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What is Performance Management?

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A set of processes and managerial behavior that involves defining, monitoring, measuring, evaluation, and providing consequences for performance expectations

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Two important concepts that are associated with Performance Management:

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-Performance Appraisal -Performance Feedback

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Performance Appraisal

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Organization gets information on how well an employee is doing on the job

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Performance Feedback

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Provides employees information regarding their performance effectiveness

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What are the 6 steps of 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. 6. Provide consequences for performance results

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Key purposes of Performance Appraisals

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-Strategic: developing measures and feedback systems that push employees to engage in behaviors and produce results that align with the organization's goals -Administrative: used in personnel decisions -Developmental: provide feedback, identify training and developmental needs

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Strategic Relevance/Congruence of Measuring Performance

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-The extent to which the standards used relate to the strategic objectives and the culture of the organization -Emphasized the need for the performance management system to direct employees towards contributing to the organization's strategic objectives and success -Ex: 95% of all customer complaints are to be resolved in one day

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Validity of Measuring Performance

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-The extent to which the performance measure assess all relevant - and only the relevant - aspects of job performance -Validity is concerned with maximizing the overlap between actual job performance and the measure of job performance

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Reliability of Measuring Performance

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Consistency of performance measures -getting the same results consistently

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Acceptability of Measuring Performance

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-Do the people who use the performance measure accept it? -Influenced by fairness perceptions regarding the measure

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Specificity of Measuring Performance

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Extent to which a performance measure tells employees what is expected of them and how they can meet these expectations

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Comparative Approach to Performance Appraisal

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-Comparing an individual's performance with that of others -Reduced leniency, central tendency, and strictness

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Ranking to Performance Appraisal

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-Simple ranking: ranks employees from highest to lowest performer -Alternation ranking: crosses off best and worst employees

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Forced Distribution to Performance Appraisal

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Certain percentage of employees goes into each category

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Paired Comparisons to Performance Appraisal

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Managers compare each employee with every other employee in the work group

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Attribute or Trait-Based Approach to Performance Appraisal

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Does the employee have the desirable attributes? (traits/characteristics)

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Graphic Rating Scales to Performance Appraisal

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-List of traits evaluated by a 5 point rating scale -Legally questionable

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Forced-Choice Method of the Attribute or Trait-Based Approach to Performance Appraisal

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Requires the rater to choose from statements to distinguish between successful and unsuccessful performance

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Essay Method of the Attribute or Trait-Based Approach to Performance Appraisal

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Rater composes a statement describing employee characteristics

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Behavior Approach to Performance Appraisal

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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 to Performance Appraisal

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Managers keep a record of specific examples of effective or ineffective performance for each employee

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Behaviorally Anchored Rating Scales (BARS) of Performance Appraisal Approaches

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Consists of a series of vertical scales, one for each dimension of job performance, typically developed by a committee including both subordinates and managers

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Behavioral Observation Scale (BOS) of Performance Appraisal Approaches

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-A variation of BARS -Measures the frequency of observed behaviors -These measures are then averaged to compute the overall performance rating

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BOS is ________ over BARS

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preferred -more objective, better in distinguishing good and bad performers, better in identifying training needs

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Organizational Behavior Modification (OBM) of Performance Appraisal Approaches

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Formal system of behavioral feedback and reinforcement

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Assessment Centers of Performance Appraisal Approaches

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-Usually used for measuring managerial performance -Combine different performance appraisal methods and multiple raters -Usually include simulated tasks

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Results Approach of Performance Appraisal Approaches

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Focusing on managing the objectives and having measurable results

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Productivity Measurement and Evaluation System of Performance Appraisal Approaches

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-The goal is to motivate employees to higher levels of productivity -Ex: salesperson evaluated on the basis of sales volume -Issues: usually the focus is on short-term results, criterion deficiency, criterion contamination

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Management by Objectives (MBO) of Performance Appraisal Approaches

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-Rates performance by employee achievement of goals mutually agreed upon by managers and employees Important Notes: -Managers and employees should develop goals together -The objective should be quantifiable and measurable (long and short term) -The results should be under the control of the employee and free from criterion contamination -Goals should be consistent with the level of the employee -Managers and employees should set specific deadlines for evaluating whether the goals have been met

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Quality Approach of Performance Appraisal Approaches

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Focuses on 1 or more of 4 perspectives on performance -Financial Performance: create sustainable growth -Customer Performance: create value for customer -Internal/Operations Performance: processes that influence customer satisfaction -Learning and Growth Performance: capacity for innovation and improvement

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Manager/Supervisor Performance Management Characteristics

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Traditional approach, usually only as good as performance measures, provide broad perspective of employee performance, usually reviewed by manager's supervisor

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Self Performance Management Characteristics

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Completed by employee, people are more lenient on themselves, employees might believe they have influence on rating, better for developmental purposes

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Subordinate Performance Management Characteristics

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Employees appraise their superior, have frequent contact, good for some behaviors but not all, managers leery of this method, good for developmental purposes

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Peer Performance Management Characteristics

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Done by fellow employees, more realistic picture of performance, more accurate and valid than appraisal by superior, may be a popularity contest, managers want control over appraisals, possible retaliation

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Team Performance Management Characteristics

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Recognizes team accomplishments rather than individual, difficult to separate out one individual's contribution, encourages teamwork if used with team-based incentives, becoming more common today

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Customer Performance Management Characteristics

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Both external and internal customers (people that depend on employee's output), popular in retail organizations, both developmental/administrative

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360 Degree Performance Management Characteristics

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Combines various sources of performance appraisals to ensure maximum quality, is comprehensive, has less bias, is more complex and requires training

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Similar To Me Effect Rating Error

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The error we make when we judge those who are similar to us more highly than those who are not

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Strictness Rating Error

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The rater gives low ratings to all employees regardless of their performance

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Leniency Rating Error

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The rater gives high ratings to all employees regardless of their performance

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Central Tendency Rating Error

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The rater gives middle ratings to all employees regardless of their performance

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Contrast Effect Rating Error

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The rater compares individuals with one another instead of comparing them with objective, predefined standards

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Halo Effect Rating Error

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-One positive performance aspect causes the rater to rate all other aspects of performance positively -Leads to employees believing that no aspects of their performance need improvement

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Horns Effect Rating Error

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-One negative performance aspect causes the rater to rate all other aspects of performance negatively -Makes employees frustrated and defensive

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Rater Error Training of Improving Performance Appraisals

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Makes managers aware of the rating errors and helps them to develop strategies that minimize them

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Frame-of-Reference (Rater Accuracy) Training of Improving Performance Appraisals

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Familiarizes raters with the multiple dimensions of performance, offers examples of performance for each of the job-related performance dimensions

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Calibration Meetings of Improving Performance Appraisals

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Meetings among managers to discuss employee performance ratings

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Recommendations for Improving Performance Feedback/Interview

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-Give feedback frequently (not once a year) -Create the appropriate context for discussion -Ask employees to rate their own performance prior to the session -Encourage employees to participate -Recognize effective performance through praise -Focus on solving problems -Focus on behaviors, not the individual -Minimize criticism -Agree to specific goals and set progress review dates -Follow up day-to-day

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How can firms avoid discrimination in performance appraisals?

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-Rater training -Use more than one rater -Have raters provide written justifications or, in general, hold them accountable for the evaluations -Make diversity a performance standard for raters

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Positive & Negative Reinforcement

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A certain behavior is encouraged/promoted by bestowing positive consequences or withholding negative consequences

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Punishment Reinforcement

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We want to make sure that a certain behavior will NOT be repeated in the future by applying a negative consequence or withholding a positive consequence following the undesirable behavior

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Extinction Reinforcement

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Weakening a behavior by attaching no positive or negative consequences to it

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Continuous Reinforcement

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Every instance of the targeted behavior is reinforced

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Intermittent Reinforcement

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Some but not all instances of the targeted behavior are reinforced

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Extinction or Non-Reinforcement

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An attempt to weaken a specific behavior by attaching no positive or negative consequences to it -Equivalent to ignoring a behavior. Ex: ignoring a child fussing over not being bought a new toy. Eventually, the fussing will stop

MPO -Performance Management (ch 14) – Flashcards

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