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Chapter 8 - Performance Management

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Chapter 8 - Performance Management

  1. 1. PERFORMANCE MANAGEMENT Group 5 Bulut, Kyle Cano, Jeffrey Gregorio, Gabby Manguba, Mike Tan, Kim
  2. 2. OBJECTIVES <ul><li>Identify the major determinants of individual performance. </li></ul><ul><li>Discuss the three general purposes of performance management. </li></ul><ul><li>Identify the five criteria for effective performance management systems. </li></ul><ul><li>Discuss the four approaches to performance management. </li></ul><ul><li>Discuss the pros and cons of the different sources of performance information. </li></ul><ul><li>Identify the cause of a performance problem. </li></ul>
  3. 3. WHAT IS PERFORMANCE MANAGEMENT? <ul><li>Employees’ outputs and activities = Company’s goals </li></ul>
  4. 4. DEFINING PERFORMANCE <ul><li>Specifies which aspects of performance are relevant to the organization through job analysis </li></ul><ul><li>Job Analysis- getting detailed information about jobs </li></ul>
  5. 5. MEASURING PERFORMANCE <ul><li>Measures those specified aspects through performance appraisal </li></ul><ul><li>Performance Appraisal- method for managing employee performance </li></ul>
  6. 6. FEEDING BACK PERFORMANCE INFORMATION <ul><li>Provides feedback to the employees through performance feedback </li></ul><ul><li>Performance feedback- process of providing employees information about their performance effectiveness </li></ul>
  7. 7. PRACTICE OF PERFORMANCE MANAGEMENT <ul><li>Frequency of Reviews= 76% Annually </li></ul><ul><li>Use: Individual performance management (82%), Pay decisions (66%), Setting individual development needs (52%), Establishing training priorities (17%), Succession planning (21%) </li></ul><ul><li>Many companies are moving to more frequent, streamlined performance reviews. </li></ul>
  9. 9. PURPOSES OF PERFORMANCE MANAGEMENT Strategic Administrative Developmental
  10. 10. STRATEGIC <ul><li>Link employee activities with the organization’s goals </li></ul>
  11. 11. ADMINISTRATIVE <ul><li>Administrative decisions like salary, pay raises, promotions, retention, terminations, layoffs </li></ul>
  12. 12. DEVELOPMENTAL <ul><li>Develop employees who are effective at their jobs </li></ul>
  13. 13. RECOMMENDATIONS FOR DEVELOPING AN EFFECTIVE PERFORMANCE MANAGEMENT SYSTEM <ul><li>Mirror the corporate culture and values </li></ul><ul><li>Have visible CEO and senior management support. </li></ul><ul><li>Focus on the right company performance measures. </li></ul><ul><li>Link job descriptions to the performance management system. </li></ul><ul><li>Differentiate performance fairly and effectively. </li></ul><ul><li>Train managers in performance management. </li></ul><ul><li>Communicate the total rewards system. </li></ul><ul><li>Require managers to search, offer and acquire regular performance feedback. </li></ul><ul><li>Set clear expectations for employee development. </li></ul><ul><li>Track effectiveness of the performance management system. </li></ul><ul><li>Adjust the system as required. </li></ul>
  15. 15. STRATEGIC CONGRUENCE <ul><li>- the extent to which the performance management system elicits job performance that is consistent with the organization’s strategy, goals and culture. </li></ul>
  16. 16. VALIDITY <ul><li>- the extent to which a performance measure assesses all the relevant – and only the relevant—aspects of job performance. </li></ul>
  17. 17. RELIABILITY <ul><li>- the consistency of a performance measure; the degree to which a performance measure is free from random error. </li></ul>
  18. 18. ACCEPTABILITY <ul><li>- the extent to which a performance is deemed to be satisfactory or adequate by those who use it. </li></ul>
  19. 19. SPECIFICITY <ul><li>- the extent to which a performance measure gives detailed guidance to employees about what is expected of them and how they can meet those expectations. </li></ul>
  21. 21. COMPARATIVE APPROACH <ul><li>- the comparative approach to performance measurement requires the rater to compare an individual’s performance with that of the others . This approach usually uses some overall assessment of an individual performance or worth, and seeks to develop some ranking of the individuals within a work group. </li></ul>
  22. 22. THERE ARE THREE (3) KINDS: <ul><li>1. Ranking </li></ul><ul><li>Simple Ranking – the employer ranks every one from the highest performer or the poorest performer (or best to worst). </li></ul><ul><li>Alternative Ranking – rater picks first the best employee, then “keeps” him. The left names would slowly taught about who the worst performer was and crosses his name off the list, and so on. </li></ul>
  23. 23. <ul><li>2. Forced Distribution </li></ul><ul><li>This technique requires the manager to put certain percentages of employees into predetermined categories. </li></ul>
  24. 24. <ul><li>3. Paired Comparison </li></ul><ul><li>This method requires managers to compare every employee with every other employee in the work group, giving an employee a score of 1 every time he or she is considered the higher performer. In the end, the manager computes for the number of times each employee received a favorable decision, making it their evaluation. </li></ul>
  25. 25. EVALUATING THE COMPARATIVE APPROACH <ul><li>PROS: </li></ul><ul><li>Effective tool in differentiating employee performance </li></ul><ul><li>Eliminates problems of leniency, central tendency, and strictness </li></ul><ul><li>Good basis for pay raises and promotions </li></ul><ul><li>Easy to develop, easy to use </li></ul><ul><li>CONS: </li></ul><ul><li>If not enough evaluators, personal biases and opinions would greatly affect the ratings </li></ul><ul><li>Lack for specificity for feedback purposes, as employees aren’t aware of what they should improve on for their ranking individually </li></ul>
  26. 26. ATTRIBUTE APPROACH <ul><li>- This approach focuses on the characteristics and traits of the people that are geared towards the success of the company. The techniques that use this approach define a set of traits – such as initiative, leadership, and competitiveness—and evaluate individuals on them. </li></ul>
  27. 27. EVALUATING THE ATTRIBUTE APPROACH <ul><li>PROS: </li></ul><ul><li>Easy to develop </li></ul><ul><li>Generalizable across variety of jobs </li></ul><ul><li>If much attention is devoted in identifying attributes related to job performance, it would be reliable and valid </li></ul><ul><li>CONS: </li></ul><ul><li>Little congruence between the techniques and the company’s strategy </li></ul><ul><li>Could be vague due to different interpretations by different raters </li></ul>
  29. 29. CRITICAL INCIDENTS <ul><li>Requires managers to keep a record of specific examples of effective and ineffective performance on the part of each employee. </li></ul>
  32. 32. ORGANIZATIONAL BEHAVIOR MODIFICATION <ul><li>Entails managing the BAHAVIOR of employees through a formal system of BEHAVIORAL feedback and reinforcement. </li></ul>
  33. 33. ASSESSMENT CENTERS <ul><li>A process in which multiple raters evaluate employees’ performance on a number of exercises. </li></ul>
  37. 37. <ul><li>Emphasize an assessment of both person and system factors in the measurement system. </li></ul><ul><li>Emphasize that managers and employees work together to solve performance problems. </li></ul><ul><li>Involve both internal and external customers in setting standards and measuring performance. </li></ul><ul><li>Use multiple sources to evaluate person and system factors. </li></ul>
  38. 38. DIFFERENCES FROM TRADITIONAL APPROACH <ul><li>Most existing systems measure performance in terms of quantity, not quality </li></ul><ul><li>Employees are held accountable for good or bad results to which they contribute but do not completely control </li></ul><ul><li>Companies do not share the financial rewards of successes with employees according to how much they have contributed to them </li></ul><ul><li>Rewards are not connected to business results </li></ul>
  39. 39. STATISTICAL PROCESS CONTROL TECHNIQUES <ul><li>Process-flow analysis </li></ul><ul><li>Cause and effect diagrams </li></ul><ul><li>Pareto chart </li></ul><ul><li>Control charts </li></ul><ul><li>Histograms </li></ul><ul><li>Scattergrams </li></ul>
  40. 40. PARETO CHART
  42. 42. HISTOGRAM
  44. 44. PERFORMANCE INFORMATION SOURCES Customers Peers Self Subordinates Managers 8-
  45. 45. HEURISTICS <ul><li>Research consistently reveals that humans have tremendous limitations in processing information. </li></ul><ul><li>Because we are so limited, we often use heuristics, or simplifying mechanisms, to make judgments, whether about investments or about people. </li></ul><ul><li>These heuristics, which appear often in subjective measures of performance, can lead to rater errors. </li></ul><ul><li>Performance evaluations may also be purposefully distorted to achieve personal on company goals (appraisal politics). </li></ul>
  46. 46. PERFORMANCE MEASUREMENT RATER ERRORS <ul><li>1. Similar to Me </li></ul><ul><li>2. Contrast </li></ul><ul><li>3. Distributional Errors </li></ul><ul><li>4. Halo and Horns </li></ul><ul><li>5. Appraisal Politics </li></ul>8-
  47. 47. REDUCING RATER ERRORS AND POLITICS <ul><li>Approaches to Reducing Rater Error: </li></ul><ul><ul><li>Rater error training </li></ul></ul><ul><ul><li>Rater accuracy training </li></ul></ul><ul><li>Calibration Meetings - attended by managers to discuss employee performance ratings </li></ul>8-
  48. 48. PERFORMANCE FEEDBACK <ul><li>It is necessary to feed performance information back to employees so they can correct any deficiencies. </li></ul><ul><li>The performance feedback process is complex and provokes anxiety for both the manager and the employee. </li></ul>
  49. 49. PERFORMANCE FEEDBACK (CONT.) <ul><li>To provide effective performance feedback managers should consider the following recommendations: </li></ul><ul><ul><li>Feedback should be given frequently, not once a year. </li></ul></ul><ul><ul><li>Create the right context for the discussion. </li></ul></ul><ul><ul><li>Ask the employee to rate his/her performance before the session. </li></ul></ul><ul><ul><li>Encourage the subordinate to participate in the session. </li></ul></ul><ul><ul><ul><li>Tell-and-sell </li></ul></ul></ul><ul><ul><ul><li>Tell-and-listen </li></ul></ul></ul><ul><ul><ul><li>Problem-solving approach </li></ul></ul></ul><ul><ul><li>Recognize effective performance through praise. </li></ul></ul><ul><ul><li>Focus on solving problems. </li></ul></ul><ul><ul><li>Focus feedback on behaviour or results, not on the person. </li></ul></ul><ul><ul><li>Minimize criticism. </li></ul></ul><ul><ul><li>Agree on specific goals and set a date to review pro </li></ul></ul>
  50. 50. WHAT MANAGERS CAN DO <ul><li>Diagnose the causes of poor performance. </li></ul>Employee Characteristics Performance Standards/ Goals Feedback Consequences Input 5 Factors to Consider When Analyzing Poor Performance
  51. 51. WHAT MANAGERS CAN DO (CONT.) <ul><li>Marginal employees – are those employees who are performing at a bare minimum level because of lack of ability and/or motivation to perform well. </li></ul><ul><li>Four different types of employees: </li></ul><ul><ul><li>Solid performers </li></ul></ul><ul><ul><li>Underutilizers </li></ul></ul><ul><ul><li>Misdirected effort </li></ul></ul><ul><ul><li>Deadwood </li></ul></ul>
  52. 52. DEVELOPING SYSTEMS <ul><li>Because performance measures play a central role in such administrative decisions such as promotions, pay raises, and discipline, employees who sue an organization primarily attack measurement systems on which the decisions were made. </li></ul><ul><li>Two types of cases have dominated: </li></ul><ul><ul><li>Discrimination </li></ul></ul><ul><ul><ul><li>Uniform Guidelines on Employee Selection Procedures </li></ul></ul></ul><ul><ul><li>Unjust dismissal </li></ul></ul>
  53. 53. CHARACTERISTICS OF A SYSTEM THAT WILL WITHSTAND LEGAL SCRUNITY <ul><li>Developed by conducting job analysis that ascertains the important aspects of job performance. </li></ul><ul><li>Based on either behaviours or results. </li></ul><ul><li>Raters should be trained. </li></ul><ul><li>Reviewed by upper-level management; employees should be able to appeal. </li></ul><ul><li>Provide some form of performance counseling or corrective guidance for poor performers. </li></ul><ul><li>Engages multiple raters. Employees should be asked to comment on their appraisals. </li></ul>
  54. 54. USE OF TECHNOLOGY <ul><li>Electronic tracking systems include hand and fingerprint recognition systems, global positioning systems (GPS), computer software, and systems that can track employees using handheld computers and cellphones. </li></ul><ul><li>To avoid the potential negative effects of electronic monitoring, managers must communicate why employees are being monitored. </li></ul>
  55. 55. SUMMARY <ul><li>Performance management is one of the key factors in gaining competitive advantage. </li></ul><ul><li>These systems serve strategic, administrative, and developmental purposes. </li></ul><ul><li>Deciding on which approach and which source of performance information are best depends on the job in question. </li></ul><ul><li>Performance information has to be sent back to employees in a way that results in improved performance rather than defensiveness and decreased motivation. </li></ul>
  56. 56. MINI-QUIZ <ul><li>________ systems seek to tie the formal performance appraisal process to the company’s strategies by specifying at the beginning of the evaluation period the types and level of performance that mush be accomplished to achieve the strategy. </li></ul><ul><li>A.) People Development System </li></ul><ul><li>B.) Performance Planning and Evaluation </li></ul><ul><li>C.) Strategic Congruence </li></ul><ul><li>D.) Organizational Behaviour Modification </li></ul>
  57. 57. <ul><li>Managers find that out of all the primary sources for performance information, _____ helps them make more appropriate performance ratings based on the discussion and feedback they receive from employees. </li></ul><ul><li>A.) peer evaluation </li></ul><ul><li>B.) subordinate evaluation </li></ul><ul><li>C.) self-evaluation </li></ul><ul><li>D.) customer evaluation </li></ul>
  58. 58. <ul><li>Employees with poor performance resulting from lack of ability but not motivation. </li></ul><ul><li>A.) Underutilizers </li></ul><ul><li>B.) Solid Performers </li></ul><ul><li>C.) Deadwood </li></ul><ul><li>D.) Misdirected efforts </li></ul>
  59. 59. VIDEOS TO WATCH: <ul><li> </li></ul><ul><li> </li></ul>
  60. 60. <ul><li>THANK YOU! </li></ul>

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