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Human Resource Management > Performance Management > Flashcards

Performance Management Flashcards

1
Q

Definition Performance Management

A

is a goal-oriented process directed toward ensuring that organizational processes are in place to maximize the productivity of employees, teams and ultimately, the organization.

is a continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning their performance with the strategic goals of the organization.”

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2
Q

Performance Management (PM)

A

Is crucial for the implementation and accomplishment of the corporate strategy.

Close relationship between incentives (incl. appreciation, development, promotion, pay increase) and performance should be in place

Dynamic, consistent, continuous process - not just the formal HR system/template oriented process.

Each part of the system should be integrated to ensure continuous organisational effectiveness.

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3
Q

Performance appraisal (PA)/ evaluation

A

is a formal system of review and evaluation of individual or team task performance.”

  • Is only one, albeit a vital instrument of performance management
  • Periodic (usually annual) event
  • Formal review
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4
Q

Elements of performance management

A
  1. Focussing on the essentials
    -Strategic/Goals
    -BSC
    -Goal-setting cascade
    objective setting
  2. Managing performance / implementation
    -objective setting –> implementation process –> performance Evaluation/feedback discussion –> HR-related actions and measures
  3. Drawing conclusions
    HR-related actions and measures
    –> other Personel measures
    –> Personnel- development
    –> Performance- Related Incentives

page 9

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5
Q

Using the Performance Evaluation

A

Performance Management evaluation Usage:
Evaluation Criteria:
-Traits, behavior, competencies
-Goal (objectives) attainment
-Improvement potential

–> Human Resource Planning
–> Training & Development
–> Career Planning
–> Compensation Programs
–> Internal Employee Relations (e.g. promotion, demotion, transfers, termination)
–> Assessment of Employee Potential

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6
Q

The three common purposes (performance evaluation)

A
  1. Develop people
    * Individual development
    * Coaching & mentoring
    * Retention of top performers
    * Leadership Development
  2. Reward people
    * Pay for contribution
    * Promotion & advancement
    * Total rewards
  3. Drive Organisational performance
    * Goal alignment
    * Further developing the organisation
    * Culture development
    * Promotion & firings
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7
Q

Performance evaluation process definition

A

is a continuous annual cycle with three main phases: Setting objectives, conducting interim meetings, and evaluating objectives and competencies, including a feedback meeting.

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8
Q

Performance evaluation process (explication)

A

A. Objectives setting with employees

B. Interim discussion / mid- year review
-change/ adjust objectives if is necessary

C. Evaluation: performance and competence assessment
-compensation process

D. Feedback discussion
-Personel and Talent development

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9
Q

A. Objective Setting

A

− Objective setting is an essential phase of the management of performance.

− Corporate objectives are translated into the objectives and responsibilities of individuals and teams (objective-setting cascade) and establish a link between corporate strategy and individual goals.

− Objectives are important because they provide the basis for continuous performance improvement.

− They create performance incentives and reinforce a performance culture.

− Employees know in which direction they should direct their efforts. Objectives provide orientation and create clarity about what successful performance means. Employees know what is expected.
→ It is important to give employees the opportunity to participate in setting their own objectives.
Thus, objectives should be set in agreement between line manager and employee.

− Objectives need to be SMART

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10
Q

Target Setting Cascade
Deduction of Operational Targets from Strategy

A

I. Corporate level:
-Strategic Obectives of Firm

II. Organisational & Process Level
-Operational Process Targets

III. Employee Level
-Operational Employee Targets

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11
Q

SMART Formula

A

Specific: Objectives must be formulated clearly, unambiguously, concretely and concisely. The target state must be described precisely.

Measurable: The achievement of objectives should be determined by measurable information (quantitative objectives) or observation (qualitative objectives). Measurement criteria and assessment scale must be transparent.

Achievable: Objectives should be appropriate to the employee’s role and resources, achievable in the time available and realistic. Objectives should be challenging and motivating.

Relevant: Objectives are derived from and support the objectives and requirements of the company and/or department.

Time bound: Objectives are defined in terms of time, i.e. start and end dates are specified. Milestones have been agreed for large targets.

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12
Q

Objective Types

A

Quantitative vs. qualitative objectives

− Performance targets
− Behavioural objectives
− Development goals
− Team goals

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13
Q

B. Interim Discussion / Mid-year Review

A

− Approximately in the middle of the year, so-called «interim discussion» or «mid-year review» should take place
− Employee receives feedback on performance
− If necessary, corrective measures and support will be discussed
− If necessary, objectives should be adjusted in the mid-year review

However:
− Line manager should monitor performance continuously
− Give regular and timely feedback
− Offer support, discuss and implement corrective measure throughout the year

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14
Q

C. Evaluation

A

− Sources of evaluation
− Performance evaluation methods
− Potential evaluation errors / biases

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15
Q

Sources of Evaluation

A
  1. Supervisor evaluation
  2. Self-evaluation
  3. Evaluation by subordinates
  4. Peer evaluation
  5. Customer/client/partner evaluation
  6. 360° Feedback
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16
Q

Performance evaluation methods

A

page 27

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17
Q

Result-based methods

A

− Focuses on measurable outcomes (e.g. sales numbers, customer service ratings, productivity)
− Line manager and employee jointly agree on objectives for the next appraisal period.
− Result-based practices:
− Management by Objectives (MbO):
− Line manager and employee determine jointly objectives tied to corporate strategies and
goals
− Action plan specifies what has to be accomplished by when
− At the end of the rating period: performance evaluation and feedback based on accomplishment of objectives
− Work Standards Method:
− Compares each employee’s performance to a predetermined standard or expected level of
output (eg. feasible in manufacturing settings)
− Is often coupled with a particular incentive pay plan known as the piecework plan

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18
Q

Comparison methods

A

− Evaluate an employee’s performance against that of other employees.
− Employees are ranked from the best performer to the poorest performer.

− The most common methods are:
− Forced ranking: Employees’ performance is compared and evaluated in relation to each other.
− Forced distribution (stacked rating system): Fixed specifications or forced distribution of assessments (according to Gauss); specifications for individual organizational units, teams, etc.

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19
Q

Pro comparison methods

A

− Creates and maintains a high performance culture, thus suitable for companies with a strong performance culture
− Makes it clear to employees where they stand in comparison to others
− Creates better comparability between areas (same benchmarks)
− Prevents the tendency to the centre (Central-Tendency- Effect) or towards excellent performance
− Better differentiation and justification of bonuses and their differences

20
Q

Cons comparison methods

A

− Emphasizes individual performance at the expense of team performance
− Leads to unhealthy internal competition
− Normal distribution does not have to correspond to the
effective power distribution
− Represents a comparison between team members rather than an objective performance evaluation
− Bad ratings are forced
− Harmful to morale (eg. fostering envy), cohesion and
motivation of employees and managers
− Dysfunctional behaviour (eg. holding information back)
− Often visibility weighs more than actual performance
− May lead to legal action (discrimination)

21
Q

Trait Systems

A

− Evaluate employees based on traits or characteristics (e.g. quality of work, quantity of work, appearance, dependability, cooperation, initiative, judgement, leadership responsibility, decision- making ability, or creativity)
− Evaluation are typically scores using descriptors, ranging from unsatisfactory to outstanding
− Limitations:
− Highly subjective
− Rates individuals on subjective personality factors rather than on objective job performance data
− Traits represent a predisposition for behaviour and do influence behaviour, but do not
fully account for behaviour.

22
Q

Behavioural Systems

A

− Rate employees on the extent to which they display successful job performance behaviours
− Tree main types of behavioural systems are:
− Critical Incident Technique (CIT)
− Behaviourally Anchored Rating Scales (BARS)
− Behavioural Observation Scale (BOS)

23
Q

Critical Incident Technique (CIT)

A

− Focusses on how the employee went about doing what was done.
− Line manager and employee to identify performance incidents (e.g. on-the-job behaviours and behavioural outcomes) that distinguish successful performance from unsuccessful ones.
− Line manager observes the employees and records their performance on these critical job aspects.
− Line manager rates employees on how often they display the behaviours described in each critical incident.

24
Q

Advanatge CIT

A

useful because it requires extensive documentation that identifies successful and unsuccessful job performance behaviours by both the employee and the line manager.

25
Q

disadvantages

A

demands continuous and close observation of the employee, record keeping may be overly burdensome.

26
Q

Behaviourally Anchored Rating Scales (BARS)

A

− Are based on the CIT, and the scales are developed in the same fashion with one exception: the incidents are written as expectations (employee does not have to demonstrate the exact behaviour that is used as an anchor to be rated at that level).

− Only the most representative behaviors will be listed for the job. A typical job might have 8-10 dimensions under BARS, each with separate rating scale.

27
Q

Advantages BARS

A

is the most defensible technique in court because it is based on actual observable job behaviours; encourages all rates to make the evaluations in the same way

28
Q

Disadvantages:

A

difficulty of developing and maintain the volume of data necessary to make it effective; requires companies to maintain and regularly update distinct appraisal documents for each job

29
Q

Behavioural Observation Scale (BOS)

A

− Similar to BARS in its development
− BUT BOS displays illustrations exclusively on positive performance incidents or behaviours

30
Q

Disadvantages BOS

A

difficult and time- consuming to develop and maintain; requires observation of job behaviours on a regular basis

31
Q

Approaches to objectifying the assessment

A

− Systematic assessment (relevant and clear criteria)
− Create a concrete requirement reference
− Default scales with unique designation
− Self-assessment (comparison of self-assessment/external assessment)
− Multiple appraisal (several appraisers and perspectives)
− Multi-method assessment (objectifiable performance results and behaviour)
− Involvement of the appraised in the decision-making process (cooperative appraisal interview)

32
Q

D. Feedback Discussion

A

− Employee appraisals (exchange between employees and line manager) are essential components of performance management

− At least three conversations:
-Objective setting meeting at the beginning of the appraisal
period (clarify expectations and goals)
-Interim discussion approximately in the middle of the assessment period (in order to be able to make target corrections) as well as
-Appraisal interview at the end of the appraisal period (year-end interview)
-Ideally, however, there is continuous dialogue and timely feedback on performance and development throughout the year

33
Q

Success Factors Feedback Discussion

A

− Good preparation of manager and employee for the interview
− Allow enough time for the interview
− Clear structure and outline of the conversation
− Appreciative attitude, pleasant atmosphere and constructive discussion climate
− Presence, exchange at eye level, active listening
− Make it comprehesive, short and simple sentences
− Talk about performance / objectives and not personality
− Objectivity, concrete with examples, reference to requirements, descriptive not judgmental
− Critical issues are addressed
− No unexpected criticism but reference to day-to-day feedback
− Reach agreement on further procedure

34
Q

Feedback Rules

A
  • Right on time
  • Positive messages first (negative information is perceived more strongly)
  • Constructive
  • Only things that can be influenced or changed
  • Be brief
  • I-Messages
  • Only inputs that can be absorbed and/or influenced
  • Ask if you are not sure
35
Q

Do‘s in Management Process

A

− Employee objectives should be derived from the company/business unit objectives
− Expectations of line manager and employee should be aligned in the objective setting process
− Team objectives encourage shared responsibility
− Objectives should be SMART
− Objectives should be challenging -> avoid demotivation due to unrealistic objectives
− Conduct at least 1 mid-year review, adjust objectives if necessary
− Train managers to give feedback in a constructive way
− Line managers should give regular feedback during the
year regarding the employees’ performance
− A common understanding what “good”, “very good”, “not sufficient” performance is should be encouraged and how this is measured

36
Q

Don‘ts

A

− No objectives are agreed
− The performance evaluation contains only quantitative
objectives
− Evaluation criteria are not defined (or understood) precisely enough
− Too many objectives are defined, priorities are missing
− Evaluation is not fair (not reliable and/or not valid)
− Managers are not aware of possible evaluation errors
− Objectives are communicated without a objectives setting discussion
− Forced Distribution for organisational units with less than 30 employees
− Discuss pay at the same time as performance
− The process of performance evaluation is not considered important by line managers

37
Q

Criticism of traditional PM in more detail

A
  • Large time commitment and bureaucratic (focus on process and rules instead of content)
  • Too many purposes are to be fulfilled with a single approach
  • Not flexible and agile enough due to annual cycle approach
  • Past-oriented evaluation instead of future-oriented development
  • Focuses too much on individual work instead of team work
  • Can be demotivating, anxiety generating and even undermine company culture
38
Q

Biggest problem for PM

A

implementation is poor in most companies
- Errors in the setting and handling of goals
- Errors in the assessment of performance
- Errors in the feedback process / appraisal interviews
- Lack of investment in introduction of concept and training
- Lack of engagement and commitment by managers and employees

39
Q

Consequence of the biggest problem for PM:

A

− Compulsory or symbolic exercise, which is handled without commitment and a toll on motivation

40
Q

Trends and new approaches to performance management

A

-Digitization
-Democratization
-Demographic change
-Dynamization of global economy

–> Reinventing Performance Management

41
Q

New Trends in Performance Management

A

− Short term targets (e.g. per quarter), agile planning
− Continuous dialogue, more frequent feedback, check-ins
− Focus on personal development and strengths (coaching instead of judgement)
− Mutual assessments
− No or specific ratings
− No forced ranking/distribution
− Decoupling of performance appraisal and bonus and/or removal of (individual) bonuses
− Stronger focus on team
− Feedback with apps (e.g. Impraise, Loopline, Youlab)
− Process is kept lean and informal: Emphasis is placed on the personal conversation, administrative effort is minimized.

42
Q

Example 1: Objectives and Key Results (OKR)

A

− OKR is an agile methodology that teams use to develop and manage goals at all organizational levels of a company.
− OKRs consist of two elements: the qualitative, inspiring Objectives and the quantitative Key Results.
− Creating horizontal coordination (no silo thinking)
− Short-cycle and agile target implementation process
− Reduction of central control, strengthening of self- organization
− Target achievement is not linked to the compensation system.

43
Q

Example 2: IBM

A

Past:
* Annual objectives
* One appraisal
* 1 or 2 appraisal discussions
* Annual documentation of
appraisal results

Future
* More short term objectives
* More performance appraisals * Ongoing feedback
* Regular meetings regarding
milestones and results

44
Q

Old performance management

A

-Process is perceived as complex, rigid, and administratively burdensome
-Objective-setting and performance appraisals are conducted once a year
-Goals are kept confidential with a focus on individual performance
-Feedback is collected and given by the manager at the end of the year
-Feedback focussed on performance evalution, weeknesses, and therefore on the past
-A leader evaluates each individual in a qualitative, opinion- based process
-Employees are evaluated on a quantitative normalized scale (Forced Ranking / Forced Distribution)
-Individual bonus is linked to performance rating

45
Q

New performance management

A

-The process is agile, faster, continuous, lighter and technology based
-Regular objective-setting in an open, collaborative process, check-ins quarterly or more frequently
-Goals are made public and transparent, with a focus on team performance
-Timely and regular feedback, continuously captured and easily reviewed at the end of the year (often via apps and mobile tools)
-Feedback focussed on strengths, coaching and personal development of employees, and therefore on the future
-Many contribute to an individual’s performance evaluation; evaluation relies heavily on data
-Employees are evaluated on a qualitative scale; ratings are considered, not enforced
-Decoupling of performance assessment and bonus or removal of (individual) bonuses, possibly company and team success-driven distribution of variable compensation

46
Q

Challenges that persist

A

− Aligning individual and company goals
− Rewarding performance
− Identifying poor performers
− Avoiding legal troubles
− Managing the feedback firehose

–> And inspiring versus measuring performance!

Human Resource Management (5 decks)

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