fundamentals of Human Resource Management  3 rd  edition by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright   CHAPT...
What Do I Need to Know? <ul><li>Identify the activities involved in performance management. </li></ul><ul><li>Discuss the ...
What Do I Need to Know?  (continued) <ul><li>Describe major sources of performance information in terms of their advantage...
What Do I Need to Know?  (continued) <ul><li>Summarize ways to produce improvement in unsatisfactory performance. </li></u...
Introduction <ul><li>Performance management:  the process through which managers ensure that employees’ activities and out...
Test Your Knowledge  <ul><li>If the performance management system created competition among team members, I would </li></u...
Figure 8.1:   Stages of the Performance Management Process
Purposes of Performance Management <ul><li>Strategic Purpose  –  means effective performance management helps the organiza...
Performance Management Needs to Be Managed
Criteria for Effective Performance Management
Figure 8.2:   Contamination and Deficiency of a Job Performance Measure
Test Your Knowledge <ul><li>Martin is a computer programmer whose job mainly consists of independently coding software.  I...
Methods for Measuring Performance
Table 8.1: Basic Approaches to Performance Measurement
Measuring Performance: Making Comparisons
Measuring Performance: Rating Individuals - Attributes <ul><li>Graphic Rating Scale </li></ul><ul><li>Lists traits and pro...
Figure 8.3: Example of a Graphic Rating Scale
Figure 8.4:  Example of a Mixed-Standard Scale
<ul><li>An employee’s performance measurement differs from job to job. For example, a car dealer’s performance is measured...
Measuring Performance: Rating Individuals - Behaviors <ul><li>Critical-Incident Method </li></ul><ul><li>Based on managers...
Figure 8.5:  Example of Task- BARS Rating Dimension for a Patrol Officer
Measuring Performance: Rating Individuals – Behaviors   (continued) <ul><li>Behavioral Observation Scale (BOS) </li></ul><...
Figure 8.6:  Example of a Behavioral Observation Scale (BOS)
Measuring Performance: Measuring Results <ul><li>Management by Objectives (MBO):  people at each level of the organization...
Table 8.2:  Management by Objectives – Two Objectives for a Bank
Test Your Knowledge  <ul><li>The performance management system at XYZ company currently is perceived as unfair and is time...
Measuring Performance: Measuring Quality <ul><li>The principles of  total quality management (TQM) , provide methods for p...
<ul><li>Coaches provide feedback to their team just as managers provide feedback to their employees. </li></ul><ul><li>Fee...
Sources of Performance Information <ul><li>360-Degree Performance Appraisal:  performance measurement that combines inform...
<ul><li>Performance management is critical for executing a talent management system and involves one-on-one contact with m...
Types of Performance Measurement Rating Errors <ul><li>Contrast errors:  the rater compares an individual, not against an ...
Types of Performance Measurement Rating Errors  (continued) <ul><li>Rater bias:  raters often let their opinion of one qua...
Test Your Knowledge  <ul><li>Bill rates all of his employees very low except for Jan.  Jan gets above average ratings beca...
Giving Performance Feedback <ul><li>Scheduling Performance Feedback </li></ul><ul><ul><li>Performance feedback should be a...
<ul><li>When giving performance feedback, do it in an appropriate meeting place. </li></ul><ul><li>Meet in a setting that ...
Giving Performance Feedback (continued) <ul><li>Conducting the Feedback Session </li></ul><ul><ul><li>During the feedback ...
Figure 8.7:  Improving Performance
Legal and Ethical Issues in Performance Management  <ul><li>Legal </li></ul><ul><ul><li>Performance management processes a...
Legal Requirements for Performance Management <ul><li>Lawsuits related to performance management usually involve charges o...
Legal Requirements for Performance Management  (continued) <ul><li>A  legally defensible   performance management system i...
Summary <ul><li>Performance management is the process through which managers ensure that employees’ activities and outputs...
Summary  (continued) <ul><li>Performance information may come from an employee’s self-appraisal and from appraisals by the...
Summary  (continued) <ul><li>Organizations can minimize appraisal politics by establishing a fair appraisal system, involv...
Summary  (continued) <ul><li>The performance feedback discussion should focus on behavior and results rather than on perso...
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Chapter 8

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  • This chapter examines a variety of approaches to performance management.
  • After reading and discussing this chapter, you should be able to:
  • After reading and discussing this chapter, you should be able to:
  • After reading and discussing this chapter, you should be able to:
  • In this chapter we examine a variety of approaches to performance management.
  • If the performance management system created competition among team members, I would. Make collaboration a criterion to be evaluated. Nothing, competition is good. Increase the specificity of the feedback. Focus on personal traits rather than behaviors. Answer: A
  • Performance management includes several activities. These are shown in Figure 8.1 . Using this performance management process helps managers and employees focus on the organization’s goals.
  • Organizations establish performance management systems to meet three broad purposes: Strategic Administrative Developmental
  • Slightly more than half of HR executives say their performance management systems are effectively linked to business results.
  • For performance management to achieve its goals, its methods for measuring performance must be good. Selecting these measures is a critical part of planning a performance manage system. Several criteria determine the effectiveness of performance measures: Fit with strategy Validity Reliability Acceptability Specific feedback
  • Figure 8.2 shows two sets of information. The circle on the left represents all the information in a performance appraisal; the circle on the right represents all relevant measures of job performance. The overlap of the circles contains the valid information. Information that is gathered but irrelevant is “contamination.”
  • Martin is a computer programmer whose job mainly consists of independently coding software. If interpersonal and teamwork skills were weighted heavily on his job performance measure it would suffer from Criterion contamination Criterion deficiency Unreliability Answer: A
  • Organizations have developed a wide variety of methods for measuring performance. These are listed on this slide, compared and discussed on the slides which follow. Many organizations use a measurement system that includes a variety of these measures.
  • Organizations have developed a wide variety of methods of measuring performance. Table 8.1 compares the methods/approaches to measuring performance in terms of our criteria for effective performance management.
  • The performance appraisal method may require the rater to compare one individual’s performance with that of others. This method involves some sort of ranking, in which some employees are best, some are average, and others are worst. The usual techniques for making comparisons are: Simple ranking Forced distribution Paired comparison
  • Instead of focusing on arranging a group of employees from best to worst, performance measurement can look at each employee’s performance relative to a uniform set of standards. The measurement may evaluate employees in terms of: Attributes (characteristics or traits) believed desirable Behaviors measurements that identify whether the employee behaved in desirable ways
  • Figure 8.3 shows an example of a graphic rating scale that uses a set of ratings from 1 to 5. A drawback of this approach is that it leaves to the particular manager the decisions about what is “excellent knowledge” or “commendable judgment” or “poor interpersonal skills.” The result is low reliability, because managers are likely to arrive at different judgments.
  • To get around the reliability problem of the graphic rating scale, some organizations use mixed-standard scales, which use several statements describing each trait to produce a final score for that trait. The manager scores the employee in terms of how the employee compares to each statement. Figure 8.4 is an example of a mixed-standard scale.
  • Ask students: “How would the performance measurements of a car dealer differ from those of a company CEO?”
  • One way to overcome the drawbacks of rating attributes is to measure employees’ behavior. To rate behaviors, the organization begins by defining which behaviors are associated with success on the job. Which kinds of behavior help the organization achieve its goals? The appraisal for asks the manager to rate an employee in terms of each of the identified behaviors. Techniques used include: Critical incident method Behaviorally anchored rating scale (BARS) Behavioral observation scale (BOS) Organizational Behavior modification (OBM)
  • The scale in Figure 8.5 shows various performance levels for the behavior of “preparing for duty” for a patrol officer.
  • Figure 8.6 provides a simplified example of a BOS for measuring the behavior “overcoming resistance to change.”
  • Performance measurement can focus on managing the objective, measurable results of a job or work group.
  • In Table 8.2 the goals listed in the second column provide two examples for a bank. The two right-hand columns are examples of feedback given after one year.
  • The performance management system at XYZ company currently is perceived as unfair and is time consuming for managers. Which of the following systems is the most likely and least likely used, respectively. Paired comparisons, Results Results, Forced distribution Behavioral, Attributes Attributes, Comparative Answer: A
  • Several kinds of errors and biases commonly influence performance measurements.
  • Bill rates all of his employees very low except for Jan. Jan gets above average ratings because she consistently comes to work on time. The rating errors Bill makes are _______ and _______, respectively. Leniency; Horn Strictness; Halo Similar-to-me; Central Tendency Horn; Strictness Answer: B
  • Once the manager and others have measured an employee’s performance, this information must be given to the employee. Only after the employee has received feedback can he or she begin to plan how to correct any shortcomings.
  • When performance evaluation indicates that an employee’s performance is below standard, the feedback process should launch an effort to correct the problem. As shown in Figure 8.7 , the most effective way to improve performance varies according to the employee’s ability and motivation. In general, when employees have high levels of ability and motivation, they perform at or above standards. But when they lack ability, motivation, or both, corrective action is needed. The type of action called for depends on what the employee lacks.
  • Legal Performance management processes are often scrutinized in cases of discrimination or dismissal. Because performance measures play a central role in decisions about pay, promotions, and discipline, employment-related lawsuits often challenge an organization’s performance management system. Lawsuits related to performance management usually involve the charges of discrimination or unjust dismissal. To protect against both kinds of lawsuits, it is important to have a legally defensible performance management system. Ethical Employee monitoring via electronic devices and computers may raise concerns over employee privacy. Computer technology now supports many performance management systems. Congress has considered laws to regulate computer monitoring. Electronic monitoring provides detailed, accurate information, but employees may find it demoralizing, degrading, and stressful. It is essential that organizations protect the privacy of performance measurements, as they must do with other employee records.
  • In developing and using performance management systems, HR professionals need to ensure that these systems meet legal requirements, such as the avoidance of discrimination. In addition, performance management systems should meet ethical standards, such as protection of employees’ privacy.
  • Chapter 8

    1. 1. fundamentals of Human Resource Management 3 rd edition by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright CHAPTER 8 Managing Employees’ Performance
    2. 2. What Do I Need to Know? <ul><li>Identify the activities involved in performance management. </li></ul><ul><li>Discuss the purposes of performance management systems. </li></ul><ul><li>Define five criteria for measuring the effectiveness of a performance management system. </li></ul><ul><li>Compare the major methods for measuring performance. </li></ul>
    3. 3. What Do I Need to Know? (continued) <ul><li>Describe major sources of performance information in terms of their advantages and disadvantages. </li></ul><ul><li>Define types of rating errors and explain how to minimize them. </li></ul><ul><li>Explain how to provide performance feedback effectively. </li></ul>
    4. 4. What Do I Need to Know? (continued) <ul><li>Summarize ways to produce improvement in unsatisfactory performance. </li></ul><ul><li>Discuss legal and ethical issues that affect performance management. </li></ul>
    5. 5. Introduction <ul><li>Performance management: the process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals. </li></ul><ul><li>This process requires: </li></ul><ul><ul><li>Knowing what activities and outputs are desired </li></ul></ul><ul><ul><li>Observing whether they occur </li></ul></ul><ul><ul><li>Providing feedback to help employees meet expectations </li></ul></ul>
    6. 6. Test Your Knowledge <ul><li>If the performance management system created competition among team members, I would </li></ul><ul><ul><li>Make collaboration a criterion to be evaluated. </li></ul></ul><ul><ul><li>Nothing, competition is good. </li></ul></ul><ul><ul><li>Increase the specificity of the feedback. </li></ul></ul><ul><ul><li>Focus on personal traits rather than behaviors. </li></ul></ul>
    7. 7. Figure 8.1: Stages of the Performance Management Process
    8. 8. Purposes of Performance Management <ul><li>Strategic Purpose – means effective performance management helps the organization achieve its business objectives. </li></ul><ul><li>Administrative Purpose – refers to the ways in which organizations use the system to provide information for day-to-day decisions about salary, benefits, and recognition programs. </li></ul><ul><li>Developmental Purpose – means that it serves as a basis for developing employees’ knowledge and skills. </li></ul>
    9. 9. Performance Management Needs to Be Managed
    10. 10. Criteria for Effective Performance Management
    11. 11. Figure 8.2: Contamination and Deficiency of a Job Performance Measure
    12. 12. Test Your Knowledge <ul><li>Martin is a computer programmer whose job mainly consists of independently coding software. If interpersonal and teamwork skills were weighted heavily on his job performance measure it would suffer from </li></ul><ul><ul><li>Criterion contamination </li></ul></ul><ul><ul><li>Criterion deficiency </li></ul></ul><ul><ul><li>Unreliability </li></ul></ul>
    13. 13. Methods for Measuring Performance
    14. 14. Table 8.1: Basic Approaches to Performance Measurement
    15. 15. Measuring Performance: Making Comparisons
    16. 16. Measuring Performance: Rating Individuals - Attributes <ul><li>Graphic Rating Scale </li></ul><ul><li>Lists traits and provides a rating scale for each trait. </li></ul><ul><li>The employer uses the scale to indicate the extent to which an employee displays each trait. </li></ul><ul><li>Mixed-Standard Scale </li></ul><ul><li>Uses several statements describing each trait to produce a final score for that trait. </li></ul>
    17. 17. Figure 8.3: Example of a Graphic Rating Scale
    18. 18. Figure 8.4: Example of a Mixed-Standard Scale
    19. 19. <ul><li>An employee’s performance measurement differs from job to job. For example, a car dealer’s performance is measured by the dollar amount of sales, the number of new customers, and customer satisfaction surveys. </li></ul>
    20. 20. Measuring Performance: Rating Individuals - Behaviors <ul><li>Critical-Incident Method </li></ul><ul><li>Based on managers’ records of specific examples of the employee acting in ways that are either effective or ineffective. </li></ul><ul><li>Employees receive feedback about what they do well and what they do poorly and how they are helping the organization achieve its goals. </li></ul><ul><li>Behaviorally Anchored Rating Scale (BARS) </li></ul><ul><li>Rates behavior in terms of a scale showing specific statements of behavior that describe different levels of performance. </li></ul>
    21. 21. Figure 8.5: Example of Task- BARS Rating Dimension for a Patrol Officer
    22. 22. Measuring Performance: Rating Individuals – Behaviors (continued) <ul><li>Behavioral Observation Scale (BOS) </li></ul><ul><li>A variation of a BARS which uses all behaviors necessary for effective performance to rate performance at a task. </li></ul><ul><li>A BOS also asks the manager to rate the frequency with which the employee has exhibited the behavior during the rating period. </li></ul><ul><li>Organizational Behavior Modification (OBM) </li></ul><ul><li>A plan for managing the behavior of employees through a formal system of feedback and reinforcement. </li></ul>
    23. 23. Figure 8.6: Example of a Behavioral Observation Scale (BOS)
    24. 24. Measuring Performance: Measuring Results <ul><li>Management by Objectives (MBO): people at each level of the organization set goals in a process that flows from top to bottom, so that all levels are contributing to the organization’s overall goals. </li></ul><ul><li>These goals become the standards for evaluating each employee’s performance. </li></ul>
    25. 25. Table 8.2: Management by Objectives – Two Objectives for a Bank
    26. 26. Test Your Knowledge <ul><li>The performance management system at XYZ company currently is perceived as unfair and is time consuming for managers. Which of the following systems is the most likely and least likely used, respectively. </li></ul><ul><ul><li>Paired comparisons; Results </li></ul></ul><ul><ul><li>Results; Forced distribution </li></ul></ul><ul><ul><li>Behavioral; Attributes </li></ul></ul><ul><ul><li>Attributes; Comparative </li></ul></ul>
    27. 27. Measuring Performance: Measuring Quality <ul><li>The principles of total quality management (TQM) , provide methods for performance measurement and management. </li></ul><ul><li>With TQM, performance measurement combines measurements of attributes and results . </li></ul><ul><ul><li>Subjective feedback </li></ul></ul><ul><ul><li>Statistical quality control </li></ul></ul>
    28. 28. <ul><li>Coaches provide feedback to their team just as managers provide feedback to their employees. </li></ul><ul><li>Feedback is important so that individuals know what they are doing well and what areas they may need to work on. </li></ul>
    29. 29. Sources of Performance Information <ul><li>360-Degree Performance Appraisal: performance measurement that combines information from the employees’: </li></ul><ul><ul><li>Managers </li></ul></ul><ul><ul><li>Peers </li></ul></ul><ul><ul><li>Subordinates </li></ul></ul><ul><ul><li>Self </li></ul></ul><ul><ul><li>Customers </li></ul></ul>
    30. 30. <ul><li>Performance management is critical for executing a talent management system and involves one-on-one contact with managers to ensure that proper training and development are taking place. </li></ul>
    31. 31. Types of Performance Measurement Rating Errors <ul><li>Contrast errors: the rater compares an individual, not against an objective standard, but against other employees. </li></ul><ul><li>Distributional errors: the rater tends to use only one part of a rating scale. </li></ul><ul><ul><li>Leniency: the reviewer rates everyone near the top </li></ul></ul><ul><ul><li>Strictness: the rater favors lower rankings </li></ul></ul><ul><ul><li>Central tendency: the rater puts everyone near the middle of the scale </li></ul></ul>
    32. 32. Types of Performance Measurement Rating Errors (continued) <ul><li>Rater bias: raters often let their opinion of one quality color their opinion of others. </li></ul><ul><ul><li>Halo error: when the bias is in a favorable direction. This can mistakenly tell employees they don’t need to improve in any area. </li></ul></ul><ul><ul><li>Horns error: when the bias involves negative ratings. This can cause employees to feel frustrated and defensive. </li></ul></ul>
    33. 33. Test Your Knowledge <ul><li>Bill rates all of his employees very low except for Jan. Jan gets above average ratings because she consistently comes to work on time. The rating errors Bill makes are _______ and _______, respectively. </li></ul><ul><ul><li>Leniency; Horn </li></ul></ul><ul><ul><li>Strictness; Halo </li></ul></ul><ul><ul><li>Similar-to-me; Central Tendency </li></ul></ul><ul><ul><li>Horn; Strictness </li></ul></ul>
    34. 34. Giving Performance Feedback <ul><li>Scheduling Performance Feedback </li></ul><ul><ul><li>Performance feedback should be a regular, expected management activity. </li></ul></ul><ul><ul><li>Annual feedback is not enough. </li></ul></ul><ul><ul><li>Employees should receive feedback so often that they know what the manager will say during their annual performance review. </li></ul></ul><ul><li>Preparing for a Feedback Session </li></ul><ul><ul><li>Managers should be prepared for each formal feedback session. </li></ul></ul>
    35. 35. <ul><li>When giving performance feedback, do it in an appropriate meeting place. </li></ul><ul><li>Meet in a setting that is neutral and free of distractions. </li></ul><ul><li>What other factors are important for a feedback session? </li></ul>
    36. 36. Giving Performance Feedback (continued) <ul><li>Conducting the Feedback Session </li></ul><ul><ul><li>During the feedback session, managers can take any of three approaches: </li></ul></ul><ul><ul><li>“ Tell-and-Sell” – managers tell employees their ratings and then justify those ratings. </li></ul></ul><ul><ul><li>“ Tell-and-Listen” – managers tell employees their ratings and then let the employees explain their side of the story. </li></ul></ul><ul><ul><li>“ Problem-Solving” – managers and employees work together to solve performance problems. </li></ul></ul>
    37. 37. Figure 8.7: Improving Performance
    38. 38. Legal and Ethical Issues in Performance Management <ul><li>Legal </li></ul><ul><ul><li>Performance management processes are often scrutinized in cases of discrimination or dismissal. </li></ul></ul><ul><li>Ethical </li></ul><ul><ul><li>Employee monitoring via electronic devices and computers may raise concerns over employee privacy. </li></ul></ul>
    39. 39. Legal Requirements for Performance Management <ul><li>Lawsuits related to performance management usually involve charges of: </li></ul><ul><ul><li>Discrimination </li></ul></ul><ul><ul><li>Unjust dismissal </li></ul></ul><ul><li>To protect against both kinds of lawsuits, it is important to have a legally defensible performance management system. </li></ul>
    40. 40. Legal Requirements for Performance Management (continued) <ul><li>A legally defensible performance management system includes: </li></ul><ul><ul><li>Based on valid job analyses, with requirements for job success clearly communicated to employees. </li></ul></ul><ul><ul><li>Performance measurement should evaluate behaviors or results, rather than traits. </li></ul></ul><ul><ul><li>Multiple raters (including self-appraisals) should be used. </li></ul></ul><ul><ul><li>All performance ratings should be reviewed by upper-level managers. </li></ul></ul><ul><ul><li>There should be an appeals mechanism for employees. </li></ul></ul>
    41. 41. Summary <ul><li>Performance management is the process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals. </li></ul><ul><li>Organizations establish performance management systems to meet three broad purposes: </li></ul><ul><ul><li>Strategic purpose </li></ul></ul><ul><ul><li>Administrative purpose </li></ul></ul><ul><ul><li>Developmental purpose </li></ul></ul><ul><li>Performance measures should fit with the organization’s strategy by supporting its goals and culture. </li></ul>
    42. 42. Summary (continued) <ul><li>Performance information may come from an employee’s self-appraisal and from appraisals by the employee’s supervisor, employees, peers, and customers. </li></ul><ul><li>Using only one source makes the appraisal more subjective. </li></ul><ul><li>Organizations may combine many sources into a 360- degree performance appraisal. </li></ul>
    43. 43. Summary (continued) <ul><li>Organizations can minimize appraisal politics by establishing a fair appraisal system, involving managers and employees in developing the system, allowing employees to challenge evaluations, communicating expectations, and having open discussion. </li></ul><ul><li>Performance feedback should be a regular, scheduled management activity, so that employees can correct problems as soon as they occur. </li></ul>
    44. 44. Summary (continued) <ul><li>The performance feedback discussion should focus on behavior and results rather than on personalities. </li></ul><ul><li>Managers must make sure that performance management systems and decisions treat employees equally, without regard to their race, sex, or other protected status. </li></ul><ul><li>A system is more likely to be legally defensible if it is based on behaviors and results, rather than on traits, and if multiple raters evaluate each person’s performance. </li></ul>

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