Performance Management MSHRD UWI -2006

Performance ManagementPerformance Management

MSHRD UWI -2006


Identify the major determinants of individual performance.Discuss the three general purposes of performance management.Identify the five criteria for effective performance-management systems.Discuss the four approaches to performance management, the specific techniques used in each approach, and the way these approaches compare with the criteria for effective performance-management systems.


Choose the most effective approach to performance measurement for a given situation.Discuss the advantages and disadvantages of the different sources of performance information.Choose the most effective source(s) for performance information for any situation.Distinguish types of rating errors and explain how to minimize each in a performance evaluation.


Understand the performance appraisal processConduct an effective performance feedback session.

Identify the characteristics of a performance measurement system that follows legal guidelines.

IntroductionIntroduction

Performance management is the process through which managers ensure that employee activities and outputs are congruent with the organization's goals.

Performance Appraisal is the process through which an organization gets information on how well an employee is doing his or her job.

Performance Feedback is the process of providing employees information regarding their performance effectiveness.

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

PERFORMANCE APPRAISAL VS PERFORMANCE MANAGEMENTPERFORMANCE APPRAISAL VS PERFORMANCE MANAGEMENT

Performance appraisal -- setting standards, informing employees, ratings and feedback.

Performance management -- “all of those processes led by managers to help employees perform as effectively as they can.”

GOALS OF PERFORMANCE MANAGEMENT

Improve employee performance Develop people for promotional opportunitiesMeet employee need for feedbackEnsure that employees are working toward organizational

goalsProvide the data needed to make and defend important

human resources decisions

3 PARTS OF PERFORMANCE SYSTEM 3 PARTS OF PERFORMANCE SYSTEM

DEFINING PERFORMANCE

MEASURING PERFORMANCE

FEEDBACK INFORMATION OF PERFORMANCE

An Organizational Model of Performance Management

An Organizational Model of Performance Management

IndividualBehaviors

SituationalConstraintsCulture and

economicconditions

IndividualAttributes

(skills, abilities)

OrganizationalStrategy

Long and shortterm goals and values

ObjectiveResults


Purposes of Performance Management

Purposes of Performance Management

Strategic

DevelopmentalAdministrative


Performance Measures CriteriaPerformance Measures Criteria

Five performance criteria stand out:Strategic congruence

Validity

ReliabilityAcceptability

Specificity


All approaches and techniques used for measuring and managing performance must be evaluated against the criteria of :- Strategic Congruence- Validity-Reliability- Acceptability-Specificity

Performance Measures Criteria

STRATEGIC CONGRUENCE STRATEGIC CONGRUENCE

DEFINITION:

The extent to which the performance management system elicits its job

performance that is congruent with the organisation’s strategy, goals and culture.

VALIDITYVALIDITY

DEFINITION:

The extent to which the performance measure assesses all the relevant – and only the relevant aspects of performance.

Validity continuedValidity continued

Validity is concerned with maximizing the overlap between actual job performance and the measure of job performance

Performance measure is deficient if it does not measure all aspects of performance

A contaminated measure evaluates irrelevant aspects of performance that are not job related

Contamination and Deficiency of a Job Performance Measure

Contamination and Deficiency of a Job Performance Measure

Job Performance

measure

Actual, or true job performance

Contamination Validity Deficiency

RELIABILITYRELIABILITY

DEFINITION:

The extent to which the performance is consistent; the degree to which a performance measure is free from random error

3 TYPES OF RELIABILITY 3 TYPES OF RELIABILITY

INTERRATER RELIABILITY

INTERNAL CONSISTENCY

RELIABILITY

TEST-RETEST RELIABILITY

ACCEPTABILITYACCEPTABILITY

DEFINITION:

The extent to which a performance measure is deemed to be satisfactory or adequate by those who use

Procedural Development Give mgrs & employees opportunity to

Fairness participate in developing system.

Ensure consistent standards when evaluating different employees.

Minimize rating errors & bias

Interpersonal Use Give timely& complete feedback. Allow

Fairness employees to challenge the evaluation.

Provide feedback in an atmosphere of

respect and courtesy.

Outcome Fairness Outcomes Communicate expectations regarding

performance evaluations & standards.

Communicate expectations regarding rewards

Fairness Importance for

Category Performance Mgmt System Implications

Categories of Perceived Fairness & Implications for Performance Management Systems

SPECIFICITYSPECIFICITY

DEFINITION:

The extent to which the performance measure gives detailed guidance to employees about what is expected of them and how they can meet these expectations.

APPROACHES TO MEASURING PERFORMANCE

APPROACHES TO MEASURING PERFORMANCE

What is a performance measure? A generic term encompassing the quantitative basis by which objectives are established and performance is assessed and gauged.

These include performance objectives and criteria, performance standards and other means that evaluate the success in achieving a specified goal.

Uses of Performance Measures Uses of Performance Measures

Aim is to manage performance by focusing on employee attributes, behaviors, or results.

Measure performance in a relative way, making overall comparisons among individual’s performance.

Approaches to Measuring Performance

Approaches to Measuring Performance

ComparativeAttributeBehavioralResults ApproachQuality Approach

Approaches to Measuring PerformanceTypes of Rating Scales

Approaches to Measuring PerformanceTypes of Rating Scales

ComparativeCompares individual’s performance with that of others

AttributeFocuses on extent to which individuals have certain attributes

BehavioralDefines behaviors employee must exhibit to be effective in the job

Results Focuses on managing the objective, measurable results of a job

QualityFocuses on customer orientation and prevention of errors

The Comparative ApproachThe Comparative Approach

RankingSimple ranking ranks from highest to lowest performer.Alternation ranking - crossing off best and worst

employees.Forced distribution

Employees are ranked in groups.Paired comparison

Managers compare every employee with every other employee in the work group.


1. Ranking1. Ranking

Simple Ranking - rank employees from best to worse.

Alternation Ranking- subjective elimination of worst employees based on best employee

Overall process considered to be subjective.

2.Forced distribution2.Forced distribution

Also requires a ranking format.ranking done in groups.

Manger groups employees into predetermined categories, employees are categorized based on distribution rules, not on their performance.

Also considered to be subjective

3. Paired Comparison3. Paired Comparison

Managers compare employee with each other in work group/units. Each employee is given a score of 1 for each high activity.

Manager computes and compares the number of times score is favorable. Sum of points is employee performance score.

Evaluating the Comparative Approach to Measuring Performance

Evaluating the Comparative Approach to Measuring Performance

Can be an effective tool in differentiating employee performance, eliminates some rater errors (leniency, distributional errors).

Disadvantage is failure to link with strategic goals of the organisation.

Subjective, therefore validity and reliability is dependent on rater.

Feed back mechanisms excluded.Low acceptance by employees- normative rather than

absolute standards used.

The Attribute ApproachThe Attribute Approach

Graphic rating scalesA list of traits is evaluated by a five-

point rating scale.Legally questionable.

Mixed-standard scalesDefine relevant performance dimensions

and then develop statements representing good, average, and poor performance along each dimension.


Still popular Easy to DevelopGeneralizeIdentifies and defines attributes relevant to

job performanceCan be reliable & valid

Advantages of the Attribute Approach

Disadvantages of the Attribute Approach Disadvantages of the Attribute Approach

•Little congruence between techniques and company strategy•Used widely because its easy to use•Performance standards vague- reliability/validity low•No feedback mechanisms

Behavioral ApproachBehavioral Approach

Defines behaviors an employee must exhibit to be effective in the job

There are 5 techniques used in this approach

Behavioral ApproachBehavioral Approach

Critical incidents approach - requires managers to keep record of specific examples of effective and ineffective performance.

Behaviorally anchored rating scales (BARS)Behavioral observation scales (BOS)Organizational behavior modification - a formal

system of behavioral feedback and reinforcement.Assessment centers - multiple raters evaluate

employees’ performance on a number of exercises.


Critical IncidentsCritical Incidents

Log is kept for recording observable behavior demonstrated by an employee that is both effective and ineffective.

Log is used to provide feedback to employees and is used as an aid in goal/ objective setting

Behavioral Observation Scales - (BOS)

Behavioral Observation Scales - (BOS)

Variation of BARS , using critical incidentsBOS useful in differentiating good from poor

performers, objectivity, providing feedback, training.

BOS is easy to use, but does require more information

Behaviorally Anchored Rating Scales(BARS)

Behaviorally Anchored Rating Scales(BARS)

Expansion of the critical incidents approach and is used to develop behavioral anchors that define different levels of performance.

Can increase interrater reliability by providing precise and complete definition of the performance, however behavioral anchors can bias information recall

Four actions in using BARSFour actions in using BARS

1. Define key behaviors

2. Use a measurement system to assess behaviors

3. Inform employee of behaviors to be measured

4. Provide feedback and reinforcement to employee

Organizational Behavior Modification(OBM)

Organizational Behavior Modification(OBM)

Managing behavior through a system of feedback and reinforcement

Uses the behaviorist approach which indicates that future behavior is influenced by past behaviour that has been positively reinforced

Assessment CentersAssessment Centers

Normally used in selection /promotion , but also for measuring performance

Simulations are carried out, multiple raters evaluate employee performance

Provide an objective measure of an employee’s job performance

Allows for specific feedback & individual developmental plans

Advantages of the Behavioral ApproachAdvantages of the Behavioral Approach

Can be effectiveProvides for strategic congruenceProvides specific guidance & feedback for

employees about performance expected of themBehaviors measured are validAcceptability usually highRaters performance is usually high

Weaknesses:Behaviors need to be constantly monitored and

revised to ensure strategic congruence.Approach assumes that there is only one way to do

the job and that behaviors are identifiable

Disadvantages of the Behavioral Approach

:Behavioral systems are” person based outcomes ”

employees do not have complete control over these outcomes- may be regarded as contaminated, rather “systems factors” should be used to evaluate performance. Outcomes can result in dysfunctional behavior.

Suggests that: performance feedback should given to employees using both objective and subjective feedback

Employees should not be categorized for performance ratings

Relies on combination of attribute & results for measurement of performance

Arguments

Results ApproachResults Approach

Management by objectives top management passes down

company’s strategic goals to next layer of management, and these managers define the goals they must achieve.

Productivity Measurement and Evaluation System (ProMES) goal is to motivate employees to

higher levels of productivity.

Goals


Hierarchy

The Results ApproachThe Results ApproachFocuses on managing the objective, measurable

results of a job or workgroup Management team defines organisation strategy. Goals are cascaded Requires specific, difficult objectives Success of system dependent on

Management commitment They effectively link employees’ performance with

organization's strategic goals.

What is MBO?What is MBO?

A goal directed and results oriented approach to performance appraisal in which employees and their managers/supervisors set goals together for the upcoming evaluation period and for and explicit time period

Common components of the MBO System

Common components of the MBO System

They require specific objective goalsGoals are set with managers’ and employees’

participationManagers provide objective feedback

throughout the rating period to monitor progress towards goals

What is an ObjectiveWhat is an Objective

Objectives describe:Conditions that will exist when the desired

outcome has been establishedA time frame during which the outcome is to be

completedResources that the organisation is willing to

commit.

GOOD OBJECTIVES ARE “SMART”

GOOD OBJECTIVES ARE “SMART”

S SpecificM MeasurableA Aligned with organizational/unit goalsR Realistic and results-orientedT Timed

What is a Standard?

Standards are established criteria used by an organisation to objectively measure the

performance of employees.

Standards refer to ongoing performance criterion that must be met consistently.

What is a Standard?

Standards are established criteria used by an organisation to objectively measure the

performance of employees.

Standards refer to ongoing performance criterion that must be met consistently.

Performance Standards

A well written performance standard is: 1.Clearly Defined

2. Reliable3.Valid

Performance Standards

A well written performance standard is: 1.Clearly Defined

2. Reliable3.Valid

Clearly Defined Performance StandardsClearly Defined Performance Standards

These standards are congruent with the organisation’s strategy, goals and objectives

They must also satisfy the following criteria: (SMART)SpecificMeasurableAttainableRealisticTime Bound

ReliabilityReliability

Refers to the consistency of the performance standards and measures

ValidityValidity

Validity refers to the extent to which the performance standards measure all/only the relevant aspects of performance.

A performance standard is contaminated whenever it measures irrelevant aspects of performance.

A performance standard is deficient if it does not measure all aspects of performance.

Performance StandardsPerformance Standards

Performance standards are used to minimise:PrejudicesRating ErrorsPersonal biases

Productivity Measurement Systems(ProMES)

Productivity Measurement Systems(ProMES)

Aims to motivate employees to higher levels of production

Has measurement and feedback mechanisms.It is effective, in increasing productivity

4 Steps in the ProMES Process4 Steps in the ProMES Process

1. Employees identify the products/activities/objectives to be accomplished by organisation.

2. Staff defines indicators of the product

3. Staff establishes the contingencies between the quantity of the indicator and level of evaluation associated with the amount

4. Feedback system is developed

Advantages of the Results ApproachAdvantages of the Results Approach

Minimises subjectivity, objective and quantifiable indicators of performance are used.

High acceptabilityLinks individual performance to organisation's

strategy & goals.

Weaknesses: Measures can be contaminated and deficientEmployees tend to focus on measurable

aspects of performance- neglecting othersFeedback may not help employees improve-

feedback needs to focus on actual behavior that needs to be changed

Disadvantages of the Results Approach

Quality ApproachQuality Approach

A performance management system designed with a strong quality orientation can be expected to:Emphasize an assessment of both person and system

factors in the measurement system. Emphasize that managers and employees work together

to solve performance problems.Involve both internal and external customers in setting

standards and measuring performance.Use multiple sources to evaluate person and system

factors.


Quality Approach (cont.)Quality Approach (cont.)

Statistical process quality control techniques used:Process-flow analysisCause-and-effect diagramsPareto chartControl chartHistogramScattergram


Recommendations for designing an Effective Performance System

Recommendations for designing an Effective Performance System

1. Aim for Precision in defining and measuring performance.

2. Link Performance dimensions to meeting internal and external customer requirements.

3. Measure and correct for the impact of situational constraints.

CURRENT ISSUES IN PERFORMANCE MANAGEMENT

The focus on ratings and rewardsToo much for one rater to appraiseThe system is too top downTeam-based work systemsTotal Quality Management

PERFORMANCE MANAGEMENT INNOVATIONS

PERFORMANCE MANAGEMENT INNOVATIONS

Increased employee involvementLess focus on ratings and rewardsMulti-rater systems (i.e., 360 degree feedback, peer

reviews)

IMPLEMENTATION ISSUES AND STRATEGIES

IMPLEMENTATION ISSUES AND STRATEGIES

Involvement of users in developmentPilot programsImplementation in one unitStaggered implementation

OBSTACLES TO SUCCESSFUL IMPLEMENTATION

OBSTACLES TO SUCCESSFUL IMPLEMENTATION

Lack of commitment from the topOverselling the programA program excessive in paperwork and

administrative requirementsFailing to train and retrain appraisersChanging the systemFailing to monitor the program and deal with non-

compliance

PERFORMANCE APPRAISALPERFORMANCE APPRAISAL

THE APPRAISAL PROCESS

PERFORMANCE APPRAISAL VS PERFORMANCE MANAGEMENT

PERFORMANCE APPRAISAL VS PERFORMANCE MANAGEMENT

Performance management -- “all of those processes led by managers to help employees perform as effectively as they can.”

Performance appraisal -- process involving setting standards, informing employees, assigning ratings and giving feedback.

Why Appraise?Why Appraise?

Appraisal is designed as a means of monitoring the progress and

achievement of the organisation ,to encourage and support the continuing development of the organisation in a

changing world

Objective of Performance Appraisal

Performance Appraisal is the systematic evaluation of an individual’s job performance which seeks to measure his/her performance in relation to the achievement of an organization’s strategy.

Effective Characteristics for Managing Performance

Effective Characteristics for Managing Performance

Know your organisation’s performance cycle Demonstrate effective communication skills Be able to explore causes of performance problems Ability to develop action plans and empower employee to

be solution-oriented Be objective and focus attention towards the problem Be able to provide feedback

Sources for Performance Information

Sources for Performance Information

Customers Peers

Self Subordinates

Supervisors


Rater Errors in Performance Measurement

Rater Errors in Performance Measurement

Similar to meContrastDistributional errorsHalo and hornsRecencyStereotypesSelective perceptionBias


Following Legal GuidelinesFollowing Legal Guidelines

Conduct a valid job analysis related to performance.

Base system on specific behaviors or results.Train raters to use system correctly.Review performance ratings and allow for

employee appeal.Provide guidance/support for poor performers.Use multiple raters.


Reducing Errors and Appraisal Politics

Reducing Errors and Appraisal Politics

Two Approaches to reducing rater error:Rater error trainingRater accuracy training

Appraisal politics - a situation in which evaluators purposefully distort ratings to achieve personal or company goals.


Purposes of Performance Appraisals

Monitor progress & achievements of organizations

Identify employees current levels of performance

Encourage & motivate employees

Reward employees performance

Identify training & development needs

Link strategic goals with employees’ activities

Organizational development

Provide for succession planning

Benefits To the Organization

Identification of skills to enhance organization’s performance

Employees are motivatedProactive identification of training and

development needsProvides a competitive advantage by managing

behavior and results of employees.

Benefits To The Manager

Builds the relationship with the employee

Enhance employee’s motivation Evaluate employee’s

effectiveness against strategic goals

Identify training & developmental needs

Builds a rational basis for constructing rewards

Provides documentation for legal purposes.

Benefits To The Employee

Fairness of system measurement enhances/effects outcomesRecognition and rewards for contributions to the

organizationEnables employee to improve performanceProvides for feedbackEnhances communication between employee and manager Acts as a motivator to improve performance

Challenges Associated With Performance Appraisals

Managers are uncomfortable providing feedbackCulture of the organization/organizational politicsProcess can be subjective rather than objective if not

properly administeredRater Errors can cause bias in appraising actual

performance.Whether to focus on individual or team performanceLegal Issues

Challenges Associated With Performance Appraisals-continued

Challenges Associated With Performance Appraisals-continued

Managers/Supervisor:

Often resist May have limited contact with subordinateMay be poor at giving feedback.Viewed as wasted paperworkFear the emotions that can be unleashed and fear being unable to defend

the ratings.Don’t like giving negative feedback, fear reaction

Preparing for Performance ReviewPreparing for Performance Review

Schedule time and place for appraisal Assemble dataCompare performance to standardsReview previous performance appraisals

Choosing a Performance Review ApproachChoosing a Performance Review Approach

Tell & SellTell & ListenProblem Solving

Appraisal StylesAppraisal Styles

Interview dominated by Managers

Interview shared between manager and subordinate

Manager tells Manager tells& Sells Manager tells & Listen Manager Shares problems & solutions

OVERCOMING BIASES

Recognize the ones you have.Share expectations with the appraisee.Keep a “log” of events during the year.Give regular feedback (no surprises!).Review your draft appraisal with someone.Remind yourself of your biases before every performance

appraisal conference.

The Appraiser’s RoleThe Appraiser’s Role

Be ReadyEstablish trustEmpowerFind OutListenNegotiatingAgreeing

Conducting AppraisalConducting Appraisal

Review purpose of the interviewBe direct and specificStart out with the positivesDon’t get personalEncourage mutual communicationDon’t “skirt” performance issuesPay attention to your non- verbals

Handling Defensive EmployeesHandling Defensive Employees

Recognise that defensive behavior s normalNever attack a person’s defensivesPostpone actionRecognise your own limitations

Appraisal of Teams Appraisal of Teams

Types of teams:Work or service Teams

Project Teams

Network Teams

Challenges of Team Performance Management

Challenges of Team Performance Management

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?

3Types of Team Performance 3Types of Team Performance

1. Individual performance

2. Individual performance that contributes to team performance

3. Team performance

Factors to consider for effective measurement of Teams

Factors to consider for effective measurement of Teams

Key Success Factors- Competencies1. Communication

2. Decision Making

3. Collaboration

Key Accountabilities 1. Goals to be reached

2. Performance standards

Appraisal of Teams Appraisal of Teams

Using Four dimensions for measurement of team performance:

1. Effectiveness

2. Efficiency

3. Learning and Growth

4. Team Member Satisfaction

Performance FeedbackPerformance Feedback

Characteristics of an Effective Feedback Process

What is Coaching?What is Coaching?

A directive process by a manager/supervisor to train and orient an employee to the realities of the workplace and to help the employee remove barriers to optimum work performance.

Crisp 1989

Benefits of CoachingBenefits of CoachingBuilds your reputation as a people developerIncreases productivity when employees know what

the goals are and how to achieve themPositive recognition and feedback increases

employee motivation and initiative Avoids surprises and defensiveness in performance

appraisalsIncreases creativity and innovation of unit as

employees feel safe to take risksIncreases team cohesiveness due to clarified goals

and roles

Improving Performance FeedbackImproving Performance Feedback

Feedback should be given every day, not once a year.Create the Right Context for Discussion.Ask employees to rate their performance before the session.Encourage the subordinate to participate in the session.Recognize effective performance through praise.Focus on solving problems.Focus feedback on behavior or results, not on the person.Minimize criticism.Agree to specific goals and set a date to review progress.


Characteristics Shared by Effective SupervisorsCharacteristics Shared by Effective Supervisors

They explore causes

They direct attention to causes

They empower worker solutions

They direct communication at performance

Managing Performance of Marginal Performers

Managing Performance of Marginal Performers

Solid performersHigh ability and motivation; managers should provide

development opportunitiesMisdirected effort

Lack of ability but high motivation; managers should focus on training

UnderutilizersHigh ability but lack motivation; managers should focus on

interpersonal abilitiesDeadwood

Low ability and motivation; managerial action, outplacement, demotion, firing.


The ProcessThe Process

Feedback should be given

FrequentlyEncourage employee to

rate his/her performance Create the right context for

the discussionEncourage employee to

participate in discussion

Coaching For Improved PerformanceCoaching For Improved Performance

Critical Discussion Steps Set informal tone Clarify discussion purpose Discuss relationship between observations & objectives Ask for and discuss solutions Mutually agree on necessary actions Express confidence in employee and set next review

date

Coaching For Improved Performance -continued

Coaching For Improved Performance -continued

Recognise effective performance

Focus on solving problems

Focus feedback on behavior or results,not the person

Minimize criticism

Coaching For Improved Performance-continued

Coaching For Improved Performance-continued

SETTING EXPECTATIONS Review organizational and unit goals and individual

performance expectations.Identify duties,objectives, and projects.Describe performance measures and standards.Identify performance factors.Develop a monitoring planAgree to specific goals Monitor performance,Set progress review dates.

Technology

Performance Management MSHRD UWI -2006