The document outlines the performance management process that helps align employee activities with organizational goals through setting expectations, observing performance, and providing feedback. It discusses the strategic, administrative, and developmental purposes of performance management, along with various methods and criteria for effective measurement, as well as potential legal and ethical issues within the system. The document also addresses the importance of regular feedback and the need for a legally defensible performance management system to avoid discrimination and unjust dismissal lawsuits.

2. INTRODUCTION
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 Performance management: the process through
which managers ensure that employees’ activities
and outputs contribute to the organization’s goals.
 This process requires:
 Knowing what activities and outputs are desired
 Observing whether they occur
 Providing feedback to help employees meet
expectations

3. 3
Specify relevant
aspects of
performance
Appraise
performance
Provide
performance
feedback
Problem Solving
Rewards

4. 4
Purpose of Performance
Management
• Strategic Purpose – Means effective performance
management helps the organization achieves its
Business objectives.
• 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.
• Development Purpose – means that it serves as a
basis for developing employees’ knowledge and skills.

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Criteria for Effective Performance
Management
Fit with strategy
Validity
Reliability
Acceptability
Specific feedback

6. 6
Methods for Measuring
Performance
Method
Attribute
Behavior
Results
Quality
Comparative

7. 7
Measuring Performance:
Making Comparisons
Requires managers to
rank employees in their
group from the highest
performer to the poorest
performer.
Assigns a certain
percentage of
employees to each
category in a set of
categories.
Compares each
employee with each
other employee to
establish rankings.
Simple Ranking Forced Distribution Paired Comparison

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Measuring Performance:
Rating Individuals - Attributes
Graphic Rating
Scale
• Lists traits and provides a
rating scale for each trait.
• The employer uses the
scale to indicate the extent
to which an employee
displays each trait.
Mixed-Standard Scale
•Uses several statements
describing each trait to produce
a final score for that trait.

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Measuring Performance:
Rating Individuals - Behaviors
Critical-Incident
Method
• Based on managers’ records
of specific examples of the
employee acting in ways that
are either effective or
ineffective.
• Employees receive feedback
about what they do well and
what they do poorly and how
they are helping the
organization achieve its goals.
Behaviorally Anchored
Rating Scale (BARS)
Rates behavior in terms of a
scale showing specific
statements of behavior that
describe different levels of
performance.

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Measuring Performance:
Rating Individuals – Behaviors (continued)
Behavioral
Observational Scale
(BOS)
• A variation of a BARS which uses
all behaviors necessary for
effective performance to rate
performance at a task.
• A BOS also asks the manager to
rate the frequency with which the
employee has exhibited the
behavior during the rating period.
Organization Behavior
Modification (OBM)
A plan for managing the
behavior of employees through
a formal system of feedback
and reinforcement.

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Measuring Performance:
Measuring Results
• 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.
• These goals become the standards for evaluating
each employee’s performance.

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Measuring Performance:
Measuring Quality
• The principles of total quality management
(TQM), provide methods for performance
measurement and management.
• With TQM, performance measurement
combines measurement of attributes and
result.
• Subject Feedback
• Statistical quality control

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Sources of Performance
Information
• 360-Degree Performance Appraisal:
performance measurement that combines
information from the employees’:
• Managers
• Peers
• Subordinates
• Self
• Customers

14. 14
Types of Performance
Measurement Rating Errors
• Contrast errors: the rater compares an
individual, not against an objective standard, but
against other employees.
• Distributional errors: the rater tends to use only
one part of a rating scale.
• Leniency: the reviewer rates everyone near the top
• Strictness: the rater favors lower rankings
• Central tendency: the rater puts everyone near the middle
of the scale

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Types of Performance Measurement
Rating Errors (continued)
• Rater bias: raters often let their opinion of one
quality color their opinion of others.
• Halo error: when the bias is in a favorable direction. This
can mistakenly tell employees they don’t need to improve in
any area.
• Horns error: when the bias involves negative ratings.
This can cause employees to feel frustrated and
defensive.

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Giving Performance Feedback
• Scheduling Performance Feedback
• Performance feedback should be a regular, expected
management activity.
• Annual feedback is not enough.
• Employees should receive feedback so often that they know
what the manager will say during their annual performance
review.
• Preparing for a Feedback Session
• Managers should be prepared for each formal feedback
session.

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Giving Performance Feedback
(continued)
• Conducting the Feedback Session
• During the feedback session, managers can take any of
three approaches:
1. “Tell-and-Sell” – managers tell employees their ratings and
then justify those ratings.
2. “Tell-and-Listen” – managers tell employees their ratings
and then let the employees explain their side of the story.
3. “Problem-Solving” – managers and employees work
together to solve performance problems.

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Legal and Ethical Issues in
Performance Management
• Legal: Performance management processes are
often scrutinized in cases of discrimination or
dismissal.
• Ethical: Employee monitoring via electronic
devices and computers may raise concerns over
employee privacy. Legal and Ethical Issues in
Performance Management

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Legal Requirements for
Performance Management
• Lawsuits related to performance management
usually involve charges of:
• Discrimination
• Unjust dismissal
• To protect against both kinds of lawsuits, it is
important to have a legally defensible
performance management system.

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Legal Requirements for
Performance Management (continued)
• A legally defensible performance management
system includes:
• Based on valid job analyses, with requirements for job
success clearly communicated to employees.
• Performance measurement should evaluate behaviors or
results, rather than traits.
• Multiple raters (including self-appraisals) should be used.
• All performance ratings should be reviewed by upper-level
managers.
• There should be an appeals mechanism for employees.

21. END……
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