Performance Management Chapter 20 Performance Management

Objectives Explain the importance of performance feedback Describe the process of performance appraisal Identify the components of effective appraisals Demonstrate the skills required for a good appraisal Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -1

…Objectives Describe 360-degree feedback Explain the opposition to appraisal systems Distinguish between effective and ineffective feedback Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -2

Performance Management System - Defined A performance management system is a process of establishing performance standards and evaluating performance to ensure that goals are being effectively accomplished Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -3

The Balanced Scorecard Customer perspective – How do customers see the organization? Internal business perspective – What must the organization excel at in order to succeed? Innovation and learning perspective – How can the organization continue to improve and create value? Financial perspective – How does the organization look to shareholders? Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -4

Basics of Performance Management Develop rigorous systems that differentiate between three groups of employees Create conditions that foster goal accomplishment Establish a culture of accountability Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -5

Function Of Performance Feedback Contributes to self-concept Reduces uncertainty about whether employee is on track Signals which organizational goals are most important Helps people master their environment and feel competent Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -6

Manager’s Role? Not a judge, but a coach Not “gotcha” but “How can I help you do better and achieve your goals?” Managers’ attitude toward appraisal and their skill in appraising and giving feedback are crucial Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -7

Basic Objectives of Performance Appraisal Systems Provide employees with feedback Provide management with data for personnel decisions Recognize skill acquisition and identify skill deficits for further training and development Motivate employees to be more effective Comply with equal opportunity regulations and ensure fairness Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -8

The Appraisal Process Review legal requirements Translate organizational goals into job descriptions Set clear job expectations Provide job training or coaching to meet expectations Supply adequate supervision Acknowledge accomplishments, diagnose strengths and weaknesses in interview Establish performance goals and development plan Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -9

Bias and Appraisals Incorrect attributions can bias appraisals Potential for bias is reduced when: Employees make their work visible to the appraiser Appraisers and appraisees together clarify objectives and task responsibilities Appraisers use behaviorally-based appraisal scales Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -10

Does Performance Appraisal Work? Meta-analysis results Feedback generally improves performance, but it can also diminish performance Appraisals used for developmental rather than administrative reasons (e.g., promotions, bonuses) are more likely to produce positive reactions Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -11

For Team Appraisals Determine KSAs required for team’s task and process-oriented skills Identify who should be involved in the appraisal Use both individual and team performance measures Address social loafing Ensure peers are trained in performance appraisal Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -12

Multirater/Multisource Feedback - Defined Multirater or multisource feedback, such as 360-degree feedback, incorporates feedback from various sources, such as: superiors, peers, subordinates, suppliers, and customers Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -13

360-Degree Multirater Feedback Employee Manufacturers’ & Customers’ ratings Suppliers’ ratings Employee’s self-rating Superiors’ ratings Other Team Members’ Ratings Subordinates’ ratings Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -14

For Effective 360-Feedback Ratees are held accountable for using the feedback Raters are held accountable for the accuracy or usefulness of their feedback Management provides resources to support the ratee’s behavioral change Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -15

Eliminate Performance Appraisal Deming’s criticisms of appraisals: Usually lack objectivity Ignore factors outside the employee’s control Encourage individual rather than team focus Promote short-sightedness and short-term focus Encourage employee to see boss as their “customer” rather than the real customer, which can result in fear, rivalry, and politics The TQM solution: recognize outstanding performers and coach poor performers; teams continuously gather data on own performance Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -16

Forced Distribution Systems - Defined In forced distribution or forced ranking systems, managers have to rank all employees and fit them into a pre-determined distribution with only a certain percentage of employees allowed in each category Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -17

Results of Forced Distribution Systems Employee skepticism Lower morale Less collaboration Lower productivity Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -18

Develop Strengths, Not Weaknesses Marcus Buckingham Focusing on Flaws Evokes negative memories/emotions Creates self-doubt Lowers motivation, energy, productivity and self-assurance Focusing on Strengths is more productive Discover each employee’s unique strengths Capitalize on them Work around their weaknesses Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -19

Effective Vs. Ineffective Feedback Descriptive Specific, data-based Directed at controllable behaviors Solicited Immediate Suggests ways to improve Intended to help Occurs when receiver is ready to listen Ineffective Evaluative General Directed at personality traits Imposed Delayed Prescribes ways to improve Intended to punish Occurs when giver is ready Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -20

Steps in the Interview Process Explain the format and purpose Discover employee opinions regarding performance and career goals Provide supervisor’s appraisal Problem solve about performance if necessary Plan for next period Employee presents self-appraisal Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -21

...Steps in the Interview Process Respond to employee self-appraisal and convey feedback Ask about conditions or problems that hinder performance Problem solve about what both could do to improve employee performance Together set objectives and design plan for next period Discuss long-term career goals and development needs Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -22

When Does Culture Matter in Performance Appraisal? Different cultures have different perceptions about the purpose of performance appraisal and how it should be carried out Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -23

Culture and Performance Appraisal Harmony and face-saving In Eastern cultures, negative feedback is likely to be interpreted as a loss of face and public humiliation Power distance In low power-distance cultures, employees are more willing to question superiors In high power-distance cultures, employees are more fearful of disagreeing with their boss Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -24

…Culture and Performance Appraisal Uncertainty avoidance In cultures characterized by high uncertainty avoidance, appraisal systems are more formalized with more detailed regulations and procedures Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -25

…Culture and Performance Appraisal Individualistic Cultures emphasize Individual achievement Individual incentive schemes Formal appraisal processes with feedback on performance Merit-based hiring and promotion Collectivist Cultures emphasize Group achievement Group incentive schemes Informal appraisals Hire and fire based on loyalty and seniority Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 20 -26