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Performance Appraisal Method

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ASSIGNMENT: PERFORMANCE APPRAISAL METHOD

Performance Appraisal Method

Critical Incident Method

Definition: This format of performance appraisal is a method which is involved identifying and describing specific incidents where employees did something really well or that needs improving during their performance period.

Critical incident is a method used for many sectors.
An incident is critical when it illustrates what the employers has done or failed to do.
The critical incidents for performance appraisal are a method in which the manager writes down positive and negative performance behavior of employees throughout the performance period.
Each employee will be evaluated as such and one’s performance appraisal will be based on the logs that are put in the evaluation form.
The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behavior.
At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers’ performance.
The critical incidents file of performance appraisal is a form of documentation that reflects all data about employee performances. Most frequently, the critical incidents technique of evaluation is applied to evaluate the performance of superiors rather than of peers of subordinates.

Disadvantages of Critical Incident

This method suffers however from the following limitations: • Critical incidents technique of evaluation is applied to evaluate the performance of superiors rather than of peers of subordinates. • Negative incidents may be more noticeable than positive incidents. • It results in very close supervision which may not be liked by the employee. • The recording of incidents may be a chore for the manager concerned, who may be too busy or forget to do it. • The supervisors have a tendency to unload a series of complaints about incidents during an annual performance review session.
Example of Critical Incident:
Good Example:
July 05 – The sales clerk of Agora patiently attended to the customer’s complaint. He is polite, prompt, and enthusiastic in solving the customers' problem.
Bad Example:
July 07 – The sales assistant of Agora stayed 45 minutes over on his break during the busiest part of the day. He failed to answer the store manager's call thrice. He is lazy, negligent, stubborn and uninterested in work.

Weighted Checklist Method

This method describes a performance appraisal method where rater familiar with the jobs being evaluated prepared a large list of descriptive statements about effective and ineffective behavior on jobs.

Process of Weighted Checklist

• HR department and Managers / Supervisors will set up checklist for each position. • If the rater believes strongly that the employee possesses a particular listed trait, he checks the item; otherwise, he leaves the item blank.

Sample of Weighted Checklist

• Does he give respect to his superiors? Yes/No • Does he follow instructions properly? Yes/No • Does he make mistakes frequently? Yes/No

The value of each question may be weighted equally or certain questions may be weighted more heavily than others.

Advantages and Disadvantages of Weighted Checklist

• This method helps the manager in evaluation of the performance of the employee. • The rater may be biased in distinguishing the positive and negative questions. He may assign biased weights to the questions. • This method also is expensive and time consuming. • It becomes difficult for the manager to assemble, analyze and weigh a number of statements about the employee’s characteristics, contributions and behaviors.
A rating score from the checklist helps the manager in evaluation of the performance of the employee. The checklist method has a serious limitation. The rater may be biased in distinguishing the positive and negative questions. He may assign biased weights to the questions. Another limitation could be that this method is expensive and time consuming. Finally, it becomes difficult for the manager to assemble, analyze and weigh a number of statements about the employee's characteristics, contributions and behaviors. In spite of these limitations, the checklist method is most frequently used in the employee's performance evaluation.

Paired Comparison Analysis

Paired comparison analysis is a good way of weighing up the relative importance of options.
A range of plausible options is listed. Each option is compared against each of the other options. The results are tallied and the option with the highest score is the preferred option.
It is similar to ranking and the result is a rank ordering of workers, but the comparative judgments are more systematic and controlled.

Comparisons are made between 2 people at a time, and a judgment is made about which of the pair is superior. If specific characteristics are to be rated, the comparisons are repeated for each item. When all possible comparisons have been made, an objective ranked list is obtained that is based on the worker’s score in each comparison.

If a supervisor evaluates 6 workers by this technique, comparing each worker with every other worker, 15 paired comparisons must be made because there are 15 possible pairs.

The following formula is used: N represents the number of persons to be evaluated: N (N-1) /2.

Advantages: an advantage of this approach over the ranking technique is that the judgmental process is simpler. The supervisor has to consider only one pair of workers at a time. Also it is possible to give the same rank to those of equal ability.

Disadvantages: large number of comparisons required when dealing with many employees. The use of the technique is necessarily restricted to small groups and to a single ranking of overall job effectiveness.

Steps to Conduct Paired Comparison Analysis

Let us list the options you will compare (elements as A, B, C, D, E for example).
Now create table 6 rows and 7 columns.
| |A |B |C |D |E |Total Point |
|A |9 |8 |6 | | | |
|B |8 |9 | | | | |
|C |6 |6 | | | | |
|D |7 |7 | | | | |
|E |6 |6 | | | | |

Let us write down option to column and row; A to row second, cell first from left and A to row first, cell second from left; B to row third, cell first from left and B to row first, cell third from left etc. Column seventh is total point.
Now let us identify importance from 0 (no difference) to 3 (major difference) and compare element “A” to B, C, D, E and place “point” at each cell.
Finally, let us consolidate the results by adding up the total of all the values for each of the options. We may want to convert these values into a percentage of the total score.

4 Rating Scales

The Rating Scale is a form on which the manager simply checks off the employee’s level of performance. This is the oldest and most widely method used for performance appraisal.
The scales may specify five points, so a factor such as job knowledge might be rated 1 (poorly informed about work duties) to 5 (has complete mastery of all phases of the job). ← Examples of a 5-point scale: ← 5=Excellent 4=Very satisfactory 3=Satisfactory 2=Unsatisfactory 1 = Very unsatisfactory ← 5=Greatly exceeds standards 4=Exceeds standards 3=Meets standards 2=Below standards 1=Far below standards ← Example of a 7-point scale: ← 7 = Truly exceptional 6 = Excellent 5 = Very good 4 = Good 3 = Satisfactory 2 = Unsatisfactory 1 = Very unsatisfactory ← In Bangladesh Air Force (my organization) ← 9= Outstanding ← 8= High Above Average ← 7= Above Average ← 6= Average ← 5= Below Average ← 4= Poor ← 3-1= Unsatisfactory

More Examples: ← Decisions: ← Use a graphic or just use words? ← Label all the points on the scale, or just label some? ← Odd or even number of points on the scale? ← Fewer points on the scale or more points on the scale? ← [pic]

Rating Scale (more)

Note that rating scales do not require you to compare one employee to another — the ratings are absolute, not comparative

Problems:

No limits on leniency, severity, & central tendency errors

Example: a manager rates all of his employees at “5 = Excellent” regardless of the employees’ actual performances

Possible solution: forced distribution?

The terms used in a rating scale to describe different levels of performance tend to be short and vague

Example: What does “Excellent” really mean?

Possible solution: BARS?

Advantages of The Rating Scales

• Graphic rating scales are less time consuming to develop. • They also allow for quantitative comparison.

Disadvantages of the Rating Scales

• Different supervisors will use the same graphic scales in slightly different ways. • One way to get around the ambiguity inherent in graphic rating scales is to use behavior based scales, in which specific work related behaviors are assessed. • More validity comparing workers ratings from a single supervisor than comparing two workers who were rated by different supervisors.

Essay Evaluation Method

This method asked managers / supervisors to describe strengths and weaknesses of an employee’s behavior. Essay evaluation is a non-quantitative technique.
This method usually use with the graphic rating scale method.

Input of Information Sources

• Job knowledge and potential of the employee; • Employee’s understanding of the company’s programs, policies, objectives, etc.; • The employee’s relations with co-workers and superiors; • The employee’s general planning, organizing and controlling ability; • The attitudes and perceptions of the employee, in general.

Disadvantages of Essay Evaluation

• Manager / supervisor may write a biased essay. • A busy rater may write the essay hurriedly without properly assessing the actual performance of the worker. • Apart from that, rater takes a long time; this becomes uneconomical from the view point of the firm, because the time of rater is costly. • Some evaluators may be poor in writing essays on employee performance. Others may be superficial in explanation and use flowery language which may not reflect the actual performance of the employee. 5. Behaviorally Anchored Rating Scales
Behaviorally anchored rating scales (BARS) are scales used to rate performance. BARS are normally presented vertically with scale points ranging from five to nine. It is an appraisal method that aims to combine the benefits of narratives, critical incidents, and quantified ratings by anchoring a quantified scale with specific narrative examples of good, moderate, and poor performance.

Background

BARS were developed in response to dissatisfaction with the subjectivity involved in using traditional rating scales such as the graphic rating scale. A review of BARS concluded that the strength of this rating format may lie primarily in the performance dimensions which are gathered rather than the distinction between behavioral and numerical scale anchors.

Benefits of BARS

BARS are rating scales that add behavioral scale anchors to traditional rating scales (e.g., graphic rating scales). In comparison to other rating scales, BARS are intended to facilitate more accurate ratings of the target person's behavior or performance. However, whereas the BARS is often regarded as a superior performance appraisal method, BARS may still suffer from unreliability, leniency bias and lack of discriminant validity between performance dimensions.

Developing BARS

BARS can be developed using data collected through the critical incident technique, or through the use of comprehensive data about the tasks performed by a job incumbent, such as might be collected through a task analysis. In order to construct BARS, several basic steps, outlined below, are followed. 1. Examples of effective and ineffective behavior related to job are collected from people with knowledge of job using the critical incident technique. Alternatively, data may be collected through the careful examination of data from a recent task analysis. 2. These data are then converted into performance dimensions. To convert these data into performance dimensions, examples of behavior (such as critical incidents) are sorted into homogeneous groups using the Q-sort technique. Definitions for each group of behaviors are then written to define each grouping of behaviors as a performance dimension 3. A group of subject matter experts (SMEs) are asked to re-translate the behavioral examples back into their respective performance dimensions. At this stage the behaviors for which there is not a high level of agreement (often 50–75%) are discarded while the behaviors which were re-translated back into their resepctive performance dimensions with a high level of SME agreement are retained. The re-translation process helps to ensure that behaviors are readily identifiable with their respective performance dimensions. 4. The retained behaviors are then scaled by having SMEs rate the effectiveness of each behavior. These ratings are usually done on a 5- to 9-point Likert-type scale. 5. Behaviors with a low standard deviation (for examples, less than 1.50) are retained while behaviors with a higher standard deviation are discarded. This step helps to ensure SME agreement about the rating of each behavior. 6. Finally, behaviors for each performance dimensions, all meeting re-translation and criteria, will be used as scale anchors.

The BARS Method Further Explained

Development of BARS evaluations requires an in-depth understanding of each position’s key tasks, along with an understanding of the full range of behaviors displayed by individuals in carrying out such tasks. You rate these behaviors for each employee; then you anchor each behavior to points on a rating scale, which indicates whether the behavior is exceptional, excellent, fully competent, or unsatisfactory. The result is a rating scale for each task.
For example, in a hypothetical position of human resources coordinator, one of the job holder’s responsibilities is to complete status change notices, which update the personnel system regarding changes in employee pay, position, title, supervisor, and personal data. The BARS method for this specific task in this specific job could read as follows:
5 — Exceptional performance: Accurately completes and submits all status change notices within an hour of request.
4 — Excellent performance: Verifies all status change notice information with requesting manager before submitting.
3 — Fully competent performance: Completes status change notice forms by the end of the workday.
2 — Marginal performance: Argues when asked to complete a status change notice.
1 — Unsatisfactory performance: Says status change notice forms have been submitted when they haven’t.

Pros and Cons of The BARS Method

The BARS approach offers several key advantages: • It’s behaviorally based. The BARS system is totally focused on employee performance. Ideally, it removes all uncertainty regarding the meaning of each numerical rating. • It’s easy to use. The clear behavioral indicators make the process easier for the manager to carry out and the employee to accept. • It’s equitable. With its heavy emphasis on behavior, the evaluation process comes across as fair. • It’s fully individualized. From the standpoint of consistency within a company, BARS is designed and applied individually and uniquely for every position. • It’s action-oriented. With an understanding of the specific performance expectations and standards of excellence, employees can much more easily take steps to improve their performance, and they’re more likely to do so as a result.
Like any method, BARS isn’t perfect. Here are some of the drawbacks to the BARS approach: • The process of creating and implementing BARS is time-consuming, difficult, and expensive. Each BARS form must be created from scratch for every position in the company. • Sometimes the listed behaviors still don’t include certain actions required of the employee, so managers can have difficulty as signing a rating. • It’s high maintenance. Jobs change over time, which means that BARS requires a high degree of monitoring and maintenance. • It’s demanding of managers. In order to successfully conduct BARS evaluations, managers need detailed information regarding the actions of their employees. Gathering such data can be quite time-consuming, and many managers end up letting this slide.
|Management by Objectives’ (MBO) Method |
|The concept of ‘Management by Objectives’ (MBO) was first given by Peter Drucker in 1954. It can be defined as a process whereby the |
|employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken |
|as the criteria for measurement of their performance and contribution and deciding the course of action to be followed. |

The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.

The MBO Process

[pic]

Unique Features and Advantages of MBO

The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals.

Some of the important features and advantages of MBO are:

▪ Clarity of goals – With MBO, came the concept of SMART goals i.e. goals that are:

Specific Measurable Achievable Realistic, and Time bound.

The goals thus set are clear, motivating and there is a linkage between organizational goals and performance targets of the employees. ▪ The focus is on future rather than on past. Goals and standards are set for the performance for the future with periodic reviews and feedback. ▪ Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment. ▪ Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period. 7. 360 Degree Feedback Performance Appraisal Method
Businesses use the 360 degree feedback performance appraisal process to evaluate the individual managers. This comprehensive performance appraisal system provides feedback on a manager’s performance collected from a variety of people with whom he interacts regularly. Sources of feedback include the manager’s direct supervisor, peers, customers, vendors and a self-assessment.

Significance

Because feedback comes from all areas in which a manager interacts, the results are more reliable. When the same feedback come from several people and departments, it becomes difficult to ignore. In addition the process requires anonymity on the part of evaluators; this encourages them to answer honesty without fear of negative repercussions.

Criteria

Survey questions should assess the manager’s knowledge, skills and behavior. The knowledge assessment determines how well the manager knows the job, company and industry as a whole. In the skills assessment portion, evaluators rate how efficiently the manager completes tasks as well as the quality and effectiveness of the result. The behavior assessment covers interpersonal skills, communication effectiveness, attitude toward others, time management skills and organization. In other words, it evaluates how well the manager handles a dynamic work environment—his behavior patterns and attitude management, but not personality traits.

Benefits

The 360 degree feedback process collects data from multiple perspectives rather than just the direct supervisor as with traditional methods. The process is customer focused and defines customers as outside the company and internal, such as a person in another department with whom the manager interacts frequently. When implemented properly, the process delivers direct, honest feedback to the manager. By reviewing the perceptions of others, he can see more clearly the effect his behaviors and attitudes have on others.

Considerations

Employees must accept the feedback process as fair and accurate for it to work properly and successfully. The process should fit into the organizational culture; it works best for businesses where employees regularly collaborate or work in teams. Survey questions should focus on relevant job performance criteria. To encourage employee acceptance, organizations should run an informational campaign emphasizing the benefits, fairness and accuracy of the system.

Warning

Businesses willing to implement this comprehensive method of assessment should be willing to spend the time and effort necessary to train each anonymous evaluator in the process as well as correct and incorrect ways to interpret questions. Failure to properly train feedback providers will most likely result in inaccurate results or a total failure of the process to produce relevant information. In addition, companies should have the swath of evaluators for each manager picked by an outside human resources associate or an outside firm.

2 Forced Ranking

Forced ranking is a controversial workforce management tool that uses intense yearly evaluations to identify a company's best and worst performing employees, using person-to-person comparisons. In theory, each ranking will improve the quality of the workforce. Managers rank workers into three categories: The top 20 percent are the "A" players, the people who will lead the future of the company. They're given raises, stock options, and training. The middle 70 percent are the "B" players, steady-eddies who are given smaller raises and encouraged to improve. The bottom 10 percent are the "C" players, who contribute the least and may be meeting expectations but are simply "good" on a team of "greats." They're given no raises or bonuses and are either offered training, asked if they'd be happier elsewhere, or fired.

Why It Matters Now

Although most large organizations refuse to publicly discuss or even confirm whether they're using some form of forced ranking, as many as one-third of Fortune 500 companies use such systems, says Dick Grote, author of "Forced Ranking: Making Performance Management Work." Forced ranking first gained attention at General Electric in the 1980s. The practice lost its glimmer in recent years following Enron's downfall, which has been attributed in part to back-biting spurred by forced rankings. But with unemployment at its lowest level since the 1990s, the talent war has heated up again, making it more important to identify top performers, since they're being more heavily recruited.

Why It Matters to You

Forced ranking tends to be popular with large corporations that have hundreds or thousands of employees and need to systematize their HR processes. If your workplace is one of these—and if the company is in trouble and looking for solutions—forced ranking could be in your future. The long-run impact should ideally be increased productivity, profitability, and shareholder value. But sometimes a company culture can shift due to forced ranking, creating a more competitive atmosphere and decreasing morale.
If you're in the market for a new job, spend some time researching which companies in your industry use forced ranking. Some firms will not openly offer this information to potential employees.

The Strong Points

By identifying their top employees, companies can jolt managers out of complacency, combat artificially inflated performance ratings, and reduce favoritism, nepotism, and promotions that may be based on factors other than performance. Managers can identify top performers—the people they least want to lose—and reward, keep, and train them to be future leaders of the business. Forced ranking also provides a justifiable way to identify and lose workers who may be holding the business back. About 40 percent of "C" players voluntarily resign, which is often a happy outcome for managers, who can then hire better-quality replacements.

The Weak Spots

Companies can inevitably make mistakes using forced ranking, firing someone who might go on to be a super star elsewhere or discouraging excellent performers by ranking them as mediocre simply to fill a quota. Replacing lower-rung employees each year can also be costly and can lower productivity in the early months of adoption. New data, including a study by Drake University professor Steve Scullen, shows that forced ranking loses its effectiveness after a couple of years, since the average quality of workers increases and there are fewer "C" players to identify.
Critics also claim the system creates a competitive environment that can result in cutthroat, unethical behavior; limit risk-taking, creativity, and teamwork; and discourage workers from asking for help or extra training out of fear that they'll be identified as low performers. The strategy has also resulted in legal troubles for such companies as Microsoft, Ford, Goodyear, 3M, and Capital One, which have fought discrimination lawsuits filed by former employees who claimed forced ranking was used to discriminate on the basis of race or age.

Forced Distribution (Hypothetical): Evaluator must place a fixed percentage of employees in each performance category. Example:

10% must be rated 5 = Excellent 25% must be rated 4 = Very satisfactory 45% must be rated 3 = Satisfactory 15% must be rated 2 = Unsatisfactory 5% must be rated 1 = Very unsatisfactory

9. Behavioral Observation Scale In production floor, we can use the number of product (in units) that processed daily or in work hours easily, as the basis of employee performance. But, this is very difficult to determine the quantitative type of work output completed by such employees (administration staff, secretary, research & development staff). We can’t use the number of letters that has been typed by the secretary as the reference, as the larger the number of the letters, the better the performance. Then, a qualitative based performance appraisal (PA) method has been developed to handle this problem, called Behavioral Observation Scale (BOS). The rationale is simple. Good behavior will produce good performance; bad behavior will be a distortion. This method is applicable for production-employees performance, too. The key factor of measurement in this method is determining the behaviors in workplace that related to the success or the failure, partially or generally, to the jobs. There are some considerations in making an effective BOS: 1. The behaviors on the job must be JOB EVALUATION based analysis. 2. Critical Incident Technique (CIT) should be performed to minimize the bias of performance measurement 3. BOS should be performed by better qualification of supervisor The instrument of BOS is ordinal scale questionnaires (usually 1-5 or 1-7 scale). The question is related to the FREQUENCY of the GOOD or BAD BEHAVIOR. Note that higher score is given to higher frequency good behavior. Lower score for higher frequency of bad behavior. Do some Correlation Test (statistical analysis) for each factors that investigated by each questions for better measures.
The total performance of an employee is the sum of the score of the questionnaire. Better employee (better performer) is someone reaches higher score. The example of questionnaires below designed for a Hotel Receptionist Right question, scale of measurement, and scale attribution for good behavior Say “Thank you for your visits” to the customer who leaves the hotel 1 (never) 2 3 4 5 (always)

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UNIVERSITY OF DHAKA
EMBA PROGRAM
Summer, 2012
EM: 540 (Performance Appraisal and Compensation Management)

Submitted by

Md Abdul Hafiz Sarker-ID-3-07-13-056

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