Managing Employee Performance

Managing Employee Performance

• Performance management ensures employee activities and outputs align with organizational goals.
• Performance management requires knowing required activities/outputs, observation, and providing feedback.
• According to SHRM's Globoforce Employee Recognition Survey, 83% of employees satisfied with reviews are satisfied with their jobs.

Steps in the Performance Management Process

• Define performance outcomes for the company, division, and department.
• Develop employee goals, behaviors, and actions to achieve outcomes.
• Provide support and have ongoing performance discussions.
• Evaluate performance.
• Identify needed improvements.
• Provide consequences for performance results.

Purposes of Performance Management

• Strategic: Helps the organization achieve strategic objectives and links employee behavior to organizational goals.
• Administrative: Provides information for day-to-day decisions, for example, salary and recognition and supports hiring decisions.
• Developmental: Provides the basis for development and builds awareness of employee strengths and areas for improvement.

Criteria for Performance Management

• Fit with strategy ensures alignment with organizational strategy, goals, and culture.
• Validity measures the intended aspects and minimizes contamination (irrelevant information) and deficiency (missing relevant information).
• Reliability ensures consistency of the performance management measure results.
• Acceptability ensures practicality and acceptance by the people using it.
• Specificity ensures clarity on "what" and "how", often involving quantitative performance measures.

Changing Performance Management at Deloitte

• Deloitte, a business consulting firm, needed a system that helps people use their strengths.
• Deloitte managers answer 4 questions quarterly or at the end of each project to create performance snapshots.

Methods of Measuring Performance

• Simple Ranking: Ranks employees from highest to lowest.
• Forced Distribution: Assigns a percentage of employees to specific categories like Outstanding (5%), Exceeds (20%), Meets (55%).
• Paired Comparison: Compares each employee to every other employee.

Rating Individuals

• Attributes: Utilizes a graphic rating scale, a widely used method.
• Behaviors: Employs methods like the critical-incident technique, BARS (behaviorally anchored rating scales), and OBM (organizational behavior modification).
• Results: Considers management by objectives (MBO) and balanced scorecards as organizational approaches.

Sources of Performance Information

• Managers
• Supervisors
• Peers
• Direct reports
• Self
• Customers
• Clients
• Crowdsourcing (variation of 360°)

Errors in Performance Measurement

• Limitations in information processing may cause humans to use simplifying mechanisms (heuristics) when making decisions.
• Unconscious bias can influence judgment based on background, culture, and personal experience.

Bias Examples

• Similar-to-Me Error: Overrating people who seem similar.
• Contrast Error: Underrating people who seem different.
• Errors in Distribution: Overusing part of a rating scale
• Halo Error: Overrating based on one good quality.
• Horns Error: Underrating based on one poor quality.

Language Bias in Performance Feedback 2024

• Men are 2-4x as likely to be positively stereotyped with terms like "brilliant", "genius" and "intelligent."
• Women are more likely to be described as "collaborative" and "helpful", while men are more likely to be described as "ambitious".

AI Use for Performance Management Activities

• Writing first/final drafts of performance goals and/or feedback.
• Providing real-time feedback.
• Summarizing multiple sources of performance data.
• Generating performance reports with improvement recommendations.
• Automating performance tracking and calibration.
• Predictive analytics analyzing data to generate insights (e.g., identify talent).

AI in Performance Management

• ChatGPT could potentially become an analysis tool, analyzing conversations from email, Slack, Teams, or other communication tools in real time.
• AI can exhibit gender bias in performance feedback, i.e; ChatGPT may use pronouns associated with specific roles.

Reducing Errors

• Implement a comprehensive organizational strategy to address bias.
• Use rater training, mindfulness, and unconscious bias training.
• Hold calibration meetings.
• Use data analytics and analysts.
• Have ratee training.

Effective Performance Feedback

• Give feedback frequently, not just annually.
• Create the right context for the discussion.
• Ask the employee to rate their performance beforehand.
• Have ongoing collaborative performance conversations.
• Provide balanced accurate feedback, emphasizing behavior and goal setting.

Performance Improvement

• Improve performance based on the employee's ability and motivation.
• Identify a lack of ability, motivation, or both.

Legal, Privacy & Ethical Issues

• Legal challenges usually relate to allegations of illegal discrimination and unjust dismissal.
• Privacy issues concern location/monitoring systems (e.g., GPS and apps) and wearables or software to analyze employee behavior.
• Ethical issues include "time theft", "over-employment", and not disclosing Al-augmented performance outcomes.
• "Time theft" can get punished with legal action in certain jurisdictions.
• In a survey of 1,272 remote workers, nearly 8 in 10 (79%) of remote employees have worked at least 2 jobs at the same time.
• Participants using GenAl scored 86% of the data scientists' benchmark and completed tasks 10% faster than data scientists
• Consider if the use of GenAl should be part of the performance management process.