MGMT – Performance Management

Performance Management
managers ensure that employees’ activities and outputs are congruent with organizational goals. It is a set of processes and managerial behavior that involve defining, monitoring, measuring, evaluating, and providing consequences for performance expectations. When this is effective, it is a continual process
Performance feedback
provides employees information regarding their performance effectiveness
Performance appraisal
organization gets information on how well an employee is doing on the job
Performance Management Process
1. Define performance outcomes for a 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
administrative, strategic, developmental
What are the 3 primary functions of performance management?
Administrative function
one of the functions of performance management; make employee related decisions – justify a pay raise, promotion or new assignment
Strategic function
One of the functions of performance management; developing measures and feedback systems that push employees to engage in behaviors and produce results
Developmental function
One of the functions of performance management; guid employee development – by assisting in identifying your strengths and weakness and highlighting training and development needs (and send strong messages)
strategic congruence, validity, reliability, acceptability, specificity
What are the five criteria of performance measures?
strategic congruence
One of the five criteria for performance measures; the extent to which a performance management system elicits job performance that is congruent with the organizations strategy – i.e. if an organization emphasizes customer service, then its performance measure should assess how well its employees are serving the customers
Validity
One of the five criteria for performance measures; producing the desired results – the extent that a performance measure assesses all of the relevant aspects of performance
reliability
One of the five criteria for performance measures; a measure of the accuracy of a test or measuring instrument – getting the same results consistently
acceptability
One of the five criteria of performance measures; refers to whether the people who use the performance measure accept it
specificity
One of the five criteria of performance measures; relevant and appropriate to the job – the extent to which a performance measurer tells employees what is expected of them and how they can meet these expectations
Establishing performance standards
must be based on job-related requirements derived from job analysis and reflected in job description and job specifications. Help translate an organization’s goals and objectives into job requirements that define acceptable and unacceptable performance levels.
Calibration
a process whereby managers meet to discuss the performance of individual employees to ensure their employee appraisals are in line with one another
Measuring performance
comparative approach compares performance with others. You can do this by ranking. Forced distribution ranks employees in groups certain percentage goes into each category. Can also be a paired comparison. This helps reduce leniency, central tendency, and strictness
Simple ranking
ranks employees from highest to lowest performer within their department
Alternation ranking
crosses off best and worst employees
Paired comparison
managers compare every employee with every other employee in work group. Every time the employee gets the “best employee”
Attribute Approach
focuses on the extent to which individuals have certain attributes (characteristics/traits like initiative, leadership, and competitiveness) considered desirable to the company. Methods include graphic rating scales and mixed-standard scales
Graphic rating scales
An attribute approach method that rates according to a scale of characteristics – most common form – managers circle the rating for the trait on a scale from 1 to 5. This is legally questionable
Mixed-standard scales
An attribute approach method that defines relevant performance dimensions and develop statements representing good, average, and poor performance along each dimension. It is a combination of ranking and comments
Essay method
An attribute approach method that is composed of statements
Behavioral approach
Attempts to define the behaviors an employee must exhibit to be effective in the job. Includes the critical incident method, behaviorally anchored rating scale (BARS) and behavioral observation scale (BOS)
Critical incident method
A behavioral approach; requires managers to keep record of specific examples of effective and ineffective performance. The manager keeps a log or diary of each employee throughout the appraisal period and notes specific critical incidents related to how well they perform
critical incident
an unusual event that denotes superior or inferior employee performance in some part of the job
Behavioral anchored rating Scale (BARS)
a behavioral approach; consists of a series of vertical scales, one for each dimension of job performance. Typically developed by a committee that includes both subordinates and managers
Behavioral observation scales (BOS)
A behavioral approach; a performance appraisal that measures the frequency of observed behavior (critical incidents). Preferred over BARS for maintaining objectivity, distinguishing good performers from poor performers, providing feedback and identifying training needs
Competency Model
identifies competencies necessary for each model and provides descriptions common for an entire occupation, organization, job family or specific job, useful for recruiting, selection, training, and development
Competencies
sets of skills, knowledge, abilities, and personal characteristics that enable employees to successfully perform their jobs
Results approach
focuses on managing the objective, measurable results of a job or working group. Includes management by objectives (MBO) and Productivity Measurement and Evaluation System (ProMES)
Management by Objectives
A philosophy of management that rates performance on the basis of employee achievement of goals set by mutual agreement of employee and manager. (top management passes down company’s strategic goals to managers to define goals). 1. Managers and employees must be willing to establish goals and objectives together 2. Objectives should be quantifiable and measurable for the long and short terms 3. Expected results must be under the employee’s control and free from criterion contamination 4. Goals and objectives must be consistent for each employee level (top executive, manager, and employee) 5. Managers and employees must establish specific times when the goals are to be reviewed and evaluated
Productivity Measurement and Evaluation System (ProMES)
goal is to motivate employees to a higher level of productivity from a team or company level productivity. Appraisal is based on quantitative measures (e.g. sales volume) that directly link what employees accomplish to results beneficial to the organization. (criterion contamination and focus on short-term results)
customer, learning and growth, internal or operations, financial
What are the four perspectives of performance?
financial
One of the four perspectives of performance; creating sustainable growth in shareholder value
customer
One of the four perspectives of performance; defines values for customers like service, quality, etc.
Internal or operations
One of the four perspectives of performance; focus on process that influence customer satisfaction
Learning and growth
One of the four perspectives of performance; focus on a companies’ capacity to innovate and continuously improve
Quality Approach
a performance management strategy designed with a strong quality orientation – can assess both person and system factors in the measurement system. Emphasizes managers and employees working together to solve performance problems. Involves both internal and external customers in setting standards and measuring performance. Uses multiple sources to evaluate person and system factors. Sustainability is key in this approach
Statistical Process (quality control techniques
These are used by employees to identify causes of problems and potential solutions. Includes: Process-flow analysis, cause and effect diagrams, pareto chart, control chart, histogram, and scattergram
Process flow analysis
A Quality control technique; each action and decision necessary to complete work – helps to reduce redundancy that increases service or production time
Cause and effect diagrams
A quality control technique; events or causes that result in undesirable outcomes are identified
Pareto chart
A quality control technique; most important cause of a problem
Control chart
A quality control technique; collecting data at multiple points in time
Histogram
A quality control technique; helps in understanding the amount of variances between the outcome and expected value
Scattergram
A quality control technique; relationship between two variables helps to determine weather the relationship between two variables is positive, negative, or zero
Kaizen
practices participated in by employees from all levels of the company that focus on continuous improvements of business processes
managers, peers, subordinates, self, customers
What are the five performance information sources?
Legal guidelines of performance information sources
Performance ratings must be job-related. Employees must be given a written copy of their job standards in advance of appraisals. Managers who conduct the appraisal must be able to observe the behavior they are rating. Supervisors must be trained to use the appraisal form correctly. Appraisals should be discussed openly with employees and counseling or corrective guidance offered. An appeals procedure should be established to enable employees to express disagreement with the appraisal.
Managers
One of the performance information sources. This is the most frequently used source.
Self
One of the performance information sources; appraisal is done by the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview
Subordinates
One of the performance information sources; Appraisal of a superior by an employee, which is more appropriate for developmental than for administrative purposes
Peers
One of the performance information sources; appraisal by fellow employees, compiled into a single profile for use in an interview conducted by the employee’s manager. This is not used often because this can be a popularity contest. Those receiving low ratings might retaliate and this method relies on stereotype ratings
Team appraisal
this is based on TQM concepts; recognizes team accomplishment rather than individual performance
Customer appraisal
a performance appraisal that, like team appraisal, is based on TQM concepts and seeks evaluation from both external and internal customers
Typical rater errors
1. Error of central tendency 2. Leniency or strictness error 3. Similar-to-me error 4. Recency error 5. Contrast error 6. Halo/Horns error
Error of central tendency
a rating error in which all employees are rated about average
Leniency or strictness error
a rating error in which the appraiser tends to give all employees either unusually high or unusually low ratings
Similar-to-me error
an error in which an appraiser inflates the evaluation of an employee because of a mutual personal connection
Recency error
a rating error in which appraisal is based largely on an employee’s most recent behavior rather than on behavior throughout the appraisal period
Contrast error
a rating error in which an employee’s evaluation is biased either upward or downward because of comparison with another employee just previously evaluated
Halo/horns error
A rating error in which an appraiser’s evaluation of an employee’s performance is based/skewed because of the appraiser’s overall impression of the employee as good or bad
rater error training, frame of reference (accuracy training), calibration meetings
What are the 3 approaches to reducing rater error?
Appraisal politics
evaluators purposefully distorting a rating to achieve goals
establishing an appraisal plan
This involves: providing an explanation of the performance appraisal system’s objectives so that raters will understand the compensation and development purposes for which the appraisal is to be used. Explain the mechanics of the rating system (how frequently will the appraisals be conducted? Who will conduct them? What are the standards of performance?) Alter raters to the weaknesses and problems of appraisal systems so that they can be avoided
Rating error training
This is a way to reduce rater error: observe other managers making errors, actively participate in discovering their own errors. Practice job-related tasks to reduce the errors they tend to make
Feedback skills training
This is a way to reduce rater error: communicating effectively, diagnosing the root causes of performance problems and setting goals and objectives
Improve performance feedback
1. Give feedback frequently, not once a year. 2. Create right context for discussion 3. Ask employees to rate performance before the session 4. Encourage employee to participate 5. Recognize effective performance through praise 6. Focus on solving problems 7. Focus feedback on behavior or results, not on the person 8. Minimize criticism 9. Agree to specific goals and set profess review date
Solid performers
high ability and motivation; provide development to manage performance
Misdirected effort
Lack of ability but high motivation; focus on training to manage performance
Underutillizers
High ability but lack motivation; focus on interpersonal abilities to manage performance
Deadwood
Low ability and motivation; managerial action, outplacement, demotion, firing to manage performance.
Withstand legal scrutiny
1. Conduct a valid job analysis related to performance 2. Base system on specific behaviors or results 3. Train raters to use system correctly 4. Review performance ratings and allow for employee appeal 5. Provide guidance/support for poor performers 6. Use multiple raters 7. Document performance evaluations
Conducting the appraisal interview
Ask for self assessment prior to the interview. Invite participation, Express appreciation. Minimize criticism – we can only take so much. When it comes to criticism, is it really necessary? consider the person, be specific and don’t exaggerate, watch your timing, make improvements to your goal, focus on solving the problem, be supporting, establish goals and follow up
Tell and Sell Interviews
ability to persuade an employee to change in a prescribed manner.
Tell and listen interviews
appraiser communicates the strong and weak points of employee performance and then employee gets to respond
Problem solving interviews
stimulates growth and development by discussing and employees problems, needs, on the job satisfaction and dissatisfaction
attribute approach, behavioral approach, results approach, quality approach
What are the four approaches to measuring performance?