Performance Diagnosis: Cengage HRM Exercise Week4

Discuss the Cengage Human Resources Management exercises included in this week’s materials.
Consider the following:
• What was the main issue of this week’s topic?
• How were your choices received by the supervisor in the simulation?
• What was the main lesson that you learned from this exercise?
• Did other people approach the scenario with your same point of view?
• How were your results similar or different from those of your peers?

***Please answer the questions 350-700 words
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PART IV EMPLOYEE DEVELOPMENT CHAPTER7

PART IV EMPLOYEE DEVELOPMENT CHAPTER7
Appraising and Managing Performance

CHAPTER 7 • APPRAISING AND MANAGING PERFORMANCE 223
The Managerial Perspective
The situation at Milo Engineering (a real organization given a fictitious name) illustrates
common problems with performance appraisal—the process of assessing employee per-
formance and diagnosing and improving performance problems. Maintaining and improv-
ing your performance and the performance of other people in the organization will be
an important part of your role as a manager. To conduct this process, you may rely on
appraisal forms and systems that are often designed by HR personnel. Although these
forms and systems are key elements of the appraisal process, they are only a starting point.
To appraise effectively, you must also spot performance problems, provide construc-
tive feedback, and take action to improve performance. Measuring and managing per-
formance are two of the most difficult issues a manager faces. However, managers must
measure performance and provide meaningful feedback to employees if employees are to
improve—even if salary dollars are not at stake. We all need, want, and deserve feedback
regarding how we are doing in the workplace.
Our first goal in this chapter is to acquaint you with the foundation, design, and imple-
mentation of performance measurement systems. Our second is to describe the principles
of effective performance management.

What Is Performance Appraisal?

Performance appraisal, as shown in Figure 7.1, includes the identification, measurement , and
management of human performance in organizations.1

¦
Identification means determining what areas of work the manager should be examining
when measuring performance. Rational and legally defensible identification requires a
measurement system based on job analysis, which we explored in Chapter 2 . The appraisal
system, then, should focus on performance that affects organizational success rather than
performance-irrelevant characteristics such as race, age, or sex.
¦
Measurement, the centerpiece of the appraisal system, entails making managerial judgments
of how “good” or “bad” employee performance was. Performance measurement
must be consistent throughout the organization. That is, all managers in the organization
must maintain comparable rating standards.2
¦
Management is the overriding goal of any appraisal system. Appraisal should be more
than a past-oriented activity that criticizes or praises workers for their performance in the
preceding year. Rather, appraisal must take a future-oriented view of what workers can
do to achieve their potential in the organization. This means that managers must provide
workers with feedback and coach them to higher levels of performance.
The Uses of Performance Appraisal

Organizations usually conduct appraisals for administrative and/or developmental purposes.3
Performance appraisals are used administratively whenever they are the basis for a decision
about the employee’s work conditions, including promotions, termination, and rewards.
Developmental uses of appraisal, which are geared toward improving employees’ performance
and strengthening their job skills, include providing feedback, counseling employees on effective
work behaviors, and offering them training and other learning opportunities.

Performance appraisal offers great potential for a variety of uses, ranging from operational
to strategic purposes.4 If done effectively, performance appraisal can be the key to developing
employees and improving their performance. In addition, it provides the criteria against which
selection systems are validated and is the typical basis on which personnel decisions, such as terminations,
are legally justified. Further, performance appraisal makes the strategy of an organization
real. For example, performance measures that assess courtesy and care can make a stated
competitive strategy based on customer service very tangible to employees.

The importance of performance appraisal is underscored in a small-business environment.
The Manager’s Notebook, “Breadth and Direction: Keys to Effective Performance Appraisal in
Small Businesses,” considers basic characteristics of effective performance appraisal in a small-
business environment.

performance appraisal

The identification, measurement,
and management of human
performance in organizations.

Identification
Measurement
Management
FIGURE 7.1

A Model of Performance
Appraisal

Managing Human Resources, Seventh Edition, by Luis R. Gómez-Mejía, David B. Balkin, and Robert L. Cardy. Published by Prentice Hall.
Copyright © 2012 by Pearson Education, Inc.

224 PART IV • EMPLOYEE DEVELOPMENT

HR in Small Business
Breadth and Direction
Keys to Effective Performance Appraisal in Small Businesses
The workers in a small business are a critical resource that can make the difference between
the success or failure of the business. A small-business employee who makes serious on-
the-job mistakes or drives away customers can put a small operation out of business. How
do you get people on-board and provide a setting in your small business that will allow them to
perform at their best? A survey of almost 18,000 employees of small and medium businesses
indicates that performance management is a key driver of employee performance. How do you
appraise and manage the performance of workers in a small business in a way that engages them
with the business and promotes their best performance? Below are basic suggestions.
Go for Breadth
Developing job descriptions may seem like a formality that can be put off in a small business,
but small businesses are increasingly turning to job descriptions to make sure employees are
clear about their duties. However, the job descriptions need to be broad so that workers realize
that stepping into different roles or putting on different hats can be part of the job. A small busi-
ness may not have a sufficient number of specialists on staff. Succeeding as a small business can
mean that others have to pitch in a variety of ways. The performance expectations and measures
need to reflect that reality.
Provide a Clear Line of Sight to Strategic Objectives
How does a worker’s task make a difference or contribute to what the business is trying to do?
Each worker should be provided the big picture about the customers and how their efforts con-
tribute to the goal of serving those customers. Sometimes it is not obvious how performance on
some tasks makes a difference. However, if employees understand that a mistake may mean a
customer not getting an order or may result in damaged goods, they will understand the impor-
tance of their contributions.
Sources: Cicerone, B. (2009). Making a car engine purr. Industrial Management, 51, 13–17; McClellan, M. (2009).
Crystal clear. Smart Business Los Angeles, 4, 13; NJBIZ (2008). In crunch, small businesses focus on their work force.
21, 17–18; Westerlund, E. J. (2010). What makes people care. Profit, 29, 35. ¦¦
MANAGER’S NOTEBOOK

Despite the many uses of performance appraisals, companies struggle to realize the potential
in their performance appraisal systems. If managers aren’t behind the system and see its value,
it is little wonder if workers also don’t see the value in it. To be effective, the performance
appraisal system may require considerable time and effort of managers and may require employees
to gather information and receive feedback. Unfortunately, some managers do not take the
task seriously or do not have the skills needed to do a good job of evaluating performance and
providing feedback. Some employees do not calmly accept the feedback, and others may become
frustrated with an ineffective performance appraisal system and end up believing that the system
is unfair and doesn’t matter.

Although performance appraisal systems can have problems and are the target of many
criticisms, employees still want performance feedback, and they would like to have it more frequently
than the typical once-a-year performance evaluation.5 Although more frequent formal
appraisal can be positive, the practical reality is that informal appraisal, including feedback and
discussion with workers, should occur on a continuous basis.

If appraisal is not done well—if, for instance, performance is not measured accurately and
feedback is poorly given—the costs of conducting the appraisal may exceed its potential benefits.
6 It makes good business sense to engage in a practice only if the benefits exceed the cost.
Some people take the position that performance appraisal should not be done at all.7 From this
perspective, the practice of performance appraisal is staunchly opposed as a hopelessly flawed

ISBN
1-256-39369-

CHAPTER 7 • APPRAISING AND MANAGING PERFORMANCE 225

and demeaning method of trying to improve performance.8 Thus, performance appraisal should
be eliminated as a practice in organizations because of the problems and errors in evaluating
performance.9 One basis for the position against doing performance appraisal is the quality philosophy10
that performance is mainly due to the system and that any performance differences
among workers are random.

Although there is selected opposition, the vast majority of organizations conduct performance
appraisal. Most organizations recognize employees as an important and nonrandom influence
on performance. (In order for selection systems to be found valid, employees must have a
nontrivial and consistent influence on performance.) However, in order to maintain and improve
their performance, employees need assessment and feedback.

Whether the performance is in the workplace, in the classroom, or on a playing field, you
have to gauge how you are performing to learn how to improve and, later, to assess whether
you have improved. Figure 7.2 lists several reasons, from both the employer’s and employee’s
perspectives, why appraisal is valuable despite the criticisms that have been leveled against it.

In the next two sections, we explain the issues and challenges involved in the first two steps
of performance appraisal: identification and measurement. We conclude the chapter by discussing
how managers can use the results of appraisal to improve employee performance.

Identifying Performance Dimensions

The first step in the performance appraisal process (see Figure 7.1 ) is identifying what is to be
measured. Consider the following example:

As part of her job as team manager, Nancy has to allocate raises based on performance.
She decides to take a participative approach to deciding which aspects, or dimensions, deter-dimension
mine effective job performance. In a meeting, she and her team start generating dimensions of An aspect of performance
performance. One of the first suggestions is the quality of work done. However, Nancy realized

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Performance Diagnosis: Cengage HRM Exercise Week4

Performance Diagnosis: Cengage HRM Exercise Week4

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