Managing Employees’ Performance Chapter 8 Managing Employees’ Performance What Do I Need to Know? 1.  Identify the activities involved in performance management.  2.  Discuss the purposes of performance management systems.  3.  Define five criteria for measuring the effectiveness of a performance management system.  4.  Compare the major methods for measuring performance.  5.  Describe major sources of performance information in terms of their advantages and disadvantages.  6.  Define types of rating errors and explain how to minimize them.  7.  Explain how to provide performance feedback effectively.  8.  Summarize ways to produce improvement in unsatisfactory performance.  9.  Discuss legal and ethical issues that effect performance management.  

2 of 16 Introduction Performance management: the process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals. The process of performance management requires: Knowing what activities and outputs are desired Observing whether they occur Providing feedback to help employees meet expectations McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

The Process of Performance Management Traditional approaches versus performance management Performance appraisal: the measurement of specified areas of an employee’s performance. Stages of the performance management process include: Defining performance Measuring performance Providing feedback on performance Using this type of performance management process in place of the traditional performance appraisal routine helps managers and employees focus on the organization’s goals. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Performance Appraisal Problems and Performance Management Solutions 4 of 16 Performance Appraisal Problems and Performance Management Solutions McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Stages of the Performance Management Process McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Purposes of Performance Management Three broad purposes include: Strategic purposes: helps the organization achieve its business objectives Administrative purposes: the ways in which the organization uses the system to provide information for day-to-day decisions about salary, benefits, and recognition programs Developmental purposes: serves as a basis for developing employees’ knowledge and skills McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Criteria for Effective Performance Management 7 of 16 Criteria for Effective Performance Management McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Basic Approaches to Performance Measurement 8 of 16 Basic Approaches to Performance Measurement McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Sources of Performance Information McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Errors in Performance Measurement 10 of 16 Errors in Performance Measurement Similar-to-me error: An unfortunate result of this type of error is possible discrimination Errors in distribution: Leniency Strictness Central tendency Errors in distribution pose two problems: They make it difficult to distinguish among employees rated by the same person They create problems in comparing the performance of individuals rated by different raters Halo and Horns When raters make these types of errors, the performance measurement cannot provide specific information needed for useful feedback McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Giving Performance Feedback 11 of 16 Giving Performance Feedback Once the manager and others have measured an employee’s performance, that information must be given to the employee. Performance feedback should be a regular, expected management activity. Providing feedback more than once a year is most beneficial to the employee and the organization. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Preparing for a Feedback Session 12 of 16 Preparing for a Feedback Session To prepare for a feedback session managers should: Be well prepared Create the right context for the meeting Select a neutral location Enable the employee to be well prepared Ask employees to complete a self-assessment ahead of time McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Conducting the Feedback Session 13 of 16 Conducting the Feedback Session During the feedback session, managers can take any of three approaches: Tell and sell approach: managers tell the employees their ratings and then justify those ratings Problem-solving approach: managers and employees work together to solve performance problems in an atmosphere of respect and encouragement Tell and listen approach: managers tell the employees their ratings and then let the employees explain their side of the story McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Finding Solutions to Performance Problems 14 of 16 Finding Solutions to Performance Problems When performance evaluation indicates that an employee’s performance is below standards, the feedback process should launch an effort to correct the problem. The final stage of performance management involves identifying areas for improvement and ways to improve performance in those areas. To determine an employee’s ability level, the manager should consider whether the employee has the knowledge, skills, and abilities needed to perform the job effectively. To determine an employee’s level of motivation, managers need to consider whether the employee is holding a job he or she wants. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Legal Requirements for Performance Management 15 of 16 Legal Requirements for Performance Management Because performance measures play a central role in decisions about pay, promotions, and discipline, employment-related lawsuits often challenge an organization’s performance management system. Lawsuits related to performance management usually involve the charges of discrimination or unjust dismissal. To protect against both kinds of lawsuits, it is important to have a legally defensible performance management system. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Electronic Monitoring and Employee Privacy 16 of 16 Electronic Monitoring and Employee Privacy Computer technology now supports many performance management systems. Congress has considered laws to regulate computer monitoring. Electronic monitoring provides detailed, accurate information, but employees may find it demoralizing, degrading, and stressful. It is essential that organizations protect the privacy of performance measurements, as they must do with other employee records. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.