Employees generally like to see performance evaluations as having a direct effect on their work lives.

The performance management systems need to include:

Decisions on: Who should evaluate performance What format should be used How the results should be utilized

Purposes of Performance Management System

Feedback - Let employees know, how well they have done and allow for employee input. Development Identify areas in which employees have deficiency or weaknesses. Documentation - To meet legal requirements.

Difficulties in Performance Management Systems

Focus on the individual: may draw strong emotions and may generate conflicts while disagreed Focus on the process: Existing setup may present barriers to a proper appraisal process. Additionally, Appraisers may be poorly trained.

1). Establishment/ Set the performance standards

Derived from companys strategic goals. Based on job analysis and job description.

2).Communication of performance standards to employee.

3).Measurement of performance tools :

personal observation statistical reports oral reports written reports

4). Comparison of actual performance with the standards.

5). Discussion of appraisal with employee. 6). Identification of corrective action where necessary.
Immediate action deals with symptoms. Basic corrective action deals with causes.

Three Approaches: Absolute standards Relative standards Objectives

Evaluating Absolute Standards: An employees performance is measured, against established standards. Evaluation is independent of any other employee.

Relative standards: Employees are evaluated by comparing their performance to the performance of other employees.

Objective: Using Achieved Outcomes to Evaluate Employees Management by Objectives (MBO) Includes mutual objective setting and evaluation based on the accomplishment of the specific objectives

Using Achieved Outcomes to Evaluate Employees Common elements in an MBO program are: goal specificity participative decision making an clear time period performance feedback Effectively increases employee performance and organizational productivity.

Use Behavior-Based Measures:

Measures based on specific descriptions of behavior are more job-related and draw out more inter-rater agreement than personality, such as loyalty or friendliness.

Combine Absolute and Relative Standards: Absolute standards tend to be positively lenient; relative standards suffer when there is little variability. Combining the standards tends to offset the weaknesses of each.

Provide Ongoing Feedback: Expectations and disappointments should be shared with employees on a frequent basis.

Train Appraisers: Untrained appraisers who do poor appraisals can demoralize employees and increase legal liabilities.

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins