Chapter 5:

Employee Performance Management and Appraisal

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OutlineI
1

Employee Performance Management

Introduction
Components of Employee Performance Management
What Influences Employee Performance?

Objective Setting
2

Performance Appraisal
Introduction to Performance Appraisal
Implementation of Work and Monitoring
Biases in Performance Appraisal
Parties Involved in Appraisal Practice
Implementation of Appraisal Practice

References
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Introduction

Performance Management
Performance management is a total process of setting goals, training
employees, and then appraising and rewarding them. The process helps
employers to ensure that employees are working towards the companys goal.
It also implies that employees must make continuous improvement [2].
Every manager is responsible to manage the performance of his
subordinates. HR specialists support managers in this role.
There is no such thing as a perfect performance management system as
while an appraisal system can be well designed, the execution is
dependent on heads of departments, managers and superiors in an
organization.

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Benefits of Performance Appraisal

Benefits of Performance Appraisal [2]:

Appraisal provides information for makingdecisions on promotion and
salary
Appraisal provides an opportunity for a supervisor and subordinates to
review their work-related behavior. They can develop a plan for making
improvement.
Appraisal provides and opportunity toreview employees career plans
based on their strengths and weaknesses.
Appraisals help a company tobetter manage employeesand improve
overall performance.

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Components of Employee Performance Management

Main Components of an Employee Performance Management System [1]:

1

3
4

The preparation oforganizational plans, including the setting of objectives

which are established for all levels down to the individual worker

Theimplementationof the work by the individual worker, accompanied by

appropriate forms ofmonitoringby the workers manager or supervisor
Theappraisalof the work of the individual workers
Follow-up actiontaken after the appraisal. The nature of the follow-up
action depends upon the quality of performance of the individual worker

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What Influences Employee Performance?

Factors that influences individual employee performance [1]:

Knowledge and skills can be developed through proper training programs
Motivation depends on a variety of factors including the style of
management in the organization, perception of remuneration package,
whether social needs are met at workplace, etc.
Work environment relates to the machinery, tools, equipment available to
do the work and is largely beyond the control of the individual employee
who must do the best with whatever he has.

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Objective or Goal Setting

Some guide on goal setting [2]:

Assign specific goals: Employees who are given specific goals perform
better than those who are not
Assign measurable goals: Goals set in absolute terms (e.g. an average
daily output of 300 units) are less confusing than goals set in relative
terms (e.g. improve production by 20%)
Assign challenging but doable goals: Goals should be realistic and
challenging but not impossible

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Introduction to Appraisal SystemI

The main purpose of performance appraisal is to ensure that an

employees current work is evaluated so that he can be assisted to
improve, if necessary.
Appraisal system is one component of a performance management
system.
Effective appraisal systems have certain characteristics [1]:
1
2
3
4
5

Integrated with a performance management system

Receive top management support
Customized to the needs of the organization
Acceptable and understandable
Reliable and unbiased as far as possible

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Introduction to Appraisal SystemII

The following question can be answered by an appraisal [1]:

Did the employee do a good job for which he/she should be given an extra
special reward?
Is the employee having difficulty with his/her job and should be given
re-training?
Should the employee be more carefully monitored in the future?
Would the employee be more useful to the company if he/she were
transferred to a different job?

The design of an appraisal system should involve multiple parties, e.g.

supervisors, managers and trade union representatives to ensure the
acceptability and successful implementation of the system

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Implementation of Work and MonitoringI

In an effective performance management system, managers find
appropriate ways to regularly monitor the work of their subordinates and
give them frequent feedback.
Monitoring methods [1]:
1
2
3
4
5
6
7

Observation of work operations (by supervisor)

Reading written reports (written by direct supervisor)
Recording (e.g. tele-marketing, call centers, tele-banking)
Watching computer screen displays of performance data
Inspecting the quality of samples of work
Holding progress review meetings
Surveying clients and customers to assess their satisfaction with products
or services
Holding meetings after a project or activity is completed to determine what
went well and what can be improved, commonly known as a post-mortem
meeting.
...
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Implementation of Work and MonitoringII

Monitoring of employees performance is a sensitive issue amongst some

workers, especially those who are senior and who consider themselves
professionals.
However, monitoring is conducted not only so that employees
performance can be formally appraised, but is also necessary so that any
problems can be identified early and remedial action taken before the
issue becomes serious.
Monitoring an employees performance on a regular basis will allow the
manager to take remedial action as soon as a problem is noted.

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Biases in Performance AppraisalI

1

Recency Effect: Managers affected by the recency take into

consideration only the most recent performance of their subordinates and
ignore earlier work which may have been better or worse than the work
carried out closer to the appraisal time.

Halo effect: Rating someone that is preferred with higher performance

scoring/results. For instance, an appraiser may give a positive rating to a
graduate from the same college as himself, or from the same part of the
country as himself.
Central/Leniency/Strictness tendency: Central tendency happens
when an appraiser rates all his subordinates as being average on all
criteria being evaluated. Leniency tendency occurs when the appraiser
gives high ratings to all his subordinates, as oppose to strictness
tendency where the appraiser rates all subordinates on the lower end of
the rating scale. To avoid this type of bias, a forced distribution system
may be introduced.
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Biases in Performance AppraisalII

Prejudice and stereotyping: Negative opinions about a particular group

of people, which can be racial, religious, sex or age-based.
Fatigue: Fatigue of the appraiser may blur judgment and causing
subordinates get undeserved rating. For example, due to the sheer
number of employee that need to be appraised at one time, or due to time
constraints.

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Parties Involved in Appraisal Practice

HR specialist should decide on who is involved in giving information about

an individual worker.

Managers, being fallible human beings, are liable to bias.

Possible sources of information in an appraisal practice:
The employees manager: as the direct supervisor
The employees subordinates: interview, complaints, etc.
The employees co-workers: peer evaluation
Customers/clients/other parties: e.g. customer feedback

360 degree feedback system or multi-rater system can provide accurate

and reliable data about employees and be a source of useful information
which will allow the employee to improve himself.

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Implementation of Appraisal PracticeI

Formal appraisals need to be conducted:

Before a new employee completes a probationary period: to see
whether the employee is fit for the job and organizational culture
After an employee is promoted
If the quality of an employees performance is declining and he has
been warned to improve
On a regular basis (annually, every six months, every quarter)
Three approaches of appraisal: comparative procedures, trait rating scales,
essay technique.

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Implementation of Appraisal PracticeII

Comparative Procedures
Compare subordinates where they can be ranked or listed in order from
the best down the weakest performer.
Easy to administer and tie to rewards but may not provide information to
help employees improve their performance unless used in combination
with other methods.
Trait Rating Scales
One of the popular appraisal methods.
Rating scales are used to measure a number of criterias such as
personality traits, behaviors, output or a combination of these criterias.
To help appraisers, some companies provide descriptions of acceptable
and unacceptable behaviors.

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Implementation of Appraisal PracticeIII

Essay Techniques
Appraisers may be asked to write down answers to certain open-ended
questions about the performance of their subordinates.

This is not a popular appraisal technique, as appraisers are encouraged

to write very specific comments rather than general phrases which are not
helpful to the employee and are unlikely to lead to improved performance.

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Implementation of Appraisal PracticeIV

The Appraisal Interview

The appraiser (usually manager) and employee sit together to review the
employees past performance, set goals for next time period and discuss
how the manager can help the employee overcome any problems faced in
the employees work.
The purpose of the interview is to give feedback to the employee.
The purpose of appraisal interview:
1
2
3

Goals will be negotiated with the subordinate

Help will be given with action plans
Counselling will be given for employees with problem

After the interview, employees who are unable to perform satisfactorily,

after all assistance has been provided so that they can improve, may need
to be either dismissed or changed to other departments for suitable tasks.

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ReferencesI
[1]A MINUDDIN , M. Human Resource Management: Principles and Practices, first ed.
Oxford University Press, Malaysia, 2008.
[2]D ESSLER , G., AND TAN, C. H. Human Resource Management: An Asian
Perspective, 10th ed. Pearson Prentice Hall, Singapore, 2005.

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The End

Thank You.

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