Simulation Portfolio

UTS BUSINESS SCHOOL UTS CRICOS PROVIDER CODE: 00099F

PERFORMANCE MANAGEMENT

21720 - WEEK 6

business.uts.edu.au

Today

2

What is performance management?

What is the process involved in performance management system?

What are the challenges in performance management?

How can performance management be done better?

What is Performance Management?

“A continuous process of identifying, measuring and developing performance in organisations by linking each individual’s performance and objectives to the organisation’s overall mission and goals” (Aguinis 2011)

“Practices associated with defining, monitoring, reviewing and developing employee performance, including performance review, feedback, employee counselling and discipline” (Nankervis et. al 2019)

Ø Not just appraisals and terminations

Ø Needs to be strategic… but often isn’t. 3

The Model for Performance Management

4

Employee Output

Organisational Goals

Performance Management

Micro

micro/meso

Macro

Team Output

Meso

The Performance Management System (PMS)

5

The components of the performance management system provide the support structure and a framework within which managers and

employees operate

There is no “one size fits all”. The type and complexity of the

performance management system used will depend on the industry, the nature of the work

and the size of the business.

Evaluative vs Developmental Approaches

Evaluative:

Traditional, ‘harder’ approach. Backward looking (assessing past performance against predetermined performance criteria). Often associated with top down, more judgemental forms of PM, and the allocation of reward.

Developmental:

‘Softer’ approach – emphasis on communicating gaps in performance expectations, clarifying job objectives, training and development.

Has been shown to negatively impact on employee behaviour and performance

Has been shown to positively impact on employee behaviour and performance

IN THEORY, A GOOD PERFORMANCE MANAGEMENT SYSTEM CAN:

• Increase productivity ; • Help retain and develop staff

(through improved engagement);

• Better meet the changing needs of the company; • Assist in salary and resource allocation;

• Provide useful insight into the workforce.

7

The facts….

Ø71% of employees in Australia rate this a “very important”

Ø79% of executives rate that redesigning their PM is “high priority”

8(Sloan, Agarwal, Garr & Pastakia 2017) (Schutz 2017)

Ø 95% of managers are dissatisfied with PMS

Ø 59% of employees find it a waste of time

Ø 56% of employees don’t receive any feedback

A Bad performance Management System Decreased or

stagnant productivity

Demotivating to staff

Cause tension within teams

Rewards unfavourable

behaviour

Unintended consequences:

1. Gaming 2. Information manipulation 3. Selective attention 4. Illusion of control 5. Relationship transformation

How does it work?

11

Elements of PM

Annual Reviews – the Traditional Way

12

• Performance planning and setting goals • Supporting the achievement of goals • Performance Appraisal (Review) • Providing Feedback • Identifying outcomes • Improving Performance • Managing Underperformance

Annual Reviews

13

People may not look at the entire

year’s worth

Not enough time to get

some serious feedback to

change behaviours

Can seem disingenuous

Self Review Employees being asked to evaluate themselves on a self-assessment basis Effective Ineffective

• Supervisor and employee jointly establish goals or development plans

• Can work in conjunction with supervisor appraisal

• If the review is tied to employment rewards

• Requires trust from all parties involved

Conducted by persons at the similar level as employee being evaluated Effective Ineffective • When managers

cannot fully monitor staff performance, either logistically or technically

• Reviews can turn into popularity contests

• Managers do not want to give up control of the review process

• Those receiving low ratings might retaliate against their peers

Peer Review

Multi-Source or 360-Degree Appraisal

16

Multiple perspectives on performance, but time-consuming….

The Current Trend – Continuous appraisals

17

“Touchpoints”

“let the departments decide”

“Saved 2-million hours”

‘those with monthly or ongoing performance check-ins are up to 1.5 times more effective at engaging and retaining employees than those with an annual process’

The Role of Line Managers

• Line-managers have traditionally been promoted from ‘the line’, because they had increased performance/output…

18

Not because they were good managers

Line Managers can make a bad PM system work...equally, a terrible Line Manager can make a good PM system break down...

Difficult Conversations

• Line Managers dislike having ‘difficult conversations’: • delivering bad news (e.g. not selected for promotion); • providing critical feedback on performance;

• raising issues of misconduct; • addressing conflict between colleagues; • investigating complaints; • providing feedback to someone more senior.

19

Performance Indicators

KPIs are goal-based indicators that can help keep employees on track in line with business objectives.

They can be qualitative (accuracy of work) or quantitative (efficiency, linked to targets)

Traditionally linked to Financial indicators

Function specific (about the job, technical

skills, efficiency)

Behavioural (communication, teamwork,

attendance)

Key Performance Indicators (KPIs)

Balanced Scorecard • Translates mission and strategy into

performance measures as framework for a strategic measurement and management system.

• Four balanced perspectives: financial, customers, internal business processes, and learning and innovation.

21

(Kaplan & Norton 1996)

22

Providing Feedback

Positive Emphasise strengths

Professional Avoid suggestions about personal traits to change

Growth Concentrate on opportunities for growth

Consolidate Limit plans for growth to a few important items

Consider Individual factors

Common causes of underperformance

24

This is where an Employment Assistance Program (EAP) can really help

Be Careful of Bias!

25

Halo and horns effect – one specific criterion or characteristic distorts the assessment of others

Crony effect – distortion is caused by the closeness of the

personal relationship

Doppelganger effect – rating reflects similar characteristics

Veblen effect – ranking everyone in the middle

Recency effect – recent events influence assessment

Confirmation bias – look for confirmation that confirms

preconceived ideas

Contrast error – comparisons made with other employees

Status effect – those in higher level positions are given more

generous ratings.

Managing Underperformance

• Find the causes of underperformance

• Work with employee to solve challenges

• Dismissal should be the last resort.

Good, Better, Best…. Performance Management

• Adopt a holistic approach

• Make it a continuous process

• Developmental, not evaluative

• Provide training & support for Line managers:

üSkills and knowledge to conduct review üTime to conduct review üManaging all performance – not just over

performers, not just under performers

Theoretically, performance appraisal is a good thing because:

• It provides recognition and helps establish a sense of cohesion in the organization;

• It offers information on how well an employee is going, and how they may improve;

• Opens a formal communication channel between supervisor and subordinate (potentially others as well).

Poorly planned appraisals can be detrimental because:

• Can be too subjective, open to issues such as bias, reliability and validity of measurements;

• Their success relies on having appropriate managers to administer the process fairly;

• Bureaucratic – they are time consuming and, particularly with multi person feedback, are difficult to administer.

NEXT TIME (12 APRIL):

Lecture:

Pay and Rewards

Readings:

Wilkinson, Redman and Dundon (2018), Chapter 6.

Simulation:

Complete planning logs for round 5.

business.uts.edu.au