MPO -Performance Management (ch 14)

What is Performance Management?
A set of processes and managerial behavior that involves defining, monitoring, measuring, evaluation, and providing consequences for performance expectations
Two important concepts that are associated with Performance Management:
-Performance Appraisal
-Performance Feedback
Performance Appraisal
Organization gets information on how well an employee is doing on the job
Performance Feedback
Provides employees information regarding their performance effectiveness
What are the 6 steps of performance management process?
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
6. Provide consequences for performance results
Key purposes of Performance Appraisals
-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
Strategic Relevance/Congruence of Measuring Performance
-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
Validity of Measuring Performance
-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
Reliability of Measuring Performance
Consistency of performance measures -getting the same results consistently
Acceptability of Measuring Performance
-Do the people who use the performance measure accept it?
-Influenced by fairness perceptions regarding the measure
Specificity of Measuring Performance
Extent to which a performance measure tells employees what is expected of them and how they can meet these expectations
Comparative Approach to Performance Appraisal
-Comparing an individual’s performance with that of others
-Reduced leniency, central tendency, and strictness
Ranking to Performance Appraisal
-Simple ranking: ranks employees from highest to lowest performer
-Alternation ranking: crosses off best and worst employees
Forced Distribution to Performance Appraisal
Certain percentage of employees goes into each category
Paired Comparisons to Performance Appraisal
Managers compare each employee with every other employee in the work group
Attribute or Trait-Based Approach to Performance Appraisal
Does the employee have the desirable attributes? (traits/characteristics)
Graphic Rating Scales to Performance Appraisal
-List of traits evaluated by a 5 point rating scale
-Legally questionable
Forced-Choice Method of the Attribute or Trait-Based Approach to Performance Appraisal
Requires the rater to choose from statements to distinguish between successful and unsuccessful performance
Essay Method of the Attribute or Trait-Based Approach to Performance Appraisal
Rater composes a statement describing employee characteristics
Behavior Approach to Performance Appraisal
Attempts to define the behaviors an employee must exhibit to be effective in the job
Critical Incidents to Performance Appraisal
Managers keep a record of specific examples of effective or ineffective performance for each employee
Behaviorally Anchored Rating Scales (BARS) of Performance Appraisal Approaches
Consists of a series of vertical scales, one for each dimension of job performance, typically developed by a committee including both subordinates and managers
Behavioral Observation Scale (BOS) of Performance Appraisal Approaches
-A variation of BARS
-Measures the frequency of observed behaviors
-These measures are then averaged to compute the overall performance rating
BOS is ________ over BARS

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

Organizational Behavior Modification (OBM) of Performance Appraisal Approaches
Formal system of behavioral feedback and reinforcement
Assessment Centers of Performance Appraisal Approaches
-Usually used for measuring managerial performance
-Combine different performance appraisal methods and multiple raters
-Usually include simulated tasks
Results Approach of Performance Appraisal Approaches
Focusing on managing the objectives and having measurable results
Productivity Measurement and Evaluation System of Performance Appraisal Approaches
-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

Management by Objectives (MBO) of Performance Appraisal Approaches
-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

Quality Approach of Performance Appraisal Approaches
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
Manager/Supervisor Performance Management Characteristics
Traditional approach, usually only as good as performance measures, provide broad perspective of employee performance, usually reviewed by manager’s supervisor
Self Performance Management Characteristics
Completed by employee, people are more lenient on themselves, employees might believe they have influence on rating, better for developmental purposes
Subordinate Performance Management Characteristics
Employees appraise their superior, have frequent contact, good for some behaviors but not all, managers leery of this method, good for developmental purposes
Peer Performance Management Characteristics
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
Team Performance Management Characteristics
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
Customer Performance Management Characteristics
Both external and internal customers (people that depend on employee’s output), popular in retail organizations, both developmental/administrative
360 Degree Performance Management Characteristics
Combines various sources of performance appraisals to ensure maximum quality, is comprehensive, has less bias, is more complex and requires training
Similar To Me Effect Rating Error
The error we make when we judge those who are similar to us more highly than those who are not
Strictness Rating Error
The rater gives low ratings to all employees regardless of their performance
Leniency Rating Error
The rater gives high ratings to all employees regardless of their performance
Central Tendency Rating Error
The rater gives middle ratings to all employees regardless of their performance
Contrast Effect Rating Error
The rater compares individuals with one another instead of comparing them with objective, predefined standards
Halo Effect Rating Error
-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
Horns Effect Rating Error
-One negative performance aspect causes the rater to rate all other aspects of performance negatively
-Makes employees frustrated and defensive
Rater Error Training of Improving Performance Appraisals
Makes managers aware of the rating errors and helps them to develop strategies that minimize them
Frame-of-Reference (Rater Accuracy) Training of Improving Performance Appraisals
Familiarizes raters with the multiple dimensions of performance, offers examples of performance for each of the job-related performance dimensions
Calibration Meetings of Improving Performance Appraisals
Meetings among managers to discuss employee performance ratings
Recommendations for Improving Performance Feedback/Interview
-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
How can firms avoid discrimination in performance appraisals?
-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
Positive & Negative Reinforcement
A certain behavior is encouraged/promoted by bestowing positive consequences or withholding negative consequences
Punishment Reinforcement
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
Extinction Reinforcement
Weakening a behavior by attaching no positive or negative consequences to it
Continuous Reinforcement
Every instance of the targeted behavior is reinforced
Intermittent Reinforcement
Some but not all instances of the targeted behavior are reinforced
Extinction or Non-Reinforcement
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

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