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Herman Aguinis, University of Colorado at Denver.
Performance Management in Context: Overview
Prof. Preeti BhaskarSymbiosis Centre for Management Studies, NOIDA
Herman Aguinis, University of Colorado at Denver
Chapter Outline 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
.
Herman Aguinis, University of Colorado at Denver
Performance Management: DefinitionContinuous Process of
Identifying performance of individuals and teamsMeasuring performance of individuals and teamsDeveloping performance of individuals and teams
andAligning performance with the strategic goals of
the organization
.
Herman Aguinis, University of Colorado at Denver.
Performance Management vs.
Performance Appraisal
Herman Aguinis, University of Colorado at Denver
PM is NOT performance appraisalPerformance
Management 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
.
Herman Aguinis, University of Colorado at Denver.
Contributions of PM Systems
For Employees
The definitions of job and success are clarified
Motivation to perform is increased
Self-esteem is increasedSelf-insight and development
and enhanced
For Managers
Supervisors’ views of performance are
communicated more clearlyManagers gain insight about
subordinatesThere is better and more
timely differentiation between good and poor
performersEmployees become more
competent
For Organization
Organizational goals are made clear
Organizational change is facilitated
Administrative actions are more fair and appropriateThere is better protection
from lawsuits
Herman Aguinis, University of Colorado at Denver.
Disadvantages/Dangers of Poorly-implemented PM Systems
For Employees
Lowered self-esteemEmployee burnout and
job dissatisfactionDamaged relationships
Use of false or misleading information
For Managers
Increased turnoverDecreased motivation
to performUnjustified demands
on managers’ resources
Varying and unfair standards and ratings
For Organization
Wasted time and money
Unclear ratings systemEmerging biasesIncreased risk of
litigation
Herman Aguinis, University of Colorado at Denver
Reward Systems: DefinitionSet of mechanisms for distributing
Tangible returns
and Intangible or relational returns
As part of an employment relationship
.
Herman Aguinis, University of Colorado at Denver
Tangible returns Cash compensation
Base pay Hourly wages, SalaryCost-of-Living Adjustment (COLA)To combat the effect of inflation in an attempt to preserve the
employee buying powerContingent Pay/ Merit PayAdditional pay based on employee level of performanceIncentives (short- and long-term )bonuses (short term) or stock options/ownership (long term)
.
Herman Aguinis, University of Colorado at Denver
Tangible returns Benefits, such as
Income Protection ProgramServe as a Backup to employee salaries in the event when employee is sick,
disabled, or no longer able to work .E.g. Disability pay, medical insurance, pension plans, savings plans.
AllowancesE.g., housing, transportation, mobile , gym facility, phone bills.
Work/life focus E.g., vacation time, counseling, financial planning, flexible work schedules (e.g.,
telecommuting, non-paid time off).
.
In fact, a recent survey including both employees in general and HR professionals in particular showed that health care/medical insurance is the most important benefit, followed by paid time off and retirement benefits
Herman Aguinis, University of Colorado at Denver
Intangible returns Relational returns, such as
Recognition and statusEmployment securityChallenging work Learning opportunities
.
Herman Aguinis, University of Colorado at Denver
Returns and Their Degree of Dependency on 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 DependencyLowLowModerateModerateModerateModerateHighHighHigh
.
Degree of DependencyReturns
Herman Aguinis, University of Colorado at Denver
Role of PM Systems
.
Herman Aguinis, University of Colorado at Denver.
• To help top management achieve strategic business objectives
Strategic Purpose
• To furnish valid and useful information for making administrative decisions about employees
Administrative Purpose
• To inform employees about how they are doing and about the organization's and the supervisor’s expectations
Informational Purpose
• To allow managers to provide coaching to their employees
Developmental Purpose
• To provide information to be used in workplace planning and allocation of human resources
Organizational maintenance Purpose
• To collect useful information that can be used for various purposes (e.g., test development, personnel decisions)
Documentation Purpose
Herman Aguinis, University of Colorado at Denver
Strategic Purpose
.
By linking the organization's goals with individual goals, the performance management system reinforces behaviors consistent with the attainment of organizational goals.
Onboarding refer to the processes that help the new employee from being Organizational outsider to organizational insider.
Herman Aguinis, University of Colorado at Denver
Administrative PurposeTo furnish valid and useful information for making administrative decisions about
employees. Such administrative decisions include-:
Salary adjustmentsPromotionsRetention or terminationRecognition of individual performanceIdentification of poor performersLayoffsMerit
.
Herman Aguinis, University of Colorado at Denver
Informational Purpose“serve as an important communication device.”
First, they inform employees about how they are doing, and provide them with information on specific areas that may need improvement.
Second, related to the strategic purpose, they provide information regarding the organisation’s and the supervisor’s expectations, and what aspects of work the supervisor believes are most important.
Third, How they can improve their performance
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Herman Aguinis, University of Colorado at Denver
Developmental Purpose
Performance feedback/coaching Identification of individual strengths and weaknesses Causes of performance deficiencies (which could be due to individual,
group or contextual factors). Tailor development of individual career path
.
Developmental purpose refers to both short-term and long-term development aspects.
Herman Aguinis, University of Colorado at Denver
Organizational Maintenance Purpose Workforce planning Talent inventory, which is information on current resources (e.g., Skills, abilities,
promotional potential and assignment histories of current employees). Assess future training needs Evaluate performance at organizational level Evaluate effectiveness of HR interventions (e.g., Whether Employees perform at higher levels after participating in a training programme).
.
Herman Aguinis, University of Colorado at Denver
Documentation Purpose
Validate selection instrumentsDocument administrative decisionsHelp meet legal requirements
.
Herman Aguinis, University of Colorado at Denver
Characteristics of an Ideal PM System
.
Strategic congruence Thoroughness Practicality Meaningfulness
Specificity
Identification of effective and
ineffective performance
Reliability Validity
Acceptability and fairness Inclusiveness Openness Correctability
Standardization Ethicality
Herman Aguinis, University of Colorado at Denver
Congruent with organizational strategy
Consistent with organization’s strategy Aligned with unit and organizational goals
Thorough• 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
Herman Aguinis, University of Colorado at Denver
PracticalAvailableEasy to useAcceptable to decision makersBenefits costs
.
Meaningful• 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
Herman Aguinis, University of Colorado at Denver
SpecificConcrete and detailed guidance to employees
what’s expected how to meet the expectations
.
Identifies effective and ineffective performance• Distinguish between effective and ineffective
– Behaviors– Results
• Provide ability to identify employees with various levels of performance
Herman Aguinis, University of Colorado at Denver
ReliableConsistentFree of error Inter-rater reliability
.
Valid• Relevant (measures what is important)• Not deficient (doesn’t measure
unimportant facets of job)• Not contaminated (only measures what
the employee can control)
Herman Aguinis, University of Colorado at Denver
Acceptable and Fair
Perception of Distributive Justice
Work performed evaluation received reward
Perception of Procedural Justice
Fairness of procedures used to:Determine ratingsLink ratings to rewards
.
Herman Aguinis, University of Colorado at Denver
InclusiveRepresents concerns of all involved
When system is created, employees should help with deciding
What should be measuredHow it should be measured
Employee should provide input on performance prior to evaluation meeting
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Herman Aguinis, University of Colorado at Denver
Open (No Secrets) Frequent, ongoing evaluations and feedback 2-way communications in appraisal meeting Clear standards, ongoing communication Communications are factual, open, honest
.
Ethical• Supervisor suppresses self-interest• Supervisor rates only where she has sufficient
information about the performance dimension • Supervisor respects employee privacy
Herman Aguinis, University of Colorado at Denver
Integration with other Human Resources and Development activities
PM provides information for:
Development of training to meet organizational needs
Workforce planningRecruitment and hiring decisionsDevelopment of compensation systems
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Herman Aguinis, University of Colorado at Denver.
