1. MKT 305 Human Resources Management Mishari Alnahedh

2. LECTURE 4: Performance Management

3. This process requires:
Performance Management
Mishari Alnahedh
Performance management: process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals.
This process requires:
Knowing what activities and outputs are desired
Observing whether they occur
Providing feedback to help employees meet expectations

4. Performance Management
Mishari Alnahedh
Effective performance management can tell top performers they are valued, encourage communication between managers and their employees, establish consistent standards for evaluating employees, and help the organization identify its strongest and weakest employees.
To meet these objectives, companies must think of effective performance management as a process, not an event.

5. Is it linked to the larger incentive and reward system?
Fundamental Questions about Performance Appraisal
Mishari Alnahedh
Is it linked to the larger incentive and reward system?
Does it make sense given the firm’s strategy?
Does it fit with the industry, workforce?
Is it consistent with the organizational culture?
Should individuals be evaluated at all?

6. Purposes of Performance Management
Mishari Alnahedh
Strategic Purpose - effective performance management helps the organization achieve its business objectives. It does this by helping to link employees’ behavior with the organization’s goals.
Administrative Purpose - ways in which organizations use the system to provide information for day-to-day decisions about salary, benefits, and recognition programs.
Developmental Purpose - serves as a basis for developing employees’ knowledge and skills.

7. Steps in the Performance Management Process
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8. Evaluating performance Diagnosing performance
Managing Performance
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Evaluating performance
Diagnosing performance
Providing feedback on performance
Linking performance with rewards & punishments
Coaching, counseling & developing

9. Can you make cause-effect linkages between actions & outcomes?
Performance Assessment & Diagnosis
Mishari Alnahedh
Can you make cause-effect linkages between actions & outcomes?
How often & to what extent have you intervened? To what extent are you part of the problem?
Can you identify root causes?
What can be corrected?
What can be capitalized on?

10. Who performs the evaluation? Who has input?
Choices Embedded in Appraisal Systems
Mishari Alnahedh
Who is evaluated?
What is evaluated?
Who performs the evaluation? Who has input?
Who sees the evaluation? For what purpose?
When is it conducted?
Is the evaluation OBJECTIVE or SUBJECTIVE?
Is performance RELATIVE or ABSOLUTE?

11. Two Dimensions of Evaluation
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12. Fit with strategy Validity Reliability Acceptability Specific feedback
Criteria for Effective Performance Management
Mishari Alnahedh
Fit with strategy
Validity
Reliability
Acceptability
Specific feedback

13. Involve those being rated in the development of the rating scheme.
Guidelines for Effective Performance Appraisal
Mishari Alnahedh
Make sure the performance rating process is strategically useful; i.e., based on the key success factors needed for execution.
Involve those being rated in the development of the rating scheme.
Insure that the process is related to job performance and meets legal requirements.
Train the raters on evaluation and feedback.

14. Based on constructive evaluation and diagnosis of performance
Helpful Feedback
Mishari Alnahedh
Based on constructive evaluation and diagnosis of performance
Timely
Descriptive & specific
Defines consequences/impact of behavior
Oriented toward problem-solving & action

15. Performance Appraisal Systems

16. Purposes of Performance Appraisal
Mishari Alnahedh
Performance appraisals can be useful for employee development under certain conditions:
Appraisal system must tell employees specifically about their performance problems and ways to improve their performance.
Employees must gain a clear understanding of differences between current and expected performance.
Appraisal process must identify causes of performance discrepancy and develop plans for improving performance.

17. Communicate strategy, values, expectations. Build the culture
Purposes of Performance Appraisal
Mishari Alnahedh
Communicate strategy, values, expectations.
Build the culture
Evaluation
Current job (e.g., salary and bonus)
Future jobs (e.g., promotion)
Development and Feedback
Legal defense
Hiring and promotion decisions
Validation
Equity and fairness

18. Behaviorally Anchored Rating Scale (BARS)
Mishari Alnahedh
BARS: Rates behavior in terms of a scale showing specific statements of behavior that describe different levels of performance.
Example: Task- BARS Rating Dimension for a Patrol Officer

19. Management by Objectives (MBO)
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Management by Objectives (MBO): people at each level of the organization set goals in a process that flows from top to bottom, so that all levels are contributing to the organization’s overall goals.
These goals become the standards for evaluating each employee’s performance.
Example: Two objectives for a bank

20. How would you measure the performance of a car dealer ?
Measuring Performance
Mishari Alnahedh
How would you measure the performance of a car dealer ?

21. Evaluating Rating Formats
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22. 360 Degree Feedback
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23. Companies Using 360º Systems
360 Degree Feedback
Mishari Alnahedh
Companies Using 360º Systems
Alcoa
Merck
American Airlines
Herman Miller
AT&T
J.P. Morgan
American Express
Morgan Stanley
Boeing
Motorola
General Electric
Procter & Gamble
Glaxo
Levi Strauss
General Mills 3M
Hewlett-Packard
UPS
Intel
FedEx
Monsanto
Compaq

24. Better acceptance by people rated Promotes equity Legal protection
Benefits of 360 degree appraisal
Mishari Alnahedh
Validity and accuracy
Better acceptance by people rated
Promotes equity
Legal protection
Diversity
Useful when spans of control are large
Better for knowledge workers
More appropriate for team-based system
Appropriate for empowered cultures

25. Over-reliance on technology Administrative overhead
Common Pitfalls
Mishari Alnahedh
Lack of safeguards
Over-reliance on technology
Administrative overhead
Incongruence with the culture
Incongruence with other systems
Cronyism in selection of raters
Lack of training
Lack of supervision and follow up
Results in too much data
Not linked to key success factors

26. Overweight negative information Lack of sufficient observation
Problems in Performance Rating
Mishari Alnahedh
Stereotypes
Overweight negative information
Lack of sufficient observation
Memory: primacy / recency
Contrast errors: rater compares an individual, not against an objective standard, but against other employees.
Leniency: the reviewer rates everyone near the top
Central tendency: the rater puts everyone near the middle of the scale
Justification for salary
Ability to write

27. Problems in Performance Rating
Mishari Alnahedh
Rater bias: raters often let their opinion of one quality color their opinion of others.
Halo error: when bias is in a favorable direction. This can mistakenly tell employees they don’t need to improve in any area.
Horns error: when bias involves negative ratings. This can cause employees to feel frustrated and defensive.
fairness in rating performance and interpreting performance appraisals requires that managers understand the kinds of distortions that commonly occur.

28. What’s the purpose (feedback, rewards)? How are the raters selected?
Some Issues to Resolve
Mishari Alnahedh
What’s the purpose (feedback, rewards)?
How are the raters selected?
Who sees the results?
How is rater anonymity protected?
What dimensions are evaluated?

29. Distorting a performance evaluation to advance one’s personal goals
Political Behavior in Performance Appraisals
Mishari Alnahedh
Distorting a performance evaluation to advance one’s personal goals
A technique to minimize appraisal politics is a calibration meeting:
Meeting at which managers discuss employee performance ratings and provide evidence supporting their ratings with the goal of eliminating influence of rating errors

30. Giving Performance Feedback
Mishari Alnahedh
Scheduling Performance Feedback:
Performance feedback should be a regular, expected management activity.
Annual feedback is not enough.
Employees should receive feedback so often that they know what the manager will say during their annual performance review.
Preparing for a Feedback Session:
Managers should be prepared for each formal feedback session.

31. “What other factors are important for a feedback session?”
Giving Performance Feedback
Mishari Alnahedh
“What other factors are important for a feedback session?”

32. During feedback sessions, managers can take any of three approaches:
Giving Performance Feedback
Mishari Alnahedh
During feedback sessions, managers can take any of three approaches:
“Tell-and-Sell” – managers tell employees their ratings and then justify those ratings.
“Tell-and-Listen” – managers tell employees their ratings and then let employees explain view.
“Problem-Solving” – managers and employees work together to solve performance problems.

33. Use specific, concrete examples. Treat employees with respect.
Giving Performance Feedback
Mishari Alnahedh
Focus on goals.
Listen as well
as talk.
Be honest.
Prevent surprises.
Use specific, concrete examples.
Treat employees with respect.

34. Improving Performance
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35. Do you agree with him ? Deming on Performance Ratings
Mishari Alnahedh
Performance evaluations leave “people bitter, despondent, dejected, some even depressed, all unfit for work for weeks after rating, unable to comprehend why they are inferior. It is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in... People ask how I grade my students. I give them all an ‘A.’ How do I know who will be great? How do I know what they will do in future years?”
Do you agree with him ?

36. Lawsuits related to performance management usually involve charges of:
Legally Defensible Performance Appraisal
Mishari Alnahedh
Lawsuits related to performance management usually involve charges of:
Discrimination
Unjust dismissal
To protect against both kinds of lawsuits, it is important to have a legally defensible performance management system.

37. Standards should be based on job analysis.
Legally Defensible Performance Appraisal
Mishari Alnahedh
Standards should be based on job analysis.
Standards communicated to employees.
Evaluations based on specific dimensions.
Dimensions defined in behavioral terms and supported by objective, observable evidence.
Raters should be trained and valid.
When possible, more than one rater is used.
Appraisal fits the cycle of work.
Documentation of extreme ratings is done.
Formal appeal process is available.