PPT and Weekly Summary4.1

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Learning Outcomes

Explain what performance management is and how the establishment of goals, ongoing performance feedback, and the evaluation process are part of it
Describe the different sources of performance-management information

Learning Outcomes

Explain the various methods used to evaluate the performance of employees
Outline the characteristics of an effective performance evaluation meetings and feedback sessions and ways in which the performance of employees can be improved

Performance Management Systems

Performance management: Process of creating a work environment in which people can perform to the best of the abilities
Performance evaluations: Result of an annual or biannual process in which a manager evaluates an employee’s performance
Uses the information to show the person where improvements are needed and why

Developing an Effective Performance Management System

Primary responsibility - Overseeing and coordinating its performance management system
Employees are to accept and be satisfied with a performance management system when they have the chance to participate in its development
Experienced employees are asked to help identify important job behaviors
Helps ensure that the system takes into account the tasks that need to be done in an organization

Performance Standards

Based on job-related requirements derived from a job analysis and reflected in an employee’s job description and job specifications
Realistic and specific performance standards that are measurable and written down communicate precise information to employees

Legal Guidelines for Evaluations

Performance ratings must be job-related
Employees must be given a written copy of their job standards in advance of evaluations
Managers who conduct the evaluation must be able to observe the behavior they are rating
Do not allow performance problems to continue unchecked
Supervisors must be trained to use the evaluation form correctly

Legal Guidelines for Evaluations

Firm’s HR department should review the evaluations to see if minority groups are being adversely impacted
Evaluations should be discussed openly with employees and counseling offered to help poor performers
Appeals procedure should be established to enable employees to express disagreement with the evaluation

Types of Performance Evaluation

Manager and/or supervisor evaluation: Conducted by an employee’s manager and reviewed by a manager one level higher
Self-evaluations: Conducted by the employee being evaluated, on an evaluation form completed by the employee prior to the evaluation meeting
Subordinate evaluations: Conducted by an employee of a superior, which is appropriate for developmental than for administrative purposes

Types of Performance Evaluation

Peer evaluations: Conducted by one’s fellow employees, on forms compiled into a single profile for use in the evaluation meeting
Team evaluations: Recognizes team accomplishment rather than individual performance
Customer evaluations: Conducted by a firm’s external and internal customers

360-Degree Evaluations

Conducted by different people who interact with the employee on forms compiled into a single profile for use in the evaluation meeting
Companies should consider the following safeguards
Assure anonymity
Make respondents accountable
Prevent gaming of the system
Use statistical procedures
Identify and quantify biases

Training Appraisers

Improves the performance evaluation process
Establishing an evaluation plan
Provide an explanation of the performance evaluation system’s objectives

Training Appraisers

Explain the mechanics of the rating system
How managers should keep performance records and review them
How frequently the evaluations are to be conducted
Who will conduct them
What are the standards of performance
How to go about preparing for evaluations
Alert raters to the weaknesses and problems of appraisal systems so that they can be avoided

Distributional Errors

Error of central tendency: Performance rating error in which all employees are rated about average
Leniency or strictness error: Appraiser gives employees either unusually high or unusually low ratings
Forced distribution: Raters are required to place a percentage of employees into various performance categories

Temporal Errors

Performance review is biased favorably or unfavorably
Depending on the way performance information is selected, evaluated, and organized by the rater over time
Recency error: Evaluation is based on the employee’s most recent behavior rather than on behavior throughout the evaluation period

Other Rater Errors

Contrast error: Evaluation is biased upward or downward because of comparison with another employee just previously evaluated
Similar-to-me error: Appraiser inflates the evaluation of an employee because of a mutual personal connection

Feedback Training

For raters which provides them some pointers they can use while providing performance feedback to the employees
Basic areas
Communicating effectively
Diagnosing the root causes of performance problems
Setting goals and objectives

Performance Evaluation Methods

Trait approaches - Based on people’s characteristics continue to be used despite their subjectivity
Behavioral approaches - Provide more action-oriented information to employees
Results methods - Focuses on the measurable contributions that employees make to the organization

Trait Methods

Graphic rating-scale method: Each employee is rated according to a scale of characteristics
Mixed-standard scale method: Similar to other scale methods but based on comparison with a standard
Forced-choice method: Requires the rater to choose from statements designed to distinguish between successful and unsuccessful performance
Essay method: Requires the rater to compose a statement describing employee behavior

Behavioral Methods

Critical incident: Unusual event that denotes superior or inferior employee performance in some part of the job
Manager keeps a log or diary for each employee throughout the appraisal period and notes specific critical incidents related to how well they perform
Behavioral checklist method - Rater checks statements on a list that the rater believes are characteristic of the employee’s behavior

Behavioral Methods

Behaviorally anchored rating scale (BARS): Consists of a series of vertical scales, one for each important dimension of job performance
Behavior observation scale (BOS): Measures the frequency of observed behavior
Preferred over BARS for:
Maintaining objectivity
Distinguishing good performers from poor performers
Providing feedback
Identifying training needs

Results Methods

Productivity measures - Directly links what employees accomplish to results that benefit the organization
Management by objectives (MBO): Philosophy of management that rates employees based on the achievement of goals set mutually by them and their manager

Creating an Effective MBO Program

Objectives should be quantifiable and measurable and accompanied by a description of how they will be accomplished
Results that are expected must be under the employee’s control
Firm’s goals and objectives must be consistent, or aligned, with the goals of employees at all levels
Timeframes for when the goals are to be reviewed and evaluated need to be established

Balanced Scorecard(BSC)

Evaluation takes into account
Financial measures
Customer measures
Process measures
Learning measures
Allows each individual to see how his or her performance ties into the overall performance of the firm

Balanced Scorecard(BSC)

Recommendations for the method’s success
Translate the firm’s strategy into a scorecard of clear objectives
Attach measures to each objective
Provide performance feedback based on measures
Empower employees to make performance improvements
Reassess the strategy

Types of Performance Evaluation Meetings and Feedback Sessions

Tell and sell - Ability to persuade an employee to change his or her behavior in a way
Tell and listen - Appraiser/supervisor communicates the strong and weak points of an employee’s job performance during the first part of the session
Problem solving - Seeks to obtain the employees’ buy-in for a mutually-agreed upon way to overcome obstacles and improve the person’s actual performance

Conducting the Performance Evaluation Meeting or Feedback Session

Ask for a self-evaluation
Invite participation
Express appreciation
Be supportive and demonstrate that you care
Minimize criticism
Establish goals
Follow up day to day

Tips for Using Criticism Constructively

Consider whether it is necessary
Consider the person’s ability to handle it
Be specific and do not exaggerate
Watch your timing
Make improvement on your goal

Managing Ineffective Performance

Courses of action
Provide training to increase skills and abilities
Transfer employee to another job or department
Attention of actions to motivate employee
Corrective measures needed to improve employee’s performance
Cautions
Actions taken must be objective and fair
Do not treat underperformer differently, setting the employee up to fail

Focus on Changing the Behavior, Not the Person

Supervisor has to separate the employee from the behavior
Way to communicate this to employees is to suggest more acceptable ways of performing
When required action is taken, it should be done:
Legally
Fairly
With an understanding of the feelings of the individual involved