PERFORMANCE MANAGEMENT Herman Aguinis Herman Aguinis, University of Colorado at Denver PERFORMANCE MANAGEMENT Herman Aguinis Prentice Hall, Inc. © 2006

PERFORMANCE PERFORMANCE MANAGEMENTMANAGEMENT

Herman AguinisHerman Aguinis

Herman Aguinis, University of Colorado at Denver

PERFORMANCE PERFORMANCE MANAGEMENTMANAGEMENT

Herman AguinisHerman Aguinis

Prentice Hall, Inc. © 2006

Herman Aguinis, University of Colorado at DenverPrentice Hall, Inc. © 2006

Performance Management in Context: Performance Management in Context: OverviewOverview

Definition of Performance Management (PM) The Performance Management Contribution Disadvantages/Dangers of Poorly-implemented PM

systems Definition of Reward Systems Aims and role of PM Systems Characteristics of an Ideal PM system Integration with Other Human Resources and

Development Activities


Performance Management: DefinitionPerformance Management: Definition

Continuous Process ofIdentifying performance of individuals and teamsMeasuring performance of individuals and teamsDeveloping performance of individuals and teams

andAligning performance with the strategic goals of the

organization


PM is NOT performance PM is NOT performance appraisalappraisal

• PM– Strategic business

considerations– Ongoing feedback– So employee can

improve performance– Driven by line manager

• Performance appraisal– Assesses employee

• Strengths & • Weaknesses

– Once a year– Lacks ongoing feedback– Driven by HR


Contributions of PM Contributions of PM For EmployeesFor Employees

The definitions of job and success are clarifiedMotivation to perform is increasedSelf-esteem is increasedSelf-insight and development and enhanced


Contributions of PMContributions of PMFor ManagersFor Managers

Supervisors’ views of performance are communicated more clearly

Managers gain insight about subordinatesThere is better and more timely differentiation

between good and poor performersEmployees become more competent


Contributions of PM Contributions of PM For Organization/HR FunctionFor Organization/HR Function

Organizational goals are made clearOrganizational change is facilitated Administrative actions are more fair and

appropriateThere is better protection from lawsuits


Disadvantages/Dangers of Disadvantages/Dangers of Poorly-implemented PM Systems Poorly-implemented PM Systems

for Employeesfor Employees

• Lowered self-esteem• Employee burnout and job dissatisfaction• Damaged relationships• Use of false or misleading information



for Managersfor Managers

• Increased turnover• Decreased motivation to perform• Unjustified demands on managers’ resources• Varying and unfair standards and ratings


• Wasted time and money• Unclear ratings system• Emerging biases• Increased risk of litigation


for Organizationfor Organization


Reward Systems: DefinitionReward Systems: Definition

Set of mechanisms for distributingTangible returns

andIntangible or relational returns

As part of an employment relationship


Tangible returnsTangible returns

Cash compensationBase payCost-of-Living & Contingent PayIncentives (short- and long-term)

Benefits, such as Income ProtectionAllowancesWork/life focus


Intangible returnsIntangible returns

Relational returns, such asRecognition and statusEmployment securityChallenging work Learning opportunities


Returns and Their Degree of DependencyReturns and Their Degree of Dependencyon the Performance Management Systemon the Performance Management System

Return Cost of Living Adjustment Income Protection Work/life Focus Allowances Relational Returns Base Pay Contingent Pay Short-term Incentives Long-term Incentives

Degree of Dependency• Low• Low• Moderate• Moderate• Moderate• Moderate• High• High• High


Purposes of PM Systems:Purposes of PM Systems:OverviewOverview

StrategicAdministrativeInformationalDevelopmentalOrganizational maintenanceDocumentation


Strategic PurposeStrategic Purpose

Link employee behavior with organization’s goals

Communicate most crucial business strategic initiatives


Administrative PurposeAdministrative Purpose

Provide information for making decisions re:Salary adjustmentsPromotionsRetention or terminationRecognition of individual performanceLayoffs


Informational PurposeInformational Purpose

Communicate to Employees:ExpectationsWhat is importantHow they are doingHow to improve


Developmental PurposeDevelopmental Purpose

Performance feedback/coachingIdentification of individual strengths and

weaknessesCauses of performance deficienciesTailor development of individual career path


Organizational Maintenance PurposeOrganizational Maintenance Purpose

Plan effective workforceAssess future training needsEvaluate performance at organizational levelEvaluate effectiveness of HR interventions


Documentational PurposeDocumentational Purpose

Validate selection instrumentsDocument administrative decisionsHelp meet legal requirements


Characteristics of an Ideal PM SystemCharacteristics of an Ideal PM System


Congruent with organizational strategyCongruent with organizational strategy

• Consistent with organization’s strategy• Aligned with unit and organizational goals


ThoroughThorough

• All employees are evaluated• All major job responsibilities are evaluated• Evaluations cover performance for entire

review period• Feedback is given on both positive and

negative performance


PracticalPractical

• Available• Easy to use• Acceptable to decision makers• Benefits outweigh costs


MeaningfulMeaningful

• Standards are important and relevant• System measures ONLY what employee can

control• Results have consequences Evaluations

occur regularly and at appropriate times• System provides for continuing skill

development of evaluators


SpecificSpecific

Concrete and detailed guidance to employees • what’s expected • how to meet the expectations


Identifies effective and ineffective performanceIdentifies effective and ineffective performance

• Distinguish between effective and ineffective– Behaviors– Results

• Provide ability to identify employees with various levels of performance


ReliableReliable

• Consistent• Free of error• Inter-rater reliability


ValidValid

• Relevant (measures what is important)• Not deficient (doesn’t measure unimportant

facets of job)• Not contaminated (only measures what the

employee can control)


Acceptable and FairAcceptable and Fair

• Perception of Distributive Justice– Work performed evaluation received reward

• Perception of Procedural Justice– Fairness of procedures used to:

• Determine ratings• Link ratings to rewards


InclusiveInclusive

• Represents concerns of all involved– When system is created, employees should help

with deciding• What should be measured• How it should be measured

– Employee should provide input on performance prior to evaluation meeting


Open (Open (NoNo Secrets) Secrets)

• Frequent, ongoing evaluations and feedback• 2-way communications in appraisal meeting• Clear standards, ongoing communication• Communications are factual, open, honest


CorrectableCorrectable

• Recognizes that human judgment is fallible• Appeals process provided


StandardizedStandardized

• Ongoing training of managers to provide• Consistent evaluations across

– People– Time


EthicalEthical

• Supervisor suppresses self-interest• Supervisor rates only where she has sufficient

information about the performance dimension • Supervisor respects employee privacy


Integration with other Human Resources Integration with other Human Resources and Development activitiesand Development activities

PM provides information for:Development of training to meet organizational

needsWorkforce planningRecruitment and hiring decisionsDevelopment of compensation systems


CHAPTER 2CHAPTER 2


Herman Aguinis, University of Colorado at DenverPrentice Hall, Inc. © 2006 2–39

Performance Management Process:Performance Management Process:OverviewOverview

PrerequisitesPerformance PlanningPerformance ExecutionPerformance AssessmentPerformance ReviewPerformance Renewal and Recontracting


Performance Management ProcessPerformance Management Process

Performance Review

Performance Renewal and Recontracting

Performance Assessment

Performance Execution

Performance PlanningPrerequisites


PrerequisitesPrerequisites

A. Knowledge of the organization’s mission and strategic goals

B. Knowledge of the job in question


A.A. Knowledge of mission Knowledge of mission and strategic goals and strategic goals

• Strategic planning – Purpose or reason for organization’s

existence– Where organization is going– Organizational goals– Strategies for attaining goals


Mission and GoalsMission and Goals

Cascade effect throughout organization

Organization Unit Employee


B.B. Knowledge of the jobKnowledge of the job

• Job analysis of key components– Activities, tasks, products, services, processes

• KSAs required to do the job– Knowledge– Skills– Abilities


Job DescriptionJob Description

• Job duties• KSAs• Working conditions


Generic Job DescriptionsGeneric Job Descriptions

Occupational Informational Network (O*Net) http://online.onetcenter.org/


Job analysisJob analysis

• Use a variety of tools– Interviews– Observation– Questionnaires (available on Internet)


Job analysis follow-upJob analysis follow-up

• All incumbents should – review information and – provide feedback

re:– Task

• Frequency• Criticality


Performance Planning:Performance Planning:ResultsResults

Key accountabilities

Specific objectives

Performance standards


Key AccountabilitiesKey Accountabilities

Broad areas of a job for which

the employee is responsible for producing results


Specific ObjectivesSpecific Objectives

Statements of outcomes Important Measurable


Performance StandardsPerformance Standards

• “Yardstick” to evaluate how well employees have achieved each objective

• Information on acceptable and unacceptable performance, such asqualityquantity costtime


Performance Planning:Performance Planning:BehaviorsBehaviors

How a job is done


Performance Planning:Performance Planning:CompetenciesCompetencies

• Measurable clusters of KSAs

• Critical in determining how results will be achieved


Performance Planning:Performance Planning:Development PlanDevelopment Plan

Areas for improvement Goals to be achieved in each area of

improvement


Performance Execution:Performance Execution:Employee ResponsibilitiesEmployee Responsibilities

Commitment to goal achievement Ongoing requests for feedback and coaching Communication with supervisor Collecting and sharing performance data Preparing for performance reviews


Performance Execution:Performance Execution:Manager ResponsibilitiesManager Responsibilities

• Observation and documentation• Updates• Feedback• Resources• Reinforcement


Performance AssessmentPerformance Assessment

• Manager assessment• Self-assessment• Other sources (e.g., peers, customers, etc.)


Multiple Assessments Are NecessaryMultiple Assessments Are Necessary

Increase employee ownershipIncrease commitmentProvide informationEnsure mutual understanding


Performance ReviewPerformance ReviewOverview of Appraisal MeetingOverview of Appraisal Meeting

• Past– Behaviors and results

• Present– Compensation to be received

• Future– New goals and development plans


Six Steps for Conducting Six Steps for Conducting Productive Performance ReviewsProductive Performance Reviews

1. Identify what the employee has done well and poorly

2. Solicit feedback3. Discuss the implications of changing behaviors


Six Steps for Conducting Six Steps for Conducting Productive Performance ReviewsProductive Performance Reviews

4. Explain how skills used in past achievements can help overcome any performance problems

5. Agree on an action plan6. Set a follow-up meeting and agree on

behaviors, actions, attitudes to be evaluated


Performance Renewal andPerformance Renewal andRecontractingRecontracting

• Same as/different from Performance Planning– Uses insights and information from previous

phases– Cycle begins again


Performance Management ProcessPerformance Management ProcessSummary: Key PointsSummary: Key Points

Ongoing processEach component is important

If one is implemented poorly, whole system suffersLinks between components must be clear


CHAPTER 3CHAPTER 3



Performance Management and Strategic Performance Management and Strategic Planning: OverviewPlanning: Overview

Definition and Purposes of Strategic PlanningLinking Performance Management to the

Strategic Plan– Strategic Planning – Developing Strategic Plans at the Unit Level– Job Descriptions– Individual and Team Performance

Building Support


Strategic Planning: Definition Strategic Planning: Definition

• Process– Describe organization’s destination– Assess barriers– Select approaches for moving forward


Strategic Planning: GoalStrategic Planning: Goal

• Allocate resources – to provide organization – with competitive advantage


Strategic Planning: PurposesStrategic Planning: Purposes

Help define the organization’s identity Help organization prepare for the future Enhance ability to adapt to environmental

change Provide focus and allow for better

allocation of resources

(continued on next slide)


Strategic Planning: PurposesStrategic Planning: Purposes

Produce an organizational culture of cooperation

Allow for the consideration of new options and opportunities

Provide employees with information to direct daily activities


Strategic Planning : OverviewStrategic Planning : Overview

1. Environmental Analysis2. Mission3. Vision4. Goals5. Strategies


Environmental AnalysisEnvironmental Analysis

Identifies external and internal trends• To understand broad industry issues• To make decisions using “big picture” context


External trendsExternal trends

• Opportunities: – environmental characteristics that can help

the organization succeed

• Threats: – environmental characteristics that can

prevent the organization from being successful


External trends – External trends – Factors to ConsiderFactors to Consider

• Economic• Political/legal • Social

• Technological• Competitors• Customers• Suppliers


Internal trendsInternal trends

• Strengths: – internal characteristics that the organization

can use for its advantage• Weaknesses:

– internal characteristics that can hinder the success of the organization


Internal trends – Internal trends – Factors to ConsiderFactors to Consider

• Organizational structure• Organizational culture• Politics• Processes• Size


Gap AnalysisGap Analysis

Analyzes:External environment (opportunities and threats)

vis-à-vis

Internal environment(strengths and weaknesses)


Gap analysis determines:Gap analysis determines:

Opportunity + Strength = Leverage

Opportunity + Weakness = Constraint

Threat + Strength = Vulnerability

Threat + Weakness = Problem


Strategic Planning for the OrganizationStrategic Planning for the Organization

Environmental and Gap Analyses provide information for organizations to decide:Who they areWhat they do


MissionMission

A good mission statement answers:Why does the organization exist?What is the scope of the organization’s activities?Who are the customers served?What are the products or services offered?


Mission Statement contains:Mission Statement contains:

A. Information on organization’s Basic product/service to be offered Primary market/customer groups Unique benefits and advantages of

product/services Technology to be used Concern for survival through growth and

profitability


Mission Statement Mission Statement maymay contain: contain:

B. Information on organization’s values and beliefs Managerial philosophy Public image sought by organization Self-concept of business adopted by

Employees Stockholders


VisionVision

• Statement of future aspirations• Focuses attention on what is important• Provides context for evaluating

– Opportunities– Threats


A Good Vision Statement is:A Good Vision Statement is:

BriefVerifiableBound by a TimelineCurrent

FocusedUnderstandableInspiringA stretch


Purposes for Setting GoalsPurposes for Setting Goals

• Formalize expected achievements• Provide motivation• Provide tangible targets • Provide basis for good decisions• Provide basis for performance measurement


StrategiesStrategies

• Create strategies or Game Plans or “How to” procedures to address issues of:– Growth– Survival– Turnaround– Stability– Innovation– Leadership


How the HR Function contributes:How the HR Function contributes:

• Communicate knowledge of strategic plan• Provide knowledge of KSAs needed for

strategy implementation• Propose reward systems


Strategic Plans at the Unit LevelStrategic Plans at the Unit Level

• Organization Mission statement, Vision statement, Goals, and Strategies

Must clearly align with

And be congruent with

• Every Unit Mission statement, Vision statement, Goals, and Strategies


Alignment of Strategic Plan with Alignment of Strategic Plan with PerformancePerformance

Organization’s Strategic PlanMission, Vision, Goals, Strategies

Unit’s Strategic PlanMission, Vision, Goals,

StrategiesJob Description

Tasks, KSAs

Individual and Team PerformanceResults, Behaviors, Developmental Plan

Critical to involve all levels of management

Critical to involve all employees


Job DescriptionsJob Descriptions

• Tasks and KSAs are congruent with Organization and Unit strategic plans

• Activities described support mission and vision of Organization and Unit


Individual and Team PerformanceIndividual and Team Performance

Organization and Unit mission, vision, goals lead toPerformance management system, which

Motivates employees Aligns development plans with organization priorities


Strategic Plan Strategic Plan Choices in PM System DesignChoices in PM System Design

• Criteria (Behavior vs. Results)• Participation (Low vs. High)• Temporal Dimension (Short Term vs. Long Term)• Level of Criteria (Individual vs. Team/Group)• System Orientation (Developmental vs.

Administrative)• Rewards (Pay for Performance vs. Tenure/Position)


Building Support – Building Support – Answering “What’s In It for Me?”Answering “What’s In It for Me?”

• Top Management: – Help carry out vision

• All levels: – Involvement – Participation – Understanding


CHAPTER 4CHAPTER 4



Defining Performance and Choosing a Defining Performance and Choosing a Measurement Approach: OverviewMeasurement Approach: Overview

Defining PerformanceDeterminants of PerformancePerformance DimensionsApproaches to Measuring Performance


Defining Performance Defining Performance

Performance is:• Behavior• What employees do


Defining PerformanceDefining Performance

Performance is NOT:• Results or Outcomes• What employees produce


Behaviors labeled as Performance are:Behaviors labeled as Performance are:

1. Evaluative– Negative– Neutral– Positive

2. Multidimensional– Many different kinds of behaviors– Advance or hinder organizational goals


Behaviors are Not alwaysBehaviors are Not always

– Observable– Measurable


Results/Consequences may be usedResults/Consequences may be used

– To infer behavior– As proxy for behavioral measure


Determinants of PerformanceDeterminants of Performance

Performance =

Declarative Knowledge

X

Procedural Knowledge

X

Motivation


A. Declarative KnowledgeA. Declarative Knowledge

• Information about– Facts – Labels– Principles– Goals

• Understanding of task requirements


B. Procedural KnowledgeB. Procedural Knowledge

• Knowing– What to do– How to do it

• Skills– Cognitive– Physical– Perceptual– Motor– Interpersonal


C. MotivationC. Motivation

• Choices– Expenditure of effort– Level of effort– Persistence of effort


Implications for Addressing Implications for Addressing Performance ProblemsPerformance Problems

• Managers need information to accurately identify source(s) of performance problems

• Performance management systems must– Measure performance

AND– Provide information on SOURCE(s) of problems


Factors Influencing Determinants of Factors Influencing Determinants of Performance:Performance:

• Individual characteristics– Procedural knowledge– Declarative knowledge– Motivation

• HR practices• Work environment


Performance Dimensions:Performance Dimensions:Types of multi-dimensional behaviors:Types of multi-dimensional behaviors:

• Task performance• Contextual performance

– Pro-social behaviors– Organizational citizenship


Task performanceTask performance

Activities that • transform raw materials • help with the transformation process

– Replenishing– Distributing– Supporting


Contextual performanceContextual performance

Behaviors that • contribute to organization’s effectiveness

and• provide a good environment in which task

performance can occur


Differences Between Differences Between Task and Contextual PerformanceTask and Contextual Performance

• Task Performance• Varies across jobs• Likely to be role

prescribed• Influenced by

• Abilities• Skills

• Contextual Performance• Fairly similar across jobs• Not likely to be role


• Personality


Why Include Task & Contextual Why Include Task & Contextual Performance Dimensions in PM system?Performance Dimensions in PM system?

1. Global competition2. Teamwork3. Customer service 4. Supervisor views


Job Performance in ContextJob Performance in Context

A performer(individual or

team)

In a given situation

Engages in certain

behaviors

That produce various results

TRAIT BEHAVIOR RESULTS


Approaches to Measuring PerformanceApproaches to Measuring Performance

• Trait Approach– Emphasizes individual traits of employees

• Behavior Approach– Emphasizes how employees do the job

• Results Approach– Emphasizes what employees produce


Trait ApproachTrait Approach

• Emphasis on individual• Evaluate stable traits

• Cognitive abilities• Personality

• Based on relationship between traits & performance


Trait Approach (continued)Trait Approach (continued)

• Appropriate if• Structural changes planned for organization

• Disadvantages• Improvement not under individual’s control• Trait may not lead to

• Desired behaviors or • Desired results


Behavior ApproachBehavior Approach

Appropriate if• Employees take a long time to achieve

desired outcomes• Link between behaviors and results is not

obvious• Outcomes occur in the distant future• Poor results are due to causes beyond the

performer’s controlNot appropriate if • above conditions are not present


Results ApproachResults Approach

Advantages:• Less time • Lower cost • Data appear objective


Results Approach (continued)Results Approach (continued)

Most appropriate when:• Workers skilled in necessary behaviors• Behaviors and results obviously related• Consistent improvement in results over time• Many ways to do the job right


CHAPTER 5CHAPTER 5



Defining Performance and Choosing a Defining Performance and Choosing a Measurement Approach: OverviewMeasurement Approach: Overview

Defining PerformanceDeterminants of PerformancePerformance DimensionsApproaches to Measuring Performance


Defining Performance Defining Performance

Performance is:• Behavior• What employees do


Defining PerformanceDefining Performance

Performance is NOT:• Results or Outcomes• What employees produce


Behaviors labeled as Performance are:Behaviors labeled as Performance are:

1. Evaluative– Negative– Neutral– Positive

2. Multidimensional– Many different kinds of behaviors– Advance or hinder organizational goals


Behaviors are Not alwaysBehaviors are Not always

– Observable– Measurable


Results/Consequences may be usedResults/Consequences may be used

– To infer behavior– As proxy for behavioral measure


Determinants of PerformanceDeterminants of Performance

Performance =

Declarative Knowledge

X

Procedural Knowledge

X

Motivation


A. Declarative KnowledgeA. Declarative Knowledge

• Information about– Facts – Labels– Principles– Goals

• Understanding of task requirements


B. Procedural KnowledgeB. Procedural Knowledge

• Knowing– What to do– How to do it

• Skills– Cognitive– Physical– Perceptual– Motor– Interpersonal


C. MotivationC. Motivation

• Choices– Expenditure of effort– Level of effort– Persistence of effort


Implications for Addressing Implications for Addressing Performance ProblemsPerformance Problems

• Managers need information to accurately identify source(s) of performance problems

• Performance management systems must– Measure performance

AND– Provide information on SOURCE(s) of problems


Factors Influencing Determinants of Factors Influencing Determinants of Performance:Performance:

• Individual characteristics– Procedural knowledge– Declarative knowledge– Motivation

• HR practices• Work environment


Performance Dimensions:Performance Dimensions:Types of multi-dimensional behaviors:Types of multi-dimensional behaviors:

• Task performance• Contextual performance

– Pro-social behaviors– Organizational citizenship


Task performanceTask performance

Activities that • transform raw materials • help with the transformation process

– Replenishing– Distributing– Supporting


Contextual performanceContextual performance

Behaviors that • contribute to organization’s effectiveness

and• provide a good environment in which task

performance can occur


Differences Between Differences Between Task and Contextual PerformanceTask and Contextual Performance

• Task Performance• Varies across jobs• Likely to be role


• Abilities• Skills

• Contextual Performance• Fairly similar across jobs• Not likely to be role


• Personality


Why Include Task & Contextual Why Include Task & Contextual Performance Dimensions in PM system?Performance Dimensions in PM system?

1. Global competition2. Teamwork3. Customer service 4. Supervisor views


Job Performance in ContextJob Performance in Context

A performer(individual or

team)

In a given situation

Engages in certain

behaviors

That produce various results

TRAIT BEHAVIOR RESULTS


Approaches to Measuring PerformanceApproaches to Measuring Performance

• Trait Approach– Emphasizes individual traits of employees

• Behavior Approach– Emphasizes how employees do the job

• Results Approach– Emphasizes what employees produce


Trait ApproachTrait Approach

• Emphasis on individual• Evaluate stable traits

• Cognitive abilities• Personality

• Based on relationship between traits & performance


Trait Approach (continued)Trait Approach (continued)

• Appropriate if• Structural changes planned for organization

• Disadvantages• Improvement not under individual’s control• Trait may not lead to

• Desired behaviors or • Desired results


Behavior ApproachBehavior Approach

Appropriate if• Employees take a long time to achieve

desired outcomes• Link between behaviors and results is not

obvious• Outcomes occur in the distant future• Poor results are due to causes beyond the

performer’s controlNot appropriate if • above conditions are not present


Results ApproachResults Approach

Advantages:• Less time • Lower cost • Data appear objective


Results Approach (continued)Results Approach (continued)

Most appropriate when:• Workers skilled in necessary behaviors• Behaviors and results obviously related• Consistent improvement in results over time• Many ways to do the job right


CHAPTER 6CHAPTER 6



Gathering Performance Information:Gathering Performance Information:OverviewOverview

• Appraisal Forms• Characteristics of Appraisal Forms• Determining Overall Rating• Appraisal Period and Number of Meetings• Who Should Provide Performance Information?• A Model of Rater Motivation• Preventing Rating Distortion through Rater Training

Programs


Major Components of Appraisal FormsMajor Components of Appraisal Forms (1)(1)

• Basic Employee Information

• Accountabilities, Objectives, and Standards

• Competencies and Indicators

• Major Achievements and Contributions

• Stakeholder Input

• Employee Comments

• Signatures


Major Components of Appraisal Forms (2) Major Components of Appraisal Forms (2) (could (could

be included in a separate form)be included in a separate form)

• Developmental Achievements• Developmental

– Needs – Plans– Goals


Desirable Features for All Appraisal FormsDesirable Features for All Appraisal Forms

• Simplicity• Relevancy• Descriptiveness• Adaptability

• Comprehensiveness• Definitional Clarity• Communication• Time Orientation


Determining Overall RatingDetermining Overall Rating

• Judgmental strategy

• Mechanical strategy


Appraisal periodAppraisal period

Number of Meetings• Annual • Semi-annual • Quarterly


When Review Is CompletedWhen Review Is Completed

• Anniversary date– Supervisor doesn’t have to fill out forms at same time– Can’t tie rewards to fiscal year

• Fiscal year– Rewards tied to fiscal year– Goals tied to corporate goals– May be burden to supervisor, depending on

implementation


6 Types of Formal6 Types of Formal Meetings Meetings (can be combined)(can be combined)

• System Inauguration• Self-Appraisal• Classical Performance Review• Merit/Salary Review• Development Plan• Objective Setting


Who Should Provide Performance Who Should Provide Performance Information?Information?

Employees should be involved in selecting• Which sources evaluate• Which performance dimensions

When employees are actively involved• Higher acceptance of results• Perception that system is fair


Who Should Provide Performance Information?Who Should Provide Performance Information?

Direct knowledge of employee performance• Supervisors• Peers• Subordinates• Self• Customers


SupervisorsSupervisors

• Advantages– Best position to evaluate performance vs. strategic

goals– Make decisions about rewards

• Disadvantages– Supervisor may not be able to directly observe

performance– Evaluations may be biased


PeersPeers

• Advantages– Assess teamwork

• Disadvantages– Possible friendship bias– May be less discriminating


SubordinatesSubordinates

• Advantages– Accurate when used for developmental purposes– Good position to assess some competencies

• Disadvantages– Inflated when used for administrative purposes– May fear retaliation (confidentiality is key)


SelfSelf

• Advantages– Increased acceptance of decisions– Decreased defensiveness during appraisal interview– Good position to track activities during review period

• Disadvantages– May be more lenient and biased


Customers (external and internal)Customers (external and internal)

• Advantages– Employees become more focused on meeting

customer expectations• Disadvantages

– Time– Money


Disagreement Across SourcesDisagreement Across Sources

• Expect disagreement• Ensure employee receives feedback by

source• Assign differential weights to scores by

source, depending on importance


Types of Rating ErrorsTypes of Rating Errors

• Intentional errors– Rating inflation– Rating deflation

• Unintentional errors– Due to complexity of task


Expected Positive and Negative Consequences of

Rating Accuracy

Probability of Experiencing Positive & Negative

Consequences

Expected Positive and Negative Consequences of

Rating Distortion

Probability of Experiencing Positive & Negative

Consequences

Motivation to Provide Accurate Ratings

Motivation to Distort Ratings

Rating Behavior

A Model of A Model of RaterRater Motivation Motivation


Motivations for Rating InflationMotivations for Rating Inflation

• Maximize merit raise/rewards• Encourage employees• Avoid creating written record• Avoid confrontation with employees• Promote undesired employees out of unit• Make manager look good to his/her supervisor


Motivations for Rating DeflationMotivations for Rating Deflation

• Shock employees• Teach a lesson• Send a message to employee • Build a written record of poor performance


Prevent Rating Distortion through Prevent Rating Distortion through

Rater Training ProgramsRater Training Programs


Rater Training Programs should cover:Rater Training Programs should cover:

• Information• Motivation• Identifying, observing, recording and

evaluating performance• How to interact with employees when they

receive performance information


Information - how the system worksInformation - how the system works

• Reasons for implementing the performance management system

• Information on the appraisal form and system mechanics


Motivation – What’s in it for me?Motivation – What’s in it for me?

• Benefits of providing accurate ratings• Tools for providing accurate ratings


Identifying, observing, recording, and evaluating Identifying, observing, recording, and evaluating performanceperformance

• How to identify and rank job activities• How to observe, record, measure

performance• How to minimize rating errors


How to interact with employees How to interact with employees when they receive performance informationwhen they receive performance information

• How to conduct an appraisal interview• How to train, counsel, and coach


CHAPTER 7CHAPTER 7



Implementing a Performance Implementing a Performance Management System: OverviewManagement System: Overview

• Preparation• Communication Plan• Appeals Process• Training Programs• Pilot Testing• Ongoing Monitoring and Evaluation


PreparationPreparation

• Need to gain system buy-in through:– Communication plan regarding

Performance Management system• Including appeals process

– Training programs for raters– Pilot testing system

• Ongoing monitoring and evaluation


Communication Plan answers:Communication Plan answers:

• What is Performance Management (PM)?• How does PM fit in our strategy?• What’s in it for me?• How does it work?• What are our roles and responsibilities?• How does PM relate to other initiatives?


Cognitive Biases that affect Cognitive Biases that affect communications effectiveness communications effectiveness

• Selective exposure• Selective perception• Selective retention


To minimize effects of cognitive biases:To minimize effects of cognitive biases:

A. Consider employees:• Involve employees in system design• Show how employee needs are met



B. Emphasize the positive• Use credible communicators• Strike first – create positive attitude• Provide facts and conclusions



C. Repeat, document, be consistent• Put it in writing• Use multiple channels of communication• Say it, and then – say it again


Appeals ProcessAppeals Process

• Promote Employee buy-in to PM system– Amicable/Non-retaliatory – Resolution of disagreements



• Employees can question two types of issue:– Judgmental

• (validity of evaluation)

– Administrative• (whether policies and procedures were followed)



• Level 1– HR reviews facts, policies, procedures– HR reports to supervisor/employee– HR attempts to negotiate settlement

• Level 2– Arbitrator (panel of peers and managers) and/or– High-level manager – final decision


Rater Training ProgramsRater Training Programs

• Content Areas to include– Information– Identifying, Observing, Recording, Evaluating– How to Interact with Employees

• Choices of Training Programs to implement– RET– FOR– BO– SL


ContentContent

A. Information - how the system works– Reasons for implementing the

performance management system– Information

• the appraisal form• system mechanics


ContentContent

B. Identifying, observing, recording, and evaluating performance– How to identify and rank job activities– How to observe, record, and measure

performance– How to minimize rating errors


ContentContent

C. How to interact with employees when they receive performance information– How to conduct an appraisal interview– How to train, counsel, and coach


Choices of Training ProgramsChoices of Training Programs

• Rater Error Training (RET)• Frame of Reference Training (FOR)• Behavioral Observation Training (BO)• Self-leadership Training (SL)


Rater Error Training (RET)Rater Error Training (RET)

• Goals of Rater Error Training (RET)– Make raters aware of types of rating errors– Help raters minimize errors– Increase rating accuracy


Intentional rating errorsIntentional rating errors

• Leniency (inflation)• Severity (deflation)• Central tendency


Unintentional rating errorsUnintentional rating errors

• Similar to Me• Halo• Primacy • First impression• Contrast

• Stereotype• Negativity• Recency• Spillover


Possible Solutions for Types of Rating ErrorsPossible Solutions for Types of Rating Errors

• Intentional– Focus on motivation– Demonstrate benefits of providing accurate

ratings• Unintentional

– Alert raters to different errors and their causes


Frame of Reference Training (FOR)Frame of Reference Training (FOR)

• Goal of Frame of Reference Training (FOR)*– Raters develop common frame of reference

• Observing performance• Evaluating performance

*Most appropriate when PM appraisal system focuses on behaviors


Expected Results of Frame of Reference Training (FOR) Expected Results of Frame of Reference Training (FOR)

• Raters provide consistent, more accurate ratings

• Raters help employees design effective development plans


Behavioral Observation Training (BO)Behavioral Observation Training (BO)

• Goals of Behavioral Observation Training (BO)– Minimize unintentional rating errors– Improve rater skills by focusing on how

raters:• Observe performance• Store information about performance• Recall information about performance• Use information about performance


Self-leadership Training (SL)Self-leadership Training (SL)

• Goals of Self-leadership Training (SL)– Improve rater confidence in ability to

manage performance– Enhance mental processes– Increase self-efficacy


Pilot TestingPilot Testing

• Provides ability to – Discover potential problems– Fix them


Pilot Testing - benefitsPilot Testing - benefits

• Gain information from potential participants• Learn about difficulties/obstacles• Collect recommendations on how to improve • Understand personal reactions• Get early buy-in • Get higher rate of acceptance


Implementing a Pilot TestImplementing a Pilot Test

• Roll out test version with sample group– Staff and jobs generalizable to organization

• Fully implement planned system– All participants keep records of issues encountered– Do not record appraisal scores– Collect input from all participants


Ongoing Monitoring and EvaluationOngoing Monitoring and Evaluation

• When system is implemented, decide:– How to evaluate system effectiveness– How to measure implementation– How to measure results


Evaluation data to collect:Evaluation data to collect:

• Reactions to the system• Assessments of requirements

– Operational– Technical

• Effectiveness of performance ratings


Indicators to considerIndicators to consider

• Number of individuals evaluated• Distribution of performance ratings• Quality of information• Quality of performance discussion meetings• System satisfaction• Cost/benefit ratio• Unit-level and organization-level performance


CHAPTER 8CHAPTER 8



Performance Management and Performance Management and Employee Development: OverviewEmployee Development: Overview

• Personal Developmental Plans• Direct Supervisor’s Role• 360-degree Feedback Systems


Stakeholders in the Development ProcessStakeholders in the Development Process

• Employees – Help plan their own development– Improve their own performance

• Managers– Help guide the process of development – Support success of process


Personal Personal DevelopmentalDevelopmental Plans Plans

• Specify actions necessary to improve performance

• Highlight employee’s – Strengths– Areas in need of development


Personal Developmental Plans answer:Personal Developmental Plans answer:

• How can I continuously learn and grow in the next year?

• How can I do better in the future?• How can I avoid performance problems

of the past?


Personal Developmental Plans:Personal Developmental Plans:OverviewOverview

• Developmental Plan Objectives• Content of Developmental Plan• Developmental Activities


Overall Developmental Plan ObjectivesOverall Developmental Plan Objectives

• Encourage:– Continuous learning– Performance improvement– Personal growth


Specific Developmental Plan ObjectivesSpecific Developmental Plan Objectives

• Improve performance in current job• Sustain performance in current job• Prepare employee for advancement• Enrich employee’s work experience


Content of Developmental PlanContent of Developmental Plan

• Developmental objectives– New skills or knowledge– Timeline

• How the new skills or knowledge will be acquired– Resources– Strategies

• Standards and measures used to assess achievement of objectives


Content of Developmental PlanContent of Developmental Plan

• Based on needs of organization and employee• Chosen by employee and direct supervisor• Taking into account

– Employee’s learning preferences– Developmental objective in question– Organization’s available resources


Developmental Activities Developmental Activities ‘On the job’‘On the job’

• On-the-job-training• Mentoring• Job rotation• Temporary assignments


Developmental ActivitiesDevelopmental ActivitiesIn addition to ‘on the job’In addition to ‘on the job’

• Courses• Self-guided reading• Getting a degree• Attending a conference• Membership or leadership role

– in professional or trade organization


Direct Supervisor’s Role:Direct Supervisor’s Role:

• Explain what is necessary • Refer employee to appropriate

developmental activities • Review & make suggestions regarding

developmental objectives


Direct Supervisor’s Role (ongoing):Direct Supervisor’s Role (ongoing):

• Check on employee’s progress • Provide motivational reinforcement


360-degree Feedback Systems360-degree Feedback Systems

Tools to help employees

• Improve performance by using • Performance information • Gathered from many sources

– Superiors– Peers– Customers– Subordinates– The employee


360-degree Feedback Systems360-degree Feedback Systems

• Anonymous feedback• Most useful when used

– For DEVELOPMENT – NOT for administrative purposes

• Internet used for collecting data






Necessary organizational norms include:Necessary organizational norms include:

• Cooperation• Openness and trust• Input and participation valued• Fairness


Overview of 360-degree Feedback SystemsOverview of 360-degree Feedback Systems

• Advantages of 360-degree Feedback Systems• Risks of 360-degree Feedback Systems• Characteristics of a Good 360-degree

Feedback System


Advantages of 360-degree Feedback SystemsAdvantages of 360-degree Feedback Systems

• Decreased possibility of biases• Increased awareness of expectations• Increased commitment to improve• Improved self-perception of performance• Improved performance• Reduction of ‘undiscussables’• Increased employee control of their own careers


Risks of 360-degree Feedback SystemsRisks of 360-degree Feedback Systems

• Unconstructive negative feedback hurts.• Are individuals comfortable with the system?

User acceptance is crucial.• If few raters, anonymity is compromised.• Raters may become overloaded.• Stock values may drop.


Characteristics of a Good 360-degree Feedback SystemCharacteristics of a Good 360-degree Feedback System

• Anonymity• Observation of employee

performance• Avoidance of survey

fatigue• Raters are trained

• Used for developmental purposes only

• Emphasis on behaviors• Raters go beyond ratings• Feedback interpretation• Follow-up


CHAPTER 9CHAPTER 9



Performance Management Skills:Performance Management Skills:OverviewOverview

• Coaching• Coaching Styles• Coaching Process• Performance Review Meetings


Coaching: DefinitionCoaching: Definition

• Manager – Interacts with employee and– Takes active role and interest in performance

• Collaborative ongoing process– Directing employee behavior– Motivating employee behavior– Rewarding employee behavior

• Concerned with long-term performance


Major Coaching Functions:Major Coaching Functions:

• Give advice• Provide guidance• Provide support• Give confidence• Promote greater competence


Key Coaching Behaviors Key Coaching Behaviors

• Establish developmental objectives• Communicate effectively• Motivate employees• Document performance• Give feedback• Diagnose performance problems• Develop employees


The Good Coach QuestionnaireThe Good Coach Questionnaire

Do you listen to your employees? Do you understand their individual needs? Do you encourage employees to express

their feelings openly? Do you give tangible and intangible support

for development? Do your employees know your expectations

about their performance?


The Good Coach Questionnaire (continued)The Good Coach Questionnaire (continued)

Do you encourage open and honest discussions and problem solving?

Do you help your employees create action plans that will

Solve problems?Create changes?

Do you help your employees explore potential areas of

Growth?Development?


Coaching StylesCoaching Styles

More Assertive Less assertive

Task & Fact oriented Driver Analyzer

People oriented Persuader Amiable


Adaptive coaches use all stylesAdaptive coaches use all stylesaccording to employee needs:according to employee needs:

• Sometimes providing direction• Sometimes persuading• Sometimes showing empathy• Sometimes paying close attention to rules and

established procedures


Set Developmenta

l Goals

Identify Developmental Resources &

Strategies

Implement strategies

Observe and Document

Developmental Behavior

Give Feedback

Coaching ProcessCoaching Process


Coaching Process:Coaching Process:Steps covered in Chapter 8Steps covered in Chapter 8

• Set Developmental Goals• Identify Resources and Strategies

Needed to Implement Developmental Goals

• Implement Developmental Goals


Coaching Process:Coaching Process: Overview of remaining stepsOverview of remaining steps

• Observe and Document Developmental Behavior and Outcomes

• Give Feedback– Praise– Negative Feedback


Observe and Document Developmental Behavior Observe and Document Developmental Behavior and Outcomesand Outcomes

Constraints:• Time• Situation• Activity


Organizational Activities Organizational Activities to improve documentation of performanceto improve documentation of performance

• Good communication plan to get manager buy-in• Training programs

– Rater error training– Frame-of-reference training– Behavioral observation training– Self-leadership training


Reasons to document performanceReasons to document performance

• Minimize cognitive load• Create trust• Plan for the future• Legal protection


Recommendations for DocumentationRecommendations for Documentation

• Be specific• Use adjectives and adverbs sparingly• Balance positives with negatives• Focus on job-related information• Be comprehensive• Standardize procedures• Describe observable behavior


Giving FeedbackGiving Feedback

• Main purposes:– Help build confidence– Develop competence– Enhance involvement– Improve future performance


Potential costs of failing to provide feedback:Potential costs of failing to provide feedback:

• Employees are deprived of chance to improve their own performance

• Chronic poor performance• Employees have inaccurate perceptions of

how their performance is regarded by others


To be effective, feedback should:To be effective, feedback should:

• Be timely• Be frequent• Be specific• Be verifiable• Be consistent (over time and across employees)• Be given privately• Provide context and consequences

(continued next slide)


To be effective, feedback should:To be effective, feedback should: (continued)(continued)

• Describe first, evaluate second• Cover the continuum of performance• Identify patterns• Demonstrate confidence in employee• Allow for both advice and idea generation


Guidelines for Giving PraiseGuidelines for Giving Praise

• Be sincere – only give praise when it is deserved

• Give praise about specific behaviors or results• Take your time• Be comfortable with act of praising• Emphasize the positive


Giving Negative FeedbackGiving Negative Feedback

Managers avoid giving negative feedback due to:• Negative reactions and consequences• Negative experiences in the past• Playing “god”• Need for irrefutable and conclusive evidence


Negative feedback is most useful when it:Negative feedback is most useful when it:

• Identifies warning signs and performance problem is still manageable

• Clarifies unwanted behaviors and consequences

• Focuses on behaviors that can be changed• Comes from a credible source• Is supported by data


Feedback Sessions should always answer:Feedback Sessions should always answer:

• How is your job going?• What can be done to make it better?

– Job– Product– Services

• How can you better serve your customers?– Internal– External


Supervisory roles in managing performanceSupervisory roles in managing performance

• Judge– Evaluate performance– Allocate rewards

• Coach– Help employee solve performance problems– Identify performance weaknesses– Design developmental plans


Performance Review Formal MeetingsPerformance Review Formal Meetings

Possible types of formal meetings:1. System Inauguration2. Self-Appraisal3. Classical Performance Review4. Merit/Salary Review5. Developmental Plan6. Objective Setting


Steps to take before meeting:Steps to take before meeting:

• Give at least 2-weeks notice• Block sufficient time• Arrange to meet in a private location without

interruptions


Merged Performance Review MeetingMerged Performance Review MeetingComponentsComponents

1. Explanation of meeting purpose2. Employee self-appraisal3. Supervisor & employee share rating and rationale4. Developmental discussion5. Employee summary6. Rewards discussion7. Follow-up meeting arrangement8. Approval and appeals process discussion9. Final recap


Possible defensive behaviors of employeesPossible defensive behaviors of employees

• Fight response– Blaming others– Staring at supervisor– Raising voice– Other aggressive responses

• Flight response– Looking/turning away– Speaking softly– Continually changing the subject– Quickly agreeing without basis– Other passive responses


To prevent/reduce defensive behaviorsTo prevent/reduce defensive behaviors

• Establish and maintain rapport• Be empathetic• Observe verbal and nonverbal cues• Minimize threats• Encourage participation


When defensiveness is unavoidable:When defensiveness is unavoidable:

Recognize itAllow its expression

If situation becomes intolerableReschedule the meeting for a later time


CHAPTER 10CHAPTER 10



Reward Systems and Legal IssuesReward Systems and Legal IssuesOverviewOverview

• Reward Systems• Legal Issues


Reward Systems: OverviewReward Systems: Overview

• Traditional and Contingent Pay (CP) Plans– Reasons for Introducing CP Plans– Possible Problems Associated with CP– Selecting a CP Plan

• Putting Pay in Context• Pay Structures


Traditional PayTraditional Pay

• Salary and salary increases are based on– Position– Seniority


Contingent Pay (CP)Contingent Pay (CP)

• Salary and salary increases are based on– Job performance

• Also called: Pay for Performance• If not added to base pay, called:

– Variable pay


Reasons for Introducing CPReasons for Introducing CP

• Performance management is more effective when rewards are tied to results

• CP Plans force organizations to:– Clearly define effective performance– Determine what factors are necessary

• CP plans help to recruit and retain top performers• CP plans project good corporate image


CP plans help improve motivation when:CP plans help improve motivation when:

• Employees see clear link between their efforts and resulting performance (Expectancy)

• Employees see clear link between their performance level and rewards received (Instrumentality)

• Employees value the rewards available (Valence)

motivation = expectancy x instrumentality x valence


Possible Problems Associated with CPPossible Problems Associated with CP

• Poor performance management system• Rewarding counterproductive behavior• Insignificant rewards• The reward becomes the driver • Extrinsic vs. intrinsic motivation• Disproportionately large rewards for executives


Selecting a CP Plan: Issues to considerSelecting a CP Plan: Issues to consider

A. Culture of organizationB. Strategic direction of organization


A. Culture of organization: A. Culture of organization: Types of organizationsTypes of organizations

• Traditional– Top-down decision making– Vertical communication– Jobs that are clearly defined

• Involvement– Shared decision making– Lateral communications– Loosely defined roles


CP systems for different organizational cultures:CP systems for different organizational cultures:

• Traditional organizations– Piece rate– Sales commissions– Group incentives

• Involvement organizations– Profit sharing– Skill-based pay


B: CP Plans to enhance Strategic Directions:B: CP Plans to enhance Strategic Directions:

• Employee development– Skill based pay

• Customer service– Competency based pay– Gainsharing

• Overall Profit– Executive pay– Profit or stock sharing

• Productivity– Individual

• Piece rate• Sales commissions

– Group• Gainsharing• Group incentives

• Teamwork– Team sales commissions– Gainsharing– Competency based pay


Putting Pay in ContextPutting Pay in Context

A reward increases the chance that• Specific behaviors and results will be repeated, or• Employee will engage in new behavior and

produce better results


Rewards can include:Rewards can include:

• Pay• Recognition

– Public– Private– Status

• Time

• Trust & Respect• Challenge• Responsibility• Freedom• Relationships


How to Make Rewards WorkHow to Make Rewards Work

• Define and measure performance first and then allocate rewards

• Only use rewards that are available• Make sure all employees are eligible• Rewards should be both

– Financial– Non-financial

(continued)


How to Make Rewards Work How to Make Rewards Work (continued)(continued)

• Rewards should be:– Visible– Contingent– Timely– Reversible


Pay StructuresPay Structures

• Job Evaluation• Broad-banding


Pay structuresPay structures

An organization’s pay structureClassifies jobs

Into categoriesBased on their relative worth

Is designed by job evaluation methods


Job evaluationJob evaluation

• Method of data collection– Determine the worth of various jobs to– Create a pay structure

• Consideration of – KSAs required for each job– Value of job for organization– How much other organizations pay


Types of job evaluation methods:Types of job evaluation methods:

• Ranking• Classification• Point


Job evaluation methods: Job evaluation methods: RankingRanking

• Create job descriptions• Compare job descriptions • Rank jobs


Advantages of using Ranking methodAdvantages of using Ranking method

• Requires little time• Minimal effort needed for administration


Disadvantages of using Ranking methodDisadvantages of using Ranking method

• Criteria for ranking may not be clear:• Distances between each rank may not

be equal


Job evaluation methods: Job evaluation methods: ClassificationClassification

• A series of classes or grades are created• Each job is placed within a job class


Advantages of using Classification methodAdvantages of using Classification method

• Jobs can be quickly slotted into structure• Employees accept method because it seems

valid


Disadvantages of using Classification methodDisadvantages of using Classification method

• Requires extensive time and effort for administration

• Differences between classification levels may not be equal


Job evaluation methods:Job evaluation methods: Point method Point method

• Identify compensable factors (job characteristics)• Scale factors (e.g. on a scale of 1 – 5)• Assign a weight to each factor so the sum of the

weights for all factors = 100%


Advantages of using Point methodAdvantages of using Point method

• Establish worth of each job relative to all other jobs within organization

• Comprehensive measurement of relative worth of each job in organization

• Easy to rank jobs when total points are known for each job


Disadvantages of using Point methodDisadvantages of using Point method

• Requires extensive administrative– Time– Effort


Does job evaluation method matter?Does job evaluation method matter?

– Fairness– Evaluators

• Impartial• Objective


Compensation surveysCompensation surveys

• Information on– Base pay– All other types of compensation

• Conducted in-house or by consultants, such as:www.salary.com or www.haypaynet.com


Broad-banding:Broad-banding:

Pay structure collapses job classes into fewer categories

Advantages:• Provides flexibility in rewarding people• Reflects changes in organization structure• Provides better base for rewarding growth in

competence• Gives more responsibility for pay decisions to

managers• Provides better basis for rewarding career progression


Reward Systems: SummaryReward Systems: Summary

• Traditional and Contingent Pay (CP) Plans– Reasons for Introducing CP Plans– Possible Problems Associated with CP– Selecting a CP Plan

• Putting Pay in Context• Pay Structures


Legal Issues: OverviewLegal Issues: Overview

• Performance Management and the Law• Some Legal Principles Affecting PM• Laws Affecting PM


Performance Management and the LawPerformance Management and the Law

• Performance management systems are legally sound, if they are fair:– Procedures are standardized– Same procedures are used with all employees


Some Legal Principles Affecting PM:Some Legal Principles Affecting PM:OverviewOverview

• Employment-at-will• Negligence• Defamation• Misrepresentation• Adverse Impact• Illegal Discrimination


Employment-at-willEmployment-at-will

• Employment relationship can be ended at any time by– Employer– Employee

• Exceptions– Implied contract– Possible violation of legal rights


NegligenceNegligence

• If organization documents describe a systemand• It is Not implemented as described,• Employee can challenge evaluation,

charging negligence


DefamationDefamation

• Disclosure of performance information that is– Untrue and– Unfavorable


MisrepresentationMisrepresentation

• Disclosure of performance information that is– Untrue and– Favorable


Adverse Impact / Unintentional DiscriminationAdverse Impact / Unintentional Discrimination

• PM system has unintentional impact on a protected class

• Organization must demonstrate:– Specific KSA is a business requirement for the job– All affected employees are evaluated in the same way

• Organization should review ongoing performance score data by protected class to implement corrective action as necessary


Illegal Discrimination or Disparate TreatmentIllegal Discrimination or Disparate Treatment

• Raters assign different scores to employees based on factors that are NOT related to performance

• Employees receive different treatment as result of such ratings

• Employees can claim they were intentionally and illegally treated differently due to their status


Employee claim of illegal discrimination:Employee claim of illegal discrimination:

• Direct evidence of discrimination, or• Evidence regarding the following:

– Membership in protected class– Adverse employment decision– Performance level deserved reward/different

treatment– How others were treated (not in protected class)


Employer response to claim of illegal discriminationEmployer response to claim of illegal discrimination

• Legitimate and non-discriminatory reason for action• Related to performance

• Note: Good performance management system and subsequent performance-related decision, used consistently with all employees, provides defense


Laws Affecting PM:Laws Affecting PM:

During past few decades, several countries have passed laws prohibiting discrimination based on:•Race or Ethnicity•Sex•Religion•National Origin•Age•Disability status•Sexual orientation


Laws in the United Kingdom:Laws in the United Kingdom:

• Equal Pay Act of 1970• Race Relations Act of 1976• Sex Discrimination Act of 1975• Disability Discrimination Act of 1995• Employment Equality (Sexual Orientation)

Regulations 2003• Employment Equality (Religion or Belief)

Regulations 2003


Laws in the United States of AmericaLaws in the United States of America

• Equal Pay Act of 1963• Civil Rights Act of 1964• Age Discrimination in Employment Act of 1967

(as amended in 1986)• Americans with Disabilities Act of 1990


Characteristics of Legally Sound PM SystemsCharacteristics of Legally Sound PM Systems

• Organization:– The system is formally explained and communicated to all

employees – The system includes a formal appeals process – Procedures are standardized and uniform for all employees

within a job group – The system includes procedures to detect potentially

discriminatory effects or biases and abuses in the system



• Management– Supervisors are provided with formal training and information

on how to manage the performance of their employees – Performance information is gathered from multiple, diverse,

and unbiased raters – The system includes thorough and consistent documentation

including specific examples of performance based on first-hand knowledge



• Employees– Performance dimensions and standards are:

• Clearly defined and explained to the employee, • Job-related, and • Within the control of the employee

– Employees are given • Timely information on performance deficiencies and • Opportunities to correct them

– Employees are given a voice in the review process and treated with courtesy and civility throughout the process


Legal Issues: SummaryLegal Issues: Summary

• Performance Management and the Law• Some Legal Principles Affecting PM• Laws Affecting PM


CHAPTER 11CHAPTER 11



Managing Team Performance:Managing Team Performance:OverviewOverview

• Definition and Importance of Teams• Types of Teams and Implications for PM• Purposes and Challenges of Team PM• Including Team Performance in the PM

System• Rewarding Team Performance


Definition of TeamDefinition of Team

Two or more people – Interact

• Dynamically• Independently

– Share common and valued• Goal, Objective or Mission


Importance of TeamsImportance of Teams

• Global pressures• Flexibility in flatter organizations• Complexity of products and services• Rapidly changing environments


Performance Management & TeamsPerformance Management & Teams

• PM systems should target:– Individual performance– Individual’s contribution to team performance– Performance of entire team


General principles of PM relating to teamsGeneral principles of PM relating to teams

1. Design and implement best possible system2. Consider dangers of poorly implemented

system


Managing for Improved Team PerformanceManaging for Improved Team Performance

• Don’t limit team processes with other task or organizational requirements

• Provide good team design and organizational support

• Give feedback only on processes that the team members can control


Types of TeamsTypes of Teams

• Classified by– Complexity of task– Membership configuration


Complexity of Task ranges from:Complexity of Task ranges from:

• Routine– Well defined– Few deviations in how work is done– Outcomes easily assessed

- to -• Non-routine

– Not defined well– No clear specifications on how to do the work– Outcomes are long term and difficult to assess


Membership Configuration includesMembership Configuration includes

• Length of time team expects to work together• Stability of team membership

Static Dynamic


Types of Teams Based on Types of Teams Based on Membership Configuration and Task ComplexityMembership Configuration and Task Complexity

Dynamic ° Network

Teams Membership Configuration

° Project Teams

Static ° Work and

Service Teams

Routine Non-Routine Task Complexity


Types of TeamsTypes of Teams

• Work or Service Teams• Project Teams• Network Teams


Work or Service TeamsWork or Service Teams

• Intact • Routine tasks• Share similar skill sets


Project TeamsProject Teams

• Assembled for specific purpose• Tasks outside core product or service • Members from different functional areas


Network TeamsNetwork Teams

• Membership not constrained by – Time or space– Organizational boundaries

• Teams may include– Temporary or full-time workers– Customers– Vendors– Consultants

• Work is extremely non-routine


Examples of PM Approaches by Type of TeamExamples of PM Approaches by Type of Team

• Type of Team– Work & Service Team

– Project Team

– Network Team

• Type of PM Approach– Peer ratings

– Ongoing measurements

– Development of competencies


Purposes of Team PMPurposes of Team PM

• Traditional goals of any PM System• Specific to Team performance:

– Make all team members accountable– Motivate all team members to have a stake in team

performance


Challenges of Team PMChallenges of Team PM

• How do we assess relative individual contribution?

• How do we balance individual and team performance?

• How do we identify individual and team measures of performance?


Including Team Performance in the PM SystemIncluding Team Performance in the PM System

• Prerequisites• Performance Planning• Performance Execution• Performance Assessment• Performance Review• Performance Renewal and Re-Contracting


Performance Management ProcessPerformance Management Process

Performance Review

Performance Renewal and Re-contracting

Performance Assessment

Performance Execution

Performance PlanningPrerequisites


PrerequisitesPrerequisites

• Knowledge of mission– Organization– Team

• Knowledge of job to be performed by the team


Performance PlanningPerformance Planning

• Results expected of the team• Behaviors expected of team members• Developmental objectives to be achieved by

team and its members


Performance ExecutionPerformance Execution

Team responsibilities1. Commit to goal achievement2. Seek feedback from

• Each other• Supervisor

3. Communicate openly & regularly4. Conduct regular & realistic peer-

appraisals


Performance ExecutionPerformance Execution

Supervisor responsibilities1. Observe and document

• Team performance• Relative contribution of team members

2. Update team on any changes in goals of the organization

3. Provide resources & reinforcement



Types of Assessments• Self-appraisals• Peer evaluations• Supervisor evaluation• Outsider appraisals (if appropriate)



Kinds of Performance to be Assessed• Individual task performance• Individual contextual performance• Team performance


Dimensions of Team Performance to assess:Dimensions of Team Performance to assess:

• Effectiveness• Efficiency• Learning and growth• Team member satisfaction


Performance ReviewPerformance Review

• Two meetings with supervisor or review board– Team meeting– Individual meeting

• Emphasis on past, present and future


Team meetingTeam meeting

• Discuss overall team – Performance– Results

• Information comes from:– Team members– Other teams/outsiders– Supervisor’s evaluation


Individual meetingIndividual meeting

• Discuss how individual behavior contributed to team performance

• Information comes from:– Self-appraisal– Peer ratings– Supervisor’s evaluation


Performance Renewal and Re-ContractingPerformance Renewal and Re-Contracting

• Make adjustments to performance plan• Include plan for individual performance as it

affects team functioning


Making Team-based Rewards EffectiveMaking Team-based Rewards Effective

• All employees should be eligible• Rewards should be

– Visible– Contingent– Reversible

• Avoid factors which cause reward systems to fail

• Consider variable pay systems (in addition to individual bonuses)

Documents

PERFORMANCE MANAGEMENT Herman Aguinis Herman Aguinis, University of Colorado at Denver PERFORMANCE MANAGEMENT Herman Aguinis Prentice Hall, Inc. © 2006