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Chapter 11:
Performance Appraisal
Paul L. Schumann, Ph.D.



2004 by Paul L. Schumann. All rights reserved.
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Outline
Performance Measurement
Functions of Performance Appraisal
Types of Performance to Measure
Performance Appraisal Methods
Performance Raters
Performance Feedback
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Performance Management
Goal:
Improve the effectiveness & efficiency of the
organization by:
Aligning the employees work behaviors & results
with the organizations goals
Improving the employees work behaviors & results
On-going, integrative process
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Performance Management Cycle
Source of figure: Fisher, Schoenfeldt, & Shaw (2003), Figure 11.1
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Functions of Performance Appraisal
Employee Development Tool
Set goals
Involve employee
Measurable
Challenging but realistic, difficult but achievable
Empower employee to achieve goals
Provide feedback to reinforce and sustain
performance
Provide help and advice to improve
performance
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Functions of Performance Appraisal
Employee Development Tool (contd.)
Assist employee in achieving career
progression goals
Determine training needs
Administrative Tool
Link rewards to performance
Pay increases, promotions, demotions, dismissals,
disciplinary actions
Evaluate HRM policies and programs
Example: before-after study (pretest-posttest design)
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Types of Performance to Measure
Results-based (results-oriented): measure
the results produced by the employee
Examples for a retail store manager:
Sales of the store
Profit per square foot
Inventory shrinkage
Customer satisfaction
Makes sense for many jobs
Use it where results matter
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Types of Performance to Measure
Results-based (contd.):
Challenges:
Which results are relevant may not be obvious for
all jobs
Some results are not under the employees control
May foster results at all costs mentality
May interfere with teamwork
May be difficult to provide effective feedback
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Types of Performance to Measure
Behavior-based (behavior-oriented):
measure the employees behaviors
Examples for a retail store manager:
Good teamwork
Welcome & thank customers
Good attendance
Monitor customers & employees for theft
Makes sense for many jobs
Use it where how the employee produces results
matters
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Types of Performance to Measure
Behavior-based (contd.):
Makes it easier to provide detailed feedback
Examples for a retail store manager:
Results: You didnt achieve your sales goal.
Behavior: You are allowing your employees to wait too
long before offering help to customers.
Challenges:
Difficult to capture the full range of relevant
behaviors
Different behaviors can lead to the same results
do we always care which behaviors were used?
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Types of Performance to Measure
Trait-based (trait-oriented): measure the
employees abilities and other personal
characteristics
Examples for a retail store manager:
Pleasant personality
Effective communicator
Usually a bad idea:
Poor reliability & validity
Weak linkages with job effectiveness
Measurement subject to biases (racism, sexism)
Difficult to provide effective feedback
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Performance Appraisal Methods
Objective Measures: measure performance
in terms of things we can see and count
Production measures: count units produced
Sales measures: count sales
Personnel data: count things in the employees
personnel file, such as:
Number of times late to work
Number of times absent
Number of disciplinary actions taken
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Performance Appraisal Methods
Objective Measures (contd.)
Performance tests: evaluate a sample of the
employees work
Business unit performance measures:
Examples:
Stock price
Market share
Profit measures: profits, return on sales, return on assets,
return on equity
Use for managers with business unit responsibility
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Performance Appraisal Methods
Subjective measures: measure performance
using human judgment
Ranking: subjectively rank employees from
best to worst
Example:
1. Bob
2. Carol
3. Ted
4. Alice
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Performance Appraisal Methods
Subjective measures (contd.)
Paired Comparisons: in all possible pairs of
employees, subjectively rate which employee is
better
# of paired comparisons = (N
2
N)/2
Example: N = 4 6 paired comparisons:
Bob > Carol; Bob > Ted; Bob > Alice
Carol > Ted; Carol > Alice
Ted > Alice
Example: N = 12 66 paired comparisons
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Outline
Performance Measurement
Functions of Performance Appraisal
Types of Performance to Measure
Performance Appraisal Methods
Performance Raters
Performance Feedback
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Performance Appraisal Methods
Subjective measures (contd.)
Rating scale (graphic rating scale): subjectively
rate the employees performance on a labeled
numeric measuring scale
Rate overall job performance as well as specific
aspects of job performance
Example:
5 = Excellent
4 = Very satisfactory
3 = Satisfactory
2 = Unsatisfactory
1 = Very unsatisfactory
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Examples of Rating Scales
Use a graphic or just
use words?
Label all the points in
the scale, or just label
the endpoints of the
scale?
Odd or even number
of points in the scale?
Fewer points in the
scale, or more points
in the scale?
Source of figure: Fisher, Schoenfeldt, &
Shaw (2003), Figure 11.7
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Performance Appraisal Methods
Subjective measures (contd.)
Forced distribution: evaluator must place a
fixed percentage of employees in each
performance category
Example:
10% must be rated 5 = Excellent
20% must be rated 4 = Very satisfactory
50% must be rated 3 = Satisfactory
15% must be rated 2 = Unsatisfactory
5% must be rated 1 = Very unsatisfactory
But what if the distribution being forced doesnt fit?
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Performance Appraisal Methods
Subjective measures (contd.)
Behaviorally Anchored Rating Scale (BARS): replace
the vague descriptors in a traditional rating scale with
specific examples of performance
Example: Customer assistance
5 = Could be expected to volunteer to help customer and to walk
with customer to desired product location
4 = Could be expected to walk with customer to desired product
location when asked for help by customer
3 = Could be expected to tell and point customer to where the
desired product is located
2 = Could be expected to shrug shoulders and walk away when
asked for assistance by customer
1 = Could be expected to hide from customers in the employee
break-room
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Performance Appraisal Methods
Subjective measures (contd.)
BARS (contd.)
A different scale will be needed for each aspect of
performance
Advantages:
Job-relevant measures of performance
Involves employees in developing scales
Disadvantages:
More work to develop BARS (time & money)
Employees may not consistently fit into one of the BARS
categories (solution to this problem is BOS)
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Performance Appraisal Methods
Subjective measures (contd.)
Behavioral Observation Scales (BOS):
evaluators rate the frequency with which an
employee engages in specific behaviors
Example: on a list of possible employee behaviors,
rate how often the employee engages in each
behavior using a rating scale where:
1 = almost never 5 = almost always
Weighted checklist: from a list of possible
employee behaviors, check off the ones that
apply to the employee
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Performance Appraisal Methods
Management By Objectives (MBO):
At the beginning of the review period, meet
with employee and agree on goals for the
employee to achieve by the end of the period
Involve employee in setting goals
Measurable goals
Challenging but realistic, difficult but achievable
At the end of the review period, meet with
employee and, for each goal, determine if the
goal has been achieved
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Performance Raters
Who should we ask to rate an employees
job performance? Need:
Opportunity to observe the employees
performance
Ability to translate observations of employees
performance into a rating
Motivation to do a good job of observing and
rating
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Performance Raters
Options for performance raters:
Supervisors
Self-evaluation
Peers (co-workers)
Subordinates
Customers
360-Degrees
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Performance Feedback
Employees need good feedback
Allow time & eliminate distractions
Types of feedback sessions:
Tell-and-sell
Tell-and-listen
Problem-solving
Mixture of tell-and-sell and problem-solving
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Performance Feedback
Doesnt hurt to cover both administrative
(e.g., pay increase) and developmental (e.g.,
future goals) issues in one feedback session
Provide specific feedback
Dont say: Youre always late.
Do say: You were more than 5 minutes late on
25 separate occasions in the last 3 months. This
is unacceptable. We need to develop (1) a
specific goal concerning prompt attendance,
and (2) an action plan that you will follow to
achieve the goal.
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Outline
Performance Measurement
Functions of Performance Appraisal
Types of Performance to Measure
Performance Appraisal Methods
Performance Raters
Performance Feedback