HRTM 344 – Chapter 8

Performance Management
Process through which managers ensure that employees’ activities and outputs contribute to the organizations goals.

-Knowing what activities and outputs are desired
-Observing whether they occur
-Providing feedback to help employees meet expectations

If the performance management system created competition among team members, I would…
Steps in Performance Management
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 improvements needed
6. Provide consequences for performance results
Purposes of Performance Management
-Strategic Purpose: effective performance management helps the organization achieve its business objectives.

-Administrative Purpose: ways in which organizations use the system to provide information for day-to-day decisions about salary, benefits, and recognition programs.

-Developmental Purpose: serves as a basis for developing employees’ knowledge and skills.

Criteria for Effective Performance Management
-Fit with strategy
-Specific Feedback
Methods for Measuring Performance
Simple Ranking
Method of performance measurement that requires managers to rank employees in their group from the highest performer to the poorest performer.
Forced-Distribution Method
Method of performance measurement that assigns a certain percentage of employees to each category in a set of categories.
Paired-Comparison Method
Method of performance measurement that compares each employee with each other employee to establish rankings.
Graphic Rating Scale
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.
Mixed-Standard Scales
Method of performance measurement that uses several statements describing each trait to produce a final score for that trait.
Critical-Incident Method
Method of performance measurement based on managers’ records of specific examples of employee acting in ways that are either effective or ineffective.
Behaviorally Anchored Rating Scale (BARS)
Method of performance measurement that rates behavior in terms of a scale showing specific statements of behavior that describe different levels of performance.
Behavioral Observation Scale (BOS)
Variation of BARS which uses all behaviors necessary for effective performance to rate performance at a task.
Organizational Behavior Modification (OBM)
A plan for managing the behavior of employees through a formal system of feedback and reinforcement.
Management by Objectives (MBO)
A system in 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 organization’s overall goals; these goals become the standards for evaluating each employee’s performance.
Total Quality Management (TQM)

-combines measurements of attributes and results

360-Degree Performance Appraisal
Method of performance measurement that combines information from the employee’s managers, peers, subordinates, self and customers.
Types of Performance Measurement Rating Errors
Contrast Errors: rater compares an individual, not against an objective standard, but against other employees.

Distributional Errors:rater tends to use only one part of a rating scale.
-Leniency: the reviewer rates everyone near the top
-Strictness: the rater favors lower rankings
-Central tendency: the rater puts everyone near the middle of the scale

Rater Bias: raters often let their opinion of one quality color their opinion of others.
-Halo Error: when bias is in a favorable direction. This can mistakenly tell employees they don’t need to improve in any area.
-Horns Error: when bias involves negative ratings. This can cause employees to feel frustrated and defensive

Political Behavior in Performance Appraisals
-Distorting a performance evaluation to advance one’s personal goals
-A technique to minimize appraisal politics is a calibration meeting
Calibration Meeting
Meeting at which managers discuss employee performance ratings and provide evidence supporting their ratings with the goal of eliminating the influence of rating errors.
Scheduling Performance Feedback
-Performance feedback should be a regular, expected management activity.
-Annual feedback is not enough.
-Employees should receive feedback so often that they know what the manager will say during their annual performance review.
Giving Performance Feedback
During feedback sessions, managers can take any of
three approaches:
1. “Tell-and-Sell” – managers tell employees their ratings and then justify those ratings.
2. “Tell-and-Listen” – managers tell employees their ratings and then let employees explain view.
3. “Problem-Solving” – managers and employees work together to solve performance problems
6 Ways to Structure Communication
1. Focus on goals
2. Listen as well as talk
3. Be honest
4. Prevent surprises
5. Use specific, concrete examples.
6. Treat employees with respect
Legal Issues in Performance Management
Performance management processes are often scrutinized in cases of discrimination or dismissal.
Ethical Issues in Performance Management
Employee monitoring via electronic devices and computers may raise concerns over employee privacy.
Legal Requirements for Performance Management
Lawsuits related to performance management usually involve charges of:
-Unjust dismissal

Important to have a legally defensible performance management system