Human Resource

Management
DeCenzo and Robbins

Chapter 10
Establishing the Performance Management System

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Introduction
Employees generally see performance
evaluations as having a direct effect on
their work lives.
The performance management
systems need to include:
decisions about who should evaluate
performance
what format should be used
how the results should be utilized
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Performance Management
Systems
Purposes of a Performance
Management System
Feedback - let employees know how well
they have done and allow for employee
input.
Development identify areas in which
employees have deficiencies or
weaknesses.
Documentation - to meet legal
requirements.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

The Appraisal Process

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

The Appraisal Process

Establishment of performance
standards
Derived from companys strategic goals.
Based on job analysis and job description.

Communication of performance
standards to employee.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

The Appraisal Process

Measurement of performance using
information from:
personal observation
statistical reports
oral reports
written reports

Comparison of actual performance with

standards.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

The Appraisal Process

Discussion of appraisal with employee.
Identification of corrective action where
necessary.
Immediate action deals with symptoms.
Basic corrective action deals with causes.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Three approaches:
Absolute standards
Relative standards
Objectives

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Evaluating absolute standards:
An employees performance is
measured against established
standards.
Evaluation is independent of any other
employee.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Evaluating absolute standards:
Essay Appraisal: Appraiser writes
narrative describing employee
performance & suggestions.
Critical Incident Appraisal: Based on key
behavior anecdotes illustrating effective or
ineffective job performance.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Evaluating absolute standards:
Checklist Appraisal: Appraiser checks off
behaviors that apply to the employee.
Adjective Rating Scale Appraisal:
Appraiser rates employee on a number of
job-related factors.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Relative standards:
Employees are evaluated by comparing
their performance to the performance of
other employees.
Group Order Ranking: Employees are
placed in a classification reflecting their
relative performance, such as top onefifth.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Appraisal Methods
Relative standards:
Individual Ranking: Employees
are ranked from highest to
lowest.
Paired Comparison:
Each individual is compared to
every other.
Final ranking is based on number of
times the individual is preferred
member in a pair.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Factors that can Distort

Appraisals

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Factors that can Distort

Appraisals
Leniency error
Each evaluator has his/her own value
system.
Some evaluate high (positive leniency) and
others, low (negative leniency).

Halo error: Evaluator lets an

assessment of an individual on one trait
influence evaluation on all traits.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Factors that can Distort

Appraisals
Similarity error: Evaluator rates others
in the same way that the evaluator
perceives him or herself.
Low appraiser motivation: Evaluators
may be reluctant to be accurate if
important rewards for the employee
depend on the results.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Factors that can Distort

Appraisals
Central tendency: The reluctance to use the
extremes of a rating scale and to adequately
distinguish among employees being rated.
Inflationary pressures: Pressures for
equality and fear of retribution for low ratings
leads to less differentiation among rated
employees.
Inappropriate substitutes for performance:
Effort, enthusiasm, appearance, etc. are less
relevant for some jobs than others.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Factors that can Distort

Appraisals
Attribution Theory
Evaluations are affected based on
whether someones performance is due to
internal factors they can control
external factors which they cannot

If poor performance is attributed to

internal control, the judgment is harsher
than when it is attributed to external
control.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Factors that can Distort

Appraisals
Impression management:
If employee positively influences the
relationship with the supervisor, he/she
is likely to receive a higher rating.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance

Management Systems
Combine Absolute and Relative Standards:
Absolute standards tend to be positively
lenient; relative standards suffer when there
is little variability.
Combining the standards tends to offset the
weaknesses of each.
Provide Ongoing Feedback:
Expectations and disappointments should be
shared with employees on a frequent basis.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance

Management Systems
Use Multiple Raters:
Increasing the number of raters leads to more
reliable and valid ratings.
Use peer evaluations: Coworkers offer
constructive insights and more specific
evaluations.
Upward appraisals allow employees to give their
managers feedback.
360-Degree appraisals: Supervisors, peers,
employees, team members, customers and others
with relevant information evaluate the employee.
Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Creating More Effective Performance

Management Systems
Rate Selectively
Appraisers only evaluate in those areas
about which they have sufficient
knowledge.
Appraisers should be organizationally as
close as possible to the individual being
evaluated.
More effective raters are asked to do the
appraisals.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

International Performance
Appraisal
Who performs the evaluation?
Different cultural perspectives and
expectations between the parent and local
country may make evaluation difficult.
Evaluation forms may not be translated
accurately.
Quantitative measures may be misleading.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

International Performance
Appraisal
Evaluation Formats
May make sense to use different forms for
parent-country nationals and host-country
nationals.
Performance criteria for a particular
position should be modified to fit the
overseas position and site.
Include a current expatriates insights as
part of the evaluation.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins