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Performance Management

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2 Performance Management
Chapter 9 Performance Management McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

3 Questions This Chapter Will Help Managers Answer
What steps can I, as a manager, take to make the performance management process more relevant and acceptable to those who will be affected by it? How can we best fit our approach to performance management with the strategic direction of our dept. and business? Should managers and non-managers be appraised from multiple perspectives – for example, by those above, by those below, by coequals, and by customers? What strategy should we use to train raters at all levels in the mechanics of performance management and in the art of giving feedback?

4 The Process of Performance Management
Define performance Facilitate performance Encourage performance

5 Defining Performance Key Elements
Goals Measures Assessment

6 Encouraging Performance
Provide a sufficient amount of rewards that employees really value 2. In a timely 3. Fair manner

7 What is Fairness? Important Practices
Voice Collect employee input through surveys or interviews Consistency Ensure that all employees are treated consistently when seeking input and communicating about the process for administering rewards Relevance Include rewards that employees really care about Communication Explain clearly the rules and logic of the rewards process

8 Figure 9-1 Elements of a Performance Management System
Define Performance Set objectives TO ENERGIZE EMPLOYEE PERFORMANCE Encourage Performance Provide timely rewards that are valued by employees Facilitate Performance Provide resources

9 Figure 9-2 Purposes of Performance Appraisal Systems
Employment Decisions Diagnosis of Organizational Problems Purposes of Performance Appraisal Systems Employee Feedback Objectives for Training Programs Criteria in Test Validation

10 Relevance Implies that there are Clear links between the performance standards for a particular job and organizational objectives, and 2. Clear links between the critical job elements identified through a job analysis and the dimensions to be rated on an appraisal form

11 Performance Standards
… translate job requirements into levels of acceptable or unacceptable employee behavior. They play a critical role in the job analysis-performance appraisal linkage.

12 Figure 9-3 Relationship of Performance Standards to Job Analysis and Performance Appraisal
Describes work and personal requirements of a particular job Translate job requirements into levels of acceptable /unacceptable performance Describes the job-relevant strengths and weaknesses of an individual or team

13 Rating Methods or Formats
Relative Rating Systems Comparing the performance of employees to that of other employees Absolute Rating Systems Evaluating each employee in terms of performance standards without reference to others Results-Oriented Systems Emphasis is on what employee produces

14 Ranking Simple ranking requires only that a rater order all employees from highest to lowest, from “best” employee to “worst” employee. Alternation ranking requires that a rater initially list all employees on a sheet of paper. From this list he or she chooses the best employee (No. 1), then the worst employee (No. n), then the second best (no. 2), then the second worst (No. n -1), and so forth, alternating from the top to the bottom of the list until all employees have been ranked.

15 Management By Objectives (MBO)
A process of managing that relies on goal-setting to establish objectives for the organization as a whole, for each department, for each manager within each department, and for each employee

16 Establishing Objectives in MBO What the Key People Involved Should Do
Meet to agree on the major objectives for a given period of time Develop plans for how and when the objectives will be accomplished Agree on the “yardsticks” for determining whether the objectives have been met

17 Who Should Evaluate Performance? Possible Raters
The immediate supervisor Peers Subordinates Self-appraisal Customers served Computers

18 Multi-Rater or 360 Degree Feedback
Using input from managers, subordinates, peers, and customers to provide a perspective on performance from all angles

19 Types of Teams Work or Service Teams Project Teams Network Teams
Intact teams engaged on routine tasks Project Teams Teams assembled for a specific purpose and expected to disband once their task is completed Network Teams Teams that include membership not constrained by time/space and membership is not limited by organizational boundaries

20 Types of Appraisal Errors
Halo error – raters assign their ratings on the basis of global (good or bad) impressions of ratees Contrast error – rater compares several employees to one another rather than to an objective standard of performance Recency error – rater assigns his or her ratings on the basis of the employee’s most recent performance

21 Table 9-3 Supervisory Activities Before, During, and After Performance Feedback Interviews
Communicate frequently with subordinates about their performance Get training in performance appraisal interviewing Plan to use a problem-solving approach rather than “tell-and-sell” Encourage subordinates to prepare for performance feedback interviews During Encourage subordinates to participate Judge performance, not personality and mannerisms Be specific Be an active listener

22 Table 9-3 contd. After Avoid destructive criticism
Set mutually agreeable goals for future improvements After Communicate frequently with subordinates about their performance Periodically assess progress toward goals Make organizational rewards contingent on performance

23 Key Terms Discussed in the Chapter
Performance management Performance appraisal Performance definition Performance facilitation Performance encouragement Relevance Performance standards Sensitivity Reliability Acceptability Practicality Applicant group Behavior-oriented rating methods Relative rating systems Absolute rating systems Results-oriented rating systems Simple ranking Alternation ranking Paired comparisons Forced distribution Leniency

24 Key Terms (contd.) Severity Central tendency Likert method
Summed ratings Critical incidents Graphic rating scales Behaviorally anchored rating scales (BARS) Management by objectives (MBO) Cascading process Work planning and review 360-degree feedback Total quality management Halo error Contrast error Recency error Active listening Destructive criticism

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