PERFORMANCE APPRAISAL

Lecturer: Le Tran Tuan Anh

Faculty of Economics and business
Learning objectives
• Basis concept in Performance Appraisal
• Appraisal Methods
• How to deal with Appraisal Problems and Appraisal Interview
• Performance Management today

2
 What is performance appraisal?
• Performance appraisal is an activity used to determine the extent to which
an employee performs work effectively

3
 Why appraise performance?

Motivation

Training &
Communications
Development

Human resource Purposes Legal compliance

and employment for (promotion, transfer,
planning appraisal reward, discharge)

4
 Performance appraisal process
Step 1
Define the job and its standards

Step 2
Measure employees’ performance against these standards

Step 3
Provide feedback to the employees so that they can improve
their performance

6
Step 1: Establish goals and performance standards

Job Description

SMART Goals

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 Step 2: Appraise the employee’s performance
Graphic rating scale

1
Management by Alternation ranking
Objectives (MBO) method
7 2

Forced distribution Paired comparison

method APPRAISAL method
6 3
METHODS

Behaviorally Anchored Critical incident

Rating Scale (BARS) 5 4 method

10
 Graphic Rating Scale
A scale that lists a number of traits and a range of
performance for each that is used to identify the score that
best describes an employee’s level of performance for
each trait

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 Graphic Rating Scale
Discrete scale
1 2 3 4 5 6 7 8 9 10

Good Average Below expectations

Unsatisfactory Questionable Satisfactory Outstanding

1 2 3 4

Continuous scale
Poor — — — — — — — — Excellent
 Alternation ranking method

Ranking employees from best

to worst on a particular trait,
choosing highest, then lowest,
until all are ranked
 Paired comparison method

Ranking employees by making a

chart of all possible pairs of the
employees for each trait and
indicating which is the better
employee of the pair
 Critical Incident Method
In this approach, a supervisor keeps a record of uncommonly good and/or
undesirable examples of an employee’s work-related behavior and reviews the
record with the employee at predetermined times. The challenge for the
supervisor is to make the time to record the incidents as soon as possible.

Negative Positive
examples examples

Critical Incidents
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 Behaviorally Anchored Rating Scale (BARS)
A behaviorally anchored rating scale
(BARS) is an appraisal method that
combines critical incidents and
quantitative ratings, by anchoring a
quantified scale with specific
narrative examples of good and poor
performance expressed as specific
behaviors
 Forced distribution method
With the forced distribution method, the manager places predetermined percentages of
subordinates in performance categories, as when a professor “grades on a curve.”

Example:
➢15% high performers
➢20% high-average performers
➢30% average performers
➢20% low-average performers
➢15% low performers
 Management by objectives (MBO)
MBO involves setting specific
measurable goals with each employee
and then periodically reviewing the
progress made
 Management by objectives process

1 2 3 4 5 6
Define expect
Set the Set Discuss Conduct
results (set Provide
organization’ department department performance
individual feedback
s goals goals goals review
goals)
 Management by
objectives (MBO)

Problems with MBO

• Unclear objectives
• Time consuming
• Different expectations
Step 3: Provide feedback to the employees
• The appraisal interview

➢ An interview in which the supervisors and subordinate review the

appraisal and make plans to remedy deficiencies and reinforce strengths

➢ Research shows that managers also use appraisal interview to improve

their employees’ level of engagement
Step 3: Provide feedback to the employees so that they can
improve their performance
• How to conduct the appraisal interview
➢ Talk in terms of objective work data
➢ Don’t get personal
➢ Recognize that defense behavior is normal
Choose time
➢ Never attack a person’s defenses Prepare the and place
➢ How to criticize a subordinate employee
➢ Encourage the person to talk Prepare the
➢ How to ensure the interview leads to interview
Improved Performance
➢ End with an action plan
 Appraising performance: Problems and Solutions
Problems:

 Unclear standards
 Halo effect
 Central tendency
 Leniency or strictness
 Bias
 Appraising performance: Problems and Solutions
• Unclear standards
- An appraisal that is too open to interpretation
• Halo effect
- Occurs when a supervisor’s rating of a subordinate on one trait biases
the rating of that person on other traits
• Central tendency
- A tendency to rate all employees the same way, such as rating them all
average
• Strict/Lenient
- The problem that occurs when a supervisor has a tendency to rate all
subordinates either high or low
• Bias
- The tendency to allow individual differences such as age, race, and
gender to affect the appraisal ratings
 Performance management
Performance management is the continuous process of identifying, measuring, and
developing the performance of individuals and teams and aligning their performance with
the organization’s goals.
It contains six elements:
➢ Direct sharing
➢ Goal alignment
➢ Ongoing performance monitoring
➢ Ongoing feedback
➢ Coaching and developmental support
➢ Recognition and rewards

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Activity 1
• Read the case study and answer question

• Write down your group’s answers and submit them to your

lecturer
1. The process of evaluating an employee's current and/or past performance relative to his or her performance
standards is called ________.
A) Recruitment B) employee selection C) performance appraisal D) organizational development
2. Which of the following is NOT one of the recommended guidelines for setting effective employee goals?
A) assigning specific goals B) assigning measurable goals C) administering consequences for poor performance
D) encouraging employees to participate in setting goals
3. SMART goals are best described as ________.
A) specific, measurable, attainable, relevant, and timely
B) strategic, moderate, achievable, relevant, and timely
C) specific, measurable, achievable, relevant, and tested
D) straightforward, meaningful, accessible, real, and tested
4. All of the following are reasons for appraising an employee's performance EXCEPT ________.
A) assisting with career planning B) making decisions about promotions
C) creating an organizational strategy map
D) determining appropriate salary and bonuses
5. In most organizations, which of the following is primarily responsible for appraising an employee's performance?
A) employee's direct supervisor B) human resources manager
C) EEO representative D) employee's peers
6. Which of the following is LEAST likely to be used by firms as an alternative source of performance appraisal
information?
A) Peers B) rating committees
C) the employee D) outside experts
7. Setting work standards, assessing an employee's performance against those standards, and providing
employee feedback are the three steps of the ________.
A) orientation process B) development analysis C) ratio analysis method D) performance appraisal cycle
8. In order to be the most effective, the performance management process should occur ________.
A) Occasionally B) continuously C) Periodically D) annually
9. Which performance appraisal technique lists traits and a range of performance for each?
A) alternation ranking ; B) graphic rating scale ; C) paired comparison ; D) constant sum rating scale
10. Which performance appraisal method involves distinguishing between the worst and best employees based
on a trait or traits?
A) alternation ranking ; B) graphic rating scale C) forced distribution ; D) constant sum rating scale
11. Suppose you have five employees to rate. You make a chart of all possible pairs of employees for each trait being
evaluated. Then, you indicate the better employee of the pair for each pair. Finally, you add up the number of
positives for each employee. In this case, you have used the ________ method of performance appraisal.
A) graphic ranking scale B) alternation ranking C) paired comparison D) forced distribution
12. Which performance appraisal tool is being used by a supervisor who places predetermined percentages of rates
into various performance categories?
A) graphic ranking scale B) alternation ranking C) forced distribution D) paired comparison
13. Which of the following is one of the primary complaints regarding the use of the forced distribution method for
performance appraisals?
A) harm to employee morale ; B) high cost of administration
C) standardization of group sizes ; D) time consuming to administer
THANKS YOU