CHAPTER 10: PERFORMANCE MANAGEMENT AND FEEDBACK

1. CHAPTER 10: PERFORMANCE MANAGEMENTAND FEEDBACK

2. 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 & specific feedback to assist with career development

3. Exhibit 10-2Strategic Choices in Performance Management

4. Purposes of Performance Management Systems • Facilitate employee development • Determine specific training & development needs • Assess individual & team strengths & weaknesses • Determine appropriate rewards & compensation • Salary, promotion, retention, & bonus decisions • Employees must understand & accept performance feedback system • Enhance employee motivation • Employee acknowledgment & praise reinforces desirable behaviors & outcomes

5. Purposes of Performance Management Systems • Facilitate legal compliance • Documentation is strong defense against charges of unlawful bias • Facilitate HR planning process • Alert organization to deficiencies in overall level & focus of employee skills

6. Exhibit 10-3Reciprocal Relationship Between T&D & Performance Management

7. 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

8. 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 & behaviors of employee bias rater’s evaluation of employee’s overall performance

9. Perceptual Errors of Raters • Central tendency error • Evaluator avoids higher & lower ends of rating 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 & organizational politics • Have significant impact on ratings employees receive from supervisors

10. Other Performance Feedback Systems • Peers • Only effective when political considerations & consequences are minimized, & employees have sense of trust • Subordinates • Insights into interpersonal & managerial styles • Excellent measures of individual leadership capabilities • Same political problems as peer evaluations • Customers • Feedback most free from bias

11. 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 & development of employee • Costly to collect & process • Consistent view of effective performance relative to strategy

12. What to Evaluate? • Traits measures • Assessment of how employee fits with organization’s culture, not what s/he actually does • Behavior-based measures • Focus on what employee does correctly & what employee should do differently

13. What to Evaluate? • 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

14. How to Evaluate? • Absolute measurement • Measured strictly by absolute performance requirements or standards of jobs • Relative assessment • Measured against other employees & 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

15. Appraisal Methods: Alteration Ranking • This method involves ranking employees from best to worst on traits • Since it is easier to distinguish between the worst and best employees, an alteration method is quite popular • For the trait you are measuring, list all the employees you want to rank • On a form, indicate the employees who is the highest on the characteristics being measured and the one who is the lowest

16. Alternation Ranking Scale

17. Performance Appraisal Methods (cont.) • Forced distribution method • Similar to grading on a curve; • predetermined percentages of rateesare placed in various performance categories • Example: • Top 20% (high performers) • Middle 70% (average performers) • Bottom 10% (low performers)

18. Performance Appraisal Methods (cont.) • Sun Microsystems force-ranks its 43,000 employees. • Managers appraise employees in groups of 30 • Those of bottom 10% of each group get 90 days to improve • If they are still in the bottom 10%, they can resign and take dismissal pay • Some prefer to resign and some stay • Those who stay must perform and if they fail, the firm fires them without dismissal

19. Performance Appraisal Methods (Cont.) • Arguments in favor of forced ranking • Best way to identify highest-performing employees • Data-driven bases for compensation decisions • Forces managers to make & justify tough decisions • Arguments critical of forced ranking • Can be arbitrary, unfair, & expose organization to lawsuits • Inherent subjectivity • Forced rankings tend to be more effective in organizations with high-pressure, results-driven culture

20. Appraisal Methods (Cont.) • Graphic Rating Scale Method • It is the simplest and most popular method • It lists traits (e.g. quality of work, quantity of work, efficiency, teamwork, communication, leadership) and a range of performance values (from “unsatisfactory” to “outstanding” or “below expectations” to “role model”) for each trait.

21. Graphic Rating Scale

22. Performance Appraisal Methods (cont’d) • Behaviorally anchored rating scale (BARS) • An appraisal method that anchors a numerical rating scale with specific narrative examples of good and poor performance.

24. Exhibit 10-8Behaviorally Anchored Rating Scale (BARS)

25. Management by Objectives (MBO) • Involves setting specific measurable goals with each employee and then periodically reviewing the progress made. • Set the organization’s goals. • Set departmental goals. • Discuss departmental goals. • Define expected results (set individual goals). • Performance reviews. • Provide feedback.

26. Objectives-Based Performance Measurement • Enhanced employee motivation • Employees can far more committed to reaching performance objectives they have agreed to • When employee participates, his/her trust & dependability placed on line

27. 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

28. Reasons Managers Resist or Ignore Performance Management • Process is too complicated • No impact on job performance • Lack of control over process • No connection with rewards • Complexity & length of forms

29. Strategies for Improving Performance Management System • Involve managers in design of system • Hold managers accountable for performance & development of subordinates • Set clear expectations for performance • Set specific objectives for system • Tie performance measures to rewards • Gain commitment from senior managers

30. “There are only three measurements that tell you nearly everything you need to know about your organization’s overall performance: employee engagement, customer satisfaction, and cash flow. It goes without saying that no company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it.”– Jack Welch

31. Thank You!