1 Chapter 6 Performance Measurement Copyright © The McGraw-Hill Companies, Inc. Royalty-Free/CORBIS

1

Chapter 6

Performance Measurement

Copyright © The McGraw-Hill Companies, Inc.

Royalty-Free/CORBIS

2

Module 1: Basic Concepts in Performance Measurement

• Uses for performance information• Criterion data

• Employee development

• Motivation/satisfaction

• Rewards

• Promotion

• Layoff


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Types of Performance Data

• Objective

• Personnel

• Judgmental


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Performance Measurement (cont'd)

• Relationships among performance measures

• Hands-on performance measures– Include carefully constructed simulations– Walk-through testing

• Employee describes in detail how to do a job


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Performance Measurement (cont'd)

• Electronic performance monitoring

– Attaining positive employee feedback

– Improving performance


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Performance Management

• Emphasizes link between individual behavior & organizational strategies & goals

• Components– Definition of performance

– Actual measurement process

– Communication between supervisor & subordinate about individual behavior & organ. expectations


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Perceptions of Fairness in Performance Measurement

• Factors associated with fairness measurement– Appraisal frequency “+” related to fairness perceptions

– Joint planning with supervisor to eliminate weaknesses enhances fairness perception

– Supervisor’s knowledge of duties of person being measured

– Supervisor’s knowledge of actual performance of person being rated


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Perceptions of Fairness in Performance Measurement (cont'd)

• Distributive justice• Fairness of outcomes related to decisions

• Procedural justice• Fairness of process by which ratings are assigned &

a decision is made

• Interpersonal justice• Respectfulness & personal tone of communications

surrounding evaluation


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Module 2: Performance Rating—Substance

• Theories of performance rating– Process model

• Addresses various factors comprising rating process

– Content model• Addresses content input to supervisory ratings

– Rating context• Includes both announced purpose & other, non-

announced agendas surrounding ratings


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Focus on Performance Ratings

• Overall performance ratings– Influenced by 3 factors

• Task performance

• Contextual performance

• Counter-productive performance


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Performance Ratings (cont'd)

• Trait ratings – a warning

• Task-based ratings– Effectiveness of employee

in accomplishing duties– Most easily defended in court

• Critical incidents method– Examples of critical behaviors that influence

performance


PhotoLink/Getty Images

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Performance Ratings (cont'd)

• Structural characteristics of performance rating scale

– Extent to which duty/characteristic being rated is behaviorally defined

– Extent to which meaning of response categories is defined

– Degree that person interpreting ratings can understand response that rater intended


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Rating Formats

• Graphic rating scales

– Graphically display performance scores running from high to low


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Rating Formats (cont'd)

• Checklist– List of behaviors presented to rater who places

a check next to items that best (or least) describe the ratee

– Weighted checklist• Included items have assigned values or weights


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Rating Formats (cont'd)

• Behaviorally anchored rating scales (BARS)

• Rating format that includes behavioral anchors describing what worker has done, or might be expected to do, in a particular duty area


Figure 6.4Behaviorally AnchoredRating Scale for Firefighters

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Behavioral Rating (cont'd)

• Mixed standard scale (MSS)– Like checklist, but includes behavioral

expectation statements like in BARS scales– Includes 3 statements for each dimension that

describe good, average, & poor performance– Not apparent to rater which dimensions are

being measured


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Employee Comparison Methods

• Involve direct comparison of 1 person w/another

• Simple ranking– Employees ranked from top to bottom according to

assessed proficiency

• Paired comparison– Each employee in a group is compared with each other

individual in the group


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Employee Comparison Methods

• Useful in making layoff or downsizing decisions

• Feedback is difficult because there is no clear standard of performance

• Difficulty in comparing individuals in different groups


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Module 3: Performance Rating—Process

• Rating sources– Supervisors

• Most common information source

• Many actively avoid evaluation & feedback


Ryan McVay/Getty Images

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Rating Sources (cont'd)

• Peers

– More likely to know about a worker’s typical performance

– Conflict of interest likely when competing for fixed resources


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Self-Ratings

– Discussion of ratings with supervisor increases perceptions of procedural fairness

– Potential for distortion & inaccuracy• Minimized with supervisor discussion

– Conflict of interest if used for administrative purposes


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Rating Sources

• Subordinate ratings– Critical that subordinate feedback be kept

anonymous

• Customer & supplier ratings– Important from business strategy vantage

point


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Rating Sources

• 360 degree systems– Collect & provide an employee with

feedback that comes from many sources

– Often used for feedback & employee development


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Potential Sources for 360 Degree Feedback


Figure 6.5 Potential Sources for360 Degree Feedback

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Rating Distortions

• Central tendency error– Raters choose mid-point on scale to describe

performance when more extreme point is more appropriate

• Leniency-severity error– Raters are unusually easy or harsh in their

ratings


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Rating Distortions (cont'd)

• Halo error

– Same rating is assigned on a series of dimensions causing them all to be similar

• A “halo” surrounds the ratings


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Rater Training

• Some distortions (errors) may be corrected through training

• Administrative training– Important for uncommon rating systems

(e.g., BARS) or if 1 or more structural characteristics are deficient


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Rater Training (cont'd)

• Psychometric training

– Makes raters aware of common rating errors in hopes of reducing such errors


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Frame of Reference Training

• Based on assumption that rater needs context for providing rating– Basic steps


1. Provide information about multidimensional nature of performance

2. Ensure raters understand meaning of scale anchors3. Engage in practice rating exercises of standard

performance4. Provide feedback on practice exercise

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Reliability & Validity of Perf. Ratings

• Reliability– Currently the subject of lively debate– Inter-rater reliability considered poor but this

isn’t necessarily bad considering each rater relies on a different perspective

• Validity– Depends on manner by which rating scales

were conceived & developed


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Module 4: Social & Legal Context of Performance Evaluation

• Motivation to rate– Suggestion that raters use process as a

means to an end, either personal or organizational

– Performance appraisal as a goal-directed activity with 3 stakeholders


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Motivation to Rate (cont'd)

• Rater goals– Task performance

– Interpersonal

– Strategic

– Internalized

• Ratee goals– Information

gathering

– Information dissemination


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Motivation to Rate (cont'd)

• Organizational goals– Between-person uses

– Within-person uses

– Systems-maintenance uses


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Goal Conflict

• When single system is used to satisfy multiple goals from different stakeholders, rater must choose which goal to satisfy before assigning a rating

• Possible solutions– Use multiple performance evaluation systems– Obtain involvement of stakeholders in

developing the system– Reward supervisors for accurate ratings


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Performance Feedback

• Problematic when same information is used for multiple purposes

• Feedback (especially negative) should be stretched over several sessions

• “Praise-criticism-praise sandwich”


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Performance Feedback

• Employee more likely to accept negative feedback if he/she believes:

• Supervisor has sufficient “sample” of subordinate’s actual behavior

• Supervisor & subordinate agree on subordinate’s job duties

• Supervisor & subordinate agree on definition of good & poor performance

• Supervisor focuses on ways to improve performance


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“Destructive” Criticism

– Feedback that is cruel, sarcastic, & offensive– Usually general rather than specific– Often directed toward personal characteristics

of employee– Leads to anger, tension, & resentment on part

of employee– Apology best to repair damage of such criticism


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Implementing 360 Degree Feedback

• Ensure anonymity of sources

• Rater & ratee should jointly identify the evaluator

• Use for developmental & growth purposes

• Train information sources & those giving feedback

• Follow up feedback session with regular opportunities for progress assessment


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Performance Evaluation & Culture

• Hofstede’s 5 dimensions of culture might affect performance evaluations

• Modesty bias– When raters give themselves lower ratings than

warranted– Prevalent in cultures with high power distance


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Performance Evaluation & the Law

• Ford Motor Company & its forced distribution rating system– Evaluators were required to place

managers into performance categories based on predetermined percentages

– Ford sued by managers & eventually paid over $10 million to litigants


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Performance Evaluation & the Law (cont'd)

• Review of court cases from 1980-1995– Judges primarily concerned with issues

of fairness rather than technical characteristics of the system


C. Sherburne/PhotoLink/Getty Images

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Performance Evaluation & the Law (cont'd)

• Relationship between court decisions & the substance of rating


Appraisal Criteria

• Should be objective rather than subjective

• Should be job related or based on job analysis

• Should be based on behaviors rather than traits

• Should be within the control of the ratee

• Should relate to specific functions, not global assessments

• Should be communicated to the employee

Adapted fromTable 6.9The Relationshipbetween Court Decisions and theSubstance of RatingSource: Malos (1998).

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Performance Evaluation& the Law

• Lawsuits most often brought against trait-based systems

• Arguments– Ratings unduly subjective & decisions based on those

ratings are unreliable or invalid– Ratings have no basis in actual behavior due to

subjectivity– Little evidence of such unfairness has been found

– Research suggests performance evaluations do not systematically discriminate against protected subgroups


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Slide 17: Adapted from Table 6.8 from Latham, G. P., & Wexley, K. N. (1981). Increasing productivity through performance appraisal, Fig. 3-8 on p. 56. Copyright 1981, Addison-Wesley Publishing Co., Inc. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ.

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Slide 43: Adapted from Table 6.9 from Malos, S. B. (1998). Current legal issues in performance appraisal. In J. W. Smither (Ed.), Performance appraisal: State of the art in practice, Table 2.2, p. 80, & Table 2.3, p. 83. San Francisco: Jossey-Bass. This material is used by permission of John Wiley & Sons, Inc.

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1 Chapter 6 Performance Measurement Copyright © The McGraw-Hill Companies, Inc. Royalty-Free/CORBIS