Performance Appraisal:

System and Design

Surabaya, 26 August 2006

T. Soemarman
Faculty of Economics
Human Resources Management Laboratory
University of Surabaya
soemarman@ubaya.ac.id
What is Performance Appraisal?
(Dessler, 1997: 343 and Wherter, 1996: 341)

It is a process by which organization evaluate

individual performance and accountability.

It means evaluating an employee’s current or past
performance relative to the person’s performance
standards.

What does Appraisal do?

It involves:
(1) setting work standards
(2) assessing the employee’s actual performance relative to these
standards
(3) providing feedback to the employee with the aim of motivating
the individual to be more productive.
 Biblliographies

Mathis, Robert L. and John H. Jackson. 2004. Human
Resource Management. South-
South-Western, Thomson Learning,
Singapore. (658.3 MAT h), Chapter 11 (pp272-
(pp272-303)

Burton, Gene E. 1989. Organizational Behavior, Instructor’s
Manual. Houghton Mifflin Company Boston.

Dessler, Gary. 1997. Human Resources Management.
Prentice--Hall Inc. New Jersey.
Prentice

Plumlee, Lynnette B et al. 1983. Improving Performance
Evaluation Procedures, A Content Validation Guide.
AMACOM. New York.

Schuller, Randall S. and Susan E. Jackson. 2006. Human
Resources Management, International Perspectives.
Thomson--South Western, USA.
Thomson
 Why appraise performance?
(Dessler, 1997: 343)

Reasons that appraisals provide:

important information for employee’s promotion and
rewards decisions

opportunity for reviewing work related behavior and in

turn developing the improvement actions

supports for company’s career-

career-planning process with the
use of persons’ career review

help to manage and improve company’s performance

 What to learn from PA?
The specific concerns in the study of PA will focus on :

The strategic Importance of Measuring The Employees’
Performance and Providing The Assessment Needs for
Performance Appraisal System.

What to measure and The methods of measuring.

Performance Appraisal Formats and Procedures.

How to provide feedback that enhances the readiness of
employees for organizational changes and development.
 Learning Objectives
Upon completion of this course/ module on “Performance
Appraisal: The Design and Practices,” the participants should
be able to :

define performance appraisal and discuss the purposes of
appraisal in the context of its strategic importances,

recognize and explain the elements of performance appraisal,

describe the major performance appraisal techniques or
methods and explain their strengths and weaknesses,

examine and discuss “who appraises whom” and “how and for
what purposes to use performance appraisal information.”

apply the knowledge and concepts of performance appraisal
into day-
day-to-
to-day operation within a project based learning.
Expected Learning Outcomes
Upon Completion of this module, participants will achieve
some important skills such as:

capable to address work related problems and define the
needs for improvement

more accountable to use performance appraisal as a tool
to recognize the importance of individual (employee)
performance improvement

able to identify and evaluate the uses of performance
appraisal in any related activities of human resource
management as well as organizational activities

capable to demonstrate the possibilities of errors in the
administration of PA and recommend the solutions to
improve the validity procedures of PA
 Purpose of PA and Orientation

The purpose of PA (Burton, 1989: p 288) is to provide
information about the achievement levels of individual
employees’ performance or team’s performance.

The orientation of PA could be judgmental/evaluative
or developmental.

The judgmental/evaluative orientation helps the
organizations to measure the employees’ performance
as a basis of controlling work performance.

Development orientation has a focus on future
improvement of employees’ performance.

PA could provide information upon which promotion of
employees (also in relation with career planning and
development) and their salary decisions can be made
by organizations (Dessler, 1997: p 343).
Use of performance appraisals:

Performance improvement

Compensation adjustments

Placement decisions

Training and development needs

Career planning and development

Staffing process deficiencies

Informational inaccuracies

Job--design errors
Job

Equal employment opportunity

External challenges

Feedback to human resources
(Wherter, 1996: 342)
 Key Elements of Performance Appraisal Systems
(Wherter, 1996: 344 Figure 12.2)

Employee Performance Performance Appraisals Employee Feedback

Performance Measures

Performance Related standards

HR Decisions Employee Records

 Steps in Appraising Performance
(Dessler, 1997: 343)

Define the job: making sure the agreeable

duties for employees and job standards

Appraise performance: comparing employees’
actual performance to the standards that have
been set

Provide feedback: discussing with employees
about their performance and improvement
after performance appraisal
 Common Problems in Performance Appraisals
Dessler, 1997: 344 Figure 10.2

1. Lack of standards. Appraisals must assure objective

evaluation, No place for subjective guess or feeling
about performance.
2. Irrelevant or subjective standards. Establish standards
by analyzing the job output to ensure that standards are
job related.
3. Unrealistic standards. The reasonable standards will be
challenging and have the most potential to motivate.
4. Poor measure of performance. Objectivity and
comparison require that progress toward standards or
accomplishment of standards be measurable.
 Common Problems in Performance Appraisals
Dessler, 1997: 344 Figure 10.2 and Wherter, 1996: 348-
348-349

5. Rater errors. These include rater bias or personal

prejudice, halo effect, constant error, central tendency,
liniency and strictness bias, cross-
cross-cultural biases,
recency effect.
6. Poor feedback to employee. Standards and/or ratings
must be communicated to the employee in order for
performance evaluation to be effective.
7. Negative communications. The evaluation process is
hindered by communication of negative attitudes, such
as inflexibility, defensiveness, and a non-
non-
developmental approach.
8. Failure to apply evaluation data.
 Appraisals Methods
Dessler, 1997: 345-
345-357 and Wherter, 1996: 350-
350-361

1. Graphic Rating Scale Method. It is a scale that lists a

number of traits and a range of performance for each
trait. Employee is rated by identifying the score that
best describes his or her level of performances for
each trait.
2. Alternation Ranking Method. This is to apply ranking
employees from best to worst on a particular trait.
3. 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.
 Appraisals Methods
Dessler, 1997: 345-
345-357 and Wherter, 1996: 350-
350-361

4. Forced Distribution Method. Predetermined percentages

of ratees are placed in various performance categories. It is
similar to grading on a curve.
5. Critical Incident Method. This method keeps a record of
uncommonly good or undesirable examples of an
employee’s work related behavior and reviews it with the
employee at predetermined times.
6. Narrative Forms. It uses narrative forms to evaluate
employee’s performance, in terms of progress and
development. Rating on performance is based on
predetermined standards. It is also to present critical
examples and an improvement plan designed to aid the
employee in meeting or exceeding the standards
 Appraisals Methods
Dessler, 1997: 345-
345-357 and Wherter, 1996: 350
350--361

7. Behaviorally Anchored Rating Scales (BARS) This

method is to combine the benefits of narrative critical
incidents and quantified ratings by anchoring a
quantified scale with specific narrative examples of
good and poor performance.
8. Checklists Method. It is to evaluate employee’s
performance with the use of selected words or
statements that describe the employee’s performance
and characteristics.