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Evaluating and Enhancing
Employee Performance

Dr. M. Bhaskara Rao

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Agenda
Performance management systems
Ongoing performance feedback
Performance appraisal programs
Developing an effective appraisal program
Performance appraisal methods
Appraisal interviews

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Performance Appraisal Programs

Performance
The action or process of performing a task or function.
Performance Management
The process of creating a work environment in which people can
perform to the best of their abilities in order to meet a companys
goals.
Performance Appraisal
The result of an annual or bi-annual process in which a manager
evaluates an employees performance relative to the requirements
of his or her job and uses the information to show the person where
improvements are needed and why.

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Steps in the Performance Management Process

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On-going Performance Feedback

Employees can benefit from ongoing performance conversations with
their managers.
Feedback should provide specific examples of desirable and
undesirable behavior.
Focus of feedback should be on behavior, not the person.
Feedback should be framed in turns helping the employee to be
successful.
Direct the feedback towards the behavior employee can control.
Feedback should be timely.
Limit the feedback to the amount the employee can process.
Use active communication skills and confirm the employee is engaged
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Focal Performance Appraisal

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

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Purposes of Performance Appraisal

What gets measured get done.
Good performance appraisal systems influence employee behavior and
improve organizations performance.
Formal appraisal process ensures employees get at least some
feedback from their supervisor. Even a negative feedback is better than
no feedback.
Common purposes of performance appraisals are administrative and
developmental.

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Performance Appraisal Programs

Appraisal Programs

Administrative Developmental

Compensation Individual Evaluation

Job Evaluation Training

EEO/AA* Support Career Planning

* Equal Employment Opportunity/ Affirmative Action

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Reasons Appraisal Programs Fail Sometimes

Lack of top-management information and support
Unclear performance standards
Rater bias
Too many forms to complete
Use of the appraisal program for conflicting (political) purposes.

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Let Me Count the Ways

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Managerial Issues Concerning Appraisals

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.
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Developing an Effective Appraisal Program

Performance Standards
Must be based on job-related requirements derived from job
analysis and reflected in job description and job specifications.
Help translate an organizations goals and objectives into job
requirements that define acceptable and unacceptable
performance levels.
Calibration
A process whereby managers meet to discuss the performance
of individual employees to ensure their employee appraisals
are in line with one another.
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Establishing Performance Standards

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What are the Performance Standards?

Performance Standards Characteristics

Strategic Relevance Individual standards directly relate to strategic goals.

Criterion Deficiency Standards capture all of an individuals contributions.

Criterion Performance capability is not reduced by external

Contamination factors.

Reliability
Standards are quantifiable, measurable, and stable.
(Consistency)
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Are You Complying with the Law?

Brito v. Zia
The U.S. Supreme Court ruled that performance appraisals
were subject to the same validity criteria as selection
procedures.
Albemarle Paper Company v. Moody
The U.S. Supreme Court found that employees had been
ranked against a vague standard, open to each supervisors
own interpretation.

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Legal Guidelines for Appraisals

Performance ratings must be job-related.
Employees must be given a written copy of their job standards in
advance of appraisals.
Managers who conduct the appraisal must be able to observe the
behavior they are rating.
Supervisors must be trained to use the appraisal form correctly.
Appraisals should be discussed openly with employees and
counseling or corrective guidance offered.
An appeals procedure should be established to enable employees
to express disagreement with the appraisal.
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Alternative Sources of Appraisal

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Sources of Performance Appraisal

Manager and/or Supervisor
Appraisal done by an employees manager and reviewed by a
manager one level higher.
Self-Appraisal
Appraisal done by the employee being evaluated, generally on
an appraisal form completed by the employee prior to the
performance interview.
Subordinate Appraisal
Appraisal of a superior by an employee, which is more
appropriate for developmental than for administrative purposes.

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Peer Appraisal
Appraisal by fellow employees, compiled into a single profile for
use in an interview conducted by the employees manager.
Why peer appraisals are not used more often:
1. Peer ratings are simply a popularity contest.
2. Managers are reluctant to give up control over the appraisal
process.
3. Those receiving low ratings might retaliate against their
peers.
4. Peers rely on stereotypes in ratings.
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Team Appraisal
Based on TQM concepts; recognizes team accomplishment
rather than individual performance
Customer Appraisal
A performance appraisal that, like team appraisal, is based on
TQM concepts and seeks evaluation from both external and
internal customers

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3600 Appraisal
3600 appraisal is intended to provide employees with as accurate
a view of their performance as possible by getting input from all
angles viz., supervisors, peers, subordinates, customers, and the
like.
360-Degree Performance Appraisal System Integrity Safeguards:
Assure anonymity (except supervisors rating)
Make respondents accountable
Prevent gaming of the system
Use statistical procedures
Identify and quantify biases

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Pros and Cons of 360-Degree Appraisal

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Training Appraisers
Establishing an Appraisal Plan
Provide an explanation of the performance appraisal systems
objectives so that raters will understand the compensation and
development purposes for which the appraisal is to be used.
Explain the mechanics of the rating system
How frequently the appraisals are to be conducted
Who will conduct them
What are the standards of performance.
Alert raters to the weaknesses and problems of appraisal
systems so that they can be avoided.
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Training Performance Appraisers

Common rater-related errors

Error of central tendency

Leniency or strictness errors

Similar-to-me errors

Recency errors

Contrast and halo errors

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Rater Errors
Halo/Horn Error: Focusing positive/negative aspect of an
employee and generalizing it into overall performance rating.
Error of Central Tendency: A rating error in which all employees
are rated about average.
Leniency or Strictness Error: A rating error in which the appraiser
tends to give all employees either unusually high or unusually low
ratings.
Forced distribution: A performance appraisal ranking system
whereby raters are required to place a certain percentage of
employees into various performance categories.
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Recency Error: A rating error in which appraisal is based largely on

an employees most recent behavior rather than on behavior
throughout the appraisal period.
Contrast Error: A rating error in which an employees evaluation is
biased either upward or downward because of comparison with
another employee just previously evaluated.
Similar-to-Me Error: An error in which an appraiser inflates the
evaluation of an employee because of a mutual personal
connection.
Stereotyping error: An error that occurs when evaluations are
influenced to some degree by a person's membership in a
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particular social group. Human Resource Management

Rater Errors: Training and Feedback

Rating Error Training
Observe other managers making errors
Actively participate in discovering their own errors
Practice job-related tasks to reduce the errors they tend to
make
Feedback Skills Training
Communicating effectively
Diagnosing the root causes of performance problems
Setting goals and objectives
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Performance Appraisal Methods

Performance appraisal methods can be broadly classified as
measuring traits, behaviors or results.
Traits approach is designed to measure the extent to which an
employee possesses certain characteristics that are viewed as
important for job and the organization. It is subjective, but used
widely.
Behavioral approach provides a more action-oriented information
and may be best for development.
Results-oriented approach is popular because it focuses on the
measurable contributions that employees make to the
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organization. Human Resource Management

Performance Appraisal Methods

Graphic Rating Scale

Mixed Standard Scale

Trait Methods
Forced-Choice

Essay

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Trait Methods
Graphic Rating-Scale Method
A trait approach to performance appraisal whereby each
employee is rated according to a scale of individual
characteristics.
Variations of graphic rating-scale
The characteristics or dimensions on which individuals are rated.
The degree to which the performance dimension is defined for
the rater, and
How clearly the points on the scale are defined.

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Mixed-Standard Scale Method

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

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Forced-Choice Method
Requires the rater to choose from statements designed to
distinguish between successful and unsuccessful performance.
1. ______ a) Works hard _____ b) Works quickly
2. ______ a) Shows initiative _____ b) Is responsive to customers
3. ______ a) Produces poor quality _____ b) Lacks good work habits

Essay Method
Requires the rater to compose a statement describing
employee behavior.

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Graphic Rating Scale with Provision for Comments

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Example of a Mixed-Standard Scale

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Behavioral Methods

Critical Incident

Behavioral Checklist

Behavioral Methods
Behaviorally Anchored Rating Scale
(BARS)

Behavior Observation Scale (BOS)

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Critical Incident Method

Critical incident
An unusual event that denotes superior or inferior employee
performance in some part of the job
The manager keeps a log or diary for each employee
throughout the appraisal period and notes specific critical
incidents related to how well they perform.
Behavioral Checklist Method
The rater checks statements on a list that the rater believes are
characteristic of the employees performance or behavior.
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Behaviorally Anchored Rating Scale (BARS)

Consists of a series of vertical scales, one for each dimension
of job performance; typically developed by a committee that
includes both subordinates and managers.
Behavior Observation Scale (BOS)
A performance appraisal that measures the frequency of
observed behavior (critical incidents).
Preferred over BARS for maintaining objectivity, distinguishing
good performers from poor performers, providing feedback,
and identifying training needs.

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BARS and BOS Examples

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Results Methods
Productivity Measures
Appraisals based on quantitative measures (e.g., sales
volume) that directly link what employees accomplish to results
beneficial to the organization.
Criterion contamination
Focus on short-term results
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.
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Performance Appraisal Under an MBO Program

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Creating an Effective MBO Program

1. Managers and employees must be willing to establish goals and
objectives together.
2. Objectives should be quantifiable and measurable for the long and
short terms.
3. Expected results must be under the employees control and free
from criterion contamination.
4. 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.
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The Balanced Scorecard

The appraisal focuses on four related categories
Financial, customer, processes, and learning & growth
Ensuring the methods success:
Translate 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.
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Personal Scorecard

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Summary of Various Appraisal Methods

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Appraisal Interviews

Types of Appraisal Interviews

Tell and Sell - persuasion

Tell and Listen non-directive

Problem Solving - focusing the interview on problem resolution

and employee development

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Appraisal Interview Guidelines

Invite Participation Ask for a Self-Assessment

Change Behavior Problem Solving Focus

Minimize Criticism Express Appreciation

Establish Goals Be Supportive

Follow Up Day by Day

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Factors that affect an Employees Performance

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Performance Diagnosis

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Managing Ineffective Performance

Possible Courses of Action
Provide training to increase skills and abilities
Transfer employee to another job or department
Attention of actions to motivate employee
Take disciplinary action
Discharge the employee
Cautions
All actions taken must be objective and fair.
Do not treat underperformer differently, setting the employee
up to fail.
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Essential Learning
Behavior Observation Scale (BOS)
Behaviorally Anchored
Rating Scale (BARS)
Calibration
Contrast Error
Critical Incident
Customer Appraisal
Error of Central Tendency
Essay Method
Forced-choice Method
Graphic Rating Scale Method
Leniency or Strictness Error
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Management by Objectives (MBO)
Manager and/or Supervisor
Appraisal
Mixed-standard Scale Method
Peer Appraisal
Performance Appraisal
Performance Management
Recency Error
Self-appraisal
Similar-to-me Error
Subordinate Appraisal
Team Appraisal
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