Managing Employee Performance

Managing Employees' Performance

• Ensures employees' activities and outputs contribute to the organization's goals
• Helps managers and employees focus on organizational objectives
• Effective performance management include several activities:
  • Specify relevant performance aspects based on job analysis
  • Measure performance through appraisals
  • Provide feedback to help employees adjust behavior

Addressing Performance Problems

• Include efforts to identify and resolve underlying issues
• Feedback should include Specify relevant aspects of performance, Appraisal of performance, and Providing performance feedback
• Feedback should be considered as organization's rewards

Purposes of Performance Management

• Meet strategic, administrative, and developmental goals
• Strategic purpose helps the organization achieve business objectives by linking employee behavior to goals
• Performance management shows what is expected from each employee
• Performance management identifies whether those expectations are being met or not
• Performance management implements corrective action if necessary
• Performance management achieves strategic goals when measurements align with organizational objectives and are communicated to employees

Administrative Purpose

• Organizations use management systems to inform decisions on salary, benefits, and recognition
• Supports decision making related to retention, termination, hiring, or layoffs
• Information from performance appraisals impacts individual employees
• Managers may avoid appraisals due to negative outcomes

Developmental Purpose

• Acts as a foundation for skill and knowledge enhancement
• Effective feedback increases awareness concerning strengths and areas needing improvement
• Identifying areas for improvement assists employees and management in pinpointing issues and suitable actions for progress

Criteria for Effective Performance Management

• Includes selecting measures critical to planning
• Several criteria determine the effectiveness of performance
• Should support the organization's strategy, goals, and culture
• Validity measures what it intends to, including relevant aspects

Measuring Performance - Reliability

• Delivers consistent results
• Interrater reliability needs consistency when multiple people measure performance
• Test-retest reliability requires consistency over time
• A measure must be acceptable to those who use it

Providing Feedback

• Requires measures to tell employees what is expected
• Should tell employees how they can meet these expectations
• Lack of measures of pointing out problems means a lack of improvement

Performance Appraisal Methods

• May require comparison of individual performance
• This method involves ranking employees
• Usual techniques for making comparisons include:
  • Simple Ranking
  • Forced Distribution
  • Paired-Comparison

Simple Ranking

• Rank employees in group from highest to lowest performer
• Downsides revolve around validity
• It does not define what is good or bad regarding the contributions to the organization
• Raises questions regarding fairness

Forced Distribution

• Assigns a percentage of employees to certain categories
• Overcomes the need to rate everyone high to avoid conflict
• It may improve performance when combined with goals and rewards
• A manager selecting, motivating, and training well will have difficulty assigning people to the lower categories
• Stating employees require improvement will hurt morale

Paired Comparison

• Compares each employee to others to establish rankings
• Ranking systems can counteract the trend to rate people as favorable or near the scale's average
• Can erase tendencies if some managers tend to be strict
• Ranking systems are key in decision making for pay raises and layoffs

Downside of ranking systems

• Methods often are not linked to organizational goals
• A simple ranking system brings the basis of ranking open to an interpretation
• Rankings may not assist in development and can hurt morale or lead to legal problems

Rating Individuals

• Focuses on standards instead of employees from best to worst
• Can evaluate in terms of employee attributes
• A performance management system must have these attributes
• Typically form a rating scale between 1 to 5. One typically being the worst and 5 is the best

Rating Attributes: Graphic Rating Scale

• lists traits and provides a rating scale; the employer uses the scale to show the extent of the trait
• Scaling is typically done from 1 to 5.
• This approach leaves the decisions of what is “good” to the manager, leading to low reliability

Mixed-Standard Scales

• Uses statements to describe a trait for a final score
• Rating attributes are the standard in measuring performance
• To be reliable and valid must identify the attributes from high performance on the appraisal form

Downside of attribute measurements

• Appraisal forms do not meet measurement standards
• Attributes are rarely linked to strategy
• Employees receiving numerical ratings tend to be defensive
• The number can be arbitrary, with no improvement

Rating Behaviors

• Begin with defining which behaviors are successes on the job
• Appraisal form needs the manager to rate employee in terms of behaviors

Methods to Rate Behaviors:

• critical-incident method
• behaviorally anchored rating scale (BARS)
• behavioral observation scale (BOS)

Critical-Incident Method

• Based on manager's records of behavior in ways effective or ineffective
• This approach requires managers to keep a record of examples acting effective or ineffective
• Evaluating performance can provide employees feedback on what they do
• Criticism of daily or weekly log of critical incidents can require significant efforts
• Critical incidents may be unique, affecting comparisons with employees

Behaviorally Anchored Rating Scale (BARS)

• Rates in terms of behaviors with specific statements for the level of performance
• Statement scales describe different levels of performance
• Statement 7 describes the rating, the statement at the bottom describes poor performance
• Organization gathers many incidents representing effective and ineffective performance to classify

Behavioral Observation Scale (BOS)

• Variation of a BARS measuring behaviors for tasks
• Is the same as BARS but BOS uses all behaviors for a task
• A BOS asks manager to rate rating period
  • Ratings average to compute employee performance

Measuring Results

• Managing results of a job or work group allows performance results
• results can include sales, cost, and productivity
• Two methods of measurement includes productivity and management objectives

Productivity

• Important measure of success - getting more w/ less increases company profits
• Productivity is an output of production workers as a performance measure

How to Measure Productivity

• Identifies expected products
• Defines how to measure the products
  • Setup measures and provide feedback for performance

Management by Objectives (MBO)

• People in each level of the org setup goals flowing top-bottom, so employees are supporting overall goals
• Goals become standards for evaluating performance
• Increase portfolio value by 10% or generate fee income

An MBO System has three components:

• Goals need to be difficult, objective, and certain
• Set by managers and employees
• Manager needs to give feedback during rating period

Managing Quality

• Principles of total quality management provide management and measurement

Total Quality Management

• Differs from performance as it assesses individual performance as well as individuals work
• Set by employees and customers
• Customer inside and outside org

Sources of Performance Information

• Traditional approach allows gathering and arriving ratings. Although may sources are available they include: managers, peers, subordinates, self, and customers.
• Bias can occur
• Complete assessment combines most if not all possible sources
• Measurement can combine from the employees

Sources: Managers

• Most used
• Advantages: Knowledge of job requirements and opportunities to observer employees, while also give incentive providing helpful feedback
• Disadvantage: Supervisors can lack opportunities

Sources: Peers or Co-workers

Advantages:

• Excellent information as the supervisor does not observe, oppurtunites to view employees, and knowledge of job requirements
• Disadvantages: Potential bias or friendships with biases or discomfort rating employees

Sources: Subordinates

• Reporting the manager
• Advantage: Informing the performance of managers, chance to see how well manager treats employees
• Disadvantage: Unwilling to say negatives against the person they report; will rate highly

Source: Self

• Individual measures their own information
• Advantage: Disagreements between self and evaluations
• Disadvantage: Can inflate performance or blame outside circumstances

Source: Customers - Advantage

• Customers may have insights regarding performnce to make evaluations
• Useful as HRM
• Disadvantage: Very Expensive

Errors in Performance Measurement

• Since there is limited information there is prone to error
• Must interpret when observing behavior
• several errors impact measurement

Rating Errors

• Tend to rate those similar or give objective standards
• Can occur with comparison, against an objective standard,or an individual's overall impression
• Halo error, bias ratings, horns effect with involve negative ratings

Giving Performance Feedback

• Required after measuring performance
• Employees can provide the most essential feedbac
• Must make feedback effective

Providing Feedback: Schedule with Preparation

• Managers need to correct defencies
• Managers need to surprise the employee
• Employees need motication and to be well prepared and engaged in opening dialogue during session

The Feedback Session: Approaches

A - Can have 3 approaches

1. tell-and-sell" approach: tell employees ratings then justify
2. 2. the "tell-and-listen” approach: tell ratings, and listen side of they story
3. problem-solving” approach: work together on problems

B - Improve employee satisfaction C - Emphasize behavior, not personalities

• Session needs ending on goals setting