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McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill ...

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    McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill ... McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill ... Presentation Transcript

    • Performance Management Systems Chapter 11
    • Chapter Overview
      • Understanding Performance
      • Performance Appraisal: Definition and Uses
      • Performance Appraisal Methods
      • Potential Errors in Performance Appraisals
      • Overcoming Errors in Performance Appraisals
      • Providing Feedback through the Appraisal Interview
      • Developing Performance Improvement Plans
      • Performance Appraisal and the Law
      • Summary of Learning Objectives
    • Performance Management Systems
      • Performance management systems that are directly tied to an organization’s reward system
        • Provide a powerful incentive for employees to work diligently and creatively toward achieving organizational objectives
      • When properly designed and implemented, performance management systems let employees
        • Know how well they are presently performing
        • Clarify what needs to be done to improve performance
    • Understanding Performance
      • Degree of accomplishment of the tasks that make up an employee’s job
        • Reflects how well an employee is fulfilling requirements of a job
        • Often confused with effort, which refers to energy expended, performance is measured in terms of results
    • Determinants of Performance
      • Job performance is net effect of an employee’s effort as modified by abilities and role (or task) perceptions
        • Performance in a given situation can be viewed as resulting from interrelationships among effort, abilities, and role perceptions
      • Effort – Results from being motivated
        • Refers to amount of energy (physical and/or mental) an individual uses in performing a task
      • Abilities – Are personal characteristics used in performing a job
        • Usually do not fluctuate widely over short periods of time
      • Role (task) perceptions – Refer to direction(s) in which individuals believe they should channel their effort on their jobs
        • Activities and behaviors people believe are necessary in the performance of their jobs define their role perceptions
    • Determinants of Performance
      • To attain an acceptable level of performance, a minimum level of proficiency must exist in each of the performance components
        • Level of proficiency in any one performance component can place an upper boundary on performance
      • If employees put forth tremendous effort and have excellent abilities, but lack a clear understanding of their roles, performance will probably not be good in the eyes of their managers
        • Much work will be produced, but it will be misdirected
    • Determinants of Performance
      • An employee who puts forth a high degree of effort and understands the job but lacks ability probably will rate low on performance
      • An employee who has a good ability and understanding of the role but is lazy and expends little effort
        • Employee’s performance will likely be low
      • An employee can compensate up to a point for a weakness in one area by being above average in one or both of the other areas
    • Environmental Factors as Performance Obstacles
      • Other factors beyond the control of the employee can also stifle performance
        • Such obstacles are sometimes used merely as excuses, they are very real and should be recognized
      • Common potential performance obstacles include
        • Employee’s lack of time or conflicting demands upon it
        • Inadequate work facilities and equipment
        • Restrictive policies that affect the job
        • Lack of cooperation from others
        • Type of supervision
        • Temperature, lighting, noise, machine or equipment pacing
        • Shifts
        • Even luck
    • Environmental Factors as Performance Obstacles
      • Environmental factors should be viewed not as direct determinants of individual performance but as modifying the effects of effort, ability, and direction
        • Poor ventilation or worn-out equipment may well affect the effort an individual expends
        • Unclear policies or poor supervision can also produce misdirected effort
        • A lack of training can result in underutilized abilities
      • One of management’s greatest responsibilities is to provide
        • Employees with adequate working conditions
        • A supportive environment to eliminate or minimize performance obstacles
    • Responsibilities of the Human Resource Department in Performance Management
      • Responsibilities of the human resource department are
        • Design the performance management system and select the methods and forms to be used for appraising employees
        • Train managers in conducting performance appraisals
        • Maintain a reporting system to ensure that appraisals are conducted on a timely basis
        • Maintain performance appraisal records for individual employees
      • Responsibilities of managers in performance appraisals are to
        • Evaluate the performance of employees
        • Complete the forms used in appraising employees and return them to the human resource department
        • Review appraisals with employees
        • Establish a plan for improvement with employees
    • Performance Appraisal: Definition And Uses
      • Process of evaluating and communicating to an employee how he or she is performing the job and establishing a plan for improvement
      • When properly conducted
        • They let employees know how well they are performing
        • Influence their future level of effort and task direction
      • Effort should be enhanced if good performance is positively reinforced
      • Task perception of the employee should be clarified through establishing a plan for improvement
      • Common uses of performance appraisals is for making administrative decisions relating to promotions, firings, layoffs, and merit pay increases
        • An employee’s present job performance is often the most significant consideration for determining whether to promote the person
    • Performance Appraisal: Definition And Uses
      • Performance appraisal information can
        • Provide needed input for determining both individual and organizational training and development needs
      • These data can then be used to help determine the organization’s overall training and development needs
        • For individual employees, completed performance appraisal should include a plan outlining specific training and development needs
      • Performance appraisals can also be used to encourage performance improvement
        • Used as a means of communicating to employees how they are doing
        • Suggesting needed changes in behavior, attitude, skills, or knowledge
    • Performance Appraisal: Definition And Uses
      • Feedback clarifies for employees manager’s job expectations
        • Feedback must be followed by coaching and training
      • Information from performance appraisals can be used as
        • Input to validation of selection procedures
        • Input to human resource planning
      • How often to conduct performance appraisals
        • No real consensus on how frequently performance appraisals should be done
        • In general, as often as necessary to let employees know
          • What kind of job they are doing
          • If performance is not satisfactory, measures that must be taken for improvement
        • It is recommended that informal performance appraisals be conducted two or three times a year in addition to an annual formal performance appraisal
    • Performance Appraisal Methods
      • Whatever method of performance appraisal an organization uses, it must be job related
        • Prior to selecting a performance appraisal method, an organization must conduct job analyses and develop job descriptions
      • Methods of performance appraisals include
        • Management by objectives (MBO)
        • Multi-rater assessment (or 360-degree feedback)
        • Graphic rating scale
        • Behaviorally anchored rating scale (BARS)
        • Critical-incident appraisal
        • Essay appraisal
        • Checklist
        • Forced-choice rating
        • Ranking methods
        • Work standards approach
    • Management by Objectives (MBO)
      • More commonly used with professional and managerial employees
      • Consists of
        • Establishing clear and precisely defined statements of objectives for the work to be done by an employee
        • Establishing an action plan indicating how these objectives are to be achieved
        • Allowing employee to implement the action plan
        • Measuring objective achievement
        • Taking corrective action when necessary
        • Establishing new objectives for the future
      • Other names for MBO include management by results, performance management, results management, and work planning and review program
    • Management by Objectives (MBO)
      • For this system to be successful, several requirements must be met
        • Objectives should be quantifiable and measurable
          • Objectives whose attainment cannot be measured or at least verified should be avoided where possible
        • Objectives should also be challenging yet achievable, and they should be expressed in writing and in clear, concise, unambiguous language
        • Employees participate in objective-setting process
          • Employee’s active participation is also essential in developing the action plan
        • Objectives and action plan must serve as a basis for regular discussions between manager and employee concerning employee’s performance
          • Provide an opportunity for manager and employee to discuss progress and modify objectives when necessary
    • Examples of How to Improve Work Objects 11-
    • Typical Areas of Supervisory Objectives 11-
    • Multi-Rater Assessment (or 360-Degree Feedback)
      • Managers, peers, customers, suppliers, or colleagues are asked to complete questionnaires on the employee being assessed
      • Person assessed also completes a questionnaire
      • Questionnaires are generally lengthy. Typical questions are:
        • “Are you crisp, clear, and articulate? Abrasive? Spreading yourself too thin?”
      • Human resources department provides results to the employee, who in turn gets to see how his or her opinion differs from those of the group doing the assessment
    • Graphic Rating Scale
      • Requires rater to indicate on a scale where the employee rates on factors such as
        • Quantity of work
        • Dependability
        • Job knowledge
        • Cooperativeness
      • Rating scales include both numerical ranges and written descriptions
      • Potential weakness
        • Evaluators are unlikely to interpret written descriptions in the same manner due to differences in background, experience, and personality
        • Choice of rating categories
          • It is possible to choose categories that have little relationship to job performance
          • Omit categories that have a significant influence on job performance
    • Sample Items on a Graphic Rating Scale 11-
    • Behaviorally Anchored Rating Scale (BARS)
      • Determines an employee’s level of performance based on whether or not certain specifically described job behaviors are present
        • Focus of BARS is not on performance outcomes but on functional behaviors demonstrated on the job
        • Assumption is that these functional behaviors will result in effective job performance
      • Job dimensions – Means broad categories of duties and responsibilities that make up a job
        • Each job is likely to have several job dimensions, and separate scales must be developed for each
      • Scale values – Define specific categories of performance
      • Anchors – Specific written statements of actual behaviors that, when exhibited on the job, indicate the level of performance on the scale opposite that particular anchor
    • Behaviorally Anchored Rating Scale (BARS)
      • Rating performance using a BARS requires
        • Rater to read list of anchors on each scale to find the group of anchors that best describe the employee’s job behavior during the period being reviewed
        • Scale value opposite the group of anchors is then checked. Process is followed for all the identified dimensions of the job
        • Total evaluation combines the scale values checked for all job dimensions
      • BARSs are normally developed following these steps:
        • Managers and job incumbents identify relevant job dimensions for the job
        • Managers and job incumbents write behavioral anchors for each job dimension
          • As many anchors as possible should be written for each dimension
        • Managers and job incumbents reach consensus concerning scale values to be used and grouping of anchor statements for each scale value
    • Behaviorally Anchored Rating Scale (BARS)
      • Advantages
        • BARSs are developed through active participation of both managers and job incumbents
        • Anchors are developed from observations and experiences of employees who actually perform the job
          • Increases the likelihood that the method will be accepted
        • BARSs can be used to provide specific feedback concerning an employee’s job performance
      • Drawbacks
        • Takes considerable time and commitment to develop
        • Separate forms must be developed for different jobs
      • From a technical point of view, BARS is a graphic rating scale that was developed to help overcome errors in performance appraisals
    • Example of a Behaviorally Anchored Rating Scale 11-
    • Critical-Incident Appraisal
      • Rater keeps a written record of incidents that illustrate both positive and negative employee behaviors
        • Rater then uses these incidents as a basis for evaluating the employee’s performance
        • Incidents recorded should involve job behaviors illustrating both satisfactory and unsatisfactory performance of employee being rated
      • Drawback
        • Rater is required to jot down incidents regularly, which can be burdensome and time-consuming
        • Definition of a critical incident is unclear and may be interpreted differently by different people
        • Method may lead to friction between manager and employees when employees believe manager is keeping a “book” on them
    • Essay Appraisal
      • Rater prepares a written statement describing an individual’s strengths, weaknesses, and past performance
        • Requires that evaluation describe an employee’s performance in written narrative form
        • Instructions are often provided as to the topics to be covered
      • Typical essay appraisal question might be
        • “ Describe, in your own words, this employee’s performance, including quantity and quality of work, job knowledge, and ability to get along with other employees.”
        • “ What are the employee’s strengths and weaknesses?”
      • Drawback
        • Their length and content can vary considerably, depending on rater
        • Essay appraisals are difficult to compare
        • Writing skill of appraiser can also affect appraisal
      • It is possible to use a critical incident method to support essay methods however
    • Checklist
      • Rater answers with a yes-or-no a series of questions about the behavior of the employee
      • Checklist can also assign varying weights to each question
      • Normally, human resource department keeps the scoring key for the checklist method
        • Evaluator is generally not aware of weights associated with each question
      • Drawbacks
        • Raters can see positive or negative connotation of each question, which introduces bias
        • It is time-consuming to assemble questions for each job category
        • Separate listing of questions must be developed for each job category
        • Checklist questions can have different meanings for different raters
    • Sample Checklist Questions 11-
    • Forced-Choice Rating
      • Requires rater to rank a set of statements describing how an employee carries out the duties and responsibilities of the job
        • Statements are normally weighted
        • Rater generally does not know the weights
      • After rater ranks all the forced-choice statements, human resource department applies weights and computes a score
      • Attempts to eliminate evaluator bias by forcing rater to rank statements that are seemingly indistinguishable or unrelated
      • Drawbacks
        • Been reported to irritate raters, who feel they are not being trusted
        • Results of forced-choice appraisal can be difficult to communicate to employees
    • Sample Set of Forced-Choice Statements 11-
    • Ranking Methods
      • Performance of an employee is ranked relative to the performance of others
      • Three of the more commonly used ranking methods are
        • Alternation
        • Paired comparison
        • Forced distribution
    • Alternation Ranking
      • Lists names of employees to be rated on the left side of a sheet of paper
      • Rater chooses most valuable employee on the list, crosses that name off the left-hand list, and puts it at the top of the column on the right-hand side of the paper
      • Appraiser then selects and crosses off name of least valuable employee from left-hand column and moves it to bottom of right-hand column
      • Rater repeats this process for all names on the left-hand side of the paper
      • Resulting list of names in right-hand column gives a ranking of employees from most to least valuable
    • Paired Comparison Ranking
      • Best illustrated with an example
        • Suppose a rater is to evaluate six employees; their names are listed on the left side of a sheet of paper
        • Evaluator then compares first employee with second employee on a chosen performance criterion, such as quantity of work
        • If he or she believes the first employee has produced more work than second employee, a check mark is placed by the first employee’s name
        • Rater then compares the first employee to the third, fourth, fifth, and sixth employee on the same performance criterion, placing a check mark by the name of employee who produced most work in each paired comparison
    • Paired Comparison Ranking
      • Process is repeated until each employee has been compared to every other employee on all of the chosen performance criteria
        • Employee with most check marks is considered to be best performer
        • Employee with fewest check marks is lowest performer
      • Drawback
        • It becomes unwieldy when comparing more than five or six employees
    • Force Distribution
      • Requires rater to compare performance of employees and place a certain percentage of employees at various performance levels
        • Assumes performance level in a group of employees will be distributed according to a bell-shaped, or “normal,” curve
      • Drawback
        • In small groups of employees, a bell-shaped distribution of performance may not be applicable
          • Even where distribution may approximate a normal curve, it is probably not a perfect curve
          • This means some employees probably will not be rated accurately
      • Ranking methods differ dramatically from other methods in that one employee’s performance evaluation is a function of performance of other employees in the job
      • Civil Service Reform Act does not permit use of ranking methods for federal employees
    • Forced-Distribution Curve 11-
    • Work Standards
      • Involves setting a standard or an expected level of output and then comparing each employee’s level to the standard
        • Most frequently used for production employees and is a form of goal setting for these employees
      • Work standards should reflect average output of a typical employee
        • Attempt to define a fair day’s output
      • Advantage
        • Performance review is based on highly objective factors
        • To be effective, affected employees must view standards as being fair
      • Drawback
        • Lack of comparability of standards for different job categories
    • Frequently Used Methods for Setting Work Standards 11-
    • Potential Errors In Performance Appraisals
      • Leniency
        • Occurs when a manager’s ratings are grouped at the positive end instead of being spread throughout the performance scale
      • Central tendency
        • Tendency of a manager to rate most employees’ performance near the middle of the performance scale
      • Recency
        • Tendency of a manager to evaluate employees on work performed most recently, usually one or two months prior to evaluation
      • These errors make it difficult to compare ratings from different raters
    • Potential Errors In Performance Appraisals
      • Halo effect
        • Occurs when a rater allows a single prominent characteristic of an employee to influence his or her judgment on each separate item in the performance appraisal
        • Results in employee receiving approximately same rating on every item
      • Personal preferences, prejudices, and biases can also cause errors in performance appraisals
        • Managers with biases or prejudices tend to look for employee behaviors that conform to their biases
        • Appearance, social status, dress, race, and sex have influenced many performance appraisals
      • Managers have also allowed first impressions to influence later judgments of an employee
        • People tend to retain these impressions even when faced with contradictory evidence
    • Overcoming Errors In Performance Appraisals
      • One approach to overcoming errors is to make refinements in the design of appraisal methods
        • One could say that forced-distribution method of performance appraisal attempts to overcome errors of leniency and central tendency
        • Behaviorally anchored rating scales are designed to reduce halo, leniency, and central tendency errors as they provide managers with specific examples of performance against which to evaluate
      • It does not appear likely that refining appraisal instruments will totally overcome errors in performance appraisals
        • Since refined instruments frequently do not overcome all the obstacles
    • Overcoming Errors In Performance Appraisals
      • Another approach to overcoming errors is to improve the skills of raters
        • Suggestions on specific training to be given to evaluators, although vague, normally emphasize that evaluators should be trained to observe behavior more accurately and judge it more fairly
      • More research is needed before a definitive set of topics for rater training can be established
      • At a minimum, raters should receive training in
        • Performance appraisal method(s) used by company
        • Importance of rater’s role in total appraisal process
        • Use of performance appraisal information
        • Communication skills necessary to provide feedback to employee
    • Providing Feedback Through the Appraisal Interview
      • Unless feedback interview is properly conducted, it can and does result in an unpleasant experience for both manager and employee
      • To prepare for it, the manager should answer the following questions:
        • What results should the interview achieve?
        • What good contributions is the employee making?
        • Is the employee working up to his or her potential?
        • Is the employee clear about the manager’s performance expectations?
        • What training does the employee need to improve?
        • What strengths does the employee have that can be built on or improved?
    • Providing Feedback Through the Appraisal Interview
      • In addition, the manager should remember several basic guidelines in conducting the interview:
        • Manager must know the employee’s job description
        • Evaluation must be based on employee’s performance and not on his or her personality
        • Manager must be positive and build on the employee’s strengths
        • Manager must be candid and specific
        • Manager must listen to the employee as well as presenting her or his own views
        • Manager must elicit employee feedback on how to improve performance
    • Factors Influencing Success or Failure of Appraisal Interviews
      • More the employees are allowed to participate in the appraisal process, the more
        • Satisfied they will be with the appraisal interview
        • Satisfied they will be with the manager
        • Likely they will be to accept and meet performance improvement objectives
      • More a manager uses positive motivational techniques, the more satisfied the employee is likely to be with appraisal interview and with manager
      • Manager and employee mutually setting specific performance improvement objectives results in better performance than when managers use a general discussion or criticism
    • Factors Influencing Success or Failure of Appraisal Interviews
      • Discussing and solving problems hampering employee’s current job performance improve employee’s performance
      • More the thought and preparation that both manager and employee devote before the appraisal interview, greater the benefits of the interview
      • More the employee perceives that performance appraisal results are tied to organizational rewards, the more beneficial the interview will be
    • Developing Performance Improvement Plans
      • Step of including a performance improvement plan in a completed performance appraisal is often ignored
      • Managers must recognize that an employee’s development is a continuous cycle of
        • Setting performance goals
        • Providing training necessary to achieve goals
        • Assessing performance related to accomplishing goals
        • Setting new, higher goals
    • Developing Performance Improvement Plans
      • Performance improvement plan consists of the following components:
        • Where are we now?
          • Answered in the performance appraisal process
        • Where do we want to be?
          • Requires evaluator and person being evaluated to mutually agree on areas that can and should be improved
        • How does the employee get from where he or she is now to where he or she wants to be?
          • Critical to performance improvement plan
          • Manager and employee must agree upon specific steps to be taken
          • May include training employee to improve his or her performance
          • May include how evaluator will help employee achieve performance goals
    • Performance Appraisal and the Law
      • Title VII of the Civil Rights Act permits use of a bona fide performance appraisal system
      • Generally not considered to be bona fide when their application results in adverse effects on minorities, women, or older employees
      • Number of court cases have ruled that performance appraisal systems used by organizations were discriminatory and not job related
        • Brito et al. v. Zia Company
        • Mistretta v. Sandia Corporation
        • Chamberlain v. Bissel, Inc.
        • Price Waterhouse v. Hopkins
    • Performance Appraisal and the Law
      • Some suggestions that have been offered for making performance appraisal systems more legally acceptable include
        • Deriving the content of the appraisal system from job analyses
        • Emphasizing work behaviors rather than personal traits
        • Ensuring that the results of appraisals are communicated to employees
        • Ensuring that employees are allowed to give feedback during the appraisal interview
        • Training managers in how to conduct proper evaluations
        • Ensuring that appraisals are written, documented, and retained
        • Ensuring that personnel decisions are consistent with the performance appraisals
    • Summary of Learning Objectives
      • Define performance
      • Define performance appraisal
      • Explain management by objectives
      • Describe multi-rater assessment
      • Describe the graphic rating scale
      • Explain critical-incident appraisal
      • Describe essay appraisal
      • Describe the checklist method of performance appraisal
      • Explain the forced-choice method of performance appraisal
      • Describe the work standards approach to performance appraisal
      • Define leniency, central tendency, recency, and the halo effect