Mgnt206- Performance appraisal goal-setting and management by objectives

Performance management
Aims to improve organisational, functional, unit and individual performance by linking the objectives of each.
Performance appraisal
Concerned with determining how well employees are doing their job, communicating that information to employees, agreeing on new objectives and establishing a plan for performance improvement
Key Elements of Performance management:
– Creation of a shared vision
– Establishment of performance objectives
– Use of formal review process to evaluate functional group and individual progress towards goal achievement
– The linking of performance evaluation and employee development and rewards to motivate and reinforce desired behaviours
– To provide information for making personnel decisions involving compensation, promotion and discipline or termination
– To provide feedback to subordinates for improving performance
Conflict between objectives:
– On the one hand, gathering information to provide helpful feedback to employees
– On the other hand, gathering information to make personnel decisions that may adversely affect an employee
Criterion Problem
– Validity and Reliability
– Is the test measuring what it is supposed to?
– Eg. Quality not easily managed, customer contact, product
Dennings view on performance appraisal
– Individual employees do not differ significantly in their work performance
– Any observed differences are simply the result of sampling error
– An variation in employee performance is predominantly a result of factors outside the individuals control
– Management appraisers are incapable of distinguishing between employee-cause and system-caused variations in performance
Why do PA systems often fail?
– Difficulties measuring performance-use of subjective performance criteria and proxies with limited criterion relevance
– PA systems don’t fit the organisational context
– Poorly designed PA systems, eg. Invalid performance criteria
– PA objectives are disliked by employees eg. Surveillance, accountability and control, rather than employee development
– Appraisal is a technology of power and may be subverted or resisted by employers and managers alike
Sources of Error in PA
– Halo Effect; if the manager gives an employee the same rating on all factors by generalising from one specific factor
– Strictness bias; when managers rate their employees either consistently low or high
– Central Tendency; manager gives everyone an average or acceptable rating, regardless of actual performance
– Recency effect; manager overemphasises the employees most recent behaviour
– Central Tendency; manager gives everyone an average or acceptable rating, regardless of actual performance
– Recency effect; manager overemphasises the employees most recent behaviour
– Rater errors; errors in the evaluation of an employees performance resulting from leniency/strictness bias, central tendency, prejudice, the recency effect and the like
– Central tendency; a common error that occurs when every employee is incorrectly rated near the average or middle scale
– Prejudice; where a manager demonstrates a positive or negative bias
– Inflating the appraisal;
➢ To maximise the merit increases a subordinate would be eligible to receive, especially when the merit ceiling was considered low
➢ To protect or encourage a subordinate whose performance was suffering because or personal problems
– deflating the appraisal
➢ to shock a subordinate back onto a higher performance track
➢ to teach rebellious subordinate a lesson about who is in charge
➢ to send a message
– relationship effect; this occurs where the nature of the superior/subordinate relationship influences a performance rating
Graphic Rating Scales
– Graphic Rating Scales
➢ The manager can choose one of 5 degrees for each specific criterion eg. Unsatisfactory or needs improvement
➢ Has merit of providing feedback to employees
➢ Problems: very susceptible to various types of rate error eg. Halo effect
➢ Raters eg. Supervisors, peers, self, subordinates and team appraisals
Behaviourally Anchored Rating Scales (BARS)
➢ A quantitative modification of critical incident technique designed to evaluate behaviour demonstrated in performing a job
➢ Gather incidents and sort them into categories of behaviour, managers then rant incidents good to bad on a 7 point scale
➢ Used to construct a rating scale that has behavioural anchors
➢ Feedback is provided
➢ Problems; time consuming and complex for small organisations, conflicting evidence and leniency can occur
Behaviour Observation Scales (BOS)
➢ Based on critical incident analysis
➢ Employee behaviours required for successful job performance are identified
➢ Frequency with which employees exhibit such behaviours are listed on 5 point scale, ranging form ‘almost always’ to ‘almost never’
➢ Problems; expensive and time consuming
Ranking system
➢ Compares each persons performance, with the manager ranking all subordinated from best to worst
➢ Problems; overcomes leniency but halo effect may creep in, highly subjective, create internal conflict, no indication of actual performance
– critical incidents
➢ examples of employee behaviour that illustrate effective or ineffective job performance
– behaviour observation scales
➢ performance appraisal system that uses critical incidents to develop a list of desired behaviours needed to perform a specific job successfully
– essay description
➢ a written statement describing an employees strengths, weaknesses, past performance and future development prepared by the rater
– balanced scorecard BSC
➢ a performance management technique that evaluates organisational performance in 4 key areas: people, internal operations, customer satisfaction and financial
– Assessment centre
➢ Technique that uses interviews, group discussion, tests, simulations, games and observations to evaluate an individuals potential
– workplace surveillance
➢ monitoring of employee performance
➢ rapidly becoming a matter of considerable controversy
➢ dsiadv: diminished productivity, potential legal liability and information theft
Management by objectives
– Involves setting specific measureable goals with each employee and then periodically reviewing the progress made
– SMART goals
– Organisation is collegial and high involvement
– Focuses in particular on managers within the organisation
– Optimistic view of people
– Entails a movement from autocratic to democratic leadership
– At intervals lower level managers meet with senior managers to develop short run goals and objectives
– Lower to mid level managers develop their own goals and present them in written form
– Goals reviewed by superior
– Meet to discuss whether goals have been met and set new ones
Strengths and Weaknesses of MBO
– strengths;
➢ Based on sound goal setting theory
➢ Objectives must be quantified and tied to time period
➢ Involves employees in process of goal setting
– weaknesses
➢ managers reluctant to let go of control
➢ lower manager unwilling to assume goal setting role
➢ hard to compare peoples performance
➢ works best when needed least
Effect of goal setting on work-task performance
– involving employees in the setting of performance goals is a powerful way to elicit better task performance
– goals setting leads to higher levels of performance
➢ behavioural direction
➢ increased effort persistence
➢ knowledge search procedure
– employee participation tends to lead to more difficult goals being set than unilateral goals
– difficult goals tend to result in higher task performance- provided the employee is committed to achieving the goals
Implications of goals setting theory
– even if the PA system you are using is less than ideal and even if the organisation you are managing is love involvement one try to allow room at the end of the appraisal for some collaborative goal-setting
effective performance appraisal interviews
– the managers knowledge of the employees job and performance
– the managers support of the employee
– the mangers involvement of the employee in discussion
Purpose of the performance review discussion
– Mutually review the employees responsibilities
– Mutually review the employees performance
– Mutually explore what each party can do to ensure performance improvement
– Mutually review the employees short term and long term goals
Preparation for the performance review discussion
– review job description and read the employees last appraisal
– check performance against mutually agree goals
– consult with other managers who have contact with the employee
– alert the employee well in advance about the forthcoming review
– list all key points to be discussed at interviews and allow sufficient time for discussion
conduct of the performance review discussion
– problems should be discussed as problems not criticisms
– the review should not attack the employees personality
– the employee should be encouraged to talk
– specific performance improvement objectives should be set
– the manager should discuss only those things that can be changed and should avioud using authority
Static and Dynamic performance appraisals
-for effective management, performance appraisal should be dynamic
– characterised by 3 key qualities:
➢ goal establishment
➢ performance feedback
➢ performance improvement
– responsibilities; major areas in which the employee is accountable for achieving results
– indicators; a means for measuring progress towards meeting a responsibility
– goals; specified desired results. They are the qualitative or quantitative values set for an indicator
The importance of goal setting in performance improvement
– research findings conclude
➢ the setting of specific goals is more likely to lead to higher performance than simply telling an employee to do your best
➢ goals that are perceived to be difficult to achieve or require stretch tend to result in better performance than goals that are perceived to easy
Possible causes for underperformance
– personal circumstances
– know how
– substance abuse
– discrimination
– harassment
– social
– ethical
– health

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