CHAPTER 6:

PERFORMANCE APPRAISALS,
FEEDBACK AND REWARDS
Objectives:
Identify purpose and focus of performance appraisal.
Discuss ways on improving performance appraisal.
Define feedback and the elements needed to ensure its
effectiveness.
Describe the 360 degree approach as a powerful
developmental method.
Explain reinforcement theory.
Determine ways of controlling behavior
Ilustrate the different types of reinforcement schedules.
Enumerate guidelines in developing, revamping or currently
implementing an employee rewards program.
Differentiate intrinsic from extrinsic rewards.
Identify different approaches to reward.
PERFORMANCE APPRAISAL
Deals with how organizations evaluate and
measure its employees’ achievements and
behaviors
It is an employee review by his manager
where his work performance is evaluated,
strengths and weaknesses are identified
so that employee knows his
improvements areas.
TWO BASIC SYSTEMS OPERATING
IN COMBINATION
1. EVALUATION SYSTEM
Identify the performance gap (if any).

This gap is the shortfall that occurs when

performance does not meet the standard set by the
organization as acceptable.
TWO BASIC SYSTEMS OPERATING
IN COMBINATION
2. FEEDBACK SYSTEM
Is to inform the employee about the quality of his
performance.

However, the information flow is not exclusively one way.

The appraiser also receives feedback from the employee
about job problems, etc.
 PURPOSES OF PERFORMANCE
APPRAISALS
1. JUDGMENTAL ORIENTATION 2. DEVELOPMENTAL ORIENTATION
Focus on past performance and Concern with improving future
provide a basis for making performance by ensuring
judgments on which employee expectations are clear and by
should be rewarded and how identifying ways to facilitate employee
effective organizational programs performance through training.
like selection and training have
been.
 FOCUS OF PERFORMANCE APPRAISALS
1. DEFICIENCY 2. CONTAMINATION 3. DISTORTION
It happens when It happens when activities This takes place when
evaluation does not not part of the job improper emphasis is given
focus on all aspects of responsibilities are to various job elements.
the job. If certain job is included in the evaluation.
not considered, the This is the exact opposite
evaluation is deficient. of deficiency.
 HERE ARE DIFFERENT VARIATIONS OF PERFORMANCE APPRAISAL
SYSTEMS, THEY ARE:

1. SELF-EVALUATION METHOD
Self-evaluation is great way to kick-off reviews.

Self-evaluation is when the employee is asked to judge their

own performance against predetermined criteria.

Employee self-evaluations help to demystify the appraisal

process and can provide interesting insight into gaps
between employee and manager ratings.
 HERE ARE DIFFERENT VARIATIONS OF PERFORMANCE APPRAISAL
SYSTEMS, THEY ARE:
1. BEHAVIORALLY ANCHORED RATING SCALES (BARS)
Behaviorally Anchored Rating Scales has a list of criteria that
an employee should work up to be a diligent worker.

This method is considered favorable as the evaluation is

done on the basis of individual employee performance
without comparisons.

A combination of the ratings scale and critical incident

techniques of employee performance evaluation.
 HERE ARE DIFFERENT VARIATIONS OF PERFORMANCE APPRAISAL
SYSTEMS, THEY ARE:
2. THE 360 DEGREE APPROACH
Involves feedback of the manager, supervisor, team members and
any direct reports.

It is a powerful developmental method and quite different to

traditional manager-subordinate appraisals.

A mixture of 8 to 12 people fill out an anonymous online

feedback form that asks questions covering a broad range of
workplace competencies.

The feedback forms include questions that are measured on a

rating scale and asks raters to provide written comments.

The person receiving feedback also self-rating survey that includes

the same survey questions that others receive in their forms.
 HERE ARE DIFFERENT VARIATIONS OF PERFORMANCE APPRAISAL
SYSTEMS, THEY ARE:
4. MANAGEMENT BY OBJECTIVES (MBO)
Is a type of evaluation which falls under modern approach of performance appraisal.

This method is designed to include employees in the goal-setting process and define
“success” by measuring accomplishments against a clearly established set of
objectives.

Manager and employees agree upon specific and obtainable goals with a set deadline.

This method is simple, clear, and empowers employee in the goal setting process but it
disregards non-goal-related success metrics
 HERE ARE DIFFERENT VARIATIONS OF PERFORMANCE APPRAISAL
SYSTEMS, THEY ARE:
5. FORCED DISTRIBUTION
Is a form of comparative evaluation in which an evaluator rates subordinates
according to a specified distribution.

Use of the forced distribution method is demonstrated by a manager who is told

that he or she must rate subordinates according to the following distribution:
10% low; 20% below average; 40% average; 20% above average; and 10% high.
In a group of 20 employees, two would have to be placed in the low category, four
in the below-average category, eight in the average, four above average, and two
would be placed in the highest category.

It is primarily used to eliminate rating errors such as leniency and central

tendency, but this method itself can cause rating errors because it forces
discriminations between employees even where job performance is quite
similar.
6. GRAPHIC RATINGS SCALE
It is the most common performance appraisal method.

It is used to evaluate an employee in terms of success

within a variety of areas,syuch as technical skill set,
teamwork and communication skills.

7. CRITICAL INCIDENT METHOD

Allows supervisors to describe an employee’s excellent or
poor response to situations arising during the year in
question.

This method keeps answers open-ended, flexible, multi-

dimensional, and respectful of context.
8. PAIRED COMPARISON ANALYSIS
Paired Comparison analysis relies on a grid that presents numerical values for each
employee based on established set of criteria.

This method can be complex and labor intensive if done manually,but it allows the kinds of
apple-and-orange comparisons that often present philosophical challenges to HR
managers who need to standardize evaluation methods across groups of employees
facing very different tasks.

9. BANKING
Ranking methods compare one employee to another, resulting in an ordering of
employees in relation to one another.

Rankings often result in overall assessments of employees, rather than in specific

judgments about a number of job components.
 A. STRAIGHT RANKING
Requires an evaluator to order a group of employees from best to worst
overall or from most effective to least effective in terms of a certain criteri

B. ALTERNATIVE RANKING
Alternative ranking makes the same demand, but the ranking process
must be done in a specified manner (for example, by first selecting the
best employee in a group, then the worst, then the second-best, then the
second-worst, etc.).

10. ESSAY METHOD

The subject of an essay appraisal is often justification of pay, promotion, or termination
decisions, but essays can be used for developmental purposes as well

Involves an evaluator’s written report appraising an employee’s performance, usually in

terms of job behaviors and/or results.
I1. IMPROVING PERFORMANCE APPRAISAL
Not every manager has the opportunity to
impact or improve the overall performance
appraisal system within which they must work.
But, every manager has the opportunity to take
the system they have been dealt and turn the
performance appraisal process into a
positive, rewarding, beneficial process for
both themselves and the employees who report
to them.
12. PERFORMANCE APPRAISAL FEEDBACK
Probably the most challenging part of the
performance appraisal meeting in giving
feedback to employees on their performance.

Feedback must be given if managers want the

performance appraisal meeting to be
motivational for an employee and to result in
improved performance
13. EFFECTIVENESS OF PERFORMANCE APPRAISALS FEEDBACK
Effective and timely feedback is a critical component of a successful
performance management program and should be used in union with setting
performance goals.

If effective feedback is given to employees on their progress towards their

goals employee performance will improve.

FEEDBACK CAN COME FROM MANY DIFFERENT SOURCES LIKE MANAGERS AND SUPERVISOR, MEASUREMENT SYSTEMS,
PEERS, AND CUSTOMERS. HOWEVER CERTAIN ELEMENTS ARE NEEDED TO ENSURE ITS EFFECTIVENESS, WHICH ARE:
1. SPECIFICITY
Feedback works best when it relates to a specific goal. Telling employees that
they are doing well because they exceeded their goal by 10% is more effective
than simply saying “you’re doing a good job.”
FEEDBACK CAN COME FROM MANY DIFFERENT SOURCES LIKE MANAGERS AND SUPERVISOR, MEASUREMENT
SYSTEMS, PEERS, AND CUSTOMERS. HOWEVER CERTAIN ELEMENTS ARE NEEDED TO ENSURE ITS EFFECTIVENESS,
WHICH ARE:

2. TIMELINESS
Employees should receive information about how they’re doing as
timely as possible. If employees have reached or exceeded a goal,
the sooner they receive positive feedback, the more rewarding it
is to them.

3. MANNER
Feedback should be given in a manner that will best
help improve performance. It must be accurate,
factual, and complete.

With effective feedback processes, employees won’t

be working blind and, hopefully, will reach their
destinations successfully.
HERE ARE DIFFERENT VARIATIONS OF PERFORMANCE APPRAISAL
SYSTEMS, THEY ARE:
14. REINFORCEMENT THEORY
Proposed by BF Skinner and his associates. It states that
individual’s behavior is a function of its consequences.

It is based on “law of effect”.

Individual’s behavior with positive consequences tends to be

repeated, but individual’s behavior with negative consequences
tends not to be repeated.

explains in detail how an individual learns behavior. This theory

focuses totally on what happens to an individual when he takes
some action.

This theory is a strong tool for analyzing controlling mechanism for

individual’s behavior. However, it does not focus on the causes of
individual’s behavior.
THE MANAGERS USE THE FOLLOWING METHODS FOR CONTROLLING THE
BEHAVIOR OF THE EMPLOYEES:
1. POSITIVE REINFORCEMENT METHOD 2. NEGATIVE REINFORCEMENT METHOD
This implies giving a positive This implies rewarding an employee by
response when an individual shows removing negative/undesirable
positive and required behavior. consequences. Both positive and
negative reinforcement can be used for
increasing desirable/ required
behavior.

3. PUNISHMENT 4. EXTINCTION
It implies removing positive
consequences so as to lower the It implies absence of reinforcements. In
probability of repeating undesirable other words, extinction implies lowering
behavior in future. In other words, the probability of undesired behavior by
punishment means applying removing reward for that kind of
undesirable consequence for showing behavior.
undesirable behavior.
HERE ARE DIFFERENT VARIATIONS OF PERFORMANCE APPRAISAL
SYSTEMS, THEY ARE:

15. REINFORCEMENT SCHEDULES

In operant conditioning, schedules of
reinforcement are an important component of the
learning process. When and how often we
reinforce a behavior can have dramatic impact on
the strength and rate of the response.

A schedule of reinforcement is basically a rule

stating which instances of a behavior will be
reinforced.
 2 TYPES OF REINFORCEMENT SCHEDULES
1. CONTINUOUS REINFORCEMENT
In continuous reinforcement, the desired behavior is reinforced
every single time it occurs. This schedule is best used during the
initial stages of learning in order to create a strong association
between the behavior and the response.

2. PARTIAL REINFORCEMENT
the response is reinforced only part of the time. Learned
behaviors are acquired more slowly with partial reinforcement, but
the response is more resistant to extinction.
 EXTRINSIC REWARDS
Intrinsic motivation is internal to the person in that it is
something that has to be offered to oneself and is driven by
personal interest or enjoyment in the work itself.

Extrinsic rewards are usually financial in nature, such a raise in

salary, a bonus for for reaching some quota or paid time off.

It can also be simple as getting the better office, verbal praise,

public recognition or awards, promotions and additional
responsibility.
THESE FOLLOWING ARE DESCRIPTIONS OF INTRINSIC REWARDS AND HOW
WORKERS VIEW THEM
A. SENSE OF MEANINGFULNESS
this reward involves the meaningfulness or importance of the purpose of a
person is trying to fulfill.

B. SENSE OF CHOICE
A person will feel free to choose how to accomplish his work, to use his best
judgment to select those work activities that make the most sense to him and to
perform them in ways that seem appropriate.

C. SENSE OF COMPETENCE
A person feels that he is handling his work activities well, that performance of
these activities meets or exceeds his personal standards, and that he is doing
good, high-quality work.

D. SENSE OF PROGRESS
A person is encouraged that his efforts are really accomplishing something.
 INNOVATIVE REWARDS SYSTEM
7 DIFFERENT APPROACHES TO REWARDS
1. SKILL-BASED PAY
Skill-based pay refers to a pay system in which pay increases are linked to
the number or depth of skills an employee acquires and applies and it is a
means of developing broader and deeper skills among the workforce. Such
increases are in addition to, and not in lieu of, general pay increases
employees may receive.

THE PAY INCREASES ARE USUALLY TIED TO THREE TYPES OF SKILLS:

1. HORIZONTAL SKILLS 2. VERTICAL SKILLS 3. DEPTH SKILLS

involves broadening involves acquiring which involve a high
of skills in terms of level of skills in
skills of a higher specialized areas
the range of tasks level relating to the same job
 7 DIFFERENT APPROACHES TO REWARDS
2. BROAD BANDING
A broad banding pay structure uses a small number of large salary pay
ranges, instead of many different pay grades within an organization.

The main objective of a broadband is to reduce salary ranges within a

certain level but introduce broader pay ranges within a job level or
family.

Broad banding systems are implemented to allow greater flexibility in

compensation.

It is this flexibility that often flattens the hierarchy of an organization

and is sometimes appealing to large organizations.

Flattening of a hierarchy can be interpreted as collapsing salary

grades into a few wide bands containing many different jobs and
salaries.
 7 DIFFERENT APPROACHES TO REWARDS
3. CONCIERGE SERVICES
It is an employee benefit award which consists of making restaurant
reservations, finding estimates for a home or automotive repair person,
providing pet care vendors, doing personal shopping before the holiday or
picking up dry cleaning to name a few.

These services are available 24 hours a day and 7 days a week in order
to free the employee from wide range of “must do” actvities and just
concentrate on performance.
 7 DIFFERENT APPROACHES TO REWARDS
4. TEAM-BASED REWARDS
It is a monetary compensation that rewards individual for teamwork and/or rewards
teams for collective results.

Team-based incentive programs can be extremely effective in increasing individual

and team performance.

They can also be very effective in shaping employee performance to be more in

line with company values and goals.
 SEVERAL TYPES OF TEAM-BASED REWARDS
A. PROFIT SHARING
Profit sharing is a team-based incentive plan in which management pay their employees a
percentage of their company’s overall profits.

B. GOAL-BASED INCENTIVES
Goal-based team incentives reward employees for reaching specific goals.

For example, topping a certain peso amount in sales, landing a specific number of contracts or
hitting a membership recruitment figure.

This incentive plan is good for businesses that promotes team work and collective effort, and
management only issue the reward if the goal is met.

C. MERIT-BASED INCENTIVES
A more subjective approach to incentive programs is the merit-based incentive approach. Following this
model, management reward employee teams for effort, regardless of outcome.

For example, if marketing employees stay late every night to finish a major advertising campaign that doesn’t
perform as anticipated, their dedication and effort are still recognized.

Because of the discretionary element of this type of incentive, it can be a challenge for employees to know
what they aiming for or how they will know when their efforts or actions are viewed as “good enough” to
merit reward.
 7 DIFFERENT APPROACHES TO REWARDS
5. PART TIME BENEFITS
Employers generally choose whether their part-time employees will receive most
benefits. These benefits include vacation time, holiday pay, sick leave, medical
insurance, retirement benefits and disability insurance. All are considered
voluntary benefits, since providing the benefits is at the employer’s discretion.

6. GAIN SHARING PROFIT

Similar to a profit-sharing plan, gain sharing is a team incentive in which management
reward employee groups for measurable, non-financial achievements in pre-
established areas. For example, teams may enjoy a bonus if a customer satisfaction
levels rise a certain percentage above figures from the previous year.

The focus of this type of incentive is for employees to recognize the role they play in
continually moving the business forward in key areas.
 7 DIFFERENT APPROACHES TO REWARDS
7. EMPLOYEES STOCK OWNERSHIP
An employee stock ownership plan (ESOP) is an employee-owner program
that provides a company’s workforce with an ownership interest in the
company.

In an ESOP, companies provide their employees with stock ownership,

often at no up-front cost to the employees' remuneration for work performed.

Shares are allocated to employees and may be held in an ESOP trust until
the employee retires or leaves the company. The shares are then sold.
THANK YOU!
 GROUP 1

MEMBERS:

BELEN, HONEY JANE

CABASE, JAHANE JANE
DE DIOS, SAMANTHA JING
ODO, ALTHEA
PEREZ, SAMANTHA NICOLE