CHAPTER 9: PERFORMANCE MANAGEMENT - After recruitment, the next step in the

AND REWARDS staffing process is selection. This involves

assessing and choosing among job
Performance Management candidates.
- This refers to the procedures and systems 1. Completing the application form:
designed to improve employee outputs 2. Conducting an interview;
and performance, often through the use 3. Completing any necessary tests:
of economic incentive systems. 4. Background investigation:
5. Physical and medical examination;
Apart from economic incentives, the other and
means used to improve employee 6. A decision to hire or not.
performance are: ➢ Socialization
1. Goal setting - It involves orienting new employees to the
2. Streamlined organizational structure organization and its work units, especially
3. Better technology the work units where the newly hired
4. New arrangements of working schedules. employee will be working.
5. High Involvement of employees - The purpose of socialization is to enable
6. Better motivation of employees new employees to quickly become
productive members of the organization.
An effective performance management
process considers human resource (HR) TWO TYPES OF RECRUITMENT
strategic planning as a basic requirement. 1. Internal Recruitment
STAFFING The advantages of internal recruitment are:
- Effective performance begins with getting 1. It is good public relations.
the right people, and then providing them 2. It builds morale.
with the right environment. To achieve this, 3. It encourages good individuals who are
the staffing function of the organization ambitious.
must be well implemented. 4. It improves the probability of a good
The staffing process consists of the following: selection, since information on the
Individual's performance is readily
➢ Job Analysis available.
- The process of staffing starts with an 5. It is less costly than external recruitment.
understanding of the positions or jobs for 6. Those chosen internally already know the
which individuals are needed in the organization.
organization. 7. When carefully planned, promoting from
- Job analysis is a technical procedure used within can also act as a training device for
to define the duties, responsibilities, and developing middle and top-level
accountabilities of a job. managers.
- The job description contains information
concerned with the job. The information The disadvantages of internal recruitment are:
includes job duties and responsibilities, 1. It can be dysfunctional to the organization
equipment and materials used, working to utilize inferior internal sources only
conditions and hazards, supervision, work because they are there, when excellent
schedules, standards of performance, and candidates are available on the outside.
relationships to other jobs. 2. It may generate infighting among the rival
➢ Recruitment candidates for promotion.
- The next step in the staffing process is the 3. It may decrease the moral levels of those
drawing of people to apply for the various not selected.
positions identified. 4. It may promote “Inbreeding”
- This step is called recruitment and it may
be defined as a human resource Methods of Internal Recruitment
management practice designed to 1. Computerized Career Progression System
locate and attract job applicants for (CCPS)
particular positions. - It is one that stores extensive amounts of
➢ Selection information about employees of a
company.
- It is a useful means of recruiting people - The notice describes the job, the salary,
currently employed by the organization. work schedule, and necessary
- The system’s computer file contains qualifications.
information on employees such as job - The most qualified applicants are chosen
history, education, strengths and for the interview
weaknesses, leadership development
needs, developmental needs, training, Advantages
and special skills. - It enhances the probability that the firm’s
Advantage of CCPS most qualified employees will be
considered for the job.
- Candidates can be found quickly. - It gives employees an opportunity to
- A broad spectrum of candidates can be become more responsible for their own
identified and it will not be limited to career development. Many may attempt
candidates working in the department to improve their job skills and performance
where the vacancy exists. because they perceive that such an effort
can lead to greater promotional
Disadvantage of CCPS opportunities.
- Skill inventory contained in the computer Disadvantages
database is limited only to objective or
factual information, such as educational - This method takes time in filling vacant
degrees, certifications, training courses positions.
taken, and languages spoken. - The system may prevent supervisors from
hiring the resort to other moves to make
2. Supervisor Recommendations sure that their favorites will get the jobs.
- When a supervisor needs to fill a certain
vacancy in his unit, he is in the best 4. Career development system
position to identify the person who fits the - Under this method, the organization
job. places "fast-track" or highpotential
- He can be asked to nominate internal employees on a career path where they
candidates. are groomed for certain target jobs.
- Most likely, the supervisor will nominate
those whose capabilities are well-known Advantages
to him. - The top performers are more likely to
Advantages remain with the organization.
- It helps ensure that someone is always
- The supervisor is given total discretion in ready to fill a position when it becomes
selecting the person who will report to him. vacant.
- The supervisor is generally in a good
position to know the capabilities of Disadvantages
potential candidates, especially those - An employee who is not selected even if
who already work for him and seeking a he is good may become disenchanted
promotion. and leave the organization.
Disadvantages - The selected employee may become
frustrated if the expected promotion does
- The supervisor’s recommendation is usually not materialize because the targeted
very subjective, and is thus susceptible to position never becomes vacant.
bias and possible discrimination.
- Some qualified employees may be 2. External Recruitment
overlooked because the supervisor wants - It is a process of attracting job applicants
to help his or her favorite, or he or she may from outside the organization.
simply be unaware of the capabilities - It is undertaken when no suitable
possessed by some individuals. candidates are available from within the
organization.
3. Job posting
- It is a method of internal recruitment in Methods of External Recruitment
which a job vacancy notice is posted and 1. Employee Referrals
all qualified employees may bid.
- It is a method of recruitment in which - It is the process of changing employee
organizations ask their employees to solicit behavior, attitudes, or opinions through
applications from qualified friends and some type of guided experience.
associates. - Training the individual employee occurs
not only initially but anytime.
Advantages - Improved skills are needed to meet
- Employees tend to be good recruiters changing job requirements.
because they know a lot about both the These are the ways to conduct training
job being filled and the individual, and programs:
can therefore accurately judge the "fit"
character to fall under the job ➢ On-the-job training
requirement. - This training method is conducted while
- Employees make good recruiters because employees perform job- related tasks.
believing their reputation is on the line, - It is the most direct approach to training.
they are encouraged to refer only the
highest qualified applicants. The common forms of on-the-job training are:

Disadvantages 1. Internships are opportunities for students

to gain real world experience. They are
- The limited choice offered to the often offered during summer breaks and
organization. Employees will tend to recruit may be with or without payment.
only those they know. Even if some are 2. Apprenticeships involve learning a trade
better qualified, they cannot be from an experienced worker.
considered unless they are referred to by 3. Job rotation provides a broad range of
employees. experience in different kinds of jobs in an
organization. It is often used to provide
2. Applicant-Initiated Recruitment
background for future managers and is
- It is a method of external recruitment in
sometimes used to try to alleviate worker
which an organization accepts unsolicited
boredom.
applications or resumes from individuals
Interested in working for the organization.
➢ Off-the-job training
3. Help-Wanted Advertisements - This type of training deals with work skills in
- It is a method of external recruitment in setting away from their ordinary
which an organization places an workplace.
advertisement for the position in the
appropriate media such as newspaper, The various off-the-job training techniques
magazine, and the like. are:
4. Private Employment Agencies and 1. Classroom lectures. These consist of
Executive Search Firms lectures designed to communicate
- The hiring organization initiates the specific Interpersonal, technical, or
recruitment process by contacting the problem-solving skills.
appropriate agency or firm and informing 2. Videos and films. This training method uses
if of the qualifications needed for the job various media productions to demonstrate
in question. specialized skills that are not easily
- The agency of firm assumes the task of presented by other training methods.
soliciting and screening applications, and 3. Simulation exercises. This is a training
then refers top applicants to the hiring method that occurs by actually
organization for further screening. performing the work. This may include
5. Campus Recruiting case analysis, experiential exercises, role
- It is an external recruiting method in which playing, or group decision making.
the organization's recruiters visit various 4. Computer-based training. This is a training
college and university campuses to recruit method that simulates the work
individuals for positions requiring a certain environment by programming a computer
degree. to imitate some of the realities of the job.
5. Vestibule training. This is a training method
TRAINING AND CAREER PLANNING AND where training materials are condensed
DEVELOPMENT into highly organized, logical
consequences. It may include computer
Training
 tutorials, Interactive video disks, or virtual role and less responsibility. Depending on
reality simulations. the individual, this can be either a very
positive or a highly upsetting stage of
CAREER PLANNING AND DEVELOPMENT one's career.
• Career - may be defined as the pattern PERFORMANCE APPRAISAL
of work-related experiences that span
the course of a person's life. - It is a key aspect of performance
• Career Stages - This term refers to the management.
distinct stages that individuals go - It may be defined as the process of
through in their careers. evaluating the management of
• Establishment stage - is one of employees, sharing that information with
apprenticeships where the young them, and searching for ways to improve
employee enters an organization who their performance.
may be technically able but often
without an understanding of the FUNCTIONS OF PERFORMANCE APPRAISAL
organization's demands and Performance appraisal is undertaken for the
expectations. following reasons:
• Advancement stage - this stage calls
for the employee to work as an 1. to give employees feedback on
independent contributor of ideas in a performance;
chosen area. Advancement may be 2. to identify the employee ' s
pursued through internal career paths developmental needs;
within the organization or through 3. to make promotion and reward decisions;
external career paths that involve 4. to make demotion and termination
taking advantage of opportunities that decisions; and
require a change of employers. 5. to develop information about the
• Maintenance stage - the employee organization's selection and placement
may experience growth, continued decisions.
encounter of performance and
accomplishments, or he may CRITERIA FOR PERFORMANCE APPRAISAL
experience career stability. Sometimes, - In performance appraisal, there are
a further change in employers to certain criteria that are used. The three
sustain advancement, but often the most popular sets of criteria are
employee loses career flexibility.
• A career plateau - is a situation in 1. Individual Task Outcomes
which, for either organizational or - One way of appraising performance is
personal reason, the probability of evaluating the employee's task outcomes.
moving up the career ladder is low. 2. Behavior
- There are instances when it is difficult to
Career plateaus are of three types:
measure an individual's task outcomes.
1. Structural plateau This is so on advisory jobs or support
- This marks the end of promotions and the positions and those who are assigned to
affected employee, will now have to work in a group.
leave the organization to find new - Examples of jobs encountering this
opportunities and challenges. difficulty are those of teachers, nurses, and
filing clerks. In such cases, management
2. Content plateau
tends to evaluate the employee's
- This occurs when a person has learned a
behavior.
job too well and is bored with day-to-day
activities. 3. Traits
- Many organizations use traits as criteria in
3. Life plateau
appraising e performance. This is true even
- This occurs when an employee
if it is a very weak means. It is weak
experiences a loss of identity and self-
because it has little connection with the
esteem when there is no longer success in
actual performance of employee the job.
his work area.
The traits commonly used as basis for
• The retirement stage - is that stage when performance appraisal include:
formal preparation for retirement is made.
The individual learns to accept a reduced 1. good attitude
2. showing confidence - The essay appraisal is a performance
3. being dependable appraisal method whereby an appraiser
4. looking busy writes a narrative about the employee.
5. possessing a wealth of experience - The employee's strengths and weaknesses
are described and recommendations for
THE PROCESS OF PERFORMANCE APPRAISAL development are indicated.
Performance appraisal is a process in an - The essay method provides an excellent
organization whereby each employee is opportunity to point out the unique
evaluated to determine how he or she is characteristic of the employee being
performing. It consists of the following steps: appraised.

1. establishment of performance standards The disadvantages, however, are the

2. mutually set measurable goals following:
3. measure actual performance 1. it is very time consuming;
4. compare actual performance with 2. the quality of the appraisal may be
standards influenced by the appraiser ' s writing skill
5. discuss the appraisal with the employee and composition style;
6. if necessary, initiate corrective action 3. it tends to be subjective and may not
Performance Standards focus on relevant aspects of job
performance.
- are those by which performance is to be ➢ Critical Incident Appraisal
evaluated. - The critical incident appraisal is a
- It should be clearly defined and performance appraisal method which
communicated to the employee. requires effective or ineffective
- These standards should be based on job- performance for each employee being
related requirements derived from job appraised. These incidents are critical
analysis and reflected in the job incidents.
descriptions and job specifications.
➢ Checklist
When goals are set with the active - The checklist is a performance appraisal
participation of the employees, appraising method wherein the evaluator uses a list
employee performance will be an easy task. of behavioral descriptions and checks off
those behaviors that apply to the
To determine what actual performance is, it is
employee.
necessary to acquire information about it.
- The advantage of the checklist method is
Information may be derived from the
that it reduces some bias since the rater
following sources:
and the scorer are different.
1. personal observation - The disadvantage is when there are many
2. statistical reports job categories, a checklist of items must
3. oral reports be prepared for each job categories and
4. written reports that is costly in terms of materials and time
consumed.
METHODS OF PERFORMANCE APPRAISAL
➢ Adjective Rating Scale
There are three different approaches which - Also known as graphic rating scale, is a
can be used for appraising employees: performance appraisal method that lists a
number of traits and a range of
1. Absolute Standards performance for each.
- Under this approach, the subjects of - The traits listed are assumed to be
appraisal are not compared with other necessary to successful job performance.
persons. - Examples of traits are quality of work,
- This approach consists of the following quantity of work, job knowledge, and
methods: the essay appraisal, the critical dependability.
incident appraisal, the checklist, the - Each trait is accompanied by a five or
adjective rating scale, forced choice, and seven-point rating scale.
behaviorally anchored rating scales.
The advantage of adjective rating scale is
➢ Essay Appraisal that it is practical and cost little to develop.
The disadvantages, however, are as follows:
1. It does not clearly indicate what a person - Under this method, the evaluators are
must do to achieve a given rating. asked to rank the employees as follows:
2. It does not provide a good mechanism for top 5 percent, second 5 percent, third 5
providing specific, nonthreatening percent, and the like. This evaluation
feedback. method prevents evaluators from inflating
3. Accurate ratings are not likely to be their evaluations or from homogenizing
achieved because the points on the the evaluations.
rating scale are not clearly defined. - The disadvantage of this method is its
inapplicability when the number of
➢ Forced-Choice Appraisal
subjects is small.
- It is a type of performance appraisal in
which the rater must choose between two ➢ Individual ranking
or more specific statements about an - The individual ranking method requires the
employee's work behavior. evaluator merely to list the employees in
- The supervisor or others familiar with the order from highest to lowest.
rate’s performance evaluate how - This method does not show the difference
applicable each statement is. between the first and second, or between
- Oftentimes, the statements are ranked the second and third.
from most to least descriptive.
➢ Paired comparison
- It can be used by superiors, peers,
- Paired comparison is an appraisal method
subordinates, or a combination of these in
whereby subordinates are placed in all
evaluating employees.
possible pair and the supervisor must
➢ Behaviorally Anchored Rating Scale choose which of the two in each pair is
(BARS) the better performer.
- A rating instrument comprised of traits - This method ensures that each employee
anchored by job behaviors. is compared against each other, but the
- Appraisers select the behavior that best method can become unwieldy when
describes the worker's performance level. large numbers of employees are being
- The typical BARS include seven or eight compared.
traits called "dimension” each anchored
by a seven or nine-point scale. 3. Objectives
- A BARS anchors each trait with examples - The third approach to appraisal makes
of specific behaviors that reflect varying use of objectives.
levels of performance. - This approach, also known as
- The greatest advantage of BARS is its management by objectives (MBO), is a
ability to direct and monitor behavior. The process of joint goal setting between a
behavioral anchors let employees know supervisor and a subordinate.
what types of behavior are expected of - It is also a process of converting
them which gives appraisers the organizational objectives into individual
opportunity to provide behaviorally based objectives.
feedback.
- The weakness of BARS is the difficulty of MBO consists of four steps:
selecting the one behavior level. • In goal setting, the individual objectives
Sometimes, an employee may exhibit are set based on the organization's overall
behaviors at both ends of on the scale objectives. These goals are agreed upon
that is most indicative of the employee's and then become the standards by which
performance the scale, so the rater would the employee's results will be evaluated.
not know which rating to assign. • In action planning, realistic plans are
developed to attain the objectives.
2. Relative Standards • Self-control refers to the systematic
This category of appraisal methods compares monitoring and measuring of
individuals against other individuals. The most performance.
popular in this category are: • Periodic reviews are the means used to
determine whether there is a need for
➢ Group order ranking corrective action.
- It is a relative standard of performance
characterized as placing employees into The advantages of MBO are the following:
a particular classification such as top 1. it improves job performance by monitoring
“one-fifth.” and directing behavior;
2. it is practical and inexpensive; and - For example, a rater may intentionally give
3. it fosters better communication between higher rating to a member of a certain
employees and supervisors. fraternity than to a non-member.

The disadvantages of MBO are the following: REWARDS

1. it does not specify the behavior required After staffing, training, career planning and
to reach goals; development, and performance appraisal, a
2. it tends to focus on short-term goals; final requirement is necessary to ensure
3. the successful achievement of MBO goals effective performance. The requirement
may be partly a function of factors outside refers to the design and implementation of
the worker's controls; reward systems.
4. MBO does not provide a common basis
for comparison of performance standards; TYPES OF ORGANIZATIONAL INCENTIVES
and Organizational incentives consist of rewards
5. it often fails to gain acceptance. to motivate people to work. Rewards may be
ERRORS IN PERFORMANCE APPRAISAL classified as either:

A perfect performance appraisal is an ideal 1. Intrinsic rewards

goal and to make it happen, errors should be - are those that the worker receives from
prevented from happening. To eliminate the the job itself, such as pride in one ' s work,
possibility of errors, they must first be a feeling of accomplishment, or being
identified. part of a team.
- These rewards are self-regulated as the
1. Halo Error worker is not dependent on an outsider,
- This is a rating error that occurs when a such as the manager, to provide for them.
rater assigns ratings on the basis of an
2. Extrinsic rewards
overall impression (positive or negative) of
- are those that the workers get from the
the person being rated.
employer, usually money, a promotion, or
2. Leniency Error benefits.
- This is a rater's tendency to give relatively
3. Financial rewards
high ratings to virtually everyone.
- are those that enhance an employee ' s
- The opposite of this is strictness error where
financial well-being directly through
the raters tend to give everyone a low
wages, bonuses, profit sharing, and the
rating.
like.
- Most often, leniency errors happen when
peers asses one another. 4. Nonfinancial rewards
- are indirect enhancement of an
3. Central Tendency Error
employee ' s financial well-being.
- This occurs when a rater lump everyone
- This is done through supportive benefits
together around the average, or middle,
like pension plans, paid vacations, paid
category.
sick leaves, and purchase discounts.
- The idea is that there are no very good or
very poor performers on the dimension 5. Performance-based rewards
being rated. As a result, no true - are those given using performance as
performance discrimination is made. basis.
- These rewards take the form of
4. Recency Error
commissions, piecework pay plans,
- This is a biased rating that develops by
incentive systems, group bonuses, or other
allowing the individual's most recent
forms of merit pay.
behavior to speak for his or her overall
performance on a particular dimension. 6. Membership-based rewards
- The result is a false picture of the - refer to those that are given to all
individual's job performance during the employees regardless of performance.
entire period. - This type includes cost-of- living increases;
benefits; and salary increases attributable
5. Personal Bias Error
to labormarket conditions, seniority or time
- This occurs when a rater allows specific
in rank, credentials such as a college
biases, such as racial, age, and gender, to
degree, or future potential such as a new
enter into performance appraisals.
MBA degree from a prestigious university.