Chapter 8: Performance Management

Question 1

What is Performance Management?

Answer 1

Creating a work environment where people can perform to the best of their abilities.

Question 2

Performance Review / Appraisals / Evaluations

Answer 2

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.

Question 3

Purposes of Performance Management

Answer 3

To influence employees bahaviour and improve an organization’s performance
- Developmental Purposes
- Administrative Purposes

Question 4

Developmental Purposes

Answer 4

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

Question 5

Administrative Purposes

Answer 5

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.

Question 6

Steps in the Performance Management Process

Answer 6

1. Goals set to align with higher level goals
2. Behavioural expectations and standards set and then aligned with employee and organizational goals
3. Ongoing performance feedback provided during the cycle
4. Performance appraised by manager
5. A formal review session conducted
6. HR decision making

Question 7

Basic Performance Management Framework

Answer 7

1. Develop strategy
2. Measure performance indicators
3. Assess Results
4. Report and Review Performance
5. Align people & culture

Question 8

Reasons that Performance Management Systems sometimes fail

Answer 8

• 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

Question 9

Developing an Effective Performance Management System

Answer 9

• 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.

Question 10

Performance Standards

Answer 10

Accepted level of performance to be achieved by an employee

• Strategic Relevance
• Criterion Deficiency
• Criterion Contamination
• Reliability
  – Calibration
• Fairness and Acceptability

Question 11

Strategic Relevance

Answer 11

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.

Question 12

Criterion Deficiency

Answer 12

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.

Question 13

Criterion Contamination

Answer 13

A comparison of the performance of production workers, for example, should not be contaminated because some work with newer machines than others.

Question 14

Reliability

Answer 14

Stability or consistency of a standard or the extent to which individuals maintain a certain performance level over time.
Correlating two sets of ratings.

Question 15

Calibration

Answer 15

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)

Question 16

Fairness and Acceptability

Answer 16

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.

Question 17

Legal Issues

Answer 17

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

Question 18

Sources of Performance Review Information

Answer 18

• Manager/Supervisor
• The Employee
• Subordinates
• Peers
• Team Evaluation
• Customers

Question 19

Manager/Supervisor

Answer 19

A performance evaluation done by an employee’s manager and often reviewed by a manager one level higher

Question 20

The Employee

Answer 20

A performance evaluation done by the employee being evaluated, generally on an evaluation form completed by the employee prior to the review meeting.

Question 21

Subordinates

Answer 21

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

Question 22

Peers

Answer 22

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

Question 23

Team Evaluation

Answer 23

A performance evaluation that recognizes team accomplishment rather than individual performance

Question 24

Customers

Answer 24

A performance evaluation that includes evaluation from both a firm’s external and internal customers

Question 25

360-Degree Evaluations

Answer 25

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.

Question 26

Maximize quality of 360-Degree Evaluations

Answer 26

1. Ensure anonymity 2. Make respondents accountable 3. Prevent “gaming” of the system 4. Use statistical procedures 5. Identify and quantify biases

Question 27

360-Degree Evaluations Pros

Answer 27

- More comprehensive - Lessen bias and prejudice - Improve an employee’s self development

Question 28

360-Degree

Answer 28

- 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

Question 29

Training Appraisers

Answer 29

Firms should make accurately evaluating and developing their subordinates a standard by which the supervisors themselves will be evaluated.

Question 30

Establishing a review plan

Answer 30

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.

Question 31

Eliminating Rating Errors

Answer 31

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

Question 32

“Horn error”

Answer 32

a manager focuses on one negative aspect about an employee and generalizes it into an overall poor evaluation rating.

Question 33

Distributional Error

Answer 33

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.

Question 34

Error of central tendency

Answer 34

A performance rating error in which all employees are rated about average

Question 35

Leniency or strictness error

Answer 35

A performance rating error in when the appraiser tends to give employees either unusually high or unusually low ratings

Question 36

Forced distribution

Answer 36

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.

Question 37

Temporal (Recency) Error

Answer 37

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.

Question 38

Contrast Error

Answer 38

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.

Question 39

Similar-to-Me Error

Answer 39

A performance rating error in when an appraiser inflates the evaluation of an employee because of a mutual personal connection.

Question 40

Feedback Training

Answer 40

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.

Question 41

3 areas under feedback training

Answer 41

1. Communicating effectively as to gain the employee’s support 2. Diagnosing the root causes of performance problems 3. Setting goals and objectives for the employee to achieve with the feedback.

Question 42

Performance Review Methods

Answer 42

- Trait Methods - Behavioural Methods - Results Methods

Question 43

Trait Methods

Answer 43

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

Question 44

Trait Methods: Graphic Rating Scale Method

Answer 44

Each employee rated according to a scale of characteristics

Question 45

Trait Method: Mixed-Standard Scale Method

Answer 45

Based on comparison (better than, equal to, or owrse than) with a standard

Question 46

Trait Method: Forced-Choice Method

Answer 46

Choose from statements to distinguish between successful and unsuccessful performance. Rater do not know the correct answer, reduces subjectivity

Question 47

Trait Method: Essay method

Answer 47

Compose a statement describing employee behaviour

Question 48

Behavioural methods

Answer 48

Specifically describe which actions should or should not be exhibited on the job.

Question 49

Behavioural Methods: Critical Incident Method

Answer 49

An unusual event denotes superior or inferior employee performance in some of the job.

Question 50

Behavioural Methods: Behavioural Checklist Method

Answer 50

Requires rater to check statements on a list that describes characteristics of the employee’s behaviour.

Question 51

Behavioural Methods: Behaviourally Anchored Rating Scale (BARS)

Answer 51

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

Question 52

Behavioural Methods: Behaviour Observations Scale (BOS)

Answer 52

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

Question 53

Results Methods

Answer 53

One of the most favorable. EVALUATE EMPLOYEE’S ACCOMPLISHMENTS

Question 54

Results Method: Productivity Measures

Answer 54

- 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.

Question 55

Results Method: Management by Objectives

Answer 55

A results review process rates employees' performance based on their achievement of goals set mutually by them and their manager.

Question 56

Results Method: The Balanced Scorecard

Answer 56

A BSC Evaluation consists of 4 related categories - Financial measures - Customer measures - Process measures - Learning measures

Question 57

Types of Performance Review Meetings and Feedback Sessions

Answer 57

1. Tell-and-Sell 2. Tell-and-Listen 3. Problem Solving

Question 58

Tell-and-Sell

Answer 58

Persuade an employee to change their behaviour in a certain way

Question 59

Tell-and-Listen

Answer 59

1st part → Communicates the strong and weak points of an employee’s performance 2nd part → Explore employee’s feelings

Question 60

Problem Solving

Answer 60

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.

Question 61

Steps to conduct review meetings

Answer 61

1. Ask for self evaluation 2. Invite participation 3. Express Appreciation 4. Be Supportive and Demonstrate that you care 5. Minimize Criticism 6. Establish Mutual Goals 7. Always follow-up day-to-day

Question 62

Identify Sources of Ineffective Performance

Answer 62

- Ability - Motivation - Environment

Question 63

2 ways of managing ineffective performance

Answer 63

1. Provide training 2. Transfer person to other position or jobs within the organization