Chapter 8: Performance Management Flashcards
What is Performance Management?
Creating a work environment where people can perform to the best of their abilities.
Performance Review / Appraisals / Evaluations
A process in which a manager evaluates an employee’s performance relative to the job’s requirements and uses the information to show the person where and how improvements can be made.
Purposes of Performance Management
To influence employees bahaviour and improve an organization’s performance
- Developmental Purposes
- Administrative Purposes
Developmental Purposes
Performance management system gives managers a concrete framework to gather and organize information about an employee’s performance, provide feedback, and discuss employee goals and how they align with the organization’s goals. –> How there’s concrete framework to spark development
Administrative Purposes
Performance management systems provide input that can be used for the entire range of HRM activities, such as promotions, transfers, layoffs, and pay decisions. → Can also be used to defend the company from legal charges and actions.
Steps in the Performance Management Process
- Goals set to align with higher level goals
- Behavioural expectations and standards set and then aligned with employee and organizational goals
- Ongoing performance feedback provided during the cycle
- Performance appraised by manager
- A formal review session conducted
- HR decision making
Basic Performance Management Framework
- Develop strategy
- Measure performance indicators
- Assess Results
- Report and Review Performance
- Align people & culture
Reasons that Performance Management Systems sometimes fail
- A manager has prepared inadequately
- Ratings are inconsistent among supervisors or other raters
- Performance standards may not be clear
- The manager may not be able to observe performance or have all the information
- The performance standards may not be clear
Developing an Effective Performance Management System
- HR Department → Overseeing and coordinating the performance management systems
- Managers → Must be actively involved as well (establish objectives and alignment)
- Employees → More likely to accept and be satisfied with a performance management system when they are also involved.
Performance Standards
Accepted level of performance to be achieved by an employee
- Strategic Relevance
- Criterion Deficiency
- Criterion Contamination
- Reliability
– Calibration - Fairness and Acceptability
Strategic Relevance
The extent to which the performance standards relate to or serve the strategic objectives of the organization in which they are applied. → Translate company objectives into performance standards.
Criterion Deficiency
Focusing on a single criterion while excluding other important but less quantifiable performance dimensions. → Performance standards should capture the entire range of an employee’s performance.
Criterion Contamination
A comparison of the performance of production workers, for example, should not be contaminated because some work with newer machines than others.
Reliability
Stability or consistency of a standard or the extent to which individuals maintain a certain performance level over time.
Correlating two sets of ratings.
Calibration
A process whereby managers meet to discuss the performance of individual employees to ensure that their employee evaluations are in line with one another (with the other managers)
Fairness and Acceptability
Fairness –> Suppose employees are allowed input on what constitutes good performance and how the performance management system operates. In that case, they are more likely to believe that it is fair, and the program is more likely to be successful.
Acceptability –> Difficuly of administering and using the performance management system.
Legal Issues
Performance reviews’s legal guidelines are as follows:
1. Relevance
2. Timeliness
3. Avoid subjectivity
a. Look for bias
b. Apply evaluation standards when making judgments
4. Transparency
5. Fairness
Sources of Performance Review Information
- Manager/Supervisor
- The Employee
- Subordinates
- Peers
- Team Evaluation
- Customers
Manager/Supervisor
A performance evaluation done by an employee’s manager and often reviewed by a manager one level higher
The Employee
A performance evaluation done by the employee being evaluated, generally on an evaluation form completed by the employee prior to the review meeting.
Subordinates
A performance review of a superior by an employee which is more appropriate for developmental than for administrative purposes.
- Submitted anonymously
- For developmental purposes rather than compensation basis
Peers
A performance evaluation is done by one’s fellow employees, generally on forms compiled into a single profile for use in the evaluation meeting conducted by the employee’s manager.
- More accurate and valid information compared to superior evaluation
Team Evaluation
A performance evaluation that recognizes team accomplishment rather than individual performance
Customers
A performance evaluation that includes evaluation from both a firm’s external and internal customers
360-Degree Evaluations
A performance evaluation is done by different people who interact with the employee, generally on forms compiled into a single profile for use in the evaluation meeting conducted by the employee’s manager.
Maximize quality of 360-Degree Evaluations
- Ensure anonymity
- Make respondents accountable
- Prevent “gaming” of the system
- Use statistical procedures
- Identify and quantify biases
360-Degree Evaluations Pros
- More comprehensive
- Lessen bias and prejudice
- Improve an employee’s self development
360-Degree
- System’s complex
- Feedback can be intimidating and cause resentment
- Conflicting opinions that are hard to weigh
- Employees may “game” the system
- Raters may not feel accountable because of anonymity
Training Appraisers
Firms should make accurately evaluating and developing their subordinates a standard by which the supervisors themselves will be evaluated.
Establishing a review plan
Training the rater’s most effective when it follows a systematic process that begins by explaining the objectives of the firm’s performance management systems and its philosophy on reviews.
Eliminating Rating Errors
Eliminate subjective errors made by managers in the evaluation process is important.
- Horn Error
- Distributional Error
- Error of Central Tendency
- Leniency or strictness error
- Forced distribution
- Temporal (Recency Error)
- Contrast Error
- Similar-to-Me Error
“Horn error”
a manager focuses on one negative aspect about an employee and generalizes it into an overall poor evaluation rating.
Distributional Error
Occurs when a single rating is skewed toward an entire group of employees. To reduce it, explain to raters that in a group, there are significant differences among the employees.
Error of central tendency
A performance rating error in which all employees are rated about average
Leniency or strictness error
A performance rating error in when the appraiser tends to give employees either unusually high or unusually low ratings
Forced distribution
A performance ranking system whereby raters are required to place a certain percentage of employees into various performance categories. → Would create rating errors if most employees are performing above standards, middle, or low.
Temporal (Recency) Error
A performance rating error is one in which the evaluation is mainly based on the employee’s most recent behavior rather than on behavior throughout the evaluation period.
Contrast Error
A performance rating error in when an employee’s evaluation is biased either upward or downward because od a comparison with another employee just previously evaluated.
Similar-to-Me Error
A performance rating error in when an appraiser inflates the evaluation of an employee because of a mutual personal connection.
Feedback Training
Managers must understand that employees want to know how they are doing and how they can improve instead of being appraised or judged. → Important to provide them with ongoing feedback.
3 areas under feedback training
- Communicating effectively as to gain the employee’s support
- Diagnosing the root causes of performance problems
- Setting goals and objectives for the employee to achieve with the feedback.
Performance Review Methods
- Trait Methods
- Behavioural Methods
- Results Methods
Trait Methods
Measure the extent to which an employee possess certain characteristics, such as dependability, reactivity, initiative, and leadership that are viewed as important for both the job and the organization
Trait Methods: Graphic Rating Scale Method
Each employee rated according to a scale of characteristics
Trait Method: Mixed-Standard Scale Method
Based on comparison (better than, equal to, or owrse than) with a standard
Trait Method: Forced-Choice Method
Choose from statements to distinguish between successful and unsuccessful performance. Rater do not know the correct answer, reduces subjectivity
Trait Method: Essay method
Compose a statement describing employee behaviour
Behavioural methods
Specifically describe which actions should or should not be exhibited on the job.
Behavioural Methods: Critical Incident Method
An unusual event denotes superior or inferior employee performance in some of the job.
Behavioural Methods: Behavioural Checklist Method
Requires rater to check statements on a list that describes characteristics of the employee’s behaviour.
Behavioural Methods: Behaviourally Anchored Rating Scale (BARS)
Consists of a series of vertical scales, one for each important dimension of job performance.
- Developed by a committee that includes both subordinates and managers
- High degree of content validity
Behavioural Methods: Behaviour Observations Scale (BOS)
A behavioural approach to performance rating that measures the frequency of observed behaviour. It is more preferable compared to BARS or trait scales because:
1. Maintaining objectivity
2. Distinguishing good performers from poor performers
3. Providing feedback
4. Identifying training needs
Results Methods
One of the most favorable. EVALUATE EMPLOYEE’S ACCOMPLISHMENTS
Results Method: Productivity Measures
- Sales people → Sales performance
- Production workers → Number of units they produce
- Executives → Basis of company’s profits and growth
- Service-oriented jobs → cooperation, adaptability, initiative, and concern for human relations.
Results Method: Management by Objectives
A results review process rates employees’ performance based on their achievement of goals set mutually by them and their manager.
Results Method: The Balanced Scorecard
A BSC Evaluation consists of 4 related categories
- Financial measures
- Customer measures
- Process measures
- Learning measures
Types of Performance Review Meetings and Feedback Sessions
- Tell-and-Sell
- Tell-and-Listen
- Problem Solving
Tell-and-Sell
Persuade an employee to change their behaviour in a certain way
Tell-and-Listen
1st part → Communicates the strong and weak points of an employee’s performance
2nd part → Explore employee’s feelings
Problem Solving
The most proactive. Seeks to obtain employee’s buy-in for a mutually agreed-upon way to overcome obstacles and improve the person’s performance. Begin with the employee’s self-evaluation then proceed to problem-solve.
Steps to conduct review meetings
- Ask for self evaluation
- Invite participation
- Express Appreciation
- Be Supportive and Demonstrate that you care
- Minimize Criticism
- Establish Mutual Goals
- Always follow-up day-to-day
Identify Sources of Ineffective Performance
- Ability
- Motivation
- Environment
2 ways of managing ineffective performance
- Provide training
- Transfer person to other position or jobs within the organization
