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Chapter 5: eHR and Performance Management—A Consideration of Positive Potential and the Dark Side

Overview

Robert L. Cardy Janice S. Miller

Technology seems to offer us boundless possibilities and hope. Somehow, technological advances seem to bring with them visions of increased ease, efficiency, and fairness, while reducing the need for labor and providing more time for leisure. Technology, in the form of improved appliances and chemistry, is taking the drudgery out of housework. Similarly, the advent of the automobile afforded safe, convenient, and economical travel to virtually everyone. Further, the personal computer offered to level the playing field and bring instantaneous information to everyone, even those who might be housebound or in remote areas.

While there can be little doubt that technological advances, such as those described above, have improved our lives, they may not have lived up to their initial promises. Further, the advances have brought with them negative aspects that may not have been anticipated. For example, technological advances would be expected to reduce the time we spend doing housework. While over the years there has been a reduction in average time spent on housework for women, the figure has increased for men (Green wood, Seshadri, & Yorukoglu, 2004; Institute for Social Research, 2002;). Changes in the amount of time spent in housework appear to have more to do with the labor market than with labor-saving devices. Further, technological advances in the form of labor- saving devices can actually increase the time spent in housework. At least in part, a reason for the counterintuitive relationship between technological advances and time spent in housework is that appliances bring with them their own set of tasks. They also make possible a higher level of performance and therefore change the standards for performance. For example, an ―automatic‖ dishwasher may involve rinsing or pre- washing dishes. Since the dishwasher makes possible storage and daily washing of dishes, dirty dishes left in a sink is no longer acceptable in many households. The level of performance made possible by technological advancement has changed the standard for acceptable performance. Similarly, the automobile has made travel easier and more accessible to millions of people. However, auto accidents maim and kill drivers, passengers, and pedestrians on a daily basis. Further, auto advancements such as four-wheel drive and traction control hold forth the possibility of horrific accidents when the performance envelope is extended beyond its boundaries. As another example, personal computers offer information and communication, but we are far from paperless and viruses and spam now seem to be permanent fixtures on the computer landscape.

In sum, technology offers great positive possibilities, but negative outcomes, often unintended, can be part of the advancement. Further, technology now permeates our lives, and its role in performance management in the workplace is no exception.

Our purpose in this chapter is to consider the role of technology in performance management. We will consider the promise and potential of technology in this important area of management. We will also consider the sometimes not-so-obvious negative possibilities that technology can bring to performance management. Our hope is that a review of positive possibilities as well as the ―dark side‖ can identify potentially beneficial applications of technology to performance management and identify potential costs and how they might be avoided.

The Positive Potential for Technology in Performance Management

In view of the fact that HRM centers on an organization’s unique human and ―inimitable‖ component, whereas technology is more standard and replicable, incorporating technology into HRM introduces some interesting and relevant concerns for practitioners. For example, to what extent is it productive to invest in technology relative to investments in employee development, mentoring, or career management? Or can technology actually support or accelerate positive outcomes in these areas? Does success depend less on how firms manage their technology than on how they manage their human assets? In short, the contrasts between ―content‖ concerns and ―process‖ concerns confronting HRM are intriguing issues to explore, as these contribute uniquely to the way organizations manage and develop their members.

The use of technology in performance management has the potential to increase productivity and enhance competitiveness. We believe that appraisal satisfaction is a key concept that is central to any discussion of technology and performance management. Clearly, gains technology makes are Pyrrhic victories if appraisal satisfaction does not improve as well. Contemporary attention to psychological variables such as appraisal satisfaction that underlie the appraisal process and user reactions to the performance management system have supplanted previous preoccupations with appraisal instrument format and rater accuracy (Cardy & Dobbins, 1994; Judge & Ferris, 1993; Waldman, 1997). In view of the uniqueness and competitive advantage that human resources provide, it is appropriate that organizations pay greater attention to questions of employee satisfaction and with how firms evaluate their performance.

We believe that appraisal satisfaction will remain a relevant concern, even when technology is a primary mechanism for the feedback process. Beyond this, appraisal satisfaction is also a critical concern when technology actually becomes the appraisal process. This is because an important link exists between satisfaction with appraisal processes and technology’s potential as an effective force for change and improved performance.

Given that high-quality performance feedback should be one factor that helps organizations retain, motivate, and develop their employees, these outcomes are more likely to occur if employees are satisfied with the performance appraisal process, feel they are treated fairly, and support the system. Conversely, if ratees are dissatisfied or perceive a system as unfair, they have diminished motivation to use evaluation information to improve their performance (Ilgen, Fisher, & Taylor, 1979). In the extreme, dissatisfaction with appraisal procedures may be responsible for feelings of inequity, decreased motivation, and increased employee turnover.

Furthermore, from a reward standpoint, linking performance to compensation is difficult when employees are dissatisfied with the appraisal process. Noting this difficulty, Lawler (1967) suggested that employee opinions of an appraisal system might actually be as important as the system’s psychometric validity and reliability. The question of appraisal satisfaction is a relevant concern in discussions of how technology interacts with performance management systems since, absent user satisfaction and support, technological enhancements are likely to be unsuccessful.

Technology as Content

Technology may contribute to performance management and thus to appraisal satisfaction in two primary ways. First, technology may facilitate measuring an individual’s performance via computer monitoring activities. This frequently occurs as an unobtrusive and rote mechanical process that relies on minimal input from individuals beyond their task performance. Jobs that incorporate this type of appraisal technology are frequently scripted or repetitious and involve little personal judgment or discretion. Working in a call center or performing data entry are examples. In this instance, the very act of performing a job simultaneously becomes the measure of how well a jobholder accomplishes it. Keystrokes, time on task, or numbers of calls made are recorded and at once become both job content and appraisal content.

A second approach to technology and performance management changes the emphasis so that technology becomes a tool to facilitate the process of writing reviews or generating performance feedback. Examples here include multi-rater appraisals that supervisors or team members generate online, as well as off-the-shelf appraisal software packages that actually construct an evaluation for a manager. This particular technological approach occurs more often in the context of jobs that involve personal judgment, high discretion, and open-ended tasks for which real-time performance monitoring is not an option. Again, it is critical to consider these aspects of technology use in performance management within a framework of appraisal satisfaction. We will address the second application of technology to performance management in the next section of this chapter.

In 1993 computerized performance reports evaluated the work of approximately ten million workers in the United States (Hawk, 1994). Although estimates vary, by the end of the twentieth century this number may have reached at least twenty-seven million workers (DeTienne & Abbot, 1993; Staunton & Barnes-Farrell, 1996). Computerized

performance monitoring (CPM) technology facilitates data collection by counting the number of work units completed per time period, number and length of times a terminal is left idle, number of keystrokes, error rates, time spent on various tasks, and so forth. The resulting data are attractive to employers who may opt to use the technique for workforce planning, evaluating and controlling worker performance, and providing employee performance feedback, our focus here.

Clearly, this use of technology in performance management has positive features from a manager’s perspective. For one, CPM permits greater span of control because it facilitates accurate collection of performance data without requiring managers to spend significant time observing each individual worker’s actual job performance. Similar to technology implemented in other organizational processes (purchasing or manufacturing, for example), when firms apply technology to performance management they stand to benefit from prized gains in efficiency.

Trust is a critical issue that arises in connection with the use of CPM. Some describe trust as the essence of social exchange. That is, when mutual trust flourishes, so also does the extent of the exchange. Earley (1988) empirically demonstrated that computer- generated performance feedback enhanced worker performance if the individual trusted the feedback source. His study centered on telemarketers who either received CPM feedback that a supervisor provided or, in an alternate condition, accessed their CPM feedback directly. Results showed that an individual’s performance and trust in feedback was higher for the self-generated than for the supervisor-generated condition. Although employees’ direct access to feedback data had positive effects, the level of specificity of information available from CPM also led to performance improvements. The researcher found that specific information produced greater performance gains than more general performance feedback, as the latter had only limited value in enhancing performance.

Another way to interpret these findings is that self-efficacy increases when an individual takes control of generating his or her own feedback via technology rather than ceding this function to a supervisor. Enhanced control over one’s work that comes from receiving feedback directly from a computer may be preferable to relying on the supervisor to manage the feedback process as an intermediary. It may be that computer-generated feedback that performers access and interpret on their own is less threatening than situations in which the person is a powerless and passive recipient of feedback from a supervisor.

More recently, Douthitt and Aiello (2001) approached CPM using a procedural-justice framework. In a laboratory study, they exposed participants to four feedback conditions in which participants experienced varying levels of control over the feedback they received. They found that the opportunity to participate in determining how one received feedback positively affected perceived procedural justice, and that this was more effective than actually having an opportunity to control or turn off the computer monitoring. One of the authors’ conclusions was that heightened perceptions of procedural fairness provide positive return for the cost involved in establishing

employee participation in a CPM environment. Thus, these researchers confirmed a growing awareness of the importance of allowing workers to retain control over some aspects of computerized feedback generation.

Organizations that invest in technology for performance improvement have wasted their resources if employees are uncomfortable with the system or are overwhelmed with the amount of data that is available. Therefore, formal training for users that will result in comfort and confidence with the system should be an essential part of CPM implementation. This is especially important if organizations allow employees access to their own CPM data.

To enhance perceptions of system fairness, practitioners should find a way to balance quantitative performance data with acknowledgment of system factors. For example, an employee who delivers high-quality customer service over the telephone could generate positive responses from the public that would foster return business, even though objective call duration data alone might not capture this fact, as more time spent on individual calls results in handling fewer calls daily. A CPM system that monitors call volume could cast this individual’s performance in a negative light. However, a process that also incorporates acknowledgment of system factors—such as call complexity— would put work performance in perspective. Since this is the kind of performance that an organization seeks to encourage, finding an appropriate objective/subjective balance benefits not only the performer in terms of fairness, but the organization from an outcome standpoint.

In this vein, DeTienne and Abbot (1993) cautioned firms not merely to measure quantity via CPM but also to find ways to measure subjective aspects of job performance. A CPM process that includes provisions for acknowledging the situational constraints or system factors affecting performance may greatly enhance employee satisfaction with an appraisal process. Examples of constraints could include changes in workload based on fluctuations in employment level, introduction of new work processes, the specialized nature of some tasks, or shifting demand as a result of marketplace changes over which an employee has no control.

A system approach to CPM is appropriate because organizational researchers now recognize that individual-level variables do not operate in isolation, but interact with situational factors that surround working individuals. The system approach to performance management hails from Deming’s (1986) assertion that 85 percent of performance variation comes from organizational systems. As most employee performance falls within a predictable range of behavior or is within statistical control, Deming believed that performance fluctuations were due to system inputs like poor training, inadequate technology, or other factors under management control.

In this framework, system factors may either facilitate or be detrimental to performance (Cardy & Dobbins, 1994). For example, economic factors, computer crashes, or task complexity variations could all influence CPM data. If firms find ways to

incorporate situational constraints and system factors into CPM practices, then satisfaction with computer generated performance feedback need not suffer.

One way to pursue objectivity, while acknowledging system factors, is by incorporating CPM into a broader ―Management by Objectives‖ (MBO) format. A key component of MBO programs is an emphasis on joint supervisor-subordinate determination of goals and performance indicators. As discussed above, employees respond with greater trust to an appraisal system in which they have had a voice. A CPM appraisal system does not preclude jointly set goals and agreement on measurement tactics. Practitioners may find that the upside potential for heightened trust that can lead to loyalty and commitment more than compensates for the time spent engaging in the MBO process in conjunction with CPM.

An additional important consideration is follow-up and establishment of a development plan after feedback delivery. Although CPM provides accurate performance feedback in quantitative form, its role and function appear to end there. To have a positive effect, data delivery must also include a developmental aspect that includes devising a plan for monitoring progress and achieving improved performance. Indeed, merely providing outcome measures without addressing how to interpret them—or establishing a program designed to elicit subsequent performance improvements—fails to fulfill the goals of a well-administered appraisal process.

One effective way to administer CPM feedback may be to borrow again from established MBO practices. For example, a supervisor might have a developmental meeting with an employee to review the CPM data, discuss tactics for raising performance, and jointly solve problems regarding current procedures. To make CPM a more positive experience, practitioners might consider exploring how to convey CPM data feedback in a way that involves interaction between supervisor and employee and is geared toward data interpretation and employee development, rather than simply overwhelming an employee with quantitative performance numbers.

An attractive feature of CPM is that feedback is more clearly related to work output and less to superiors’ biased impressions (Shamir & Salomon, 1985). This contrasts with performance-management processes that may be highly political or that encourage individuals to practice impression management or other nonperformance tactics to improve appraisal outcomes. Despite a wide range of impression-management behaviors that employees may engage in to influence appraisal results, these behaviors are largely irrelevant in organizations that rely on objective CPM data. Certainly recipients of CPM performance feedback should feel confident that data are unbiased by nonperformance factors or political behaviors that can affect traditional performance appraisal in various ways (Longnecker, Sims, & Gioia, 1987). While this is clearly a positive feature of CPM from the standpoint of fairness, it does not tell the whole story.

There is growing research interest in CPM and its impact on employees and their performance, but few conclusions about personality and other individual-level variables such as demographic or biographical characteristics and their roles in CPM. There has

been a surprising lack of attention to individual differences in technology acceptance, particularly in view of extant research on individual differences and technology implementation (Agarwal & Prasad, 1999). Both theory development and practice could benefit from discovering which personality traits or individual qualities provide the best fit for a CPM environment. There are two approaches organizations could use to explore this supposition.

First, the ―Big Five‖ model of personality (Barrick & Mount, 1991) may shed some light on the type of individual who prospers in a firm that uses CPM to evaluate his or her performance. A starting point for this discussion comes from Earley’s findings (1986, 1988) regarding the importance of employee participation in CPM practices. Along with increased trust and individual self-efficacy resulting from accessing one’s own CPM data, personality factors may enhance success in this environment. For example, one relevant factor might be the Big Five concept of ―openness to experience.‖ Individuals high in openness tend to be broad-minded, motivated to learn, imaginative, and interested in new ideas. This willingness to try something new (that is, master the technology necessary to access one’s own CPM data and benefit from it) seems consistent with the kind of CPM procedures Earley (1988) advocated.

Second, recent work exploring the relationship between worker age and technology has disclosed that age significantly influences workplace technology usage. In a recent longitudinal study, Morris and Venkatesh (2000) reported that, compared to older workers, the ease or difficulty of technology usage strongly influenced attitudes of younger workers toward a particular technology. They also found that social pressure to use a technology was a more important factor in determining older workers’ attitudes toward usage. Consideration of these findings could have positive implications for satisfaction with performance management administered via CPM.

Technology as Process

In contrast to the performance management of routine or low-discretion jobs that CPM addresses, organizations also have the option to use software that can both generate appraisal forms and their accompanying narrative. In this case, technology becomes an aid that facilitates delivering performance feedback, rather than generating the actual content or data, as CPM does. This broadens technology options to the remaining jobs in an organization whose incumbents receive appraisals.

There are several ways to achieve technological enhancement of performance- management systems in these remaining jobs. One method incorporates appraisal as part of an overall enterprise resource planning (ERP) software system. Today many performance/competency management systems are part of ERP packages. The advantage of this macro approach is that it comprises a wide variety of enterprise data, including finance, operations, and sales/marketing. The ERP system permits viewing an organization in ways that otherwise would not be feasible by exploring the enterprise data and analyzing competencies for individuals, groups of workers, departments, and project teams. This allows HR practitioners to identify high performers, to spot skill and

competency gaps, and to analyze pay relative to performance (Greengard, 1999). The ERP creates a continuous process, providing managers with easy access to information. The ERP can also adapt to fluctuations in subordinates’ progress toward goals.

Once HR holds this information, it may provide training, coaching, and education so an organization remains competitive. The ERP methodology is also attractive from the standpoint of permitting a strategic approach to HRM—the HR practitioner can concentrate on developing an organization’s unique human component, while the employees remain fully engaged in their work (Greengard, 1999).

Firm intranets or the Internet may also serve as key technological enhancements of the performance-management process. Novell Inc., in San Jose, California, anticipates reaching the point where employee evaluations are accomplished entirely online, creating a truly paperless system (Caudron, 1994). Increasingly, these tools serve as the method of choice for implementing multi-rater or 360-degree feedback. For example, a performance evaluation process might begin with email messages coordinating the program. Next, participants can nominate potential evaluators who provide feedback about them. When the process is web-based, the technology may actually impose limits on participation that prevent ―popular‖ evaluators from being overwhelmed with requests to rate others. In addition, online systems prevent evaluators from receiving separate communications from all multi-rater participants. Instead they receive only one email message announcing whom they will evaluate. Assigned passwords then allow evaluators to enter a secure website and, complete evaluation questionnaires; feedback is collected and assembled into reports that participants receive electronically (Summers, 2001).

One highly attractive aspect of web-based appraisal technology is that organizations can evaluate more employees and evaluate them more frequently. The value of frequent appraisal is that the focus changes from appraisal as an annual (and perhaps adversarial) event to one that is an ongoing, real-time process geared toward development. Since employees both want and need feedback on their performance, frequent appraisals done in such a user-friendly manner should have a positive and immediate effect on job performance.

Web-based systems also offer training advantages. Rater training is often a standard feature of web-based appraisals, simultaneously saving the firm money for training costs and also enhancing the value of resulting feedback (Summers, 2001). In addition, feedback recipients can automatically access online development suggestions, training opportunities within their firms, and other related sources on the web. A web-based system may also allow users to track their own progress over a series of evaluations. This option is an attractive means for employees to bridge the gap between feedback and development planning.

Another way technology facilitates performance appraisal is through use of stand- alone software products designed to help compose an appraisal. Most of these software packages are relatively inexpensive and easy to use. One of the most appealing

advantages of appraisal software is that it allows performance management to become paperless, simplifying the logistics of the appraisal process for evaluators, workers, and administrators (Bracken, Summers, & Fleenor, 1998).

A feature of some appraisal software packages is their ability to automate the more tedious parts of creating evaluations, which helps managers focus on the content of the evaluation rather than on the forms. Some programs allow users to click buttons on a screen for each rating and simultaneously create sentences and paragraphs of text. If ratings within an individual factor are high or low—or varied at both ends of the scale— the program prompts the evaluator to review the rating and to add his or her own comments to the evaluation (Adams, 1995).

As a means of assisting evaluators in writing narratives, some software products contain enormous databases of prewritten text, a feature allowing users to automatically upgrade to more positive evaluation or downgrade to more negative evaluation (Adams, 1995). Appraisal software may also include a coaching utility that provides information to evaluators about coaching individuals they evaluate. All these options have the potential to make the performance evaluation process less daunting to frontline managers, engineers, scientists, and others who often strongly resist spending time and effort on this activity. Since information technology can potentially save time and resources, it should free individuals to concentrate on tasks they are more qualified to perform. As a result, supervisors who can avail themselves of the benefits of online performance appraisals may be less reluctant to do them. Rather than viewing performance management as an unwelcome diversion from regular duties, the process should become a less onerous one that individuals learn leads to higher performance among those they supervise. One would expect increases in appraisal satisfaction when viewed from the ratee’s perspective as well, since feedback will occur more frequently and be more informative.

Software packages also have the advantage of promoting adherence to legal guidelines. For example, technology-based systems allow evaluators to receive feedback reports regarding how closely they agree with others’ ratings of the same participants (Bracken, Summers, & Fleenor, 1998). Thus a frame of reference for rating can be developed that increases accuracy. Similarly, online systems permit evaluators to compare their ratings with aggregated ratings others have produced on the same workers (Summers, 2001). Evaluators who receive this information may learn to eliminate rater distortion. In addition, an appraisal-software program is presently available that allows an evaluator to check whether protected classes of employees receive more harsh or lenient evaluations than their colleagues do. This package also includes an optional legal/_language review utility that scans an evaluation for words that could lead to charges of discrimination or harassment.

While it is critical to deliver timely and accurate information so that performance improvements ensue and organizational learning takes place, individuals generally resist being a bearer of bad news. Consequently, managers often either postpone delivery of negative feedback or attempt to alleviate its impact through positive distortion

or leniency. In a laboratory study, Sussman and Sproull (1999) investigated the possibility that computer-mediated communication increased honesty and accuracy in delivering negative information that had personal consequences for a recipient. They found that participants engaged in less distortion of negative information and were more accurate and honest when they used computer-mediated communication than when they used face-to-face or telephone communication. In addition, those receiving feedback in their study reported higher levels of satisfaction and comfort in the computer-mediated communication situation.

The psychometric features available in some appraisal programs include checks in the process that hinder evaluators from inflating ratings. A manager may feel more confident in feedback sessions—even when delivering bad news—if he or she is convinced of an appraisal’s psychometric robustness and accuracy. Furthermore, ratees may also appreciate appraisal accuracy and value rewards that are determined more objectively and not on the basis of distorted ratings. Again, organizations will benefit in the long term from an elevated level of appraisal satisfaction inherent in this process.

Since online evaluation and appraisal software packages can make the appraisal process less onerous for evaluators, ease of administration may lead to more frequent, accurate, and ongoing feedback. In this way performance management may become more of a real-time, continuous process or ―conversation‖ and less an annual event. Creators of a web-based 360-degree system believe that taking the multi-rater appraisal process online allows resources to be directed to value-adding activities such as feedback and development planning, and that online components therefore optimize face-to-face discussions (Bracken, Summers, & Fleenor, 1998). Indeed, more frequent feedback delivery enhances its potential to improve performance. Rater training available in performance-appraisal software helps solve the problem that supervisors may not know what to talk about or why they are even doing appraisals. Similarly, an online appraisal, like a traditional one, can be the basis for a meaningful conversation about performance between supervisor and subordinate. The online process should be more informative for all users so that supervisors will know what to discuss as well as why they are talking. As a result, they may be willing to deliver feedback to subordinates more often.

Information technology proponents recognize that the greatest impediments to success are often people related rather than information, technology, and systems related (Roepke, Agarwal, & Ferrat, 2000). Obviously, the human component is a central concern when organizations introduce technology to the performance- management process. After all, melding people and technology successfully is of critical importance to today’s firms. While the potential for accelerating positive HRM outcomes through technology applications clearly exists, implementation that fails to consider trust, fairness, system factors, objectivity, personality, or computer literacy and training has negative implications for an organization’s distinct and inimitable human component. Possible gains in efficiency, objectivity, or accuracy that a high-technology approach to performance management produces could turn out to be costly for firms if they bring

about user dissatisfaction leading to diminished job attitudes, poor performance, or increased turnover. We turn next to a discussion of this ―dark side‖ of the technology/performance management interface.

The “Dark Side” of Technology in Performance Management

As discussed at the outset of this chapter, technology can have unintended and negative consequences. In this section, we emphasize the potential negative characteristics that can result from applying technology to performance management. The negative outcomes are no more guaranteed than are positive outcomes. However, these negative aspects can be unintended costs that can accompany a technology- aided approach to managing performance. Thus, it is worthwhile to consider some of the major negative possibilities, with the hope that awareness of these negative possibilities can assist practitioners in avoiding potential problems.

This consideration of the ―dark side‖ of a technologically aided approach to performance management is presently a more conceptual than an empirical discussion because little research has been done from this perspective. Nonetheless, we provide a structure for these comments using the framework appearing in Figure 5.1. This framework distinguishes between two major types of performance management. On the one hand, performance management can occur at a more macro level and consist of allocating labor to projects or jobs. On the other hand, performance management can occur at a more micro level and involve performance measurement and development of individual or team performance. The micro category of performance management is probably the category most I/O and HRM people tend to think of. However, line managers often approach performance management from a more macro perspective of combining labor and other resources in order to assure adequate performance on various initiatives. Thus, the framework directs our attention at both micro and macro levels of performance management.

Figure 5.1: Content and Process of Performance Management.

The second factor included in the framework is ―focus,‖ which refers to the content or process of performance management. With a focus on content, the primary concern is with the ―what‖ of performance management. Content issues primarily have to do with criteria and what is measured. With a focus on process, the primary concern is with the ―how‖ of performance management. Process issues primarily have to do with how managers carry out performance management.

Depending on whether performance management is at a macro or micro level and whether our focus is on content of process, there are four possible combinations. We next consider each of these four cells that result from crossing the performance management and focus factors. This framework provides a convenient way for categorizing, discussing, and thinking about possible negative outcomes.

Cell 1: Macro and Content

Technology has recently made some important strides when it comes to allocating human resources to projects. Separate HRM functions, such as hiring, training, and benefits, have seen the application of software and the development of web-based approaches. However, it is at a more macro level, a level that cuts across and integrates various management functions, where development and corporate funds seem to be focused. Software that integrates across all areas of an organization and captures the entire enterprise would seem to hold the promise of wringing out all of the potential advantages of a technological approach, such as greater speed, clarity, efficiency, and improved planning capabilities, among others. We will next broadly consider enterprise resource planning and then look at potential content problems that may accompany this approach.

Enterprise resource planning software is meant to provide managers the information technology needed for real-time assessment of the status of orders and where materials are in the system. Further, and perhaps most important, the technology can provide the information needed to realize new projects or strategic direction. For example, paired with a human resource information system, the competencies of employees can easily be electronically catalogued. Breaking down a project into its component tasks and then identifying the competencies needed for those tasks allows a manager to identify employees who have the skills that best position them to make the project a success. The electronic approach allows management to determine the type of labor needed and its likely cost. Enterprise resource planning vendors, including SAP, Oracle, IBM, Infinium, PeopleSoft, Lawson, Austin-Hayne, and others, have developed sophisticated capabilities to accomplish these objectives. Estimates of how long a project may take to complete or to get up-to-speed can be made and return-on-investment estimates can be generated. We are not far from a system in which labor is brought together to accomplish particular projects and then reconfigured in a different fashion for another project. ―I’ll take one from column A and two from column B for this project.‖ ―I’ll put in my labor order for the next project as soon as I finish running the numbers.‖ Technology is theoretically providing the means for maximal efficiency by taking, essentially, a Chinese takeout approach to managing initiatives.

The electronically assisted approach described above is certainly rational. The tasks needed, associated competencies, and employees (portrayed as boxes of competencies), can all be represented as a flow of boxes on a computer screen. Putting the various components together in cyberspace can allow examination of the bottom- line impact of varying combinations and amounts of the components. How can labor be most efficiently allocated? How should labor be assigned so that it results in the greatest productivity? How much more competitive, then, could we be in the marketplace? Certainly these are rational business questions and the ability to answer them is wonderfully enhanced by the use of technology. What could be wrong with this picture of management nirvana?

We believe that problems associated with the software-based approach to management don’t really reside in the software. The problems stem from the mindset that underlies or is engendered by the software-based approach. Specifically, the software approach seems to be the computerization of scientific management. The central concept here is reductionism. If projects or jobs can be unbundled into their component tasks, then the discrete competencies needed to perform each component can be identified. The competencies available in the labor force can then be assigned in the most efficient and productive manner possible. A firm that employs this approach is Stride Rite Corporation, in Cambridge, Massachusetts (Caudron, 1994). Certainly, this general approach has been with us for many years. However, competitive pressures and technology are combining to result in reductionism and allocation on a much more rapid basis.

In the extreme, employees may be thrown together on a short-term basis and never even meet each other because their project is conducted virtually. What makes a

manager think that people can be successfully allocated like this? For one thing it is because labor and other pieces of the service or production function are portrayed as separate factors on an electronic display. But are the competencies so separable and easily reconfigured? The problem, of course, is that even though factors can be conceptually portrayed as independent and separable features, operationally it may be the bundle of factors that is the meaningful unit. In other words, the configuration may be more important than the separate figures. Put in terms that we are probably all familiar with from the Gestalt school of thought, ―The whole is more than the sum of its parts.‖ This truism was originally directed at perception, but it may apply just as well to organizational life.

A real-life example may clarify why it may be compelling but dysfunctional to manage by separating parts from a whole. Consider the case of an unnamed book publisher. A cost-conscious and computer-savvy editor had laid out all of the tasks associated with publishing another edition of a text. Timelines and budgets were in place for each piece of the puzzle, from revising each chapter to the instructor’s manual and video cases. One of the pieces that could be broken out as a separate task was editing the text. Of course, good project planning would indicate that costs could be minimized and efficiency and ROI maximized if only new material (for example, inserts and cases) would be copy edited. A copy editor was asked to do his job without having access to the entire text, only the new material. Thus, the context, the terms that may already have been defined, and the overall voice and style of the text were not part of the editing process. You can imagine the difficulty caused by this approach. The reductionistic approach of breaking out all of the tasks was supposed to result in cost savings and efficiency. It must have been a compellingly attractive cost saving item on the computer screen. Unfortunately, the computer analysis was wrong, and the forest was almost lost for the trees. Viewed as partners in the process rather than as boxes to manage, people could participate out of commitment rather than compliance or fear. Yes, productivity and profit are important, but so are people. As a contrast to reductionism, we generically refer to this alternative perspective as the holistic approach.

A holistic approach might differ in a number of important ways from the common reductionistic approach. Some of the contrasts that may be important distinctions are presented in Table 5.1.

Table 5.1: Contrast Between Reductionistic and Holistic Approaches.

Reductionistic Holistic

Feature Gestalt

Process Outcome

Control Trust

One Way Many Possibilities

Component Boundaries Discipline or Project Boundaries

The reductionistic approach focuses on the features or components that make up the overall process. It is by focusing on and controlling the steps in the process that a positive outcome will be achieved. The emphasis is on control, even though an ostensibly liberating technology is used. That same technology can be used to collect various and fairly invasive measures of performance. In addition, the reductionistic approach ends up, perhaps by default, assuming that there is one way to successful performance. That is, a certain set of competencies, perhaps defined in behavioral terms, are specified as required for effective performance. This competency model serves as the screen and template for success. The boundaries in the reductionistic approach are defined by the components. The limits to someone’s job are clearly drawn (often literally on a computer screen), and marching orders and domains are clearly separated.

In contrast, a holistic approach focuses on the whole, which may include employee well-being and development, as well as profit. The focus in a holistic approach would, somewhat ironically, seem to be on the outcome, not so much on the process. For example, a holistic approach might lead to discussion with employees about the competitive environment in which the organization operates and exploration of what the organization may need to do in order to survive and be competitive. The focus may be on the overall outcome, but employees would be trusted to find means to achieve those ends. In contrast to the reductionistic approach, the holistic approach would allow for a variety of paths to success. Given a sufficiently organic, empowered, and flexible approach toward how the process of work is structured, people find where their skills and style best fit and what roles they can best play. In most work situations, the reality is that there are a lot of paths to success, and great variance in styles and in patterns of strengths and weaknesses can be observed across successful people. Some people are best with concepts, and others seem best with details. Some people are quantitative and technically oriented, while others are more people oriented and are gifted with exceptional interpersonal skills. However, people find ways to compensate and deal with their deficits and make the most of their strengths. There are numerous paths to success. Finally, in a holistic approach the boundaries constraining or defining an employee’s responsibilities and activities are handed to them by their function or discipline or by the project. For example, responsibility in a job may capture or include aspects that, in a reductionistic approach, are clearly in the domain of another component. However, the holistic approach allows for employees to more broadly define their responsibility based on logic and common sense as to what is best for the overall project.

The above contrasts highlight some of the distinctions between the reductionistic and holistic approaches to managing work. It is interesting to note that the reductionistic approach, fueled by software capabilities, would seem to be contrary to the desires of most upper-level managers. A summarization of the ideal workplace for most people in upper management is to have a fluid and flexible workplace that can quickly adapt to changing competitive pressures. However, a reductionistic approach compartmentalizes and fixes structure and labor contributions. This end—that seems to us to be at variance with what top management would really like to achieve—is brought about by the

seductive rationale of reductionism and the promise of increased efficiency all quickly and easily laid out in an electronic fashion. Once the component system is in place, there is little doubt that increased speed should be a benefit. Quality of the overall product or service? Well, that depends on whether all of the parts that were separated and done independently fit together into a seamless whole. Further, it must be assumed that the whole isn’t more than the sum of its parts.

As can be seen in the above discussion, the reductionistic approach can conceptually lead to greater efficiency, but can operationally lead to increased costs and other negative outcomes. Allocating labor to the various parts of the production or service function conveys to employees that they are just another cog in the process. Enterprise software provides the capability to push this approach to the extreme. Projects can be broken into their component parts and each part can be managed to minimize costs and maximize productivity. Looking at each step in a production or service function as simply a separate component can dehumanize what really exists within those components.

Related to the potential problem of reductionism, technology-aided macro performance management tends to result in content that is made up of physical characteristics rather than psychological or social components. Viewed as units of labor that can be shifted around as needed, the human resource tends to be seen as sets of quantities: How many? What kind? What types and level of skill? However, physical concerns, such as how the workers may get along together, whether they will psychologically mesh, and whether they will be committed to each other and to the project may be important issues. These psychological and social factors, while easily ignored with technology, can play a critical role in determining bottom-line issues such as quality, productivity, and profit.

Cell 2: Macro and Process

Using technology to assist in managing performance at a macro level also can bring with it potential problems in regard to process. How is labor allocated to a project? We are going to make some gross generalizations here, but we think they capture an important and representative distinction between a nontechnological and a technological approach. In a nontechnological environment, labor assignment is often the result of negotiation between a manager/_supervisor and a worker. A new project or a sudden increase in demand may result in a manager discussing the needed labor with workers to see what may work out in terms of balancing production needs against worker schedules and preferences. Volunteers may even be requested. If assignments are made by the manager, they would usually be open for some discussion and negotiation.

In contrast, a technologically aided approach removes the decision making from the managers and workers. How many units of what kind of labor as well as when and where they should be assigned can all be electronic outcomes. It is difficult to negotiate

with software. The technological approach to macro performance management can thus be seen, particularly from the worker’s perspective, as top-down and arbitrary.

Cell 3: Micro and Content

Managing performance at an individual or team level rests on measuring performance. The critical content of performance management at an individual or team level is criteria. In other words, what are the standards? What is being measured? The answers to these questions are at the heart of it. The criteria signal what is important and guide the feedback and development efforts that are directed toward the worker or team of workers. Using technology in the management of individual or team performance can influence these criteria in ways that may be unintended and negative.

Technological assistance for individual or team level performance management can range from online rating scales to computer-aided creation of performance dimensions and feedback. There are increasing numbers of websites that, for a fee, guide managers through the process of identifying performance dimensions. If you don’t have dimensions already developed, the website will offer a set or help you develop your own—on the spot and online. Further, depending on the pattern of evaluations, the software or the website will generate narrative prose to serve as feedback to the worker.

An electronic version of rating scales is a convenience, but the use of software to generate dimensions is much more substantive and potentially problematic. The ―dark side‖ content issues we discuss next are directed at this more substantive application of technology to performance management.

Potential content problems with the technology-aided approach center on criteria. Specifically, do the characteristics of performance being evaluated really capture the core or important facets of the job? In other words, are the performance measures relevant? There are at least two ways in which the relevance of performance measures can be undermined with the application of technology. First, generic performance dimensions can be selected or custom dimensions can be created online. This on-the- spot and quick process is made possible through technology, but it is a far cry from the recommended approach of deriving performance dimensions from a thorough job analysis. The use of online performance management tools does not preclude the use of a thorough job analysis, but this background work would likely be sidestepped, particularly by organizations that are in competitive and rapidly changing environments. The technological approach allows for the quick solutions that are needed in dynamic environments. However, the cost of this speed may be reduced relevance of the measures. In the extreme, the measures can be created at the time of the evaluation. Workers certainly might question the relevance and fairness of criteria that were unknown and were not available to guide their efforts.

A second means by which technology can reduce the relevance of performance measures has to do with what technology allows us to measure. For example, the average number of keystrokes per hour, the average duration of phone interactions, and

so on can now be fairly easily measured with technology. However, just because these measures are available or easily obtained doesn’t mean they should be measured. Do measures such as speed of keystrokes and duration of phone calls really capture, for example, the speed or quality of customer service? Probably not. However, because technology makes such measures possible or readily available, our fear is that they will be embraced as operational performance measures. Such measures, though, may be a better reflection of what is technologically possible than of what is really important about the job.

In addition to relevance, technology has the potential to negatively affect the discrimination among performance measures. Specifically, technology brings with it the capability of measuring characteristics at a level that may not have been possible before. For example, not only can speed be measured, but it can be measured at a fine-grained level of keystroke rate, and there will be variance across workers on this measure. Setting aside the relevance issue that we just discussed, a critical issue is the meaningfulness of this variance. To coin a phrase, the use of technology can lead us to make mountains out of molehills.

Cell 4: Micro and Process

The process of individual or team performance management revolves around how things are measured and how performance feedback is conveyed to people. With a technologically aided approach, the performance management process can be a source of difficulty. A ―dark side‖ process issue is the perceived distance between a worker and the evaluator. Technology can act as a third and intervening party between them. For example, an evaluator may not be able to explain why the software generated certain conclusions and recommendations. All the evaluator may know is the judgments that were entered into the program. How the data were massaged and the rationale for any results is not directly observable. This ―black box‖ effect can be used by evaluators to duck responsibility for some of the performance management outcomes. However, workers will quickly perceive a distance between management and their performance feedback. As such, we would expect this problem to lead to less regard for people in the evaluation role and reduced leadership or managerial power.

A related problem is the extent to which workers will trust the evaluations and associated feedback. If workers know that software generates their performance feedback, they would be expected to discount and distrust the conclusions and recommendation. Even if workers are not privy to details of how the performance management system works, the types of measures and any inability of the evaluator to explain aspects of the system or its results would be expected to lead to lower trust of the performance management system and its results.

Finally, the types of measures and the precision of measurement can lead workers to question the very intent of the performance management function. Fine-grained measurement of discrete activities or behaviors, particularly if viewed as not really capturing important aspects of job performance, can lead workers to question the intent

of evaluation and feedback. Specifically, while management would like to think that the purpose of performance management is primarily to improve performance, workers may think otherwise. The technologically aided approach can result in workers concluding that the performance management system is there to trip them up. Far from being a partnership focused on maximizing performance, technology can help divide managers from workers and instill an adversarial climate.

Recommendations for Practitioners

To make best use of the positive facets of technology while avoiding the ―dark side‖ potential discussed here, we suggest the following:

1. Monitor employee satisfaction with appraisal via periodic surveys or focus groups.

2. Bolster trust in feedback by allowing employees direct access to feedback data and some level of control in CPM processes.

3. Balance quantitative performance data with allowance for system factors. 4. To elevate trust, consider incorporating an MBO format and development plan

where computer monitoring systems are in place. 5. Be aware of potential relationships between demographic and personality

factors and workplace technology usage, and be willing to adapt as appropriate. 6. Provide evaluator training if performance appraisal software does not offer it as

part of the package. 7. Take a holistic approach to enterprise management that includes employee

well-being and development as well as job competencies and profit. 8. Allow employees to broadly define their responsibilities on projects and teams

rather than being ―compartmentalized.‖ 9. Continue to use a thorough job analysis rather than selecting generic

performance dimensions and criteria that are not relevant to your organization. 10. Avoid allowing technology to intervene between an evaluator and a worker. Do

not replace face-to-face discussion with reliance on computer-generated feedback.

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