1. Class 11 - Chapter 9 Performance Management MGT 430 – Spring 2016

2. Performance Appraisals WHY???

3. Corporate Purposes of Performance Management
Used for personnel decisions, e.g. promotions, transfers, assignments and terminations;
Provide a legal paper trail to justify the above
Used to identify training and development needs;  
Used as a criterion against which selection and development programs are validated;
Used as a basis for reward allocation, i.e. salary increases;
Uses to keep our companies in compliance with, and in the spirit of, our labor laws.

4. Personal Reasons for Performance Evaluations
Compare yourself with others
Identify strengths & weaknesses that you can exploit for personal gain

5. Performance Management
Where was I then Where am I now Where do I need to be

6. Step 1: Identify the Performance Dimensions
What am I to deliver in this job
How will I be evaluated
What criteria will I be measured against
Ideally and rationally, these criteria will be articulated in a job description and
jointly modified during the rating period

7. Step 2: Developing Performance Dimensions
Developing measureable and meaningful performance criteria
Quantitative, i.e.:
That which can be objectively measured, e.g.
# new hires, turnover, payroll costs, benefit costs, disciplinary measures, tardiness, etc.
Qualitative, i.e.
Harder to measure and justify, e.g. morale, job satisfaction, satisfied customer service, etc.

8. PERFORMANCE MANAGEMENT EXAMPLE
You have just hired a bus driver for Mega-Bus. What are some of the quantitative and qualitative performance dimensions for this job? QUANTITATIVE QUALITATIVE

9. Step 3: Evaluating Employee Performance
(1) Individual Comparisons
Ranking approach — comparing employees to each other (e.g. best to worst). Easiest to do if quantitative data is available (e.g. sales volume);
Paired comparison — each employee is compared to every other employee and points are assigned to the “better” individual, points are totaled and compared
Forced distribution — managers are forced to distribute employees into predetermined categories and prevented from rating everyone as outstanding, or average.

10. RANKING APPROACH Superior Above average Average Below average
Marginal/unacceptable

12. FORCED DISTRIBUTION
Top 20% ________________________ Middle 70% ___________________________________________ Bottom 10% _________________________________________________________

13. Absolute Approaches to Performance Management
Employees are compared to a pre-determined standard. The evaluation is independent of any other employee in a work group
Attribute –
Designed to measure the extent to which an employee possess certain desirable characteristics - such as loyalty, dependability, creativity, initiative, and leadership – that are viewed as important for the job and the organization in general
Examples:
Graphic Rating Scale

15. Absolute Approaches to Performance Management
Behavioral
Attempts to define the behaviors an employee must exhibit to be effective in the job.
Examples:
Critical Incidents,
Behavior Observation Scales,
Behaviorally Anchored Rating Scales

17. Other Concepts of Performance Management
Management By Objectives (MBO)
Results based evaluation approach where managers meet with their employees to jointly set goals for them to accomplish during a rating period.
Commentary
Employees participate in the setting of goals
Evaluation is based upon quantifiable data
Objectives may change frequently and significantly during the rating period
Not all employees are capable to setting corporate goals or aligning these goals to the company’s business plan.

18. 360 Degree Appraisals
A comprehensive measurement approach that involves gathering performance data from as many sources as possible, e.g.
Supervisors — a key source but may not have time to monitor and observe employees every day
Co-Workers — may be able to comment on cooperation and support, but may intentionally skew rating
Self-Appraisal — can be useful starting point and developmental tool to help employee improve performance
Subordinates — may be hard to separate skill from “likeability”
Customers — satisfaction levels may only report extremely good or bad experiences

19. Pros & Cons With 360-Degree Ratings
Employee performance as seen from multiple perspectives
Studies indicate that 360 degree feedback may be an indicator of future performance
Cons -
Raters may be unqualified to rate objectively
May not elicit accurate data
Inconclusive empirical studies – the jury is still out
Some can use this system for revenge

20. Evaluating Employee Performance
(5) Weighting Performance Criteria
Each job differs in terms of how it adds value to the organization
Some forms of contributions may be more important than others for particular jobs
Weights are used to adjust the relative importance of different performance dimensions

22. COMMON PERFORMANCE MEASUREMENT ERRORS
Halo error — A bias that occurs when a positive characteristic of an employee affects the evaluation of that persons other attributes;
Horn Error - A bias that occurs when a negative characteristic of an employee affects the evaluation of that persons other attributes;
Contrast effect — manager artificially inflates or deflates an employee’s rating after comparing employee to another individual
Primacy error — rater’s earlier impressions of individual biases later evaluations of the person
Recency error — rater focuses on employee’s performance near the time of the evaluation

23. Performance Measurement Errors
Similar-to-me error — when managers rate more highly employees who resemble them in some way
Leniency error — constantly rating employees on the high end of the scale
Strictness error — constantly rating employees on the low end of the scale
Error of central tendency — rating everyone “average”

24. Step 4: Providing Feedback
Most managers are required to appraise employees every six months to a year
Feedback meeting on performance could be separate from meeting on salary decisions
Focus on behaviors rather than employee
Balance approach — positive and improvement areas
Involve/engage employee in discussion

25. Developing Action Plans to Improve Performance
Understanding the causes of poor performance which could
stem from
Work environment
Design of jobs
Technology
Support or performance of co-workers
Employee’s competencies, attitudes and behaviors
NOTE: This assumes that the manager knows well what excellent performance looks like.

26. Developing Action Plans to Improve Performance
Taking action
Removing barriers to employee success
Training and development activities
Coaching and mentoring
Work design and technology solutions
Addressing quality of employee’s performance

27. HRM CHALLENGE QUESTION
Should Performance Evaluations be abolished? Yes – Why No – Why