College: INDUSTRIAL TECHNOLOGY

Campus : BAMBANG

DEGREE BSIT COURSE IT9

PROGRAM CODE
SPECIALIZATION COURSE HUMAN RESOURCE
TITLE MANGEMENT
YEAR LEVEL 3RD YEAR TIME FRAME 3 WK 10- IM 8
NO. 11 NO.

I. UNIT TITLE/CHAPTER TITLE

Management of Performance Appraisal System

II. LESSON TITLE

1. Purposes of Performance Appraisal III. LESSON

2. Criteria in the Development of a Measuring Instrument OVERVIEW
3. Developing and Administering an Appraisal Plan
4. Approaches to Performance Management This
5. Problems of Management Appraisal chapter
6. Performance Management Appraisal Feedback discusses
performance
appraisal
systems that provide a means of systematically evaluating employees across
various performance dimensions to ensure that organizations are getting what they pay
for. They provide valuable feedback to employees and managers, and they assist in
identifying promotable people as well as problems.

IV. DESIRED LEARNING OUTCOMES

At the end of the lesson, the students should be able to:

1. know and understand the purposes of performance appraisal;

2. state the different criteria in the development of measuring instruments;
3. learn how to evaluate the performance of an employee and communicate the
results of the appraisal in a way that the employee will understand.

V. LESSON CONTENT

Performance appraisal is the on-going process of evaluating employee

performance. Performance appraisals are reviews of employee performance over time.

The Purposes of Performance Appraisal

 1. Strategic Purpose – The performance management system should link
employee activities with the organization’s goals and objectives. These strategies
are implemented through defining results, behavior, and to some extent,
employee characteristics that are necessary for carrying out the predetermined
goals and objective.

2. Administrative Purpose – Performance management information relative to

performance appraisal points to the use of evaluation in decisions for salary
adjustment, promotion, retention and termination, lay off, and recognition of
individual performance.

3. Developmental Purpose – develop employees who are effective in their jobs.

When employees are not performing as well as they should, performance
management seeks to improve their performance. The feedback given during the
performance evaluation process often pinpoints the employee’s weaknesses.

The Criteria in the Development of a Measuring Instrument

Performance should be accurately measured so employees will know where they

can improve. Knowing where to improve should lead to training employees to develop
new skills to improve. To be an accurate measure of performance, our measure must be
valid and reliable, acceptable and feasible, specific, and based on the mission and
objectives.

Valid and reliable. As with all areas of our people management process, we must make
sure that all of our performance management tools are valid and reliable. When a
measure has validity, it is a factual measure that measures the process that you wanted
to measure. A reliable measure is consistent; it works in generally the same way each
time we use it.

Acceptable and feasible. In addition to validity and reliability, we need to look at a

couple of other characteristics of our performance measures. We need to analyze
acceptability and feasibility. Acceptability means that the use of the measure is
satisfactory or appropriate to the people who must use it. Acceptability must include
whether or not the evaluation tool is feasible. Is it possible to reasonably apply the
evaluation tool in a particular case? As an example, if the performance evaluation form
is two or three pages long and covers the major aspects of the job that is being
evaluated, and both managers and employees believe that the form truly evaluates
performance measures that identify success in the job, then they are likely to feel that
the tool is acceptable and feasible. If, however, the manager must fill out a 25-page form
that has very little to do with the job being evaluated, the manager may not feel that the
form is acceptable or feasible, at least partially due to its length, even if the employee
does.

Specific. Next, we want any evaluation measure to be specific enough to identify what is
going well and what is not. The word specific means that something is explicitly identified
or defined well enough that all involved understand the issue completely. In performance
appraisal, specific means that the form provides enough information for everyone to
understand what level of performance has been achieved by a particular employee
within a well-identified job.

Creating specific measures is the only way that we can use a performance appraisal to
improve the performance of our employees over time. The employees have to
understand what they are doing successfully and what they are not. Many times,
evaluation forms may be too general in nature to be of value for modifying employee
behaviors because we want the form to serve for a large number of different types of
jobs. This can create significant problems in the performance appraisal process.

Based on the mission and objectives. Finally, you want to make sure that your
performance management system leads to accomplishment of your organizational
mission and objectives. As with everything else we do in HR, we need to ensure that the
performance management process guides our employees toward achievement of the
company’s mission and objectives over time. As managers in the organization, making
sure of this connection will allow us to reinforce employee behaviors that aim at
achieving organizational goals and to identify for our employees things that they may be
doing that actively or unintentionally harm our ability to reach those goals.

Thus, stating specific objectives of exactly what each person in each job should achieve
or his or her performance outcomes leads to accurate assessment that can increase
performance.

Developing and Administering an Appraisal Plan

Performance appraisal is a line responsibility to be met with the assistance of the

human resource management and his staff. Any plan will be worthless if it lacks the
support of top management, if supervisors are poorly trained in systematic appraisal or
are not convinced of its value, if discussions of results are badly handled, or if appraisals
are not properly used for the purpose for which they are intended. There are certain
guidelines in developing and understanding an appraisal plan using the following steps:

1. Secure full agreement of line managers about the need for a formal
performance appraisal plan and for the purpose in which it will be used. A
choice has to be made among several types of appraisal plans.
2. Secure plans of other companies and existing literature on the subject to
develop a plan best suited for the needs of the particular organization. The
HRD should study all other plans and make a careful analysis as to their
suitability into the organization. Complicated plans should be avoided.
3. Enlist the cooperation of the supervisor in drawing up the appraisal plan.
Discuss the factors to be used and the uniform descriptions or instructions to
be followed.
4. Make sure that the purposes and nature of the performance appraisal plan
are explained to those who will make the appraisal. These are the first level
supervisors and department heads and those who will be affected by the
appraisal.
5. Provide training to those who will use the instrument. Training will provide
enough knowledge on how the rating scale will be used to avoid biases and
provide uniform appraisal of the employees.
 6. Develop and achieve line and staff coordination. There should exist a mutual
checking of employees, performance appraisal in order to be consistent and
to provide uniform within and between departments.
7. Arrange for periodic discussion of the performance appraisal. Supervisors
and their subordinates should discuss the good points, the difficulties and the
lapses in the performance appraisal. Supervisors should encourage better
performance. The employee has the right to know his standing in the
organization and to know his progress in his performance.
8. The appraisal system should be carefully used in selecting employees for
possible promotions.
9. Provide for challenges and review of performance appraisal. The grievance
procedure should be put in place if the employee is not satisfied with the
rating given to him. In case there is a company union, the union
representative should be entitled to challenge personnel decisions.

A systematic performance appraisal plan helps supervisors thoroughly to review

the performance of their employees, and this is probably the greatest value in any
organization. Line managers should participate from the start of the development of the
program, for it is their line responsibility to evaluate employee performance.

Approaches to Performance Management

1. Comparative Approach – the comparative approach of performance measurement

consists of techniques that require the rater to compare the individual’s performance
with that of others. This approach usually uses some overall assessment of the
individual’s performance or worth, and seeks to develop some ranking of the
individual within a given work group. The following are the techniques under this
approach:

a. Ranking – this method provides a comparison of the relative qualities of

performance among all the employees in a group or unit. The employees to be
rated are ranked from the most efficient to the less capable in each trait or quality
used in judging the employees’ performance. Some of the traits or qualities are:
quality of work, dependability, judgment, attendance and attitude toward the job.

b. Forced Distribution Technique – this system uses a five-point job performance

scale in rating employees who are doing similar jobs. Under this method, it is
assumed that a normal group of workers doing similar jobs fall into some such
levels as Superior, Above Average, Average, Below Average, and Poor. The
common group percentage would be 5-20-50-20-5. This means that 5 of his
subordinates are superior, 20 are above average, 50 are average, 20 are
average and 5 are poor.

c. Paired Comparison Method – under this method the name of each employee
who is to be rated is written on the card. Each employee to be rated is then
paired off with every other employee in the same unit. In the process, the person
rating the employee determines which of the two employees in each pair is
superior in terms of the traits as quantity of work output, quality of work done,
cooperation, and job attitude.
 d. The Checklist Method – the rating method provides a number of traits or factors
with corresponding definitions for evaluating the employees written in the left
hand column of the form, such as quantity or work done, quality of work, attitude
toward work, judgment, reliability, cooperation, punctuality and others. The rater
checks the statements that most nearly describe the performance of the
employee being rated during the rating period.

2. Behavioral Approach – the behavioral approach of performance management

attempts to define the behavior an employee exhibits to be effective in the job. The
various techniques define these behaviors, and then require managers to assess the
extent to which an employee exhibits them.

a. The Critical Incidents – the critical incident approach require managers to keep
a record of specific examples of effective and ineffective performances on the
part of each employee. It is a narrative report of incidents or occurrences that
involve the employee.

b. The Behavioral Anchored Rating Scale – this builds on the critical incidents
approach. It is designed to specifically define performance dimensions by
developing behavioral anchors associated with different levels of performance. In
developing the behavioral anchored rating scale, the manager gathers a large
number of critical incidents that represent effective and ineffective performance
dimensions. The manager and the employee agree on particular incidents and
use these anchors in the rating of the employees’ performance.

c. The Organizational Behavior Modifications – this entails managing the

behavior of employees through a formal system of a behavioral feedback and
reinforcement. It has the following components:

 They define a set of key behaviors necessary for job performance.

 They use a measurement system to assess whether these behaviors are
exhibited.
 The manager informs the employees of those behaviors and set goals for
achievement.
 Feedback and reinforcement are provided to the employee.

3. The Result Approach – focuses on managing the objectives, measurable results of

a job or work group. This approach assumes that subjectivity can be eliminated from
the measurement process and that results are the closest indicators of one’s
contribution to the organizational effectiveness. We will examine two performance
management systems that use results:

a. Management by Objectives (MBO) – used in most companies who believe in

results as bases for performance management. Under this system, the top
management defines the company’s strategic goals and objectives and passes it
on to the next level of management and down the line. The manager and
subordinates agree on performance indicators and these performance goals are
then the points that will be evaluated at the end of a specified period.
 b. Productivity Measurement and Evaluation System (PROMES) – the goal of
this system of measurement is to motivate the employees to go for a higher level
of productivity. It is a means of measuring and feeding back productivity
information to personnel. The following are the steps in the accomplishment of
this evaluation process:

 The manager and subordinates identify the product and the process of
accomplishing the evaluation, plus the level of quality of performance.
 The indicators are established and will be made as bases for
management evaluation.
 The staff establishes the contingencies and possible problems related to
indicators and the level of evaluation associated with them.
 A feedback system is developed that provides employees and work
groups with information about their specific levels of performance on each
of the indicators.
Problems of Management Appraisal

There are many possible sources of errors in the performance of the appraisal
process. One of the major sources of error is the lack of careful understanding of the
raters on the real purpose of management appraisal. There is no simple solution to
completely eliminate these errors, but making raters aware through training is usually
helpful.

To correct some of the fears in the management appraisal system, the following
errors should be studied very carefully:

1. Problems of varying standards – the manager should avoid using different

standards among employees performing similar jobs. This could trigger anger
from employees.

2. Recent effect – the error in which the rater gives greater weight to recent
events when appraising an individual performance. This is very true when
employees’ are about to be evaluated; they are early in coming to work and
are more prudent in the performance of the assigned tasks.

3. Central tendency – occurs when employees are incorrectly rated near the
average or middle of the scale. The supervisors who play safe in giving
performance ratings usually commit this error.

4. Rater’s bias – occurs when the rater’s value distorts the rating. It may be
unconsciously or quite unintentionally. If a manager has a strong dislike of a
certain ethnic group, this bias is likely the result. Regional groupings, age,
sex, and other arbitrary classifications may be reflected in appraisal if they
are not properly designed. Review of the next level manager may help correct
this problem.

5. Halo effect – occurs when a manager rates an employee high or low on all
items because of one characteristics. For example, if a worker has few
absences, the supervisor might give her a high rating in all other areas of
 work including quantity and quality of output because of her attendance. The
manager may not really think about the employee’s other characteristics
separately.

6. Contrast error – tendency to rate people relatively with other people rather
than the performance standards. The rating should reflect performance
against the job requirement not against other people.

The Performance Management Appraisal Feedback

Feedback on employees’ performance is an important component of

performance management. After appraisals have been completed, it is important to
communicate them to the employees so that they have a clear understanding of how
they stand in the eyes of their immediate superiors and the organization. It is imperative
that managers and supervisors discuss their appraisals with employees.

The following should be undertaken to give employees feedback:

1. Feedback as a system

a. Data – are factual information regarding observed actions or

consequences of actions. These are facts that report what happened.

b. Evaluation – is the way the feedback system reacts to the fact and
requires performance standards.

c. Action – a system in which data and evaluation influence action. The

manager gives specific suggestions regarding future actions the
employee must take.

2. The appraisal interview

The appraisal interview presents an opportunity for the manager to

talk about the employees’ potential and also their weaknesses. It could be an
emotional experience for the manager and the employees because the
manager must communicate both the praises and the constructive criticisms
in the evaluation. In this process, the manager should emphasize more on
counseling and development rather than the poor performance of the
employees. It should be handled tactfully as employees may feel resentment
and conflicts may result which could be reflected in future work relationship.

Effective Performance Management System

Regardless of what appraisal system is used, an understanding of what

performance management is supposed to do is critical. When performance appraisal is
used to develop employees as resources for the company’s profitability and
advancement and as instruments for employees’ development, then it will work to the
advantage of both management and employees. The key is not which evaluation or
 appraisal form is used, but whether managers and employees understand its purposes.
An effective performance management system must be:

a. Consistent with the strategic mission and goals of the organization.

b. Beneficial as a development tool.
c. Useful as an administrative tool of management.
d. Legal and job related.
e. Generally fair and acceptable by the supervisor and the employees.
f. Useful as documentary evidence in all personnel actions.

Viewed from this perspective, performance management evaluation and

appraisal is still considered as a tool effectively developed for a functional organizational
system, directed to its growth and development. Organizations, formal or informal, need
a system of appraisal and an instrument of control. It is therefore important for
organizations or companies to develop a well-studied appraisal system that is accepted
by the workers and managers and approved by top management.

VI. LEARNING ACTIVITIES (Offline or Asynchronous Assessment)

GENERAL DIRECTION: Follow the format below. Submit hard copy or soft copy.

Name: __________________________________Course&Year: ______________

Schedule: _______________________________Date Submitted: _____________
Subject: _________________________________

Answer Sheet for Evaluation Chapter # ______ (ex. Evaluation Chapter 8)

TRUE or False.
1.
2.
3.

ESSAY

Which of the following criteria for a measure to be accurate is not met in each of the
given situations?

A. valid
B. reliable
 C. accepted
D. feasible
E. specific
F. based on the mission and objectives

______1. My boss asked me to fill out a self-evaluation of my performance. But I

refused to do it. Evaluation is her job, so let her do it.
______2. My boss told me that I was not doing a very good job of data entry. When I
asked him what he meant, he went around in circles and never gave me a
good answer.
______3. The boss said I’m not producing as many widgets as I used to. But it’s not my
fault that the machine jams every now and then and I have to stop working to
fix it.
______4. My boss asked to me to evaluate my employees four times a year instead of
only once. I told her I don’t have the time to do it that many times. It’s just not
possible to do a good review that often without cutting back other things that
are more important.
______5. My boss said I have a bad attitude and gave me a lower overall rating. But I
pointed out that I get all my work done well and by the deadline or early, and I
questioned what my attitude had to do with my performance.

VII. EVALUATION (Synchronous Assessment)

TRUE or FALSE. Write T on the space provided if the statement is correct and F if
the statement is incorrect.

1. The annual performance evaluation process is naturally motivational because the

company identifies each employee’s weaknesses.
2. In performance appraisals, the word specific means that the form provides
enough information for everyone to understand what level of performance has
been achieved by a particular person within a well-identified job.
3. As a manager, an important part of your job is to make sure that your employees
know exactly what is expected of them—the standards.
4. The basic performance appraisal is very simple to carry out.
5. To meet the communication purpose of performance appraisals, managers have
to allow the employee the opportunity to speak to them concerning factors that
inhibit their ability to succeed.
6. Without good information on performance of individual workers, managers
cannot make reasonable decisions about their workforce.
7. Traits that most people would be likely to focus on, such as physical
attractiveness, punctuality, and extroversion, have been shown to have very little
bearing on job performance.
8. Results-based appraisal is the most concrete, or fact-based, form of appraisal.
9. The critical incidents and MBO methods tend to be the best appraisal methods
for an evaluative interview.
10. The immediate supervisor is always the best person to evaluate any employee.
11. Personality conflicts and personal biases can affect how individual employees
rate their peers.
12. Subordinate evaluations must be confidential in nature, or it is unlikely that the
subordinates will provide an honest evaluation of their supervisor.
13. We rarely use 360° evaluations because they are so difficult to coordinate.
 14. If they are guilty of halo error, evaluators assume reasons or motivations (such
as attitudes, values, or beliefs) for an observed behavior.
15. Using multiple evaluators will limit the ability of one individual appraiser to
provide a biased opinion concerning an employee’s performance.

VIII. REFERENCES

A. Book/Printed Resources

Corpuz, C. R. (2006). Human Resource Management (3rd ed.). Rex Bookstore, Inc.

Payos, R. (2016). Human Resource Management. Rex Bookstore, Inc.

Pereda, P. R. (2008). Human Resource Management. Mindshapers Co., Inc.

B. e-Resources

Performance Appraisal and Management: CCHRSC. Performance Appraisal and

Management | CCHRSC. (n.d.). http://www.ccsc-cssge.ca/hr-resource-
centre/hr-toolkit/retention/performance-appraisal-and-management.

Black, S., Gardner, D. G., Pierce, J. L., & Steers, R. (2019, February 27).
Performance Appraisal Systems. Organizational Behavior.
https://opentextbc.ca/organizationalbehavioropenstax/chapter/performance-
appraisal-systems/.

Shrm. (2021, March 22). Managing Employee Performance. SHRM.

https://www.shrm.org/resourcesandtools/tools-and-
samples/toolkits/pages/managingemployeeperformance.aspx.