Objectives

Chapter 8: Performance Management

Identify the major determinants of individual performance Discuss the 3 general purposes of performance management Identify the 5 criteria for effective performance management Discuss the 4 approaches to performance Choose the most effective performance measurement approach Discuss the advantages and disadvantages of different sources of performance information Choose the most effective sources for performance information Distinguish types of rating errors and explain how to minimise each in a performance evaluation Identify characteristics of a performance measurement system that follows legal guidelines Conduct an effective performance feedback session

 Performance Management is the means through which managers ensure that employee activities and outputs are congruent with the organisations goals. Performance Management is central to gaining a competitive advantage Performance Management system is made up of 3 parts
Defining performance Measuring performance Feeding back performance information

An Organisational Model of Performance Management

Organisational Strategy Long and short term goals and
values Performance Planning and Evaluation-system to tie performance to strategic goals

Individual attributes (KSAS)

Individual behaviours

Objective results

Situational Constraints
Culture; Economic conditions

Purposes of Performance Management

Strategic Purpose
Link activities with organisational goals

Administrative Purpose
Personnel issues
Pay increases, promotions; retention

Necessary Evil?

Developmental Purpose
Development of current ineffectuality Causes of ineffectuality

Performance Measures Criteria

Strategic Congruence
Extent to which the performance management system elicits job performance consistent with the organisations strategy, goals and culture

Validity
The performance measure assesses ALL and ONLY the relevant aspects of job performance Maximising the overlap between actual job performance and measure of job performance

Job Performance measure

Validity

Actual Job Performance

Contamination

Deficiency

 Reliability
Consistency among the individuals who evaluate performance, free from random error
Inter-rater; internal consistency, test- retest

Acceptability
The performance measure is deemed accurate by those who use it (fairness)
Procedural
Give managers and employees an opportunity to participate in the development of the system Ensure consistent standards when evaluating different employees Minimise rating errors and biases

 Interpersonal
Give timely and complete feedback Allow employees to challenge evaluation Provide feedback in an atmosphere of respect and courtesy

Outcomes
Communicate expectations regarding performance evaluation and standards Communicate expectations regarding rewards

Specificity
The extent to which the performance measure gives details guidance as to what is expected of employees and how to meet those expectations

 The Comparative Approach

Ranking Forced Distribution Paired Comparison

Approaches to Measuring Performance

Comparison between individuals

Evaluation
Effective when purpose is to differentiate employee performance Eliminates problems of central tendency; leniency It is easy to develop and accepted by users Not linked to strategic goals; reliability and validity depend on the raters and not enough specificity

 The Attribute Approach

Focuses on the extent o which employees display certain attributes deemed desirable for organisational success
Graphic Rating Scales Mixed Standard Scales

Evaluation
Most Popular Easy to develop and generalisable Reliability and Validity? Little strategic congruence Feedback elicits defensiveness

 The Behavioural Approach

Definition of behaviours that make for effective job performance
Critical Incidents Behaviourally Anchored Rating Scales (BARS) Behavioural Observation Scales (BOS) Organisational Behaviour Modification (OBM) Assessment Centres Can link strategy to behaviour Specific Feedback Valid Acceptability is high Reasonable reliability Constant monitoring Not suitable for complex jobs

Evaluation

 The Results Approach

Focuses on managing the objective, measurable results of a job. Assumes subjectivity can be eliminated, and expects that the results are the closest indicator of ones contribution to organisational effectiveness
Management by Objectives (MBO) Productivity measurement and evaluation system (ProMES)

Evaluation
Minimises subjectivity Highly acceptable Links performance to strategic goals Objective measurements can be contaminated and deficient Focus only on areas of work being assessed Feedback may not give information needed to change

 The Quality Approach

Includes customer orientation and prevention of errors approach. Provision of feedback for improvement.
Subjective Performance Evaluation
Dimensions: Cooperation, attitude, communication skills Not linked to compensation, focus on career path

Objection Performance Evaluation

Statistical process quality control techniques Process-flow analysis; cause-and-effect; Pareto charts etc.

Evaluation
Combination of the Attribute and Results approaches Systems oriented focus Problems with the lack of a link to compensation Personal traits are difficult to link to performance unless a work-team structure is in place

Choosing a Source for Performance Information

Supervisors
Extensive knowledge of the job and opportunity to observe Motivated to make accurate ratings Supervisor feedback is related to performance Opportunity for bias

 Peers
Excellent sources if supervisors cant observe Bias Discomfort in rating when linked to admin decisions

Subordinates
Valuable source, best at evaluating managers treatment of employees Fear of retribution; emphasis on employee satisfaction over productivity Use only for developmental purposes

 Self
Can be valuable, unlikely to be only source Inflated assessments, especially if rating used for admin purposes Use as a prelude to feedback session

Customers
Often the only person to observe Expensive

The Best Source

Use sources that provide best opportunity to observe 360 feedback

Errors in Performance Measurement

Rater Errors
Similar to me Contrast Distributional
Leniency Strictness Central Tendency

Halo/ Horns

 Reducing Rater errors

Rater Error Training Frame-of-reference training

Appraisal Politics
Purposeful distortion of ratings
To avoid:
Train raters on appropriate use Build top management support for appraisal process Ensure constraints such as budget do not drive the process Ensure consistency across the organisation Foster a climate of openness

 Feedback is complex and stressful for both parties Improving the feedback process
Feedback given every day, not once a year
Managers responsibility to correct deficiencies as soon as he/ she is made aware of them Subordinate should not be surprised by the evaluation

Performance Feedback

Create the right context for discussion

Neutral location Describe the meeting as an opportunity Encourage open dialogue

 Ask employee to rate own performance

Employees have to think about performance including weaknesses Focus on areas of disagreement More likely to participate

Encourage subordinate participation

Problem solving approach- tell and sell/ listen Satisfaction with the process

Praise Focus on Solving problems Focus on behaviour/ results not the person Minimise criticism Agree to specific goals and set a date to review progress

Managing the Performance of Marginal Employees

Performance is at bare minimum level due to lack of ability or motivation.
Solid performers
High ability and motivation Managers should provide development opportunities

Misdirected efforts
Lack of ability but high motivation Managers should provide skill development

 Underutilisers
High ability but lack motivation Managers should consider actions that focus on interpersonal problems or incentives

Deadwood
Low ability and motivation Managers should consider outplacement, demotion or dismissal

Developing and Implementing a System that follows Legal Guidelines

Claims have been made that performance rating are subjective, and that the rater was biased by gender or racial stereotypes
Research has shown that both black and white raters give higher ratings to members of their own race even after training Discriminatory biases are worse when one group makes up a small portion of the workplace

 Characteristics of a performance management system that will withstand legal scrutiny

A valid job analysis related to performance Base systems on specific behaviour or results Train raters to use system correctly Review performance rating and allow for employee appeal Provide guidance/ support for poor performers Use multiple raters

Chapter 8 Discussion Question

Why might a manager distort appraisal results? What would you recommend to minimise this problem?