Performance Management Overview

Performance Management

• Clear expectations, career development, and recognition & rewards are benefits of performance management systems
• Performance management systems can improve communication between employees and managers, leading to better working relationships.

History of Performance Management

• Early forms: Informal and focused on past performance
• Modern approach: Strategic and systematic approach to continuous improvement
• Phase 1 (1908-1914): Taylorism and scientific management principles emphasized replacing traditional work methods with scientific studies, training workers scientifically, and dividing work between managers & workers.
• Phase 2 (1914-1920): Taylorism became popular in the USSR, integrated in labor practices. Performance appraisals focused on worker productivity and traits like punctuality and loyalty
• Phase 3 (1930-1960): Performance appraisals rated employees based on personality traits, but this method was criticized for not directly linking to productivity
• Phase 4 (1960-1970): Appraisals began using 'Annual Confidential Reports' (ACRs) to document employee performance, but these were not shared with employees. Later, the focus shifted towards future achievements.
• Phase 5 (1980-2000): 360-degree feedback was introduced, emphasizing multi-person ratings and traits like teamwork and communication

Key Criteria for Effective Performance Management Systems

• Validity: Measure must accurately reflect the intended assessment and provide consistent results
• Reliability: Consistency in results over time
• Acceptability: Performance measures should be perceived as satisfactory and appropriate by users
• Feasibility: Must be practical and manageable - overly lengthy or irrelevant tools lead to dissatisfaction
• Specificity: Measures should clearly identify areas of performance needing improvement
• Alignment: The system should support the organizations mission and goals, guiding employees towards achieving them

Why Conduct Performance Appraisals

• Communication: Appraisals facilitate dialogue between managers & employees, offering feedback on performance and allowing employees to share obstacles they face.
• Decision-making: Appraisals provide information on performance, allowing informed decisions related to promotions, pay raises, training, and terminations.
• Motivation: Setting clear expectations and providing feedback on performance can motivate employees. Development plans, training, and ongoing support can improve employee performance.

Development and Motivational Aspects of Appraisals

• The appraisal process includes evaluating past performance and motivating future development
• Evaluations: Feedback should be constructive and focus on areas previously discussed.
• Motivational: Provide tools and support for improvement.
• Separating evaluation and development discussions can enhance effectiveness.

What to Evaluate in Performance Appraisals

• Traits: Physical or psychological characteristics of individuals.
  • Accuracy: Traits like conscientiousness may correlate with performance, especially in leadership. Traits like attractiveness have minimal impact on performance.
  • Validity: Challenging to link traits directly to performance, leading to less valid evaluations.
  • Usefulness: Traits are commonly used, but their subjective nature can lead to bias and inaccuracies.
• Behaviors: Actions and activities individuals perform at work.
  • Accuracy: Behaviors are generally easier to observe and measure, leading to more valid assessments.
  • Validity: Behavioral evaluations meet the OUCH test (objectivity, uniformity, consistency, and job-relatedness)
  • Usefulness: Behaviors are easier to defend legally since they are related to the job function.
• Results: Outcomes or goals achieved through work processes.
  • Accuracy: Results provide concrete measurement of performance. However, external factors beyond the individual's control (unrealistic goals, resource limitations) can affect results.
  • Validity: Result-based evaluations meet the OUCH test.
  • Usefulness: Results are often perceived as fair and objective and are highly defensible legally.

Appraisal Methods

• Critical Incidents Method: Records significant positive and negative employee performance throughout the year. Used for developmental and evaluative purposes.
• Management By Objectives (MBO): Sets specific, measurable, attainable, relevant, and time-based (SMART) goals. It involves providing regular feedback and rewarding based on achieved objectives.
• Narrative Method: Provides a written description of employee performance. Can be used along with other methods to include developmental plans.
• Graphic Rating Scale Form: Uses a continuum (e.g., excellent to poor) to rate performance. Simple and widely used, but lacks accuracy due to subjective ratings.
• Behaviorally Anchored Rating Scale (BARS): Provides descriptions for each performance level on a scale, leading to a more objective measure.
• Ranking Method: Evaluates employees from best to worst for making comparative decisions.

Evaluator Selection Considerations

• Choosing the right evaluators is crucial for effective performance appraisals.
• Supervisors: Offer insights into employee performance within their specific roles.
• Peers: Provide perspectives on collaboration and teamwork.
• Subordinates: Offer feedback from those being supervised.
• Self-assessments: Enable employees to reflect on their own performance
• Customers: Offer valuable feedback on product quality or service delivery.

360-Degree Evaluation Method

• Definition: Gathers feedback from multiple sources (supervisors, subordinates, peers, customers) for a holistic evaluation of an individual’s performance.
• Origin: Developed by DuPont in 1973
• Benefits: Provides a well-rounded view of performance and encourages honest feedback.
• Problems: Time-consuming and expensive to implement. Can be challenging to scale for all employees.

Mitigation Strategies for 360-Degree Evaluations

• Focus on development to identify specific areas for improvement.
• Minimize administrative decision-making using 360-degree feedback.