INDUSTRIAL PSYCHOLOGY MIDTERM NOTES

PERFORMANCE APPRAISAL

Performance - The accomplishment of a given task measured against preset known standards of
accuracy, completeness, cost, and speed.

Performance Appraisal methods of gauging or assessing the quality of work. The results of these
evaluations have an important bearing in your future they determine whether or not you will be
promoted.
Refers to the process by which an individuals work performance is assessed
The formal process of observing and evaluating an employees performance
Provides a review and evaluation of an individual's job performance.

Purposes of Performance Appraisal

The overall purpose of performance appraisal is to provide an accurate measure of how well a
person is performing the job.
Validation of Selection Criteria
Training Requirements
Employee Improvement
Promotions, Wages and Transfers
Reductions in Force

Objectives of Performance Appraisal

1. To maintain records in order to determine compensation packages, wage structure, salaries

raises, etc.
2. To identify the strengths and weaknesses of employees to place right men on right job.
3. To maintain and assess the potential present in a person for further growth and development.
4. To provide a feedback to employees regarding their performance and related status.
5. To provide a feedback to employees regarding their performance and related status.
6. It serves as a basis for influencing working habits of the employees.
7. To review and retain the promotional and other training programmes.

Advantages of Performance Appraisal

1. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion
programmes for efficient employees. In this regards, inefficient workers can be dismissed or
demoted in case.
2. Compensation: Performance Appraisal helps in chalking out compensation packages for
employees. Merit rating is possible through performance appraisal. Performance Appraisal tries
to give worth to a performance. Compensation packages which includes bonus, high salary
rates, extra benefits, allowances and pre-requisites are dependent on performance appraisal.
The criteria should be merit rather than seniority.
3. Employees Development: The systematic procedure of performance appraisal helps the
supervisors to frame training policies and programmes. It helps to analyse strengths and
weaknesses of employees so that new jobs can be designed for efficient employees. It also
helps in framing future development programmes.
4. Selection Validation: Performance Appraisal helps the supervisors to understand the validity
and importance of the selection procedure. The supervisors come to know the validity and
thereby the strengths and weaknesses of selection procedure. Future changes in selection
methods can be made in this regard.
5. Communication: For an organization, effective communication between employees and
employers is very important. Through performance appraisal, communication can be sought for
in the following ways:
a. Through performance appraisal, the employers can understand and accept skills of
subordinates.
b. The subordinates can also understand and create a trust and confidence in superiors.
c. It also helps in maintaining cordial and congenial labour management relationship.
d. It develops the spirit of work and boosts the morale of employees.

All the above factors ensure effective communication.

 INDUSTRIAL PSYCHOLOGY MIDTERM NOTES

6. Motivation: Performance appraisal serves as a motivation tool. Through evaluating

performance of employees, a persons efficiency can be determined if the targets are achieved.
This very well motivates a person for better job and helps him to improve his performance in the
future.

Performance Appraisal Methods

1. Rating Technique most frequently used method of
performance appraisal. It is commonly used because it is
economic in nature and raters do not require to have high
skills to use it.
- The major drawback of this method is when
the employees might be incorrectly rated due
to raters biasedness

2. Ranking systems used to assess the working performance

of employees from the highest to lowest levels.
- Simplest method of performance appraisal

3. Paired-Comparison Analysis requires that each worker be

compared with every other worker in the work unit.
- The pairs of employees of same job post or level
are formed, following which they are evaluated on
the basis of performance of each other.

4. Forced-Distribution Technique rates employees in terms of a

predetermined distribution of ratings.
- Employees must be assigned in accordance with this distribution
on whatever characteristics or abilities are being evaluated.

5. Forced-Choice Technique
raters are presented with a
series of descriptive
statements (in pairs or groups of three or four) and asked
to select the phrase that describes the same employee.
6. Checklist under this method, a checklist is prepared by
the HR manager and is forwarded to the rater. May
include list of questions (depicting behavior and job
performance of employee) and the rater has to answer
them in just YES or NO form.
7. Critical Incident
Method used to evaluate
the ability of employees to work during
such situation.
- Under this method, the rater
keeps record of effective as well as
ineffective behaviors of individual
employee at the workplace.

8. Behaviorally Anchored Rating

Scales (BARS) attempts to evaluate
performance in terms of specific
behaviors that are critical to success or failure on the job rather than
in terms of general traits or attitudes such as aggressiveness,
ambitiousness, or diligence.
- Combination of critical incident and rating scale
methods of performance appraisal
 INDUSTRIAL PSYCHOLOGY MIDTERM NOTES

9. Behavioral Observation Scales employees are

evaluated in terms of critical incidents of behavior on
the job.
- The method based on the scales of
observation on behaviors is the one in
which important tasks that workers
have performed during their working
time will be assessed on a regular
basis
10. Management by Objectives (MBO) involves a
mutual agreement between employees and
supervisors on goals to be achieved in a certain period of time.
- Managers or employers set a list of objectives and make assessments on their
performance on a regular basis, and finally make rewards based on the results
achieved.
Sources of Error in Performance Appraisal
Halo effect the familiar tendency to judge all aspects of a persons behavior on the basis of a
single positive attribute or characteristics.
Horn effect opposite of halo effect
Constant/ Systematic Bias a source of performance appraisal error has its basis n the
standards or criteria used by the raters.
Most-Recent-Performance Error tendency to base the rating on the most recent behavior of
the workers, not taking into account or being able to remember their performance throughout
the period since the last appraisal
Average-Rating Error error occurs when employees are incorrectly rated near average or
middle of scale
Attribution Error the tendency to attribute performance failings to factors under the control of
the individual and performance success to external causes/ factors.
Leniency giving undeserved high ratings
Strictness being unduly critical of employees work performance
Stereotyping - This refers to classifying people into our own predefined categories. This bias
can come from the managers attitudes and opinions about race, national origin, sex, religion,
age, disability, hair color, weight, height, intelligence, etc.

Improving Performance Appraisals

Training of Raters
Providing Feedback to Raters
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TRAINING AND DEVELOPMENT

Training
- Is the systematic process of altering the behavior of employees in a direction that will achieve
organizational goals.
- is related to present job skills and abilities needed to be successful.
Training and development are processes that attempt to provide an employee with information, skills
and understanding of the organization and its goals. It focuses on learning and personal development.
Importance of Training
increases organizational commitment
develops the cognitive, affective, physical, and spiritual dimensions of the employee
improves job performance
helps improve and acquire technical skills
develops creativity and problem-solving skills
helps retain a competent and efficient workforce
helps achieve overall organizational objectives
 INDUSTRIAL PSYCHOLOGY MIDTERM NOTES

Purposes of Conducting a Training

To set standards for each field so that professional growth of personnel will be fairly measured
and enhanced
To support the staff in their understanding and focus of work expectations and skills development
To enhance employees personal growth
To have more efficient employees and develop loyalty to the company
To develop quality career practices and growth in the profession
To ensure maximum efficiency on the performance of functions, duties, responsibilities and
improve employee more
To have high qualified employees who are fit for the job
To continuously update and upgrade competencies to meet demands and government policies
To align employees with current trends in the market and technology
To increase chances for promotion and other job opportunities

TRAINING METHODS FOR NONSUPERVISORY EMPLOYEES

On-the-Job Training takes place directly on the job for which the worker is being trained. It
allows employees to learn by actually performing a specific job or task. The employee will perform
the job and learn as he goes. On-the-job training can be structured by using hands-on application
supported by classroom-type instruction. It can also be unstructured using only hands-on
application.
Vestibule Training Using the same kind of equipment and operating procedures as in the actual
work situation, trainees learn to perform the job under the guidance of skilled instructors, not
experienced workers.
Apprenticeship involves extensive background preparation in the craft and actual work
experience under the guidance of experts. Trainees usually must complete their apprenticeship
successfully before they are allowed to join a trade union- membership is vital to secure
employment.
Programmed Instruction - consists of self-teaching with the aid of a specialized textbook or
teaching machine that presents material structured in a logical and empirically developed
sequence or sequences. Some of the jobs being taught include blueprint reading, basic
electronics, insurance sales, bank teller procedures and computer programming.
Computer-Assisted Instruction - refers to instruction or remediation presented on a computer. A
computer, which stores an entire program of instruction, becomes the teacher and interacts with
each trainee on an individual basis.
Behavior Modification A performance audit is conducted periodically in an organization to
determine the existence of specific problems or employee behaviors that should be changed.
Then, a program of positive reinforcement is introduced whereby employees are reinforced when
they display the desired behavior.

TRAINING METHODS FOR MANAGERS

Job Rotation involves exposing trainees to different jobs and departments within the
organization to acquaint them with all facets of the business
Case Study Method in this approach, a complex problem, the kind faced daily by managers and
executives, is presented to the trainees prior to their general meeting. The trainees are expected
to familiarize themselves thoroughly with the case and to find, on their own, additional relevant
information.
Business Games involves a gaming process in which a complex, real-life situation is simulated.
This approach is intended primarily to develop problem-solving and decision-making skills and to
provide practice in exercising these skills in a situation in which mistakes will not harm the
organization.
In-basket Training a business game in that it stimulates the job of a manager. Usually, the
trainee operates alone in the in-basket technique rather than as a part of a group.
Role Playing management trainees project themselves into a particular role and act out the
behavior they believe is appropriate in that situation.
Behavior Modelling involves having trainees model their behavior on examples of exemplary
management performance. Four features of behavior modelling are modelling, behavior
rehearsal, feedback, and transfer of learning.
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Sensitivity Training designed to develop an understanding of interpersonal communication and

interaction. The technique shows individuals how others react to, or perceive, them and what
effect their behavior has on others. In this way, it is hoped that the trainees will develop a clearer
and more accurate picture of themselves.

TRAINING THE HARD-CORE UNEMPLOYED

EVALUATING TRAINING AND DEVELOPMENT PROGRAMS

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LEADERSHIP IN ORGANIZATIONS

Leadership the ability to lead

- The ability to guide, direct or influence people

APPROACHES TO LEADERSHIP
1. Trait Approach emphasizes personal attributes of leaders
- Born not made
- Good supervision a selection problem
- Good leaders good in all situations
2. Situational Approach focuses on the dynamic interactions between leaders and followers
3. Behavioral Approach leaders can be trained to function well
- Good leaders do certain things
- Leaders made not born

THEORIES OF LEADERSHIP
Contingency Theory leaders
effectiveness is determined by the
interaction between the leaders
personal characteristics and some
aspects of the situation. Fielder
classifies leaders as primarily
person oriented or task oriented.
According to Fielder, in extreme
situations (highly favorable or
highly unfavorable), the task-
oriented leader will be more
effective
Path-Goal Theory focuses on
the kinds of behavior a leader
should exercise to allow
subordinates achieve their goals.
Specifically, the theory states that
leaders can increase their
subordinates satisfaction and
performance by giving rewards that are contingent on reaching performance goals.
Normative Decision Theory focuses on one aspect of leadership, decision-making decision. It
attempts to prescribe behaviors for leaders in decision-making situation. The word normative
refers to a norm or standard behavior considered to be the correct one.

LEADERSHIP STYLES
Headship leaders are imposed on the group by external sources
Authoritarian dictatorial and tyrannical, and its leaders exercise absolute political, economic
and social power
Democratic places a large measure of power in the hands of the people who are able, through
vote, to influence the major issues affecting the country.
 INDUSTRIAL PSYCHOLOGY MIDTERM NOTES

Laissez faire characterized by the absence of leadership. The group is left to its own devices;
there is no external interference.
Transformational - approach that causes change in individuals and social systems. In its ideal
form, it creates valuable and positive change in the followers with the end goal of developing
followers into leaders.
Charismatic relies on the charm and persuasiveness of the leader. Charismatic leaders are
driven by their convictions and commitment to their cause.
Servant leadership - leaders place the interests and needs of their followers ahead of their own self-
interests and needs. Generally, they value the development of their followers, building their
communities, acting authentically, and sharing power.

THE ROLE OF POWERS IN LEADERSHIP

1. Reward Power the ability to reward their

subordinates.
2. Coercive Power ability to punish
subordinates by firing them, failing to give
them promotions or pay raises, or keeping
them in undesirable jobs.
3. Legitimate Power refers to the
formalization of the power structure by the
rules of the organization
4. Referent Power the extent to which
followers identify with their leaders and the
leaders goals
5. Expert Power the extent to which leaders
are perceived to be knowledgeable in an
area that is necessary to the attainment of group goals.

FUNCTION OF LEADERS
Effective managers:
1. Creating a feeling of approval
2. Developing personal relations
3. Providing fair treatment
4. Equitable rule enforcement

ORGANIZATIONAL PSYCHOLOGY
Characteristics of Leaders
Supervisors
Executives
Women in Management
 INDUSTRIAL PSYCHOLOGY MIDTERM NOTES

MOTIVATION, JOB SATISFACTION AND JOB INVOLVEMENT

Employee Motivation - refers to the "psychological forces that determine the direction of a person's
behavior in an organization, a person's level of effort and a person's level of persistence

Theories:
1. Need Achievement Theory the desire to accomplish
something, to do a good job, to be the best. Those who possess
this need derive great satisfaction from their achievement and
are motivated to excel in everything they undertake.
2. Needs-Hierarchy Theory human needs are arranged in a
hierarchy of importance. According to Maslow, people
constantly desire better circumstances; they always want what
they do not yet have.

3. ERG Theory - developed by

Clayton Alderfer, is a modification of
Maslows hierarchy of needs. Instead of
the five needs that are hierarchically
organized, Alderfer proposed that basic human needs may be grouped
under three categories, namely, existence, relatedness, and
growth. Existence corresponds to Maslows physiological and safety
needs, relatedness corresponds to social needs, and growth refers to
Maslows esteem and self-actualization.

4. Motivator-Hygiene Theory combining motivation and job

satisfaction, was proposed by Frederick Herzberg. According to this theory,
the lower level needs have generally been satisfied in contemporary
society. Where they have not, job dissatisfaction is the result. In Herzbergs
theory, hygiene needs must be satisfied before attention is paid to motivator
needs.

5. Job Characteristics Theory - designed by Hackman and Oldham, is based on the idea that the
task itself is key to employee motivation. Job enrichment and job rotation are the two ways of
adding variety and challenge to a job and encourage workplace motivation. It states that there
are five core job characteristics (skill variety, task identity, task significance, autonomy, and
feedback) which impact three critical psychological states (experienced meaningfulness,
experienced responsibility for outcomes, and knowledge of the actual results), in turn influencing
work outcomes (job satisfaction, absenteeism, workplace motivation, etc.). The five core job
characteristics can be combined to form a motivating potential score (MPS) for a job, which can
be used as an index of how likely a job is to affect an employee's attitudes and behaviors.

6. Expectancy Theory - individual motivation to put forth more or less effort is determined by a
rational calculation in which individuals evaluate their situation. According to this theory,
individuals ask themselves three questions. The first question is whether the person believes that
high levels of effort will lead to outcomes of interest, such as performance or success. This
perception is labeled expectancy. The second question is the degree to which the person
believes that performance is related to subsequent outcomes, such as rewards. This perception
is labeled instrumentality. Finally, individuals are also concerned about the value of the rewards
awaiting them as a result of performance. The anticipated satisfaction that will result from an
outcome is labeled valence.

7. Goal Setting Theory developed by Edwin Locke, also has common-sense appeal and is clearly
relevant to the world of work. Locke argues that our primary motivation in a work situation can be
defined in terms of our desire to achieve a particular goal.
8. Equity Theory - John Stacey Adams' equity theory helps explain why pay and conditions alone
don't determine motivation. It also explains why giving one person a promotion or pay rise can
have a demotivating effect on others.
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JOB SATISFACTION (also referred to as morale) -is an employee's attitudinal response to his or her
organization.
- As an attitude, job satisfaction is summarized in the evaluative component and
composed of cognitive, affective, behavioral components. As with all attitudes,
the relationship between satisfaction and behavior, most specifically job
performance and membership, is complex.

Evaluative Component - An individual's overall response to the employing organization is

summarized in the evaluative component. It represents dislike vs. like for the organization.
When asked for a single response to the question, How satisfied are you with your job,
individuals response with their overall evaluation.

Cognitive Component - An individual's perceptions, opinion, beliefs and expectations regarding

the organization are the focus of his or her cognitions.

Affective Component - This component represents the feeling evoked by the organization. Does
thinking about and association with the organization evoke pleasurable or uncomfortable
feelings; feelings of anger or joy; feelings of security or stress; feelings of affirmation or
invalidation?
Factors affecting the Job Satisfaction
Age
Sex
Race
Intelligence
Use of Skills
Personality
Occupational Level

JOB SATISFACTION AND BEHAVIOR ON THE JOB

TURNOVER AND ABSENTEEISM
PRODUCTION
COUNTERPRODUCTIVE BEHAVIOR
PAY AS A SOURCE OF MOTIVATION AND SATISFACTION
JOB INVOLVEMENT
ORGANIZATIONAL COMMITMENT

EMPLOYEE ENGAGEMENT - is a workplace approach designed to ensure that employees are

committed to their organizations goals and values, motivated to contribute to organizational success,
and are able at the same time to enhance their own sense of well-being.
- Opposite of burnout.
- Employees have a sense of energetic and effective connection with their work and
they see themselves as able to deal well with the demands of their job.

Elements:
Vigor: high levels of energy and resilience, willingness to invest effort, and not easily fatigued,
and persistence in the face of difficulties.
Absorption: totally and happily engrossed in their work and having difficulties detaching oneself
form it.
Dedication: identify with their work because it is experienced and meaningful, inspiring, and
challenging.