{"id":800,"date":"2019-08-13T21:36:03","date_gmt":"2019-08-13T21:36:03","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/?post_type=chapter&#038;p=800"},"modified":"2024-04-25T01:34:43","modified_gmt":"2024-04-25T01:34:43","slug":"why-it-matters-performance-management-and-appraisal","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/chapter\/why-it-matters-performance-management-and-appraisal\/","title":{"raw":"Why It Matters: Performance Management and Appraisal","rendered":"Why It Matters: Performance Management and Appraisal"},"content":{"raw":"<h2>Why learn about\u00a0performance management and employee appraisal?<\/h2>\r\n<img class=\"alignright wp-image-866\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/4056\/2019\/08\/14201317\/25497542550_275cb756a1_k.jpg\" alt=\"Photograph of two women sitting on a window bench. One is holding an open computer and talking to the other.\" width=\"400\" height=\"267\" \/>Performance appraisals have the power to change career trajectories and motivate a level of engagement and discretionary effort that transcends job expectations. So why is it that, as one manager phrased it, \u201cperformance reviews typically suck?\u201d\r\n\r\nThe unfortunate fact is the perception of performance reviews as ineffective is shared by organizations, management and employees. Consulting firm Deloitte found that 82% of companies responding to their 2015 Global Human Capital Trends survey stated that \u201cperformance evaluations were not worth the time.\u201d[footnote]Sloan, Nathan, Dimple Agarwal, Stacia Garr, and Karen Pastkia. \"<a href=\"https:\/\/www2.deloitte.com\/insights\/us\/en\/focus\/human-capital-trends\/2017\/redesigning-performance-management.html\" target=\"_blank\" rel=\"noopener\">Performance Management: Playing a Winning Hand<\/a>.\" Deloitte Insights: 2017 Global Human Capital Trends. Accessed August 15, 2019.[\/footnote] Deloitte also cited a study published in Personnel Psychology that reported that 41% of companies found evidence of extensive manager bias and 45% percent didn\u2019t believe performance evaluations motivated employees. Statistics not only support that opinion, they indicate that ineffective performance appraisal processes are a critical business and human resource management issue.\r\n<div class=\"textbox key-takeaways\">\r\n<h3>Key Statistics<\/h3>\r\nConsider the following statistics:[footnote]Wholley, Meredith. \"<a href=\"https:\/\/blog.clearcompany.com\/mind-blowing-statistics-performance-reviews-employee-engagement\" target=\"_blank\" rel=\"noopener\">17 Mind-blowing Statistics on Performance Reviews and Employee Engagement<\/a>.\" ClearCompany. March 25, 2019. Accessed August 15, 2019.[\/footnote]\r\n<ul>\r\n \t<li style=\"font-weight: 400;\">45% of HR leaders do not think annual performance reviews are an accurate appraisal for employee\u2019s work.<\/li>\r\n \t<li style=\"font-weight: 400;\">69% of employees say they would work harder if they felt their efforts were better recognized.<\/li>\r\n \t<li style=\"font-weight: 400;\">Recognition is the number one thing employees say their manager could give them to inspire them to produce great work.<\/li>\r\n \t<li style=\"font-weight: 400;\">22% of employees that don\u2019t feel recognized when they do great work have interviewed for a job in the last three months, compared to just 12% that do feel recognized.<\/li>\r\n \t<li style=\"font-weight: 400;\">Only 8% of companies believe their performance management process is highly effective in driving business value, while 58% say it\u2019s not an effective use of time.<\/li>\r\n<\/ul>\r\n<\/div>\r\nGallup\u2019s State of the Global Workplace research demonstrates that \u201cengaged employees produce better business outcomes than do other employees across industry, across company size and nationality, and in good economic times and bad.\u201d[footnote]\"<a href=\"https:\/\/www.gallup.com\/workplace\/238079\/state-global-workplace-2017.aspx\" target=\"_blank\" rel=\"noopener\">State of the Global Workplace<\/a>.\" Gallup. Accessed August 15, 2019.[\/footnote] For perspective, refer to the following list, which indicates business improvements realized by business units in the top quartile of engagement:[footnote]Ibid.[\/footnote]\r\n<ul>\r\n \t<li>10% higher customer metrics<\/li>\r\n \t<li>17% higher productivity<\/li>\r\n \t<li>20% higher sales<\/li>\r\n \t<li>21% higher profitablity<\/li>\r\n \t<li>41% lower absenteeism<\/li>\r\n \t<li>24% lower turnover (in high-turnover organizations)<\/li>\r\n \t<li>59% lower turnover (in low-turnover organizations)<\/li>\r\n \t<li>28% less shrinkage<\/li>\r\n \t<li>70% fewer employee safety incidents<\/li>\r\n \t<li>58% fewer patient safety incidents<\/li>\r\n \t<li>40% fewer quality incidents (defects)<\/li>\r\n<\/ul>\r\nThe challenge: Gallup\u2019s global employee surveys find that just 15% of employees are engaged\u2014\u201cpsychologically invested in their job and motivated to be highly productive\u201d\u2014at work. The majority of employees (67%) are not engaged\u2014effectively \u201cat risk.\u201d The final 18% are actively disengaged. Key opportunity: Gallup reports that \u201cmanagers are responsible for at least 70% of the variance in their employees\u2019 engagement.\u201d[footnote]Ibid.[\/footnote] Given the business and human resource management implications, the ability to provide effective feedback\u2014recognition and developmental\u2014is an essential management competence and responsibility. In this module, we\u2019ll discuss the concept and process of performance management and how to improve appraisal effectiveness.","rendered":"<h2>Why learn about\u00a0performance management and employee appraisal?<\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-866\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/4056\/2019\/08\/14201317\/25497542550_275cb756a1_k.jpg\" alt=\"Photograph of two women sitting on a window bench. One is holding an open computer and talking to the other.\" width=\"400\" height=\"267\" \/>Performance appraisals have the power to change career trajectories and motivate a level of engagement and discretionary effort that transcends job expectations. So why is it that, as one manager phrased it, \u201cperformance reviews typically suck?\u201d<\/p>\n<p>The unfortunate fact is the perception of performance reviews as ineffective is shared by organizations, management and employees. Consulting firm Deloitte found that 82% of companies responding to their 2015 Global Human Capital Trends survey stated that \u201cperformance evaluations were not worth the time.\u201d<a class=\"footnote\" title=\"Sloan, Nathan, Dimple Agarwal, Stacia Garr, and Karen Pastkia. &quot;Performance Management: Playing a Winning Hand.&quot; Deloitte Insights: 2017 Global Human Capital Trends. Accessed August 15, 2019.\" id=\"return-footnote-800-1\" href=\"#footnote-800-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a> Deloitte also cited a study published in Personnel Psychology that reported that 41% of companies found evidence of extensive manager bias and 45% percent didn\u2019t believe performance evaluations motivated employees. Statistics not only support that opinion, they indicate that ineffective performance appraisal processes are a critical business and human resource management issue.<\/p>\n<div class=\"textbox key-takeaways\">\n<h3>Key Statistics<\/h3>\n<p>Consider the following statistics:<a class=\"footnote\" title=\"Wholley, Meredith. &quot;17 Mind-blowing Statistics on Performance Reviews and Employee Engagement.&quot; ClearCompany. March 25, 2019. Accessed August 15, 2019.\" id=\"return-footnote-800-2\" href=\"#footnote-800-2\" aria-label=\"Footnote 2\"><sup class=\"footnote\">[2]<\/sup><\/a><\/p>\n<ul>\n<li style=\"font-weight: 400;\">45% of HR leaders do not think annual performance reviews are an accurate appraisal for employee\u2019s work.<\/li>\n<li style=\"font-weight: 400;\">69% of employees say they would work harder if they felt their efforts were better recognized.<\/li>\n<li style=\"font-weight: 400;\">Recognition is the number one thing employees say their manager could give them to inspire them to produce great work.<\/li>\n<li style=\"font-weight: 400;\">22% of employees that don\u2019t feel recognized when they do great work have interviewed for a job in the last three months, compared to just 12% that do feel recognized.<\/li>\n<li style=\"font-weight: 400;\">Only 8% of companies believe their performance management process is highly effective in driving business value, while 58% say it\u2019s not an effective use of time.<\/li>\n<\/ul>\n<\/div>\n<p>Gallup\u2019s State of the Global Workplace research demonstrates that \u201cengaged employees produce better business outcomes than do other employees across industry, across company size and nationality, and in good economic times and bad.\u201d<a class=\"footnote\" title=\"&quot;State of the Global Workplace.&quot; Gallup. Accessed August 15, 2019.\" id=\"return-footnote-800-3\" href=\"#footnote-800-3\" aria-label=\"Footnote 3\"><sup class=\"footnote\">[3]<\/sup><\/a> For perspective, refer to the following list, which indicates business improvements realized by business units in the top quartile of engagement:<a class=\"footnote\" title=\"Ibid.\" id=\"return-footnote-800-4\" href=\"#footnote-800-4\" aria-label=\"Footnote 4\"><sup class=\"footnote\">[4]<\/sup><\/a><\/p>\n<ul>\n<li>10% higher customer metrics<\/li>\n<li>17% higher productivity<\/li>\n<li>20% higher sales<\/li>\n<li>21% higher profitablity<\/li>\n<li>41% lower absenteeism<\/li>\n<li>24% lower turnover (in high-turnover organizations)<\/li>\n<li>59% lower turnover (in low-turnover organizations)<\/li>\n<li>28% less shrinkage<\/li>\n<li>70% fewer employee safety incidents<\/li>\n<li>58% fewer patient safety incidents<\/li>\n<li>40% fewer quality incidents (defects)<\/li>\n<\/ul>\n<p>The challenge: Gallup\u2019s global employee surveys find that just 15% of employees are engaged\u2014\u201cpsychologically invested in their job and motivated to be highly productive\u201d\u2014at work. The majority of employees (67%) are not engaged\u2014effectively \u201cat risk.\u201d The final 18% are actively disengaged. Key opportunity: Gallup reports that \u201cmanagers are responsible for at least 70% of the variance in their employees\u2019 engagement.\u201d<a class=\"footnote\" title=\"Ibid.\" id=\"return-footnote-800-5\" href=\"#footnote-800-5\" aria-label=\"Footnote 5\"><sup class=\"footnote\">[5]<\/sup><\/a> Given the business and human resource management implications, the ability to provide effective feedback\u2014recognition and developmental\u2014is an essential management competence and responsibility. In this module, we\u2019ll discuss the concept and process of performance management and how to improve appraisal effectiveness.<\/p>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-800\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Why It Matters: Performance Management and Appraisal. <strong>Authored by<\/strong>: Nina Burokas. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>wocintech stock - 119. <strong>Authored by<\/strong>: WOCinTech Chat. <strong>Provided by<\/strong>: Flickr. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/flic.kr\/p\/ER8z5A\">https:\/\/flic.kr\/p\/ER8z5A<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section><hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-800-1\">Sloan, Nathan, Dimple Agarwal, Stacia Garr, and Karen Pastkia. \"<a href=\"https:\/\/www2.deloitte.com\/insights\/us\/en\/focus\/human-capital-trends\/2017\/redesigning-performance-management.html\" target=\"_blank\" rel=\"noopener\">Performance Management: Playing a Winning Hand<\/a>.\" Deloitte Insights: 2017 Global Human Capital Trends. Accessed August 15, 2019. <a href=\"#return-footnote-800-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><li id=\"footnote-800-2\">Wholley, Meredith. \"<a href=\"https:\/\/blog.clearcompany.com\/mind-blowing-statistics-performance-reviews-employee-engagement\" target=\"_blank\" rel=\"noopener\">17 Mind-blowing Statistics on Performance Reviews and Employee Engagement<\/a>.\" ClearCompany. March 25, 2019. Accessed August 15, 2019. <a href=\"#return-footnote-800-2\" class=\"return-footnote\" aria-label=\"Return to footnote 2\">&crarr;<\/a><\/li><li id=\"footnote-800-3\">\"<a href=\"https:\/\/www.gallup.com\/workplace\/238079\/state-global-workplace-2017.aspx\" target=\"_blank\" rel=\"noopener\">State of the Global Workplace<\/a>.\" Gallup. Accessed August 15, 2019. <a href=\"#return-footnote-800-3\" class=\"return-footnote\" aria-label=\"Return to footnote 3\">&crarr;<\/a><\/li><li id=\"footnote-800-4\">Ibid. <a href=\"#return-footnote-800-4\" class=\"return-footnote\" aria-label=\"Return to footnote 4\">&crarr;<\/a><\/li><li id=\"footnote-800-5\">Ibid. <a href=\"#return-footnote-800-5\" class=\"return-footnote\" aria-label=\"Return to footnote 5\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":17,"menu_order":1,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Why It Matters: Performance Management and Appraisal\",\"author\":\"Nina Burokas\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"wocintech stock - 119\",\"author\":\"WOCinTech Chat\",\"organization\":\"Flickr\",\"url\":\"https:\/\/flic.kr\/p\/ER8z5A\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"ad011e92-d640-4aa0-b2ec-7260229bd84a","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-800","chapter","type-chapter","status-publish","hentry"],"part":798,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapters\/800","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/wp\/v2\/users\/17"}],"version-history":[{"count":9,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapters\/800\/revisions"}],"predecessor-version":[{"id":3372,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapters\/800\/revisions\/3372"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/parts\/798"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapters\/800\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/wp\/v2\/media?parent=800"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapter-type?post=800"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/wp\/v2\/contributor?post=800"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/wp\/v2\/license?post=800"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}