11 - 1

Chapter

11
Performance Appraisals

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11 - 2

Learning Objectives
After studying Chapter 11, students should be able to:
1.
2.
3.
4.
5.

Discuss when each of the five types of performance

appraisal formats would be appropriate to use.
Discuss the relevant factors to consider when deciding
who should conduct performance appraisals.
Discuss strategies that can be used to improve the
accuracy of performance appraisals.
Discuss EEO considerations in performance appraisals.
Explain the issues involved in designing merit pay
guidelines.

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11 - 3

You cant manage

what you dont
understand.
You dont
understand what you
dont measure.
What gets measured
gets done.
What gets measured
gets rewarded.
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11 - 4

Performance Appraisal
! Control mechanism for feedback
! Allows progress to be assessed
! Ensures strategy-consistent behavior
! Reinforces values of the organization
! Ensures alignment of individual performance and

behavior to organization culture and work

systems

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11 - 5

Purposes of Performance Appraisal

Evaluation

Development

! Performance Measurement

! Management Development

! Compensation

! Identification of Potential

! Motivation

! Feedback
! Human Resource Planning
! Communications
! Performance Improvement
! Research on Legal

Compliance
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11 - 6

Halo Error

Horn Error

Spillover Error

Central Tendency
Error

Clone Error

Common
Errors in the
Appraisal
Process

First Impression
Error
Recency Error

Leniency Error
Severity Error
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11 - 7

Strategies to Better Understand and Measure

Job Performance

Improve Appraisal Formats

Select the Right Raters

Understand Why Raters

Make Mistakes
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11 - 8

Performance Appraisal Approaches

!
!

Comparative
Comparative
!
! ranking
!
! forced distribution

Show me the
performance!

!
! paired comparison
!
!

Attribute
Attribute
!
! graphic rating scales
!
! mixed standard scales

!
!

Behavioral
Behavioral
!
! critical incidents
!
! BARS
!
! essay

!
!

Results
Results
!
! MBO

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An Evaluation of Performance Appraisal Formats

Format

CRITERIA
Employee
Personnel
Development Administration Research

11 - 9

Cost

Validity

Ranking

poor

poor

average

good

average

Standard
Rating Scale

average

average

average

good

average

BARs

good

good

good

average

good

MBO

excellent

poor

poor

poor

excellent

Essay

unknown

poor

poor

average

unknown

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11 - 10

Select the Right Raters

Supervisors

Peers

Subordinates
Self

Customers
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11 - 11

Understand Why Raters Make Mistakes

Errors in
Observation
(Attention)

Errors in the
rating process

Errors in
Storage and
Recall
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11 - 12

Training Raters to Rate More Accurately

! Rater-error training to reduce psychometric errors
! Performance dimension training
! Performance-standard training

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11 - 13

At a minimum, the performance measurement

system should provide:
! A clear sense of direction.
! An opportunity for employees to participate in setting

the goals and standards for performance.

! Prompt, honest, and meaningful feedback.
! Immediate and sincere reinforcement.
! Coaching and suggestions for improving future
performance.
! Fair and respectful treatment.
! An opportunity for employees to understand and
influence decisions which affect them.
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11 - 14

EEO and Performance Evaluation

The courts stress six issues in setting up a
performance appraisal system:
1. Instructions on how to complete the appraisal
should be specific and written.
2. Performance dimensions, criteria, and scale
levels should be written, objective, and clear.
3. Job descriptions should be adequately
developed and documented.

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11 - 15

EEO and Performance Evaluation

(continued)

4.

5.
6.

Supervisors should be required to provide

feedback about appraisal results to the
employees affected.
Review of any performance rating by a higher
level supervisor should be part of the system.
Consistent treatment across raters, regardless of
race, color, religion, sex, and national origin
should be built into the system.

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11 - 16

Tying Pay to Subjectively Appraised Performance

Designing merit guidelines involves answering

four questions:
! What should the poorest performer be paid as an

increase?
! What should average performers be paid as an increase?
! What should the top performers be paid as an increase?
! What should be the size of the percentage increase
differential between different levels of performance?

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11 - 17

How to Create a Merit Pay Grid

Merit Grids Combine 3 Variables:
! Level of Performance
! Distribution of Employees Within Pay Ranges
! Merit Budget Increase Percentage

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11 - 18

The Performance Management Process

Establish
Expectations
Performance
Management is a
continuous process
where employees
and managers work
together

Coaching and
Development

Feedback

Review
Rewards and
Recognition
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11 - 19

Summary
! Development of sound appraisal systems requires an

understanding of organizational objectives balanced

against the relative merits of each type of appraisal
system.
! Training supervisors effectively to appraise performance
requires an understanding of organizational objectives.
! That combined with a knowledge of common errors in
evaluation can make a significant difference in the
quality of appraisals.

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

11 - 20

Review Questions
1.

Employees in your department semi-autonomous work teams.

Individual performance is assessed using four performance
dimensions: quantity of work, quality of work, interpersonal
skills, and teamwork.
a.
b.

2.

3.

Should the supervisor have a role in the rating process?

What role, if any, should other members of the work team have in the
assessment process?

What do you think should be included in the design of a

performance appraisal process to lessen the probability that your
company would be accused of discrimination in performance
appraisal?
If you wanted to ensure that employees had good feedback
about performance problems and strengths, which appraisal
format would you recommend using? Why?
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2002 by The McGraw-Hill Companies, Inc. All rights reserved.