The
PERFORMANCE
APPRAISAL
QUESTION and
ANSWER BOOK:
A SURVIVAL GUIDE
FOR MANAGERS
AMACOM
Dick Grote
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MorePraisefor...
The Performance Appraisal Question and Answer Book:
‘‘An enlightening, practical, and valuable tool. Dick has taken the sometime
confusing and frightening problem of performance appraisal and provided
effective approaches and answers that can be adapted to any organization.
It is a MUST for the human resources professional’s library.’’
—William K. Hill
Human Resources Director
City of Winston-Salem (NC)
‘‘Dick Grote clearly and eloquently presents a very practical guide for navi-
gating the often-murky waters of the performance appraisal process. The
Performance Appraisal Question and Answer Book is a must-read for all who
are captivated with the notion that the development, administration, and
oversight of an effective performance management system is not only possi-
ble, but indispensable to the organizational life of any business.’’
—Michael S. Sorrells
Deputy Commissioner for Human Resources
Georgia Department of Juvenile Justice
‘‘Much has been written and debated about the value of performance man-
agement systems. However, the fact remains that top-performing compa-
nies have rigorous performance management systems. The Performance
Appraisal Question and Answer Book is a must-have handbook for every
manager’s most complex issue: performance.’’
—Don Langewisch
Performance Systems Manager

p. cm.
Includes index.
ISBN 0-8144-0747-1 (hardcover)
ISBN 0-8144-7151-X (paperback)
1. Employees—Rating of. 2. Performance standards. I. Title.
HF5549.5 .R3 G642 2002
658.3Ј125—dc21
2002002171
᭧ 2002 Dick Grote.
All rights reserved.
Printed in the United States of America.
This publication may not be reproduced,
stored in a retrieval system,
or transmitted in whole or in part,
in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise,
without the prior written permission of AMACOM,
a division of American Management Association,
1601 Broadway, New York, NY 10019.
Printing number
10987654321
Contents
Introduction ....................................... xv
1. TheImportanceofPerformanceAppraisal........ 1
1.1 Whatis‘‘performanceappraisal’’? ....................... 1
1.2 Where did performance appraisals come from? . . . . . . . . . . . . . . 2
1.3 Whatisthepurposeofperformanceappraisal? .............. 4
1.4 The performance management process in our organization has
conflicting purposes. We use it to determine merit increases and
performance feedback for work done during the previous twelve

2.4 When is the best time to set and review expectations? . . . . . . . . . 26
2.5 I have never held a performance-planning meeting. How do I get
theplanningmeetingofftoagoodstart?................... 26
2.6 What is the difference between ‘‘results’’ and ‘‘behaviors’’? . . . . . 27
2.7 How do you determine someone’s key job responsibilities? . . . . . 29
2.8 Some big rocks may be bigger than others; some key job
responsibilities are more critical than others. How do you determine
themostimportantitems? ............................. 32
2.9 How do you determine a method for evaluating someone’s
performance in meeting their key responsibilities? . . . . . . . . . . . . 32
2.10 Descriptive measures seem subjective. Don’t we have to be
objectivewhenweevaluatesomeone’sperformance? ......... 34
2.11 Where does goal setting fit into the performance-planning process? 36
2.12 How do I pick the right goals? Where should an individual look to
findgoalsandobjectives? ............................. 37
2.13 Howshouldagoalstatementbewritten? .................. 39
2.14 WhatareSMARTobjectives? ........................... 41
2.15 How high should I set my performance expectations? . . . . . . . . . 42
2.16 What do I do if the individual disagrees with the goals I want set, or
says that my standards are unreasonable or that one of the key job
responsibilities I’ve identified is not really part of the job? . . . . . . . 44
2.17 HowdoIwrapupaperformance-planningmeeting?.......... 44
3. PerformanceExecution ......................... 46
3.1 Whatis‘‘performanceexecution’’?....................... 46
3.2 What are the manager’s responsibilities in the performance
executionphase? ................................... 46
3.3 What are the employee’s responsibilities in the performance
executionphase? ................................... 48
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3.4 How should I keep track of employees’ performance? Should I keep

phase? Does she have to review and approve my appraisals before
Ideliverthemtomystaff? ............................. 78
4.5 Should I ask the individual whose performance appraisal I am
preparingtomakeupalistofaccomplishments? ............. 80
4.6 Should I ask the individual to complete a self-appraisal using the
company’sperformanceappraisalform? ................... 82
4.7 I have to write a performance appraisal. Where do I start? . . . . . . 83
viii Contents
4.8 What information do I need to write a valid performance appraisal? 85
4.9 What about collecting data from other people to use on the
performance appraisal form? Would it be a good idea to ask for
information from a salesman’s customers, or ask a manager’s
subordinatesaboutherperformanceasasupervisor? .......... 87
4.10 I’ve asked the employee to write a self-appraisal. Should I use what
the employee has written in the self-appraisal as part of the official
appraisalI’mwriting? ................................ 88
4.11 Should I put more emphasis on the results the individual achieved
or on the way the person went about doing the job? . . . . . . . . . . 89
4.12 One of my subordinates works in a different city and I don’t see her
very much. How can I appraise her performance accurately? . . . . 90
4.13 Should I include the employee’s successes and failures in
completing the development plan as part of his formal performance
appraisal?......................................... 91
4.14 Whatare‘‘ratingerrors’’? ............................. 91
4.15 Should I go over the employee’s appraisal with my manager before
Ireviewitwiththeindividual? .......................... 92
4.16 How do I go about convincing my boss (assuming her approval is
needed) that one of my people deserves a particularly positive or
negativereview? .................................... 97
4.17 If the appraiser’s boss approves the appraisal before the employee

thefirsttimeontheperformanceappraisal? ................ 107
5. PerformanceReview ........................... 110
5.1 Whatis‘‘performancereview’’?......................... 110
5.2 What are the manager’s responsibilities in the performance review
phaseoftheprocess? ................................ 110
5.3 What are the employee’s responsibilities in the performance review
phase? ........................................... 112
5.4 WhatshouldIdobeforethemeeting? .................... 114
5.5 Before I sit down to conduct an appraisal discussion with an
individual, is it appropriate to talk with others to get some insights
intowhatImightexpect? ............................. 118
5.6 HowshouldIopenthediscussion?....................... 119
5.7 How do I start the appraisal discussion with an individual who has
a great deal of experience and has worked for the company much
longerthanIhave? .................................. 121
5.8 It’s easy to discuss the performance appraisal when the individual
and I are in agreement. But what do I do when we disagree about
somethingimportant? ................................ 122
5.9 How do I figure out what the employee is feeling? . . . . . . . . . . . . 125
5.10 How can I get someone to agree with an honest and accurate
performanceappraisalrating?........................... 127
5.11 The employee I’m about to review is an unsatisfactory performer
and the appraisal tells it like it is. How should I start the meeting? 127
5.12 What do I do when an employee disagrees with something I have
writtenontheperformanceappraisal? .................... 128
5.13 How do I handle those awkward moments that always seem to arise
in performance appraisal discussions? For example, the employee
x Contents
who is silent, or makes excuses, or turns the conversation around
sothatwearecaughtupinirrelevancies? .................. 129

6.11 What should we call the different levels? Does it make any
differencewhetherweusewordsornumbers? .............. 157
6.12 Should we use different rating scales for assessing different areas
withintheform? .................................... 161
6.13 Should the form provide for putting different weights on the various
sections? ......................................... 162
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xiContents
6.14 Should the form provide a recommended distribution of
performanceappraisalratings? .......................... 163
6.15 Some computer-based performance appraisal systems offer an
electronic form with different traits listed: quality of work, quantity
of work, attitude, or dependability. The manager clicks on a one to
five scale and then the machine generates the text for the appraisal.
Aretheseprogramsagoodidea? ........................ 165
6.16 Most people do a good job—not outstanding, not
unacceptable—and therefore get rated in the middle category. But
they all hate getting rated there. They see it as being labeled as a
‘‘C’’ student. How do we explain that getting the middle rating is
notabadthing? .................................... 166
7. ThePerformanceAppraisalProcess.............. 169
7.1 What does an effective performance appraisal process look like? . . 169
7.2 We’re getting ready to design a completely new performance
appraisal system from scratch. Where should we start? . . . . . . . . . 170
7.3 What should top management, appraisers, employees, and human
resources professionals expect from a performance appraisal
system? .......................................... 172
7.4 What kind of training do managers need to do a good performance
appraisal?......................................... 174
7.5 Do we need to provide training to employees about our
performanceappraisalprocess? ......................... 176
7.6 Should we provide managers with samples of completed appraisal
forms that they can use as models when they have to prepare
performanceappraisals? .............................. 176

8.6 How do I create a development plan that works . . . one that
actuallyproducesresults?.............................. 198
8.7 Isn’t development the responsibility of the individual? What are the
manager’s responsibilities for developing subordinates? . . . . . . . . 200
8.8 Most development plans seem to involve little more than just
signing up for training programs. Where does training fit into a
developmentplan? .................................. 202
8.9 How can I use the job itself as a developmental experience? . . . . 203
8.10 Should I evaluate the employee’s success in completing his
development plan as part of the performance appraisal? . . . . . . . . 205
8.11 I have an employee whose performance is not acceptable. I have
had one or two informal conversations with him, but nothing’s
changed. What should I do? . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
8.12 How do I identify exactly what the gap is between the desired
performanceandtheemployee’sactualperformance?......... 207
8.13 How do I make sure that I’m on solid ground before beginning the
discussion about poor performance? . . . . . . . . . . . . . . . . . . . . . . 210
8.14 How do I get the discussion off to a good start? . . . . . . . . . . . . . . 212
8.15 How do I get someone to agree to change and correct a problem? 214
8.16 How do I document a performance improvement discussion? . . . 215
xiiiContents
8.17 The individual’s quality and quantity of work are okay. It’s his
attitude that’s the problem. How do I solve an attitude problem? . 217
8.18 The individual’s performance is very good, but her attendance
record is spotty. How do I convince someone that we need to come
towork,ontime,everyday? ........................... 219
8.19 Our discipline system seems harsh and inappropriate for
professional employees with its warnings and reprimands and
suspensions without pay. Is there a better approach? . . . . . . . . . . 221
8.20 Why should we suspend the employee as a final step of our

Make no mistake. Performance appraisal is difficult. Doing per-
formance appraisal is like being in the Olympics of management. Few
people ever get the chance to participate; even fewer are true masters.
My goal in this book is to make you and your organization a true
master of performance appraisal.
The questions in this book have come from two sources. First,
they have come from the thousands of questions I have responded to
from top executives, human resources professionals, managers, and
individuals both in my consulting practice in helping companies cre-
ate a new appraisal system, and in the management seminars I have
conducted to help managers maximize the effectiveness of their exist-
ing systems.
Second, questions poured forth from hundreds of managers in
response to the e-mail I sent clients, colleagues, and friends just before
I began writing this book. I explained the project that I had under-
taken and asked them to send me the most difficult and important
xv
xvi Introduction
questions they had about performance appraisal. They responded al-
most overwhelmingly. The questions in this book are real; they repre-
sent the actual issues of managers whose goal is to create a climate of
performance excellence.
The book begins with an overview of why performance appraisal
is an incredibly powerful but underappreciated management tech-
nique. Chapters 2 through 5 deal with the four phases of an effective
performance management system: performance planning, execution,
assessment, and review.
The sixth chapter deals specifically with the performance ap-
praisal form. Yes, there is an ideal form. In Chapter 6, I will tell you
exactly what an ideal appraisal form looks like—what it contains and

QUESTION and
ANSWER BOOK
Chapter 1
TheImportanceof
Performance Appraisal
1.1 What is ‘‘performance appraisal’’?
Performance appraisal is a formal management system that provides
for the evaluation of the quality of an individual’s performance in an
organization. The appraisal is usually prepared by the employee’s im-
mediate supervisor. The procedure typically requires the supervisor to
fill out a standardized assessment form that evaluates the individual
on several different dimensions and then discusses the results of the
evaluation with the employee.
Tell Me More
Too often, performance appraisal is seen merely as a once-a-year drill
mandated by the personnel department. But in organizations that take
performance appraisal seriously and use the system well, it is used as
an ongoing process and not merely as an annual event. In these compa-
nies, performance appraisal follows a four-phase model:
Phase 1: Performance Planning. At the beginning of the year, the
manager and individual get together for a performance-planning meet-
ing. In this hour-long session they discuss what the person will achieve
over the next twelve months (the key responsibilities of the person’s job
and the goals and projects the person will work on) and how the person
will do the job (the behaviors and competencies the organization ex-
pects of its members). They typically also discuss the individual’s de-
velopment plans.
Phase 2: Performance Execution. Over the course of the year the em-
ployee works to achieve the goals, objectives, and key responsibilities
of the job. The manager provides coaching and feedback to the individ-

back over a hundred years. The federal Civil Service Commission’s
merit rating system was in place in 1887. Lord & Taylor introduced
performance appraisal in 1914. Many companies were influenced by
Frederick Taylor’s ‘‘scientific management’’ efforts of the early twenti-
eth century and concocted performance appraisals.
Before World War II, however, very few organizations conducted
any formal performance appraisals. A handful of companies and the
military were the only ones using the procedure regularly. Most ap-
praisals that were done concentrated more on an individual’s personal-
ity and traits than on actual achievements against goals and formal
analyses of the behaviors that produced those results.
3The Importance of Performance Appraisal
Figure 1-1. Strategy-based performance management.
Overall
Organization
Strategy
Strategic Plan
Mission/Vision/Values
Department/Unit Objectives
Common Organizational Competencies
What
Objectives
Standards
Goals
Results
How
Competencies
Behaviors
Skills
Performance

Reinforce effective behavior
Achieve objectives
Solicit feedback and coaching
Communicate openly
Collect and share data
Prepare for reviews
Individual’s
Responsibilities
❏
❏
❏
❏
❏
❏
❏
❏
❏
❏
Source: Grote Consulting Corporation.
Then, in the 1950s Peter Drucker’s novel idea of management by
objectives (MBO) and Douglas McGregor’s book The Human Side of En-
terprise, which introduced his notions of Theory X and Theory Y, gained
a lot of attention. A few companies moved from a mere trait assessment
to the development of a procedure that concentrated on goal setting
and made the appraisal process a shared responsibility between the
individual and the manager. From the work of Drucker and McGregor,
the performance appraisal procedure has grown to the point where a
huge majority of companies now have a formal appraisal system.
Tell Me More
‘‘Effective development of managers,’’ McGregor wrote in a 1957 Har-


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4 The Performance Appraisal Question and Answer Book
how benevolently) into acceptance of the goals of the enterprise, nor

formance appraisal procedure.
1.3 What is the purpose of performance
appraisal?
Performance appraisal serves over a dozen different organizational pur-
poses:
5The Importance of Performance Appraisal
Providing feedback to employees about their performance
Determining who gets promoted
Facilitating layoff or downsizing decisions
Encouraging performance improvement
Motivating superior performance
Setting and measuring goals
Counseling poor performers
Determining compensation changes
Encouraging coaching and mentoring
Supporting manpower planning or succession planning
Determining individual training and development needs
Determining organizational training and development needs
Confirming that good hiring decisions are being made
Providing legal defensibility for personnel decisions
Improving overall organizational performance
Tell Me More
Providing Feedback. Providing feedback is the most common justi-
fication for an organization to have a performance appraisal system.
Through its performance appraisal process the individual learns ex-
actlyhowwellshedidduringtheprevioustwelvemonthsandcan
then use that information to improve her performance in the future. In
this regard, performance appraisal serves another important purpose
by making sure that the boss’s expectations are clearly communicated.
Facilitating Promotion Decisions. Almost everyone in an organization

standards. Performance appraisal forces managers to confront those
whose performance is not meeting the company’s expectations.
Determining Compensation Changes. This is another classic use of
performance appraisal. Almost every organization believes in pay for
performance. But how can pay decisions be made if there is no measure
of performance? Performance appraisal provides the mechanism to
make sure that those who do better work receive more pay.
Encouraging Coaching and Mentoring. Managers are expected to be
good coaches to their team members and mentors to their prote
´
ge
´
s.
Performance appraisal identifies the areas where coaching is necessary
and encourages managers to take an active coaching role.
Supporting Manpower Planning. Well-managed organizations regu-
larly assess their bench strength to make sure that they have the talent
in their ranks that they will need for the future. Companies need to
determine who and where their most talented members are. They need
to identify the departments that are rich with talent and the ones that
are suffering a talent drought. Performance appraisal gives companies
thetooltheyneedtomakesuretheyhavetheintellectualhorsepower
required for the future.
Determining Individual Training and Development Needs. If the per-
formance appraisal procedure includes a requirement that individual
development plans be determined and discussed, individuals can then
make good decisions about the skills and competencies they need to
acquire to make a greater contribution to the company. As a result,
they increase their chances of promotion and lower their odds of layoff.
7The Importance of Performance Appraisal

feedback for work done during the previous twelve
months, to determine training needs, and as a key
tool in succession planning. Can one procedure
really serve all those functions well?
One of the fundamental problems with performance management is
that we load one system with too many expectations.