interview, the employee's feelings about the appraisal are thoroughly explored. The supervisor is still in the role of appraiser, but the method requires listening to disagreement and coping with defensive behavior without attempting to refute any statements. The tell-and-listen method assumes that the opportunity to release frustrated feelings will help to reduce or remove those feelings. Problem-solving interview. The skills associated with the problem-solving interview are consistent with the nondirective procedures of the tell-and-listen method in that listening, accepting, and responding to feelings are essential. However, the problem-solving method goes beyond an interest in the employee's feelings. It seeks to stimulate growth and development in the employee by discussing the problems, needs, innovations, satisfactions, and dissatisfactions the employee has encountered on the job since the last appraisal interview. Maier recommends this method, since the objective of appraisal is normally to stimulate growth and development in the employee.

Managers should not assume that only one type of appraisal interview is appropriate for every review session. Rather, they should be able to use one or more of the interview types, depending on the topic being discussed or on the behavior of the employee being appraised. The interview should be seen as requiring a flexible approach.

Conducting the Appraisal Interview While there are probably no hard-and-fast rules for how to conduct an appraisal interview, there are some guidelines that may increase the employee's acceptance of the feedback, satisfaction with the interview, and intention to improve in the future. Many of the principles of effective job interviewing apply to performance appraisal interviews as well. Here are some other guidelines that should also be considered. Ask for a self assessment. It is useful to have employees evaluate their own performance prior to the appraisal interview. Even if this information is not used formally, the self-appraisal starts the employee thinking about his or her accomplishments. Self-appraisal also ensures that the employee knows against what criteria he or she is being evaluated, thus eliminating any potential surprises. When the employee has evaluated his or her own performance, the interview can be used to discuss those areas where the manager and the employee have reached different conclusions. Invite participation. The core purpose of a performance appraisal interview is to initiate a dialogue that will help an employee improve her or his performance. To the extent that an employee is an active participant in that discussion, the more likely it is that the root causes and obstacles to performance will be uncovered, and the more likely it is that constructive ideas for improvement will be raised. In addition, research evidence suggests that participation is strongly related to an employee's satisfaction with the appraisal feedback as well as her or his intention to improve performance. As a rule of thumb, supervisors should spend only about 30 to 35 percent of the time talking during the interview. The rest of the time they should be listening to employees respond to questions. Express appreciation. Praise is a powerful motivator, and in an appraisal interview, particularly, employees are seeking out positive feedback. It is frequently beneficial to start the appraisal interview by expressing appreciation for what the employee has done well. In this way, he or she may be less defensive and more likely to talk about aspects of the job that are not going so well. However, try to avoid obvious use of the sandwich technique, in which positive statements are followed by negative ones, which are then followed by positive statements. This approach may not work for several reasons. Praise often alerts the employee that criticism will be coming. Positive comments following the criticism then suggest to the employee that no more negative comments will come for a while. If managers follow an appraisal form, the problem of the sandwich technique will oftentimes be avoided. Minimize criticism. Employees who have a good relationship with their managers may be able to handle criticism better than those who do not. However, even the most stoic employees can absorb only so much criticism before they start to get defensive. If an employee has many areas in need of improvement, managers should focus on those few objective issues that are most problematic or most important to the job. Change the behavior, not the person. Managers frequently try to play psychologist, to figure out why an employee has acted a certain way. However, when dealing with a problem area, in particular, remember that it is not the person who is bad, but the actions they have exhibited on the job. Avoid suggestions about personal traits to change; instead suggest more acceptable ways of performing. For example, instead of focusing on a persons unreliability, a manager might focus on the fact that the employee has been late to work seven times this month. It is difficult for employees to change who they are; it is usually much easier for them to change how they act. Focus on solving problems. In addressing performance issues, it is frequently tempting to get into the blame game in which both manager and employee enter into a potentially endless discussion of why a situation has arisen. Frequently, solving problems requires an analysis of the causes, but ultimately the appraisal interview should be directed at devising a solution to the problem. Be supportive. One of the better techniques for engaging an employee in the problem-solving process is for the manager to ask, What can I do to help? Employees frequently attribute performance problems to either real or perceived obstacles (such as bureaucratic procedures or inadequate resources). By being open and supportive, the manager conveys to the employee that he or she will try to eliminate external roadblocks and work with the employee to achieve higher standards.

 Establish goals. Since a major purpose of the appraisal interview is to make plans for improvement, it is important to focus the interviewees attention on the future rather than the past. In setting goals with an employee, the manager should observe the following points: 1. Emphasize strengths on which the employee can build rather than weaknesses to overcome. 2. Concentrate on opportunities for growth that exist within the framework of the employee's present position. 3. Limit plans for growth to a few important items that can be accomplished within a reasonable period of time. 4. Establish specific action plans that spell out how each goal will be achieved. These action plans may also include a list of contacts, resources, and timetables for follow-up. Follow up day to day. Ideally, performance feedback should be an ongoing part of a managers job. Feedback is most useful when it is immediate and specific to a particular situation. Unfortunately, both managers and employees are frequently happy to finish the interview and file away the appraisal form. A better approach is to have informal talks periodically to follow up on the issues raised in the appraisal interview. This practice may also help the manager adopt more of a coaching role and less a judging role. Improving Performance Employees cannot improve their performance unless they know exactly what is expected of them. Supervisors have the responsibility to inform employees of their job standards at the start of the review period. By doing this, employees can adjust their behavior to conform to performance criteria, and surprises can be avoided at the appraisal interview. Sources of Ineffective Performance There are a number of possible reasons why an employees performance may not meet the expected standards. These may include the following: 1. The unique pattern of strengths and weaknesses of an individual. 2. Work environment e.g. company policies and practices such as ineffective job placement, insufficient job training, ineffectual employment practices, permissiveness with enforcing policies or job standards, heave handed management, lack of attention to employee needs or concerns etc. Job Concerns such as unclear or constantly changing work requirements, boredom with job, lack of job growth or advancement opportunities, management-employee conflict etc. 3. External environment Industry decline or extreme competition, union management conflict, home, community and personal problems

Diagnosis of poor employee performance should focus on three interactive elements: skill, effort, and external conditions. For example, if an employee is not performing according to the established standards, the cause could be a skill problem (knowledge, abilities, and technical competencies), an effort problem (motivation to get the job done) and/or some problem inherent in the external conditions of work (poor economic conditions, supply shortages, difficult sales territories). If any one of the three elements is deficient or unfavorable, performance will suffer. Managing Ineffective Performance A three step process is recommended to correct poor employee performance. First, identify the source of poor performance. Second, develop a course of action to improve performance. This action may lie in providing training in areas that would increase the knowledge and/or skills needed for effective performance. Third, motivate the employee to correct undesirable job behavior. There will always be some individuals who require assistance with emotional problems, family related problems and physical problems.

Where ineffective performance persists, it may be necessary to demote an employee or to take disciplinary action with possible discharge from the organization. Whatever action is taken to cope with ineffective performance should be done with objectivity, fairness, and recognition of the feelings of the individuals who are involved.

Bibliography: Bohlander, G. W., Sherman, A. W., & Chruden, H. (1988). Managing Human Resources. Cincinnati, Ohio, United States of America: Southwestern Publication Co. Bohlander, G., & Snell, H. (2012). Managing Human Resources (16th ed.). Cincinnati, Ohio: SouthWestern Publishing Company. Gomez-Mejia, L. R., Balkin, D. B., & Cardy, R. L. (2012). Managing Human Resources. New Jersey: Prentice Hall. Sison, P. (1991). Personnel and Human Resources Management. Manila: Rex Bookstore.