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Performance management

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the process of ensuring that employees activities and outputs match the organization's goals

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3 Stages of Performance Management:

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Defining Performance Measuring Performance Performance feedback

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"Defining performance" means...

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it specifies which aspects of performance are job related *based on job analysis

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How is Performance Measured?

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done by conducting performance appraisals

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In the process of performance management, explain performance feedback.

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manages to give employees information about their performance so they can maintain and adjust their behaviour to meet the organization's goals *When there are performance gaps, the feedback session should include efforts to identify and resolve the underlying problems

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Strategic purpose

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effective performance management helps the organization achieve its business objective Starts with defining what the organization expects from each employee--measures each employees performance to identify where those expectations are and are not being met. This enables the organization to take corrective action such as training, incentives or discipline.

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Performance management can achieve its strategic purpose only when...

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measurements are truly aligned with the organization's goals and when the goals and feedback about performance are communicated to employees

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Administrative purpose

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the way in which organizations use the system to provide information for day to day decisions about salary, benefits, and recognition programs *also support decision making related to employee retention, termination of poor performance, hiring and layoffs

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Developmental purpose

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serves as a basis for developing employees' knowledge and skills

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What are the 5 criteria for effective performance measures?

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RAV SF Reliability Specific Feedback Acceptability Fit with strategy Validity

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Fit with strategy

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performance management system should aim at achieving employee behavior and attitudes that support the organization's strategy, goals and culture Ex: if a company emphasizes customer service, then its performance management system should define the kinds of behaviour that contribute to good customer service. Performance appraisals should measure whether employees are engaging in those behaviours

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Validity

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is the extent to which a measurement tool actually measures what it is intended to measure. In the case of performance appraisal, validity refers to whether the appraisal measures all the relevant aspects of performance and omit irrelevant aspects of performance

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Reliability

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describes the consistency of the results that the performance measure will deliver

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Interrater reliability

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consistency of results when more than one person measures performance

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Test retest reliability

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consistency of results over time

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Acceptability

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the measurement must meet pratical standards of being accepted by the people who use it

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Specific feedback

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performance measurement should tell employees what is expected of them and how they meet those expectations

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Methods of measuring performance:

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Generally, the rater will compare one individual's performance with that of others. There are several ways to do this: Simple Ranking, Forced-distribution, Paired-comparison method

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Simple ranking

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requires managers to rank employees in their group from the highest preformer to lowest performer

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Forced distribution

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method of performance measurement that assigns a certain percentage of employees to each category in a set of categories

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paired comparison method

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performance measurement that compares each employee with each other employee to establish ranking

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Methods of rating attributes:

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Graphic rating scale, Mixed-standard scale

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graphic rating scale

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method of performance measurement that lists traits and provides a rating scale for each trait; the employer uses the scale to indicate the extent to which an employee displays each trait

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mixed standard

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method of performance measurement that uses several statements describing each trait to produce a final score for that trait

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Methods of rating behaviours:

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Critical-incident method, Behaviourally anchored rating scale (BARS), Behavioural observation scale (BOS), Organizational Behaviour Modification (OBM)

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Critical-incident method for rating behaviours:

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method of performance measurement based on managers records of specific examples of the employee acting in ways that are either effective or ineffective

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Behavioral anchored rating scale (BARS) for rating behaviours:

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method of performance measurement that rates behavior in terms of a scale showing specific statements of behavior that describe different levels of performance

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Behavioral observation scale (BOS) for rating behaviours:

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a variation of a BARS which uses all behaviors necessary for effective performance to rate performance at a task

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Methods of measuring results:

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Organizational behaviour modification (OBM), Management by objectives (MBO)

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Organizational behavior modification (OBM) for measuring results:

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a plan for managing the behavior of employees through a formal system of feedback and reinforcement

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OBM techniques to measure results can vary but most have 4 components: (Organizational Behaviour Modification)

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1) Define a set of key behaviours necessary for job performance 2) Use a measurement system to assess whether the employee exhibits the key behaviours, perhaps in terms of goals for how often to exhibit the behaviors 3) Inform employees of the key behaviours, perhaps in terms of goals for how often to exhibit the behaviours 4) Provide feedback and reinforcement based on employees' behaviour

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Management by objective (MBO) for measuring results:

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a system which people at each level of the organization set goals in a process that flows from top to bottom so employees at all levels are contributing to the organizations overall goals; these goals become the standards for evaluating each employees performance

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An MBO (management by objective) has 3 components:

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1) Goals are specific, difficult and objective 2) Managers and their employees work together to set the goals 3) the manager gives objective feedback through the rating period to monitor progress toward the goals.

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Balanced Scorecard

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is an organizational approach to performance management that integrates strategic perspectives including financial, customer, internal business processes, and learning and growth. *they are widely used in both public and private sector

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Total Quality Management (TQM)

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assess both individual and system within which the individual works, this assessment is a process through which employees and thier customers work together to set standards and measure performance, with the overall goal being to improve customer satisfaction

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What are the sources for performance information?

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Possibilities of information sources include managers, peers direct reports, self, and customers

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Why shouldn't just one person be used as a source of performance information?

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People tend to like some people more than others, and those feelings can bias how an employee's efforts are perceived. Also, one person is likely to see an employee in a limited number of situations. A supervisor cannot see how an employee behaves when the supervisor is not there

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360 degree performance appraisal

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also called a "multi-rater" *Performance measurement that combines information from the employees managers peers subordinates self and customer

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Mangers as raters of performance:

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*most used source of performance information. They have extensive knowledge of the job requirements and enough opportunity to observe the employees. *they have incentive to provide accurate and helpful feedback because their own success depends on their employees performance *managers try to observe behaviour or discuss performance issues in the feedback session to improve performance to get an accurate appraisal

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Peers as raters of performance:

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*excellent source when the supervisor does not often observe the employee. Ex: law enforcement and sales *they have expert knowledge of the job requirements *they bring a different perspective to the evaluation and can provide extremely valid assessments of performance

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Some disadvantages of using peers to rate performance:

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Friendships or rivalries have the potential to bias ratings *when evaluations are done to support administrative decisions, peers are uncomfortable with rating employees for decisions that may affect themselves. Generally, peers are more willing to participate in reviews to be used for employee development.

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Direct reports for rating performance:

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*especially valuable source of information *these are the people reporting to the manager--often have the best chance to see how well a manager treats employees

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Potential problems with direct reports on performance:

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there are power relationships involved; Direct reports are reluctant to say negative things about the person to whom they report; they prefer to provide feedback anonymously. *when managers receive ratings from direct reports, the employees have more power, so managers tend to emphasize employee satisfaction at the expense of productivity *direct reports are more appropriate for developmental purposes. To protect employees, the process should be anonymous and use at least 3 employees to rate each manager.

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Self reporting for rating performance:

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*rarely used alone *areas of disagreement between self appraisal and other evaluations can be fruitful topics for feedback sessions.

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Problems with self-ratings for performance:

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*individuals have a tendency to inflate assessments of their performance, especially if the ratings will be used for administrative decisions, exaggerating one's contributions has practical benefits. *people tend to blame outside circumstances for their failures while taking a large part of the credit for successes. *not appropriate as a basis for administrative decisions

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Customers for rating performance:

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*often the only person who directly observes the service performance and may be the best source for performance information. *ex: customer satisfaction cards *appropriate when an employee's job requires direct service to the customer or linking the customer to other services within the organization AND, customer evaluations are appropriate when the organization is interested in gathering information to determine what products and services the customer wants

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Customer evaluations are useful for both...

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evaluating an employee's performance and for helping to determine whether the organization can improve customer service by making changes in HRM activities such as training or compensation.

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types of rating errors

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1. Similar-to-me error 2. Contrast error 3. Leniency error 4. Strictness error 5. Central tendency 6. Recency emphasis 7. Focus on activities 8. Halo and Horns errors

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Similar-to-me error

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tendency to give a higher evaluation to people we consider similar to ourselves; decisions may be discriminatory

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Contrast error

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comparing employees performance to co-workers rather than to an objective standard; a competent worker who works well with others may be rated lower simply because they have several exceptional co-workers even though they are completely competent.

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Distributional errors

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using only one part of the rating scale

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Leniency error

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when a rater inaccruately assignes high ratings to all employees

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Central tendency

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Rating all employees as somehow "average" or in the middle of the rating scale

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Strictness error

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When a rater incorrectly gives low ratings to all employees holding them to unreasonably high standards

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Recency Emphasis

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Raters sometimes base an annual rating only on the employee's most recent work. Raters may have difficulty remembering things that happened several months to a year ago versus work from a few weeks before the performance review. *Can also occur when the supervisor is rushing the evaluation process because of a heavy workload or lack of time

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Focus on activities

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Rushing due to insufficient time or heavy workload can contribute to this. when employees are assessed on how busy they appear rather than how effective they are in achieving results

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Halo and Horns errors

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when employees are rated on their communication skills; those with better communication are perceived positively in all areas of performance and giving an overall appearance of intelligence; negatively: if an employee arrives late one day this may be seen as a sign of lack of motivation (responding to one negative aspect)

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Halo error

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When the rater reacts to one positive performance aspect by rating the employee positively in all areas of performance

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Horns error

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when the rater responds to one negative aspect by rating an employee low in other aspects

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How can ratings errors be reduced?

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*training to avoid rating errors including watching videos with story lines designed to lead them to make specific rating errors *raters can focus not on errors in rating but on the complex nature of employee performance that deserve attention.

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How does political behaviour influence performance appraisals?

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Sometimes the people rating the performance distort an evaluation on purpose to advance their personal goals. The resulting feedback does not focus on helping employees contribute to the organization's goals. High performing employees will become frustrated and low performing employees who are overrated will be rewarded rather than encouraged to improve.

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Appraisal politics are most likely to occur when...

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raters are accountable to the employee being rated, the goals of rating are not compatible with one another

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Organizations can minimize appraisal politics by...

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establishing an appraisal system that is fair. One techniques is to hold a calibration session

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Calibration session to minimize appraisal politics:

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a meeting at which managers discuss employee performance ratings and provide evidence supporting their ratings with the goal of eliminating the influence of rating errors.

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Why is annual feedback not good enough?

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Managers are responsible for dealing with performance gaps as soon as they occur. If the manager notices a problem in June and the performance evaluation isn't until November, the employee has lost all of that time in between to make improvements. *You don't want to surprise the employee. They should be receiving feedback so often they should know what the manager will say during their performance review.

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How should managers prepare a formal feedback session?

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*be well prepared *create the right context for the meeting; location should be neutral such as a conference room *manager should describe it as a chance to discuss the role of the employee, the role of the manager and the relationship between them *they should also encourage open dialogue; use the right type of language to have a successful meeting *ask employees to complete a self-assessment *create a coaching culture to manage, assess, and develop employees

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What are the 3 approaches to giving feedback in the feedback session?

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tell and sell tell and listen problem solving

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Most managers rely on the _____________________ approach to giving feedback.

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tell and sell; however, managers can improve employee satisfaction with the feedback process and improve performance by creating two-way communication, by letting employees voice their opinions and discuss performance goals

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Tell and Sell approach to giving feedback:

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managers tell employees their rating and then justify those ratings

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Tell and listen approach to giving feedback:

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manager tell employees their ratings and then let the employees explain their side oif the story

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Problem solving approach to giving feedback:

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managers and employees work together to solve performance problems in an atmosphere of respect and encouragement

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When performance evaluation indicates that an employee's performance is below expectations, the feedback process should...

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launch an effort to address the performance gap

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The final feedback stage of performance management involves 2 things:

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identifying areas for improvement ways to improve performance in those areas

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The most effective way to improve performance varies according to...

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the employee's ability and motivation. When employees have high levels of ability and motivation, they perform at or above expectations. When they lack motivation or ability or both, corrective action is needed.

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The type of action needed for Lack of ability is:

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to offer training and more detailed feedback; the employee must be motivated though. Sometimes it may be appropriate to restructure their job so the employee can meet the demands

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The type of action needed for Lack of Motivation is:

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Managers can explore ways to demonstrate that the employee is being treated fairly and rewarded adequately. The solution may be as simple as delivering more positive feedback. *Employees may also benefit from a referral for counselling to help with stress management

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The type of action needed for both lack of ability and motivation:

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May not be a good fit for the position. Performance may improve if the manager directs their attention to the significance of the problem by withholding rewards or by providing specific feedback.

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Performance Improvement plan

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Summary of performance gaps and includes action plan mutually agreed to by the employee and supervisor with specific dates to review progress *Demotion, Outplacement, Discipline

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Solid performers

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should be rewarded for good performance Identify development opportunities for them Provide direct feedback

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