Chapter 9Chapter 9

Performance Management

McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All

rights reserved.

Questions This Chapter Will Help Managers AnswerQuestions This Chapter Will Help Managers Answer

What steps can I, as a manager, take to make the performance management process more relevant and acceptable to those who will be affected by it?

How can we best fit our approach to performance management with the strategic direction of our dept. and business?

Should managers and non-managers be appraised from multiple perspectives – for example, by those above, by those below, by coequals, and by customers?

What strategy should we use to train raters at all levels in the mechanics of performance management and in the art of giving feedback?

The Process of Performance ManagementThe Process of Performance Management

1.Define performance

2.Facilitate performance

3.Encourage performance

Defining PerformanceDefining PerformanceKey ElementsKey Elements

GoalsMeasures

Assessment

Encouraging PerformanceEncouraging Performance

1. Provide a sufficient amount of rewards that employees really value

2. In a timely

3. Fair manner

What is Fairness?What is Fairness?Important PracticesImportant Practices

Voice Collect employee input through surveys or interviews

Consistency Ensure that all employees are treated consistently when seeking input and

communicating about the process for administering rewards

Relevance Include rewards that employees really care about

Communication Explain clearly the rules and logic of the rewards process

Figure 9-1Figure 9-1 Elements of a Performance Management Elements of a Performance Management SystemSystem

Define PerformanceSet objectives

Define PerformanceSet objectives

Encourage PerformanceProvide timely rewards that are valued by employees

Encourage PerformanceProvide timely rewards that are valued by employees

Facilitate PerformanceProvide resources

Facilitate PerformanceProvide resources

TO ENERGIZE EMPLOYEE

PERFORMANCE

Figure 9-2Figure 9-2 Purposes of Performance Appraisal SystemsPurposes of Performance Appraisal Systems

Employment Decisions

Diagnosis of Organizational

Problems

Objectives for Training

Programs

Criteria in Test

Validation

Employee Feedback

Purposes of Performance Appraisal

Systems

RelevanceRelevance

Implies that there are

1. Clear links between the performance standards for a particular job and organizational objectives, and

2. Clear links between the critical job elements identified through a job analysis and the dimensions to be rated on an appraisal form

Performance StandardsPerformance Standards

… translate job requirements into levels of acceptable or unacceptable employee behavior. They play a critical role in the job analysis-performance appraisal linkage.

Figure 9-3Figure 9-3 Relationship of Performance Standards to Relationship of Performance Standards to Job Analysis and Performance AppraisalJob Analysis and Performance Appraisal

Job AnalysisPerformance

StandardsPerformance

Appraisal

Describes work and personal

requirements of a particular job

Translate job requirements into

levels of acceptable

/unacceptable performance

Describes the job-relevant

strengths and weaknesses of an individual or

team

Rating Methods or FormatsRating Methods or Formats

Relative Rating Systems Comparing the performance of employees to that of other

employees

Absolute Rating Systems Evaluating each employee in terms of performance standards

without reference to others

Results-Oriented Systems Emphasis is on what employee produces

RankingRanking

Simple ranking requires only that a rater order all employees from highest to lowest, from “best” employee to “worst” employee.

Alternation ranking requires that a rater initially list all employees on a sheet of paper. From this list he or she chooses the best employee (No. 1), then the worst employee (No. n), then the second best (no. 2), then the second worst (No. n -1), and so forth, alternating from the top to the bottom of the list until all employees have been ranked.

Management By Objectives (MBO)Management By Objectives (MBO)

A process of managing that relies on goal-setting to establish objectives for the organization as a whole, for each department, for each manager within each department, and for each employee

Establishing Objectives in MBOEstablishing Objectives in MBOWhat the Key People Involved Should DoWhat the Key People Involved Should Do

Meet to agree on the major objectives for a given period of time

Develop plans for how and when the objectives will be accomplished

Agree on the “yardsticks” for determining whether the objectives have been met

Who Should Evaluate Performance?Who Should Evaluate Performance?Possible RatersPossible Raters

The immediate supervisorPeersSubordinatesSelf-appraisalCustomers servedComputers

Multi-Rater or 360 Degree FeedbackMulti-Rater or 360 Degree Feedback

Using input from managers, subordinates, peers, and customers to provide a perspective on performance from all angles

Types of TeamsTypes of Teams

Work or Service Teams Intact teams engaged on routine tasks

Project Teams Teams assembled for a specific purpose and expected to

disband once their task is completed

Network Teams Teams that include membership not constrained by

time/space and membership is not limited by organizational boundaries

Types of Appraisal ErrorsTypes of Appraisal Errors

Halo error – raters assign their ratings on the basis of global (good or bad) impressions of ratees

Contrast error – rater compares several employees to one another rather than to an objective standard of performance

Recency error – rater assigns his or her ratings on the basis of the employee’s most recent performance

Halo error – raters assign their ratings on the basis of global (good or bad) impressions of ratees

Contrast error – rater compares several employees to one another rather than to an objective standard of performance

Recency error – rater assigns his or her ratings on the basis of the employee’s most recent performance

Table 9-3Table 9-3 Supervisory Activities Before, During, and Supervisory Activities Before, During, and After Performance Feedback InterviewsAfter Performance Feedback Interviews

Before

Communicate frequently with subordinates about their performanceGet training in performance appraisal interviewingPlan to use a problem-solving approach rather than “tell-and-sell”Encourage subordinates to prepare for performance feedback interviews

During

Encourage subordinates to participateJudge performance, not personality and mannerismsBe specificBe an active listener

Table 9-3 contdTable 9-3 contd..

Avoid destructive criticismSet mutually agreeable goals for future improvements

After

Communicate frequently with subordinates about their performancePeriodically assess progress toward goalsMake organizational rewards contingent on performance

Key Terms Discussed in the ChapterKey Terms Discussed in the Chapter

Performance management Performance appraisal Performance definition Performance facilitation Performance encouragement Relevance Performance standards Sensitivity Reliability Acceptability Practicality

Applicant group Behavior-oriented rating methods Relative rating systems Absolute rating systems Results-oriented rating systems Simple ranking Alternation ranking Paired comparisons Forced distribution Leniency

Key TermsKey Terms (contd.)(contd.)

Severity Central tendency Likert method Summed ratings Critical incidents Graphic rating scales Behaviorally anchored rating

scales (BARS) Management by objectives

(MBO) Cascading process

Work planning and review 360-degree feedback Total quality management Halo error Contrast error Recency error Active listening Destructive criticism