Management and Appraisal of Employee Performance

Management and Appraisal of Employee Performance

Instructions/Descriptions

Management and Appraisal of Employee Performance

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Module Overview

In the last module, you looked at training needs assessment and the processes organizations use to ensure their employees have the knowledge, skills, and abilities they will need. This module’s focus is a natural progression of these topics: performance management systems, or the methods employers use to evaluate employee performance.

If you have worked full time, you have likely been through your company’s performance appraisal or performance evaluation process.

While evaluating employee performance seems to be a straightforward process, there are many tasks’ managers need to perform to ensure employees receive the feedback, support, and encouragement they need to succeed.

Watch this video,  Performance Appraisals Gone Bad! , and make a list of the mistakes you see the manager make when conducting the appraisal meeting. Be sure to keep in mind the concepts you have covered in previous modules.

– The captioned version of this video may be accessed in the following link:   OL-211: Performance Appraisal Gone Bad!! (CC)

Setting Performance Objectives: Long before the performance evaluation form is completed, the manager and employee set performance objectives which become the basis for the performance appraisal. How the objectives relate to the performance evaluation varies, depending on the type of evaluation used.

The evaluation process may be directly based on the objectives, as it supposedly was in the video. While it was not stated, the company portrayed may have been using management by objectives (MBO), which is described in this module’s textbook reading. Other types of appraisals are based more on the employee’s behavior or traits, giving the performance objectives a more indirect influence.

No matter what form the performance evaluation takes, the performance objectives need to be clearly stated at the start of the appraisal period. Did you notice in the video that the employee’s performance objectives did not follow the SMART approach, resulting in confusion and frustration for the employee?

During the Performance Period: The performance period, the time frame during which the employee’s performance is evaluated, is most often 12 months. Employees new in their roles may be evaluated after 30 or 90 days, and some organizations have semi-annual appraisals. As the term implies, performance management is an active, ongoing process.

Managers need to give regular informal feedback, including both praise and correction, throughout the appraisal period. Done well, this helps the employee succeed and ensures that the content of the written performance appraisal never comes as a surprise to the employee.

Do you recall in the video that the employee directly asked the manager why he did not give her feedback immediately after she fell short of her objectives? He also neglected to praise her after the director meeting, so she did not know to repeat her behavior.

Preparing the Performance Appraisal: As you will see in this module’s resources, there are many types of performance appraisals. When it is time to complete the performance evaluation, many people may be involved in giving feedback besides the employee’s manager.

Others to give input may include the employee and people they interact with such as peers, customers, and subordinates, if the employee manages other people. These individuals need to be trained and given ample time to complete the appraisal form. The employee’s manager then reviews whatever feedback was solicited and completes the evaluation form.

Did you catch in the video that the manager never located the self-appraisal the employee had sent weeks before their meeting? In addition, the meeting logistics were not handled properly. The time frame of the session was not clear, and the room had not been reserved.

While the film presented these blunders lightheartedly, oversights such as these send a powerful message to employees that the manager does not value the appraisal process. It essential that managers see the benefit of effective performance evaluation and convey this understanding through all of their actions.

Conducting the Performance Appraisal Meeting: Many employees dread receiving their performance appraisal. Based on the video, it is easy to see why. With effective communication during the performance period and effective planning on the manager’s part, however, the performance evaluation session should be a positive experience for both parties most of the time.

In the video, did you observe the manager’s lack of consideration toward the employee? It was clear that she did not feel valued as he took a personal phone call, looked at his watch while she was talking, dismissed her concerns repeatedly, ignored her questions and requests for clarification, talked over her, contradicted the established process, and then asked her to type up her finalized performance appraisal.

For some tips and a demonstration of how to conduct a successful performance appraisal meeting, view this video on  How to Do Effective Performance Appraisals . In this video, you are able to see some key points illustrated, such as how to open and close the session, how to ask for and respond to the employee’s input, ways to give praise, and how to give negative feedback.

Notice that the focus of the negative situation is on how to correct it. There is no hint of corrective action. When an employee’s performance is not meeting standards, it needs to be addressed during the performance period. Module Six covers the employee relations aspect of HRM, including correcting employee performance problems.

– The captioned version of this video may be accessed in the following link:  OL-211: How to do Effective Performance Appraisals (CC)

It takes training for managers to become skilled at performance appraisals. Untrained evaluators can fall prey to a host of rating errors, which can be avoided with awareness. Here is a summary of the most common rating errors, any of which can be detrimental to a performance management process:

References

Armstrong, S. (2012, April 11). 10 rating errors to avoid in performance reviews. Retrieved from http://hr.blr.com/HR-news/Performance-Termination/Performance-Employee-Appraisal/zn-10-Rating-Errors-Avoid-in-Performance-Reviews#

College of William and Mary. (n.d.). Common rating errors. Retrieved from http://www.wm.edu/offices/hr/documents/compensation-perf-

Learning Objectives

By the end of this module, you will be able to:

• Describe HRM’s role in the performance management process and how HRM can ensure the process aligns with an organization’s strategic plan
• Identify and describe a variety of performance rating scales that can be used in organizations that include graphical scales, letter scales, and numeric scales
• Compare and contrast the three types of performance evaluation methods and how to identify best suited appraisals based on employee job duties

Reading and Resources

Textbook:  Managing Human Resources, Section 8.1: Performance Management Systems through Section 8.1a; Section 8.2a: What Are the Performance Standards? Section 8.2c: Who Should Appraise an Employee’s Performance? and Section 8.2d: Putting It All Together: 360-Degree Evaluations; and Section 8.3: Performance Evaluation Methods

Click the Managing Human Resources e-text link in this module to access this resource.

Article: Performance Management: Which performance rating scale is best, and what should an employer consider in adopting a performance rating scale?

This brief SHRM article describes the differences in and uses of the rating scales employer’s use.

Optional Resources

Peer Feedback Boosts Employee Performance This article discusses the value of peer feedback as an essential part of performance evaluation.

Peer Feedback Boosts Employee Performance

Here is the article: Employee performance improves when organizations foster a culture of peer feedback and capture how employees add value to others work.

Serena has 10 direct reports to evaluate, and she is finding it difficult. Her team faces ever-faster project cycles and the people best able to adapt at speed — the employees she values most and wants to incentivize — aren’t scoring well on the company’s ratings for specific job goals and behaviors.

Serena’s problem is common in today’s complex business environment, where the demands on employees evolve rapidly and employees add value to each other’s work.

Some organizations might consider scrapping performance ratings altogether in  today’s changing workplace , but that would likely undermine employee performance. Instead, companies can bolster performance management in three ways:

Provide ongoing, not episodic, performance feedback; make performance reviews forward-looking, not backward-looking; and include peer, not just manager, feedback in evaluating performance.

“High-quality peer input has become an essential part of effective performance feedback”

Of those three tactics, research by Gartner shows peer feedback can have a particularly strong impact, boosting employee performance by as much as 14%.

“As work becomes more interdependent and managers have less direct visibility into the day-to-day of their teams, high-quality peer input has become an essential part of effective performance feedback,” says Jessica Knight, research director at Gartner.

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Evaluate network relationships

To improve the quality and accuracy of peer feedback, managers should identify sources of feedback based on who has knowledge of an employee’s work, rather than the employee’s formal relationships. The possible sources of 360-degree feedback include these peers:

• Enablers who have the same roles/skills as the employee and work on the same projects as the employee
• Coaches who have similar roles/skills as the employee but work on different projects
• Collaborators who make different contributions to the same projects as the employee
• Mentors who have different roles/skills from the employee and work on different projects

One global professional services company asks its employees to recognize the contribution colleagues have made to their success through a point system, rather than evaluating their cognitive behaviors.

For example, of 10 points, an employee might assign 1 point to a peer who provided encouragement during a challenging project but 4 points to a colleague who introduced a solid prospect based on their understanding of the business.

“It is important to set the tone for open and honest conversations”

A material science company asks employees to rank peers based on the impact and effectiveness of their contributions, and whether the peer’s behavior aligns with enterprise values when make a contribution. Employees make qualitative comments to justify their rankings. For example, one peer might get a 1 for streamlining an existing process or cutting costs, but a 3 for pioneering a new approach to solving a strategic challenge.

Foster a culture of feedback

There are dos and don’ts for an effective peer-to-peer feedback program that ensure integrity in the process. Employees shouldn’t review peers they don’t know well enough to evaluate, should only focus on their own (not secondhand) experience of peers, should never focus on personal traits that aren’t related to work and should never share their comments with colleagues.

To review peers effectively, employees should:

• Remain objective and describe behaviors in terms of their impact on the team, project or organization.
• Be as specific as possible about actions and behaviors the peer displayed.
• Suggest ways a peer can improve on a development area or build on a strength.
• Provide both positive feedback and developmental feedback.
• Highlight traits or tasks they see as a peer to which manager may not be exposed.

Employees initially may be uncomfortable providing feedback, especially to those who are senior to them in the organization. It is important to set the tone for open and honest conversations, maybe even train employees to give high-quality feedback.

One global food company clearly sets objectives for the peer reviews in general and specific guidelines for upward reviews. It urges employees to focus on what is already working, not just what needs to be improved, to give concrete examples, focus on the future not the past, and avoid being judgmental.

Ultimately, the aim is to frame all observations in a constructive way that helps engage others and encourage the network of peers to listen to each other’s ideas and solve problems together in a way that drives continuous performance improvement

This article discusses the value of peer feedback as an essential part of performance evaluation.

Performance Appraisal Self-Assessment As a SHRM member, you may find this self-assessment of benefit.

• Managing Human Resources, Chapter 8

External Learning Tool

Click to access Cengage. Read:

• Section 8.1: Performance Management Systems through Section 8.1a
• Section 8.2a: What Are the Performance Standards?
• Section 8.2c: Who Should Appraise an Employee’s Performance?
• Section 8.2d: Putting It All Together: 360-Degree Evaluations
• Section 8.3: Performance Evaluation Methods

8.1Performance Management Systems

LO 1

We have discussed some of the ways that you as a manager can acquire top-notch employees and train and develop them. But how do you know if your efforts are really paying off in terms of what the employees are contributing once they are on the job?

Performance management  is the process of creating a work environment in which people can perform to the best of their abilities in order to meet a company’s goals. It is an entire work system that flows from a company’s goals. Figure 8.1 shows the elements of a performance management process.

Performance reviews  are the result of a process by which a manager evaluates an employee’s performance relative to the requirements of his or her job, the goals set with his or her manager, and then uses the information to show the person where improvements can be made and how.

The reviews are a tool organization can use to develop employees. Performance reviews are also referred to as performance appraisals and performance evaluations.

Typically, performance reviews are delivered annually, biannually, or sometimes on a quarterly basis. However, firms are finding that more frequent short reviews that provide employees with feedback regularly are more effective.

At RoundPegg, a hiring startup that develops social applications, all employees have quarterly reviews, or “feedback sessions,” that last just 20 minutes.

“My job here isn’t just to make sure everyone is crossing their T’s and dotting their I’s,” says Brent Daily, RoundPegg’s cofounder and chief operating officer. “My job is to remove the obstacles they face and allow them to do what they do best.”

In Figure 8.1, the performance review is just part of the performance management process. Aligning the goals of employees with those of the firm, providing workers with continual on-the-job feedback, and encouraging and rewarding them for a job done well are critical, too.

Steps in the Performance Management Process

Goals set to align with higher level goals

HR decision making (e.g., pay, promotion, etc.)

Performance appraised by manager

Behavioral expectations and standards set and then aligned with employee and organizational goals

Formal review session conducted

On-going performance feedback provided during cycle

You might compare a performance review to taking a test in college. Do tests motivate you? Do they make you want to truly excel, or do you just want to get through them? Now compare your test-taking experience with an experience in which your instructor talked to you about your career plans, complimented you on your performance, and offered you suggestions for improving it. That probably motivated you more.

We hope you can see the analogy we are making. Employers have to look at how well you are doing on the job, just as your university has to test you to be sure you graduate with the qualifications people in society expect. But your performance in either scenario consists of so much more than that.

This is why organizations need to look at the performance management system as a whole, to motivate and foster the growth of employees so they can contribute the maximum value to the firm. Reviews are simply a logical extension of the day-to-day performance management process, not the end goal.

8.1aThe Purposes of Performance Management

Figure 8.2 shows the other two most common purposes of performance management programs—developmental and administrative. Next, let’s look at each purpose.

Figure 8.2Purposes of a Performance Review

Developmental Purposes

A performance management system gives managers a concrete framework they can use to gather information about the performance of employees, provide them with feedback, and discuss their goals and how they align with the organization’s goals.

The goal is to build on a person’s strengths, eliminate potential weaknesses, and further his or her career while improving the performance of the organization as well. By taking a developmental approach to the performance management process, managers help employees understand that the feedback they are getting is designed to improve their future competencies and further their careers, and are not being conducted simply to judge them.

Companies such as GE and Microsoft are among the organizations that have redesigned their performance management programs to focus more on ongoing employee feedback, support, development, and learning. The idea is to shift the role of manager from that of “judge” to one of “coach.”

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Administrative Purposes

Performance management programs provide input that can be used for the entire range of HRM activities, such as determining the relative worth of jobs, recruiting criteria, validating selection tests, promotions, transfers, layoffs, and pay decisions. “Pay-for-performance” systems—basing employees’ pay on their achievements—is found in all types of organizations.

Studies have shown employees who earn performance-based pay are more satisfied. Performance management programs also provide input for talent reviews: strategic meetings to determine if a company has the human resources it needs to compete in the future. Performance data can also be used for HR planning.

Yet another purpose of having a performance management system is to document HRM actions that can result in legal action. Equal employment opportunity and affirmative action directives require employers to maintain accurate, objective employee performance records.

Without them, firms will be unable to defend themselves against possible discrimination charges when it comes to promotions, salaries, and terminations. Finally, the success of the entire HR program depends on knowing how the performance of employees compares with the goals established for them.

8.2aWhat Are the Performance Standards?

Performance standards should be based on job-related requirements derived from a job analysis and reflected in an employee’s job description and job specifications. Establishing SMART goals can be very helpful for this purpose.  SMART goals  are goals that are specific, measurable, attainable, realistic, and time-based—hence, the abbreviation SMART.

Realistic and specific performance standards that are actually attainable in a certain amount of time (given the firm’s current resources and employee’s abilities), measurable, and written down communicate precise information to employees.

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For example, “the ability and willingness to handle customer orders” is not as good a performance standard as “all customer orders will be filled in 4 hours with a 98 percent accuracy rate in 2019.” When the standard is expressed in specific, measurable terms, comparing an employee’s performance against it results in more accurate feedback.

The ultimate goal is to create effective goals that will work for your employees, says Gary Foster, customized training program manager at Minnesota’s Ridgewater College. “It’s not an easy task; it’s not a short task, but it can be done.”

SMART goals can help improve the performance of employees as well as remove the vagueness and subjectivity of performance reviews.

Management and Appraisal of Employee Performance

Management and Appraisal of Employee Performance

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