Performance Management Overview

Performance Management

• Performance management is a process where managers ensure that employees' activities and outputs contribute to organizational goals.
• Effective performance management systems are perceived as fair by employees and involve their participation in development and implementation.
• Performance management systems serve three purposes: strategic, administrative, and developmental.
• Strategic purpose: links employee behavior to organizational goals to achieve business objectives.
• Administrative purpose: provides information for everyday decisions like salary, benefits, recognition programs, and employment decisions.
• Developmental purpose: helps employees develop knowledge and skills by providing feedback on strengths and weaknesses.

Criteria for Effective Performance Management

• Fit with Strategy: employee behavior and attitudes should support the organization's goals and culture.
• Validity: appraisal measures should focus only on relevant aspects of job performance.
• Contamination: measures should avoid irrelevant aspects of performance.
• Deficiency: measures should include all relevant aspects of performance.
• Reliability: measures should be consistent over time and across raters.
• Inter-rater reliability: consistency of results when multiple people measure performance.
• Test-retest reliability: consistency of results over time.
• Acceptability: employees and managers should find the system easy to use and fair.

Methods for Measuring Performance

• Making Comparisons: comparing one employee's performance to another (simple ranking, alternation ranking, paired comparisons).
• Rating Individuals: Rating against a set of standards (attributes, behaviors - graphic rating scale).

Critical Incident Behavior

• Critical incidents are specific examples of employee behavior, both effective and ineffective.
• This method involves documenting these incidents for feedback and improvement.

Behavioral Observation Scale (BOS)

• BOS is a variation of BARS (Behaviorally Anchored Rating Scales).
• It uses various behaviors necessary for effective performance to define performance levels.
• Easy to use, provides feedback, maintains objectivity, and suggests training and development needs.

Organizational Behavior Modification (OBM)

• OBM is a formal plan for managing employee behavior using feedback and reinforcement.
• It involves: defining specific behaviors, measuring their occurrence, and providing feedback and appropriate reinforcement.

Measuring Results

• Measures productivity and effectiveness.
• This approach gets more done with fewer resources.

Management by Objectives (MBO)

• MBO is a system where individuals at all levels set objectives that support overall organizational goals.
• Goals are specific, measurable, achievable, relevant, and time-bound (SMART).

Sources of Performance Information

• Performance information can come from various sources, such as employees, managers, peers, and customers.
• Multi-rater systems combine information from multiple sources to provide a more complete and balanced assessment.
• 360-degree performance appraisal: combines information from employees, managers, peers, direct reports, and customers.

Errors in Performance Measurement

• Similar to Me: judging favorably someone perceived as similar to oneself.
• Contrast Error: Comparing employee performance to coworkers instead of objective standards.
• Distributional Errors: Rater only uses one part of rating scale (strictness/leniency/central tendency).
• Halo effect: Positive evaluation in one area affects ratings in other areas.
• Horns effect: Negative evaluation in one area affects ratings in other areas.

Conducting Feedback Sessions

• Various approaches exist for conducting feedback sessions, including tell-and-sell, tell-and-listen, and problem-solving approaches.

Explore the essential components of performance management, including its purposes and criteria for effectiveness. Understand how strategic, administrative, and developmental aspects align employee behavior with organizational goals.