Performance management – an organization-wide system by which managers integrate the activities of goal-setting, monitoring and evaluating, providing feedback and coaching, and rewarding employees on a continuous basis
Goal Setting Employees with a clear line of sight understand the organization’s strategic goals and know what actions they need to take, both individually and a team members.
Two Types of Goals Performance outcome goal – targets a specific end result. Learning goal – strives to improve creativity and develop skills
Goal Setting Management by objectives – management system incorporating participation in decision making, goal setting, and feedback
Step 1: Set goals – Whether goals are imposed or, preferably, set participatively via a free exchange with one’s manager, they should be “SMART.” – specific, measurable, attainable, results oriented, and time bound
Two additional recommendations: 1.For complex tasks, managers should train employees in problem-solving techniques and encourage them to develop a performance action plan
2.Because of individual differences, it may be necessary to establish different goals for employees performing the same job.
Step 2: Promote goal commitment – Explain why the organization is committed to a comprehensive goal-setting program. – Create clear lines of sight by clarifying the corporate goals and linking the individual’s goals to them. – Let employees participate in setting their own goals – Have employees build goal ladders
Step 3: Provide support and feedback – Make sure each employee has the necessary skills and information to reach his goals – Pay attention to employees’ effort → performance expectations, perceived self-efficacy, and reward preferences and adjust accordingly – Be supportive and helpful
Feedback – information about individual or collective performance
Functions of Feedback Instructional – clarifies roles or teaches new behaviors Motivational – serves as a reward or promise of a reward Feedback enhances the effect of specific, difficult goals
Practical Lessons Managers can enhance their credibility as sources of feedback by developing their expertise and creating a climate of trust. Negative feedback is typically misperceived or rejected Recipients of feedback perceive it to be more accurate when they actively participate in the feedback session versus passively receiving feedback
360-Degree feedback – Letting individuals compare their own perceived performance with behaviorally specific (and usually anonymous) performance information from their manager, subordinates, and peers
Giving Feedback Focus on performance, not personalities. Give specific feedback linked to learning goals and performance outcome goals. Channel feedback toward key result areas for the organization. Give feedback as soon as possible. Give feedback to coach improvement, not just for final results.
Extrinsic Rewards Fail 1.Too much emphasis on monetary rewards. 2.Rewards lack an “appreciation effect.” 3.Extensive benefits become entitlements. 4.Counterproductive behavior is rewarded. 5.Too long a delay between performance and rewards. 6.Too many one-size-fits-all rewards.
Pay for Performance Pay for performance – monetary incentives linking at least some portion of the paycheck directly to results or accomplishments
Extrinsic Rewards Tie praise, recognition, and noncash awards to specific results. Make pay for performance an integral part of the organization’s basic strategy Base incentive determinations on objective performance data. Have all employees actively participate in the development of the performance-pay formulas Reward teamwork and cooperation whenever possible
Thorndike’s Law of Effect Law of effect – Behavior with favorable consequences tends to be repeated; behavior with unfavorable consequences tends to disappear
Positive Reinforcement Respondent behavior – Skinner’s term for unlearned reflexes or stimulus-response connections Operant behavior – behavior that is learned when one “operates on” the environment to produce desired consequences.
Positive reinforcement – process of strengthening a behavior by contingently presenting something pleasing Negative reinforcement – strengthens a desired behavior by contingently withdrawing something displeasing
Punishment – process of weakening behavior through either the contingent presentation of something displeasing or the contingent withdrawal of something positive Extinction – Weakening a behavior by ignoring it or making sure it is not reinforced
Extinction Negative Reinforcement Active (do something) Discourage Passive (withhold something) Punish Positive Reinforcement Encourage
Schedules of Reinforcement Continuous reinforcement – reinforcing every instance of a target behavior Intermittent reinforcement – reinforcing some but not all instances of a target behavior