11

Performance Performance ManagementManagement

Effective Performance Management

System

Make clear what the organization

expects

Provide performance

information to employees

Document performance for

personnel records

Identify areas of success and

needed development

22

Performance

Management Linkage

33

Performance Management Performance Management versus Performance versus Performance

AppraisalAppraisal

Performance Management

Processes used to identify, encourage, measure, evaluate,

improve, and reward employee

performance

Performance Appraisal

The process of evaluating how well employees perform their jobs and then communicating that information to the

employees

44

Components of a Performance-Focused Culture

55

Identifying and Measuring Identifying and Measuring Employee PerformanceEmployee Performance

*Quantity of output*Quantity of output

*Quality of output*Quality of output

*Timeliness of output*Timeliness of output

*Presence*Presence

*Citizenship*CitizenshipTeam memberTeam member

66

Identifying and Measuring Identifying and Measuring Employee PerformanceEmployee Performance

Job DutiesJob Duties– Important elements in a job as identified from job Important elements in a job as identified from job

descriptions.descriptions.– What an employer pays an employee to do.What an employer pays an employee to do.

77

Types of Performance Information

Subjective

Objective

88

Relevance of Performance Relevance of Performance CriteriaCriteria

Factors:Factors:– Deficient measuresDeficient measures– Contaminated measuresContaminated measures– Overemphasized measuresOveremphasized measures

99

Example: ACTFL Performance Standards for Speaking

Proficiency

1010

Performance Metrics Performance Metrics in Service in Service

BusinessesBusinesses

Common Sources

of Performance Differences

Regional Labor Cost Difference

s

Service Agreement Difference

s

Equipment/ Infrastruct

ure Differences

Work Volume

Performance that is measured can be managed.

1111

Conflicting Uses for Performance Appraisal

1212

Decisions About the Decisions About the Performance Appraisal Performance Appraisal

ProcessProcess

1.1. Appraisal responsibilitiesAppraisal responsibilities

2.2. Informal vs. systematic Informal vs. systematic processesprocesses

3.3. Timing of appraisalsTiming of appraisals

4.4. Source(s) of performance Source(s) of performance informationinformation

1313

Legal Concerns and Legal Concerns and Performance AppraisalsPerformance Appraisals

Legally Defensible Performance Appraisal System:

• Appraisal criteria based on job analysis (i.e., job-related)

• Absence of disparate impact and evidence of validity

• Formal evaluation criteria that limit managerial discretion

• Formal rating instrument linked to job duties and responsibilities

• Personal knowledge of and contact with ratee

• Training of supervisors in conducting appraisals

• Review process to prevent undue control of careers

• Counseling to help poor performers improve

1414

Typical Division of HR Responsibilities: Performance Appraisal

1515

Performance Information Performance Information SourcesSources

1.1. Supervisor ratingsSupervisor ratings

2.2. Team member/peer evaluationTeam member/peer evaluation

3.3. Subordinate evaluationSubordinate evaluation

4.4. Self-appraisalSelf-appraisal

5.5. Customer feedbackCustomer feedback

6.6. 360 Degree360 Degree

1616

Employee Rating of Employee Rating of ManagersManagers

Advantages Disadvantages

•Helps in identifying competent managers

•Serves to make managers more responsive to employees

•Contributes to the career development of managers

•Negative reactions by managers to ratings

•Subordinates’ fear of reprisals may inhibit them from giving realistic (negative) ratings

•Ratings are useful only for self-improvement purposes

1717

Team/Peer RatingTeam/Peer Rating

Advantages Disadvantages

•Helps improve performance of lower-rated individuals

•Peers have opportunity to observe other peers

•Peer appraisals focus on individual contributions to teamwork and team performance

•Can negatively affect working relationships

•Can create difficulties for managers in determining individual performance

•Organizational use of individual performance appraisals can hinder the development of teamwork

1818

Performance

Management Linkage

1919

Category Scaling MethodsCategory Scaling MethodsGraphic Rating ScaleGraphic Rating Scale

– Allows the rater to indicate an employee’s performance Allows the rater to indicate an employee’s performance on a continuum of job behaviors.on a continuum of job behaviors.

Aspects of Performance

Measured

Descriptive

Categories

Job Duties

Behavioral

Dimensions

2020

Sample Performance Appraisal

Form

2121

Graphic Rating ScalesGraphic Rating Scales

Disadvantages:Disadvantages:

• Restrictions on the range and type of rater responses

• Differences in rater interpretations of scale item meanings and scale ranges

• Rating form deficiencies limit effectiveness of the appraisal

• Poorly designed scales that encourage rater errors

2222

Sample Terms for Defining Anchors

2323

More Scaling MethodsMore Scaling Methods

Behaviorally Anchored Rating Scale Behaviorally Anchored Rating Scale (BARS)(BARS)– Composed of job dimensions (specific Composed of job dimensions (specific

descriptions of important job behaviors) descriptions of important job behaviors) that “anchor” performance levels on that “anchor” performance levels on the scale.the scale.

Developing a BARSDeveloping a BARS– Identify important job dimensionsIdentify important job dimensions– Write short statements of job behaviorsWrite short statements of job behaviors– Assign statements (anchors) to job Assign statements (anchors) to job

dimensionsdimensions– Set scales for anchorsSet scales for anchors

2424

Behaviorally-Anchored Rating Scale Example

for Customer Service Skills

2525

Comparative MethodsComparative Methods

RankingRanking

– Listing employees from highest to Listing employees from highest to lowestlowest

– DisadvantagesDisadvantages

1.1. Doesn’t reflect size of differences Doesn’t reflect size of differences between employeesbetween employees

2.2. Implies that lowest-ranked employees Implies that lowest-ranked employees are unsatisfactory performers.are unsatisfactory performers.

3.3. Laborious if the group to be ranked is Laborious if the group to be ranked is large.large.

– Paired comparisonsPaired comparisons

2626

More Comparative MethodsMore Comparative MethodsForced DistributionForced Distribution

– Employee performance ratings distributed along bell-Employee performance ratings distributed along bell-shaped curve.shaped curve.

Advantages

• Helps deal with “rater inflation.”

• Makes managers identify high, average, and low performers.

• Ensures that compensation increases reflect performance differences among individuals.

Disadvantages

• Managers resist placing people in the lowest or highest groups.

• Explanation for placement can be difficult.

• Performance may not follow normal distribution.

• Managers may make false distinctions between employees.

2727

Forced Distribution on a Bell-Shaped Curve

2828

Narrative MethodsNarrative Methods

Critical IncidentCritical Incident– Manager keeps written record of Manager keeps written record of

highly favorable and unfavorable highly favorable and unfavorable employee perf.employee perf.

– DisadvantagesDisadvantages1.1. Variations in how managers define “critical Variations in how managers define “critical

incident”incident”

2.2. Time consuming and limited opportunity to Time consuming and limited opportunity to observeobserve

3.3. Most employee actions are not observed and Most employee actions are not observed and may change if observedmay change if observed

2929

Narrative MethodsNarrative Methods

EssayEssay– Manager writes essay describing Manager writes essay describing

an employee’s performance.an employee’s performance.– DisadvantagesDisadvantages

1.1. Depends on the managers’ writing Depends on the managers’ writing skills and their ability to express skills and their ability to express themselves.themselves.

2.2. Time consuming Time consuming

3.3. May lack opportunities to observe May lack opportunities to observe perf.perf.

3030

Management by Objectives Management by Objectives (MBO)(MBO)

Management by ObjectivesManagement by Objectives– Performance goals that an individual and his/her Performance goals that an individual and his/her

manager agree the employee will to try to attain manager agree the employee will to try to attain within appropriate length of time.within appropriate length of time.

Key MBO IdeasKey MBO Ideas– Employee involvement creates higher levels of Employee involvement creates higher levels of

commitment and performance.commitment and performance.

– Employees encouraged to work effectively toward Employees encouraged to work effectively toward goals.goals.

– Perf. measures should be measurable and should Perf. measures should be measurable and should define results.define results.

3131

The MBO ProcessThe MBO Process

4. Continuing performance discussions

3. Setting of objectives

2. Development of performance

standards

1. Job review and agreement

3232

MBO ProcessMBO Process

1.1. Job Review and agreementJob Review and agreement

2.2. Development of performance Development of performance standardsstandards

3.3. Setting of objectivesSetting of objectives

4.4. Continuing performance Continuing performance discussionsdiscussions

3333

Preparing Managers to Preparing Managers to Deliver Performance Deliver Performance

InformationInformation

1.1. Procedure and timingProcedure and timing

2.2. Performance criteriaPerformance criteria

3.3. Rating errorsRating errors

4.4. Delivering feedbackDelivering feedback

5.5. Compensation decisionsCompensation decisions

6.6. Training needs assessmentTraining needs assessment

3434

Common Rater Errors

3535

Hints for Delivering an Effective Performance Appraisal

3636

Strategic Performance Management System

*Consistent with org strategic mission*Consistent with org strategic mission

*Documents performance*Documents performance

*Perceived as fair*Perceived as fair

*Legal and job-related*Legal and job-related

*Developmental tool—leads to *Developmental tool—leads to performance improvement, performance improvement, promotion, etc.promotion, etc.