Chapter 7: Appraising and Managing Performance

In order to measure performance, organizations must develop ways in which to design and implement effective performance appraisals that improve performance. This appraisal process includes providing feedback to employees regarding performance, and, in some organizations, employees receive feedback from many constituents (peers, customers, vendors, and self). Chapter 7 will provide an overview of performance appraisals within organizations.

Chapter Challenges

In Chapter 7, we’ll look at how to effectively carry out each of the steps in performance appraisal, gain familiarity with challenges to effective performance measurement, and develop competence in managing performance.

What Is Performance Appraisal?

Performance appraisal includes the identification, measurement, and management of human performance in organizations. Identification means determining what areas of work the manager should be examining when measuring performance. Rationally and legally defensible identification requires a measurement system based on job analysis. Measurement (the centerpiece of the appraisal system) entails making managerial judgment of how good or bad employee performance was. Measurement must be consistent throughout the organization in order to avoid legal ramifications. Management is the overriding goal of any appraisal system. Appraisals should be more than a past-oriented activity that criticizes or praises worker performance. Rather, it should take a future-oriented view of what workers can do to achieve their potential. This will mean managers must provide immediate and frequent feedback.

Uses of Performance Appraisals

• Administrative Purposes
• Developmental Purposes

Organizations usually conduct appraisals for administrative and/or developmental purposes. 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.

Identifying Performance Dimensions

The first step in the performance appraisal process is identifying what is to be measured. Dimension refers to an aspect of performance that determines effective job performance. One of the first suggestions in generating dimensions of performance is to decide the quality of work that should be done. The second dimension is the quantity of work performance, and the third is the interpersonal effectiveness dimension. When determining the dimensions, it is important to remember that what is measured should be directly tied to what the business is trying to achieve.

Another approach to identifying performance dimensions focuses on competencies, which are characteristics associated with successful performance. These characteristics should be observable.

Benefits of Performance Appraisal

There are several benefits of a performance appraisal. The employer benefits include improving performance that impacts the company, providing a sound legal defense if implemented correctly, and helping reach strategic goals and clarify performance expectations. From the employee perspective, the benefits are that the performance appraisal feedback informs the employee of performance and can motivate employees toward improving their performance.

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