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Performance management system has three parts

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defining performance, measuring performance and feeding back performance information

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performance management

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managers ensure that employees' activities and outputs are congruent with organizational goals

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performance appraisal

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organization gets information on how well an employee is doing on the job -appraisal is done by the employee themselves

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performance feedback

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provides employees information regarding their performance effectiveness

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Performance Management Process

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1. define performance outcomes for company division and department 2. develop employee goals, behavior and actions to achieve outcomes 3. provide support and ongoing performance discussions 4. evaluate performance 5. identify needed improvements 6. provide consequences for performance results

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Situational constraints

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are always at work within the PMS.

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3 purposes of performance management (PMS)

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-administrative -strategic -developmental

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Strategic

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system needs to link employee activities to goals -best way to do this is to define results, behaviors, etc necessary to carry out these strategies

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Administration

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use performance, management information in making administrative decisions -salary, promotions, lay-offs

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developmental

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to develop employees that are effective at their jobs

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5 criteria of performance measures

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strategic congruence validity reliability acceptability specificity

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strategic congruence

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extent to which PMS elicits job performance that is congruent with the organization's strategy, goals, and culture. Strategic congruence emphasizes the need for the performance management system to guide employees in contributing to the organization's success

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validity

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extent to which the performance measures assesses all the relevant- and only the relevant- aspects of job performance. Validity is conceded with maximizing the overlap between actual job performance and the measure of job performance -focus on big picture -don't care about irrelevant things

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reliability

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consistency of the performance measure

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acceptability

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whether the people who use the performance measure accept it. Acceptability is affected by the extent to which employees believe the performance management system is fair. Performance management systems that are perceived as unfair are likely to be legally challenged, be used incorrectly, and decrease employee motivation to improve -do people stand behind it? do they think that it's right?

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specificity

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extent to which a performance measure gives specific guidance to employees about what is expected of them and how they can meet these expectations.

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Comparative approach

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compares performance with others

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3 techniques with comparative approach

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ranking forced distribution paired comparison

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ranking

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techniques that arrive at an overall assessment of the individual's performance

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simple ranking

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requires managers to rank employees within their departments from highest performer to poorest performer

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alternation ranking

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manager looks at a list of employees, decking who is the best employee, and crossing that person's name off the list

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forced distribution

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requires the managers to put certain percentages of employees into predetermined categories -motivate employees and open the door for more talent

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paired comparison

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requires managers to compare every employee with every other employee in the work group, giving an employee a score of one every time he or she is considered the higher performer. Employees are ranked by how many points they receive.

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attribute approach

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performance management focuses on the extent to which individuals have certain attributes that are desired for success

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graphic rating scales

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-list of traits evaluated by 5-point rating scale -legally questionable

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mixed standard scales

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-define relevant performance dimensions -develop statements representing good, average, and poor performance along each dimension -created to get around not being able to use graphic rating scales

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behavioral approach

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attempts to define the behaviors an employee must exhibit to be effective in the job.

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critical incidents

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requires managers to keep record of specific examples of effective and ineffective performance

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behaviorally anchored rating scales (BARS)

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specifically define performance dimensions by developing behavioral anchors associated with different levels of performance

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behavioral observation scales

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variation of a BARS developed from critical incidents but use a larger number of the behaviors that are necessary for effective performane

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organizational behavior modification (OBM)

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entails managing the behavior of employees through a formal system of behavioral feedback and reinforcement

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assessment centers

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used for measuring managerial performance

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competencies

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sets of skills, knowledge, abilities and personal characteristics that enable employees to successfully perform their jobs.

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competency model

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identifies competencies necessary for each model and provides descriptions common for an entire occupation, organization, job family or specific job. Also useful for recruiting, selection, training and development.

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results approach

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to PM focuses on managing the objective, measurable results of a job or work group. It assumes that subjectivity can be eliminated from the measurement process and that results are the closest indicator of one's contribution to organizational effectiveness.

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management by objectives (MBO)

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is a joint goal‑setting process in which goals are agreed upon between the managers and each subordinate. These goals then become standards used to evaluate the individual's performance.

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Productivity measurement and evaluation system (ProMES)

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The goal of ProMES is to motivate employees to higher levels of productivity. Four steps: Identify objectives, products, or set of activities or objectives that the organization expects to accomplish; staff defines indicators of the products; Staff establishes contingencies between the amount of the indicators and the level of evaluation associated with the amount; A feedback system- provides employees and groups with information about their specific level of performance on each indicators. ProMES -measures and feeds back productivity information to personnel.

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Balanced Scorecard Approach

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includes four perspectives of performance - financial, customer, internal or operations and learning and growth.

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Balanced Scorecard Approach

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Financial focuses on creating sustainable growth in shareholder value. Customer defines value for customers. Internal or operations focuses on processes that influence customer satisfaction. Learning and growth focuses on company's capacity to innovate and continuously improve.

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Two fundamental characteristics of the quality approach are

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customer orientation and a prevention approach to errors

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sustainability

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increasingly important consideration of quality approach and continuous improvement

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Statistical Process

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1. process-flow analysis 2. cause-and-effect diagrams 3. pareto chart 4. control chart 5. histogram 6. scattergram

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process-flow analysis

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involves identifying each action and decision necessary to complete work

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a paret chart

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highlights the most important cause of a problem. In a Pareto chart, causes are listed in decreasing order of importance, where importance is usually defined as the frequency with which that cause resulted in a problem. The assumption of Pareto analysis is that the majority of problems are the result of a small number of causes.

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cause-and-effect diagrams

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events or causes that result in undesirable outcomes are identified

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control charts

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involve collecting data at multiple points in time. By collecting data at different times, employees can identify what factors contribute to an outcome and when they tend to occur

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histograms

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display distributions of large sets of data and allow data to be grouped into a smaller number of categories or classes.

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scattergrams

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show the relationship between two variables, events, or different pieces of data and help employees determine whether the relationship between two variables or events is positive, negative, or zero.

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Kaizen

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practices participated in by employees from all levels of the company that focus on continuous improvement of business processes The most effective way of measuring performance is to rely on a combination of two or more alternatives.

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5 performance information sources

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managers peers/coworkers subordinates self-ratings customer

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managers

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most frequently used source

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peers/coworkers

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excellent sources of information when the supervisor does not always observe the employee

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subordinates

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a valuable source of performance information when managers are evaluated. they often have the best opportunity to evaluate how well a manger treats employees

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self-ratings

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valuable but are not usually used as the sole source of performance

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customer

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often the only person present to observe the employee's performance

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360 technique

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consists of having multiple raters (boss, peers, subordinates, customers) provide input into a manager's evaluation. It provide a means for minimizing bias in an otherwise subjective evaluation technique.

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3 ways technology influences PMS

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1. aligns performance goals across all levels 2. access to performance information, data and tools 3. improves efficiency of PMS

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electronic tracking and monitoring systems

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software to ensure that employees are working when and how they should be and to block access to visiting certain websites (such as those containing pornographic images). These systems include hand and fingerprint recognition systems, global positioning systems (GPS), and systems that can track employees using cell phones and handheld computers

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Typical rater errors

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"Similar to Me" is the error we make when we judge those who are similar to us more highly than those who are not. Contrast errors occur when we compare individuals with one another instead of with an objective standard. Leniency- Rater gives high ratings to all employees regardless of their performance. 4. Strictness- Rater gives low ratings to all employees regardless of their performance. 5. Central Tendency- Rater gives middle or average ratings to all employees despite their performance. 6. Halo errors occur when one positive performance aspect causes the rater to rate all other aspects of performance positively. Halo error leads to employees believing that no aspects of their performance need improvement 7. Horns error works in the opposite direction: one negative aspect results in the rater assigning low ratings to all the other aspects. Horns error makes employees frustrated and defensive.

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appraisal politics

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evaluators purposefully distorting a rating to achieve goals

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3 approaches to reducing rater error

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rate error training frame-of-reference or rater accuracy training calibration meetings

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5 factors to consider when analyzing poor performance

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input performance standards/goals consequences feedback employee characteristics

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marginal employees

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are those employees who are performing at a bare minimum level because of a lack of ability and/or motivation to perform well.

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ways to manage performance

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solid performers misdirected effort underutilizers deadwood

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solid performers

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Employees with high ability and motivation are likely good performers

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misdirected effort

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Poor performance resulting from lack of ability but not motivation

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underutilizers

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Managers with employees who have the ability but lack motivation

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deadwood

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Chronic poor performance by employees with low ability and motivation

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