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Chapter 10

Establishing the Performance Management System

Fundamentals of Human

Resource Management

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

Performance Management

Systems

Difficulties in Performance Management Systems

• Focus on the individual : Discussions of performance may elicit strong emotions and may generate conflicts when subordinates and supervisors do not agree.

Performance Management

Systems

Difficulties in Performance Management Systems

• Focus on the process : Company policies and procedures may present barriers to a properly functioning appraisal process.
• Additionally, appraisers may be poorly trained.

The Appraisal Process

The Appraisal Process

• Establishment of performance standards - Derived from company’s strategic goals. - Based on job analysis and job description.
• Communication of performance standards to employee.

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.

Appraisal Methods

Three approaches:

• Absolute standards
• Relative standards
• Objectives

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.

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.

Appraisal Methods

Evaluating absolute standards :

• Behaviorally Anchored Rating Scales (BARS): Appraiser rates employee on factors which are defined by behavioral descriptions illustrating various dimensions along each rating scale.

Appraisal Methods

Relative standards:

• Employees are evaluated by comparing their performance to the performance of other employees.

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.

Appraisal Methods

Using Achieved Outcomes to Evaluate Employees Management by Objectives (MBO)

• includes mutual objective setting and evaluation based on the attainment of the specific objectives