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Conducting Performance Management—An Overview
John D. Blair, PhDSnyder Professor in Management
PowerPoint 17
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The Strategic Importance of Performance Management
Performance Management System A formal, structured process used to
measure, evaluate, and influence employees’ job-related attitudes, behaviors, and performance results.
Purposes of Performance Management To enhance employee motivation and
productivity To support the achievement of the
organization’s strategic goals To facilitate strategic planning and change
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Effective Performance Management
Helps to direct and motivate employees to maximize their efforts on behalf of the organization by: Defining clear performance goals and measures Conducting performance appraisals Providing ongoing performance feedback Linking performance results to rewards and
consequences Providing career planning and development
opportunities
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EXHIBIT 9.1 Concerns about Ineffective Performance Management Practices
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Detection of Performance Problems
Responsibility for managing the performance of a company’s CEO rests with the board of directors.
Monitoring the performance of employees at lower levels in the organization is useful for detecting organizational shortcomings.
Evaluating Change First, identify objectives and subsequently assess
change results (employee performance) in light of those objectives.
Not all organizational change efforts target performance improvement as an objective.
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EXHIBIT 9.5 Prescriptions for Legally Defensible Appraisal and Feedback
1. Job analysis to identify important duties and tasks should precede development of a performance appraisal system.
2. The performance appraisal system should be standardized and formal.
3. Specific performance standards should be communicated to employees in advance of the appraisal period.
4. Objective and uncontaminated data should be used whenever possible.
5. Ratings on traits such as dependability, drive, or attitude should be avoided or operationalized in behavioral terms.
6. Employees should be evaluated on specific work dimensions rather than on a single global or overall measure.
7. If work behaviors rather than outcomes are to be evaluated, evaluators should have ample opportunity to observe ratee performance.
8. To increase the reliability of ratings, more than one independent evaluator should perform appraisals whenever possible.
9. Behavioral documentation should be prepared for extreme ratings.
10. Employees should be given an opportunity to review their appraisals.
11. A formal system of appeal should be available for appraisal disagreements.
12. Raters should be trained to prevent discrimination and to evaluate performance consistently.
13. Appraisals should be frequent, offered at least annually.
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What to Measure Performance Criteria
The dimensions against which the performance of an incumbent, a team, or a work unit is evaluated.
Personal Traits Criteria that focus on personal characteristics
such as “loyalty” and “dependability” Not reliable and difficult to defend as
measurable performance criteria
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What to Measure (cont’d) Behaviors
Focus on how work is performed Easier to observe and defend than traits
“Has not been late to work during past 6 months.”
Types Task-related Behaviors General Counter-Productive Behaviors Organizational Citizenship
May want to include in evaluation as part of overall performance:
Volunteering for tasks not formally part of the jobHelping othersEndorsing, supporting, and defending organizational objectives
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What to Measure (cont’d)
Objective Results Focus on what was accomplished or produced May miss critical aspects of job that are difficult to
quantify For example: number of traffic tickets written.
Multiple Criteria Performance appraisal should capture all aspects of the
job Weighting the Criteria
Adding values to specific criteria based on their importance relative to other criteria
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Timing Focal-Point Approach
All employees evaluated at the same time Easier to standardize across employees May create burdensome workload on managers May create artificial performance cycles
Anniversary Approach On employee’s anniversary with the organization
Does not tie individual performance to overall organizational performance
Ratings earlier in year may be more lenient Difficult make comparisons to other employees
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Timing of Evaluations (cont’d)
Natural Time Span of the Job Ensures feedback is given when it is most
useful. Not suited for short-cycle simple jobs. Possible time spans:
For teams: feedback on progress at the mid-point of a project and again at project completion to assess goal achievements.
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EXHIBIT 9.8 Frequency of Performance Reviews
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Participants in Performance Measurement and Feedback
Sources for EmployeeAppraisals
Sources for EmployeeAppraisals
Supervisors
Self-Appraisal
Peers
Subordinates
Customers
360-DegreeAppraisals
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Participants
Issues Consider the amount and type of information each
source has available. Supervisors
may make the most reliable judgments Self-Appraisals
Accuracy Increase satisfaction with appraisal but are subject to
inflation and leniency bias by the employee. Cultural Differences
Employees from collectivist cultures approach self-appraisals differently.
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Participants (cont’d) Peers
Often have best opportunity to observe behavior. Are useful predictors of future performance.
Subordinates Useful if anonymity guaranteed and contains specific
improvement suggestions. Managers should discuss results with direct reports.
Customers Most useful when a large number of customers respond
and results are not biased by few customers with bad experiences.
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Participants (cont’d)
360-Degree Appraisals Evaluations collected from colleagues,
supervisors, subordinates, peers, and employees
Less susceptible to gender/ethnicity biases
Research support for anonymity of raters and the use of a full circle of raters
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Performance Appraisal Formats
Comparative
Results-Based
Formats
AbsoluteStandards
• Straight ranking• Forced distribution
• Graphic rating scales• Behaviorally-anchored rating
scales• Behavioral observation scales
• Direct index• Management by objectives (MBO)
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Performance Appraisal FormatsForced
Distribution
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EXHIBIT 9.9 Sample Graphic Rating Scales for Work Quantity
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EXHIBIT 9.10 Sample Behaviorally Anchored Rating Scale for One Dimension of the Work Performance of a Corporate Loan Assistant
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EXHIBIT 9.11Sample Behavioral Observation Scale Items for a Maintenance Mechanic
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The Rating Process
The Rating Process
The Rating Process
(4) Make performance
judgment
(4) Make performance
judgment
(5) Record official
performance judgment
(5) Record official
performance judgment
(1) Recognize relevant
information
(1) Recognize relevant
information
(2) Store information in
memory
(2) Store information in
memory
(3) Revise information
based on new rater
perception
(3) Revise information
based on new rater
perception
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EXHIBIT 9.12 Common Performance Rating Errors
Halo and Horn A tendency to think of an employee as more or less good or bad is carried over into specific performance ratings. Or stereotypes based on the employee’s sex, race, or age affect performance ratings. In either case, the rater doesn’t make meaningful distinctions when evaluating specific dimensions of performance. All dimensions of performance are rated either low (horn) or high (halo).
Leniency All employees are rated higher than they should be rated. This happens when managers aren’t penalized for giving high ratings to everyone, when rewards aren’t part of a fixed and limited pot, and when dimensional ratings aren’t required.
Strictness All employees are rated lower than they should be. Inexperienced raters who are unfamiliar with environmental constraints on performance, raters with low self-esteem, and raters who have themselves received a low rating are most likely to rate strictly. Rater training that includes a reversal of supervisor-incumbent roles and confidence building can reduce this error.
Central Tendency
All employees are rated as average, when performance actually varies. Raters with large spans of control and little opportunity to observe behavior are likely to use this “play-it-safe” strategy. A forced distribution format requiring that most employees be rated average also may create this error.
Primacy As a cognitive shortcut, raters may use initial information to categorize a person as either a good or a bad performer. Information that supports the initial judgment is amassed, and unconfirming information is ignored.
Recency A rater may ignore employee performance until the appraisal date draws near. When the rater searches for cues about performance, recent behaviors or results are most salient, so recent events receive more weight than they should.
Contrast Effects When compared with weak employees, an average employee will appear outstanding; when evaluated against outstanding employees, an average employee will be perceived as a low performer.
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Common Rating Errors
Halo/Horn Overly focusing on specific performance ratings or
stereotyping employee by a single personal characteristic.
Leniency Rating all employees higher than they should be.
Strictness Rating all employees lower that they should be.
Central Tendency Rating all employees as average when individual
employee performance actually varies.
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Common Rating Errors Primacy
Using initial information that supports the rating decision while ignoring later information does not.
Recency Basing the rating decision primarily on the most recent
performance information while placing much less emphasis on past performance.
Contrast Effects Comparing one employee to another rather than
applying a common standard to all employees
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Improving Rater Accuracy Precise Rating Scale Format
Each dimension addresses a single job activity
Each performance dimension is rated separately; scores are summed to determine overall rating
Ambiguous terms (e.g. “average”) should not to be used.
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Improving Rater Accuracy (cont’d)
Provide Memory Aids Behavioral diaries and critical incident files Electronic diary-keeping software
Provide Rater Training Frame-of-reference training
especially useful
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Improving Rater Accuracy Reward Accurate and Timely Appraisals
Salary increases, promotions, assignments to key positions can be partly based on performance as a rater.
Use Multiple Raters To increase evaluation accuracy by diffusing
responsibility for negative results. To increase employee acceptance of
evaluation results To allow for group discussion which can help
alleviate individual rater biases
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Providing Feedback Sources of Conflict Associated with
Providing Performance Feedback: Understanding Attributions Timing Preparation Content of the Discussion Follow-Up When Nothing Else Works
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Providing Feedback (cont’d) Understanding Attributions
Combining evaluative and developmental goals Need to be candid and protect employee’s self-
esteem
Self-serving employee attributions that interfere with performance improvement Discounting role of external
forces in good performance Over-emphasizing external
effects in poor performance
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Providing Feedback (cont’d) Timing:
Providing immediate feedback is most useful.
Giving only as much information as the receiver can use.
Preparation Scheduling feedback sessions in advance Clarifying purpose and content of meeting Giving both participants time to prepare
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Providing Feedback (cont’d)
Content of the Discussion: the Problem-Solving Approach Diagnosis: seek to understand the factors that affect
performance. Removing Roadblocks: seek agreement with the
employee on an action plan to address issues such as: Lack of resources Need for additional information and training Improving ongoing communications and feedback
Mutual goal setting: employee participation increases employee acceptance of goals.
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EXHIBIT 9.13 Sample Checklist for Diagnosing the Causes of Performance Deficiencies
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Follow-Up to the Feedback Session
Positive Reinforcement Use of positive rewards to increase occurrence of
desired performance Principles:
People perform in ways that they find most rewarding By providing proper rewards, it is possible to improve
performance
Punishment Decreases frequency of undesired behavior Gets immediate results and has vicarious power Can have undesirable side effects—employee anger
and contingent bad behavior
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When Nothing Else Works
Transfer When employee and job are not well
matched Neutralize
Assign noncritical tasks to minimize the impact of deficiencies
Terminate For dishonesty, habitual absenteeism,
substance abuse, insubordination, and low productivity that cannot be corrected
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Current Issues
Automated Performance Management Uses
Tracking progress on goals Scoring and approving appraisals Processing, storing, and retrieving data
Benefits Improved efficiency and time savings Increased accuracy of appraisals Better communication of standards
Monitoring through Technology Balancing the legal necessity to monitor employees
with their expectation of privacy.