PERFORMANCEMANAGEMENT

S E C O N D E D I T I O N

Hermann Agninmins

The Busines SchoolUniversity of Colorado Denver

(PI

Pearson Education International

BRIEF CONTENTS

PART I: STRATEGIC AND GENERAL CONSIDERATIONS

Chapter 1 Performance Management and Reward Systems in Context 1Chapter 2 Performance Management Process 30Chapter 3 Performance Management and Strategic Planning 50

PART II: SYSTEM IMPLEMENTATION 77

Chapter 4 Defining Performance and Choosing a MeasurementApproach 77

Chapter 5 Measuring Results and Behaviors 94Chapter 6 Gathering Performance Information 118

Chapter 7 Implementing a Performance Management System 153

PART III: EMPLOYEE DEVELOPMENT 179

Chapter 8 Performances Management and Employee Development 179Chapter 9 Performance Management Skills 206

PART IV: REWARD SYSTEMS, LEGAL ISSUES, AND TEAM

PERFORMANCE MANAGEMENT 239

Chapter 10 Reward Systems and Legal Issues 239Chapter 11 Managing Team Performance 268

CONTENTS

Preface xi

Acknowledgments xvi

About the Author xvi

PART I: STRATEGIC AND GENERAL CONSIDERATIONS 1

CHAPTER 1 Performance Management and Reward Systems in Context 11.1 Definition of Performance Management (PM) 21.2 The Performance Management Contribution 41.3 Disadvantages/Dangers of Poorly Implemented PM Systems 71.4 Definition of Reward Systems 9

1.4.1 Base Pay 101.4.2 Cost-of-Living Adjustments and Contingent Pay 101.4.3 Short-Term Incentives 101.4.4 Long-Term Incentives 101.4.5 Income Protection 111.4.6 Work/Life Focus 121.4.7 Allowances 121.4.8 Relational Returns 12

1.5 Aims and Role of PM Systems 137.5.7 Strategic Purpose 141.5.2 Administrative Purpose 151.5.3 Informational Purpose 151.5.4 Developmental Purpose 151.5.5 Organizational Maintenance Purpose 151.5.6 Documentational Purpose 16

1.6 Characteristics of an Ideal PM System 171.7 Integration with Other Human Resources and Development

Activities 21Case Study 1-1 Reality Check: Ideal Versus Actual Performance

Management System 24Case Study 1-2 Performance Management at Network Solutions, Inc. 26

CHAPTER 2 Performance Management Process 30( 2.1 Prerequisites 31> • -

2.2 Performance Planning 38

1 Contents vio

2.2.7 Results 382.2.2 Behaviors 39

2.2.3 Development Plan 39

2.3 Performance Execution 402.4 Performance Assessment 412.5 Performance Review 422.6 Performance Renewal and Recontracting 44Case Study 2-1 Job Analysis Exercise 47Case Study 2-2 Disrupted Links in the Performance Management

Process at "Omega, Inc." 47Case Study 2-3 Performance Management at the University of Ghana 48

CHAPTER 3 Performance Management and Strategic Planning 503.1 Definition and Purposes of Strategic Planning 513.2 Process of Linking Performance Management to the

Strategic Plan 523.2.1 Strategic Planning 543.2.2 Developing Strategic Plans at the Unit Level 653.2.3 Job Descriptions 663.2.4 Individual and Team Performance 67

3.3 Building Support 69Case Study 3-1 Evaluating Vision and Mission Statements at

Harley-Davidson 73Case Study 3-2 filbert's Mission Statement Generator 74Case Study 3-3 Linking Individual with Unit and Organizational

" *vv Priorities 74

PART II: SYSTEM IMPLEMENTATION 77

CHAPTER 4 Defining Performance and Choosing a MeasurementApproach 77

4.1 Defining Performance 784.2 Determinants of Performance 78

4.2.7 Implications for Addressing Performance Problems 804.2.2 Factors Influencing Determinants of Performance 80

4.3 Performance Dimensions 81

4.4 Approaches to Measuring Performance 834.4.1 Trait Approach 844.4.2 Behavior Approach 85

4.4.3 Results Approach 87

Case Study 4-1 Diagnosing the Causes of Poor Performance 91Case Study 4-2 Differentiating Task from Contextual Performance 91

{ Case Study 4-3 Choosing a Performance Measurement Approachat Paychex, Inc. 92

viii Contents

CHAPTER 5 Measuring Results and Behaviors 945.1 Measuring Results 95

5.7.7 Determining Accountabilities 955.1.2 Determining Objectives 975.1.3 Determining Performance Standards 98

5.2 Measuring Behaviors 1005.2.7 Comparative Systems 1035.2.2 Absolute Systems 106

Case Study 5-1 Accountabilities, Objectives, and Standards 113Case Study 5-2 Evaluating Objectives and Standards 114Case Study 5-3 Measuring Competencies at the Department of

Transportation 114

Case Study 5-4 Creating BARS-Based Graphic Rating Scales forEvaluating Business Student Performance in TeamProjects 115

CHAPTER 6 Gathering Performance Information 1186.1 Appraisal Forms 1196.2 Characteristics of Appraisal Forms 1256.3 Determining Overall Rating 1286.4 Appraisal Period and Number of Meetings 1316.5 Who Should Provide Performance Information? 134

6.5.7 Supervisors 1346.5*2 Peers 1356.5>3h Subordinates 1366.5.4 "Self 1366.5.5 Customers 1376.5.6 Disagreement Across Sources: Is This a Problem? 137

6.6 A Model of Rater Motivation 1386.7 Preventing Rating Distortion Through Rater Training

Programs 141Case Study 6-1 Evaluating the Appraisal Form Used by a Grocery

Retailer 145

Case Study 6-2 Judgmental and Mechanical Methods of Assigning OverallPerformance Score at The Daily Planet 147

Case Study 6-3 Minimizing Intentional and Unintentional RatingErrors 149

CHAPTER 7 Implementing a Performance Management System 1537.1 Preparation: Communication, Appeals Process, Training

Programs, and Pilot Testing 1547.2 Communication Plan 155

Contents ox

7.3 Appeals Process 1597.4 Training Programs for the Acquisition of Required Skills 161

7.4.1 Rater Error Training 1627.4.2 Frame of Reference Training 1657.4.3 Behavioral Observation Training 1667.4.4 Self-Leadership Training 167

7.5 Pilot Testing 1687.6 Ongoing Monitoring and Evaluation 170Case Study 7-1 Implementing a Performance Management

Communication Plan at Accounting, Inc. 175Case Study 7-2 Implementing an Appeals Process at Accounting, Inc. 175Case Study 7-3 Evaluation of Performance Management System at

Accounting, Inc. 176

PART III: EMPLOYEE DEVELOPMENT 179

CHAPTER 8 Performance Management and Employee Development 1798.1 Personal Developmental Plans 180

8.1.1 Developmental Plan Objectives 1808.1.2 Content of Developmental Plan 1838.1.3 Developmental Activities 184

8.2 Direct Supervisor's Role 186

8.3 360-Degree Feedback Systems 1888.3.1 Advantages of 360-Degree Feedback Systems 1968.3.2 Risks of Implementing 360-Degree Feedback Systems 1988.3.3 Characteristics of a Good System 198

Case Study^-l Developmental Plan Form at Old DominionUniversity 203

Case Study 8-2 Evaluation of a 360-Degree Feedback SystemDemo 203

Case Study 8-3 Implementation of 360-Degree Feedback System at RidgeIntellectual 204

CHAPTER 9 Performance Management Skills 2069.1 Coaching 2079.2 Coaching Styles 2129.3 Coaching Process 213

9.3.1 Observation and Documentation of Developmental Behaviorand Outcomes 215

9.3.2 Giving Feedback 2189.4 Performance Review Meetings 226Case Study 9-1 Was Robert Eaton a Good Coach? 233

/ Case Study 9-2 What Is Your Coaching Style? 234s Case Study 9-3 Preventing Defensiveness 236

x Contents

PART IV: REWARD SYSTEMS, LEGAL ISSUES, AND TEAM

PERFORMANCE MANAGEMENT 239

CHAPTER 10 Reward Systems and Legal Issues 239

10.1 Traditional and Contingent Pay Plans 240

10.2 Reasons for Introducing Contingent Pay Plans 241

10.3 Possible Problems Associated with Contingent Pay Plans 243

10.4 Selecting a Contingent Pay Plan 245

10.5 Putting Pay in Context 248

10.6 Pay Structures 25270.6.7 Job Evaluation 25210.6.2 Broad Banding 255

10.7 Performance Management and the Law 255

10.8 Some Legal Principles Affecting Performance Management 256

10.9 Laws Affecting Performance Management 259

Case Study 10-1 Making the Case for a CP Plan at Architects, Inc. 264

Case Study 10-2 Selecting a CP Plan at Dow AgroSciences 264

Case Study 10-3 Possible Illegal Discrimination at Tractors, Inc. 265

CHAPTER 11 Managing Team Performance 268

11.1 Definition and Importance of Teams 268

11.2 Types of Teams and Implications for Performance1 Management 270

11.3 Purposes and Challenges of Team Performance Management 272

11.4 Including Team Performance in the Performance ManagementSystem 272

1114.1 Prerequisites 27311.4.2 Performance Planning 27511.4.3 Performance Execution 27611.4.4 Performance Assessment 27611.4.5 Performance Review 27811.4.6 Performance Renewal and Recontracting 279

11.5 Rewarding Team Performance 280

Case Study 11-1 Not All Teams Are Created Equal 282

Case Study 11-2 Team Performance Management at Duke UniversityHealth Systems 283

Case Study 11-3 Team-Based Rewards for the State of Georgia 285

Name Index 288

Subject Index 290

/ Author Index 294