Performance Management & Feedback

•Farmington Connecticut -Otis Elevator is the worlds largest manufacturer-installer and servicer of elevators-escalators- moving walkways etc•Otis products offered in more than 200 countries worldwide•Employs-63000 people•Important installations•Human transport system- Eiffel Tower-Sydney opera house –Vatican etc•For years ineffective performance management system existed-excessive time consuming—little confidence•Revamped PMS•Moved towards system –provides feedback based on critical strategic competencies –related to compy’s new focus on project team

Performance Management & Feedback

• Organizations need broader performance measures to insure– Performance deficiencies addressed in timely manner

through employee development programs– Employee behaviors channeled in appropriate direction

toward performance of specific objectives– Employees provided with appropriate and specific

feedback to assist with career development

Performance Management & Feedback

• An effective performance management process can be conceptualized as one that connects three time periods

• Performance management timeline

Past Data related to past performance

Present Allows work plans-goals and development opportunities to be set

FutureResulting in the achievement of strategic objectives

Performance Management & Feedback

• Objectives of performance management• Classified as:-• Strategic-comprises the role of managing strategy

implementation and challenging assumptions

• Communication-Comprises the role of checking position-complying with non negotiable parameters-communicating direction-providing feedback and benchmarking

• Motivational-Comprises the role of evaluating and rewarding behaviour and encouraging improvement and learning

Source Jeffrey Mello

Strategic Choices in Performance Management

Use of the system1. Facilitate development2. Second is to determine appropriate rewards and

compensation3. Third purpose –enhance motivation4. Fourth –to facilitate legal compliance5. Facilitate the human resource planning process

Reciprocal Relationship Between T&D and Performance Management

Source Jeffrey Mello

Elements of Effective Performance Management

• Performance management seeks to balance business alignment with learning -development and performance reward

Effective performance management

ProcessClarity and culture

Motivation

Learning organisation

People management

capability

Measurement and reward

Role of HR professionals

Challenges to Performance Management

1. Linking reward system to performance management2. Measuring organizational and employee results3. Using competencies in a performance management

system4. Using performance management tools to improve

organizational effectiveness5. Supporting organizational culture with performance

management6. Developing and implementing performance

management7. Aligning employees with organizational objectives and

strategy

Top 10 HR challenges for Indian Corporate

1. Decreasing number of committed employees2. Finding and retaining the right people3. Competitive compensation and benefits4. Knowledge transfer from senior to newer employees5. Problems in aligning HR strategies with business

strategies6. Aligning educational curriculum to meet industry

needs7. Managing HR cost and accounting8. Recruiting for critical positions9. Managing retirement problems10.Developing an HR infrastructure

Who Evaluates?

• Problems with immediate supervisors conducting performance evaluations– Lacking appropriate information to provide informed

feedback on employee performance– Insufficient observation of employee’s day-to-day

work to validly assess performance– Lack of knowledge about technical dimensions of

subordinate’s work– Lack of training or appreciation for evaluation

process– Perceptual errors by supervisors that create bias or

lack of subjectivity in evaluations

Perceptual Errors of Raters

• Halo effect– Rater allows single trait, outcome or consideration

to influence other measures of performance• Stereotyping

– Rater makes performance judgments based on employee’s personal characteristics, rather than employee’s actual performance

• Recency error– Recent events and behaviors of employee bias

rater’s evaluation of employee’s overall performance

Perceptual Errors of Raters (cont.)

• Central tendency error– Evaluator avoids higher and lower ends of rating

scale in favor of placing all employees at or near middle of scales

• Leniency or strictness errors– Evaluator’s tendency to rate all employees above

(leniency) or below (strictness) actual performance level

• Personal biases and organizational politics– Have significant impact on ratings employees

receive from supervisors

Purposes of Performance Management Systems

• Facilitate employee development– Determine specific training and development needs– Assess individual and team strengths and weaknesses

• Determine appropriate rewards and compensation– Salary, promotion, retention, and bonus decisions– Employees must understand and accept performance

feedback system• Enhance employee motivation

– Employee acknowledgment and praise reinforces desirable behaviors and outcomes

Purposes of Performance Management Systems (cont.)

• Facilitate legal compliance– Documentation is strong defense against charges of

unlawful bias– cf., Werner & Bolino (1997)

• Facilitate HR planning process– Alert organization to deficiencies in overall level and

focus of employee skills

Other Performance Feedback Systems

• Peers– Only effective when political considerations and

consequences are minimized, and employees have sense of trust

• Subordinates– Insights into interpersonal and managerial styles– Excellent measures of individual leadership

capabilities– Same political problems as peer evaluations

• Customers– Feedback most free from bias

Other Performance Feedback Systems

• Self-evaluations– Allow employees to participate in critical employment

decisions– More holistic assessment of performance

• Multi-rater systems or 360-degree feedback systems– Can be very time-consuming– More performance data collected, greater overall

facilitation of assessment and development of employee– Costly to collect and process– Consistent view of effective performance relative to

strategy

What to Evaluate?

• Trait measures– Assessment of how employee fits with

organization’s culture, not what she actually does• Behavior-based measures

– Focus on what employee does correctly, and what employee should do differently

What to Evaluate? (cont.)

• Results-based measures– Focus on accomplishments or outcomes that can be

measured objectively– Problems occur when results measures are difficult to

obtain, outside employee control, or ignore means by which results were obtained

– Limitations• Difficult to obtain results for certain job responsibilities• Results sometimes beyond employee’s control• Ignores means or processes• Fails to tap some critical performance areas

Job Performance Competencies

• Closely tied to organization’s strategic objectives• Can take tremendous amount of time to establish• Must be communicated clearly to employees• Must be tied in with organization’s reward structure

Source Jeffry Mello

Multilevel Corporate Competency Model

Capital One Success Factors and Competencies

• Builds relationships– Communicates clearly and

openly– Treats others with respect– Collaborates with others

• Applies integrative thinking– Analyzes information– Generates and pursues ideas– Develops and shapes strategies– Identifies and solves problems– Applies integrated decision

making

• Drives toward results– Focuses on strategic priorities– Organizes & manages multiple

tasks– Directs and coordinates work– Gets job done

• Leads in learning environment– Recruits talent– Motivates and develops– Builds and leads teams– Influences others– Promotes culture

• Takes personal ownership– Takes responsibility– Learns continuously– Embraces change– Initiates opportunities for

improvement– Shows integrity– Maintains perspective

How to Evaluate?

• Absolute measurement– Measured strictly by absolute performance

requirements or standards of jobs• Relative assessment

– Measured against other employees, and ranked on distance from next higher to next lower performing employee

– Ranking allows for comparison of employees, but does not shed light on distribution of performance

Forced Ranking/Distribution

• Arguments in favor of forced ranking– Best way to identify highest-performing employees– Data-driven bases for compensation decisions– Forces managers to make and justify tough decisions

• Arguments critical of forced ranking– Can be arbitrary, unfair, and expose organization to

lawsuits– Inherent subjectivity

• Forced rankings tend to be more effective in organizations with high-pressure, results-driven culture

Measures of Evaluation

• Graphic rating scales• Weighted checklists• Behaviorally anchored rating scales (BARS)• Behavioral observation scales (BOS)• Critical incident method• Management by objectives (MBO)

Source Jeffry Mello

Graphic Rating Scales

Source Jeffry Mello

Weighted Checklist

Source Jeffry Mello1–28

Behaviorally Anchored Rating Scale (BARS)

Source Jeffry Mello

Behavioral Observation Scale (BOS)

Objectives-Based Performance Measurement

• Enhanced employee motivation

• Employees can be far more committed to reaching performance objectives (goals) that they have agreed to

• When employee participates, his/her trust and dependability placed on line

Objectives-Based Performance Measurement

• Three common oversights– Setting vague objectives– Setting unrealistically difficult objectives– Not clarifying how performance will be measured

• Objectives selected must be valid

Other Considerations

• Ensure link between performance management, training & development, and compensation

• Assignments and responsibilities• Traditional performance evaluation may need redesign due

to changes in contemporary organizations• Degree of standardization or flexibility of performance

management system– Standardization important to prevent job bias– Flexibility important for differing levels of responsibility

and accountability

Reasons Managers Resist or Ignore Performance Management

• Process is too complicated• No impact on job performance• Possible legal challenges• Lack of control over process• No connection with rewards• Complexity and length of forms

Strategies for Improving Performance Management System

• Involve managers in design of system• Hold managers accountable for performance and

development of subordinates• Set clear expectations for performance• Set specific objectives for system• Tie performance measures to rewards• Gain commitment from senior managers

Has 360 Degree Feedback Gone Amok?

• Purposes of 360 Degree feedback systems– Furthering management and leadership

development– Facilitating organizational change and

improvement initiatives that allow organization to become more open and participative

– Expand formal appraisal system by making feedback evaluative and linking more with formal performance appraisal

Reading 10.1Has 360 Degree Feedback Gone Amok?

• Recommendations for increasing likelihood that 360 feedback will benefit organization– Assign internal consultant or champion to oversee

process, and hold him/her accountable for results– Initial implementation should be on limited basis to allow

for evaluation of process using pre-post test control group test design

– Create focus group to identify effectiveness criteria that organization values and that will be used in the measurement process

– Train all raters to avoid systematic rater errors

The Reward system

Business Strategy

HR Strategy

Reward Strategy

Financial reward process

Performance management process

Non financial Reward process

Recognition, responsibilityachievement, development

growth

Base pay

Employee benefits

Variable pay

Job evaluation

Pay surveys

Pay structure

Totalremuneration

Reward system

Improved individual /team performance

Improved organizational effectiveness