Performance Management PDF

Chapter 8 Performance Management 1. Identify the major parts of an effective performance management process 2. Discuss the three general purposes of performance management 3. Identify the five criter...

Chapter 8 Performance Management 1. Identify the major parts of an effective performance management process 2. Discuss the three general purposes of performance management 3. Identify the five criteria for effective Chapter 8 Performance Management 4. Discuss the five approaches to performance management, the specific techniques used in each approach, and the way these approaches compare with the criteria for effective performance management systems 5. Choose the most effective approach to performance measurement for a given Chapter 8 Performance Management 6. Discuss the advantages and disadvantages of the different sources of performance information 7. Choose the most effective source(s) for performance information for any situation 8. Discuss the potential advantages of performance management, gamification, social performance management, and Chapter 8 Performance Management 9. Distinguish types of rating errors, and explain how to minimize each in a performance evaluation 10. Conduct an effective performance feedback session 11. Identify the cause of a performance problem What is Performance Management? The process through which managers ensure that employee activities and outputs are congruent with the organization's goals. It is about aligning individual effort to support organizational priorities. It is the central to gaining competitive advantage.  Parts of the Performance Management 1. Defining Performance 2. Measuring Performance 3. Feeding back performance information The Process of Performance Management  Purposes of Performance Management Strategic Administrative Developmental  Criteria for Effective Performance Management Systems Five performance criteria stand out: Strategic congruence Specificity Validity Acceptability Reliability  Criteria for Effective Performance Management Systems 1. Validity - the extent to which a performance measure assesses all the relevant—and only the relevant—aspects of performance. 2. Reliability - the consistency of a performance measure 3. Acceptability - refers to whether the people who use a performance measure accept it 4. Specify - The extent to which a performance measure tells employees what is expected of them and how they can meet these expectations  Approaches to Measuring Performance 1. Comparative Approach 2. Attribute Approach 3. Behavioral Approach 4. Quality Approach 5. Results Approach  The Comparative Approach Requires the rater compare an individual’s performance with that of others. Techniques use in Comparative approach 1. Ranking-can be simple or alternation ranking 2. Forced Distribution – employees are ranked in groups 3. Paired Comparison - compare every employee with every other employee in the work group, giving an employee a score of 1 every time he or she is considered the higher performer.  Evaluating the Comparative Approach The comparative approach to performance measurement is an effective tool in differen tiating employee performance; it virtually eliminates problems of leniency, central ten dency, and strictness. This is especially valuable if the results of the measures are to be used in making administrative decisions such as pay raises and promotions. In addition, such systems are relatively easy to develop and in most cases easy to use; thus, they are often accepted by users. One problem with these techniques, however, is their common failure to be linked to the strategic goals of the organization. Although raters can evaluate the extent to which individuals’ performances support the strategy, this link is seldom made explicit. In addition, because of the subjective nature of the ratings, their actual validity and reliabil ity depend on the raters themselves. Some firms use multiple evaluators to reduce the biases of any individual, but most do not. At best, we could conclude that their reliability and validity are modest These techniques lack specificity for feedback purposes. Based only on their relative rankings, individuals are completely unaware of what they must do differently to improve their ranking. This puts a heavy burden on the manager to provide specific feedback beyond that of the rating instrument itself. Finally, many employees and man agers are less likely to accept evaluations based on comparative approaches. Evaluations depend on how employees’ performance relates to other employees in a group, team, or department (normative standard) rather than on absolute standards of excellent, good, fair, and poor performance.  The Attribute Approach Focuses on the extent to which individuals have certain attributes (characteristics or traits) believed desirable for the company’s success Techniques include the following: 1. Graphic rating scales - list of traits is evaluated by a five-point rating scale. 2. Mixed-standard scales - define relevant performance dimensions and then develop statements representing good, average, and poor performance along each dimension.  Evaluating the Attribute Approach Attribute-based performance methods are the most popular methods in organizations. They are quite easy to develop and are generalizable across a variety of jobs, strategies, and organizations. In addition, if much attention is devoted to identifying those attributes relevant to job performance and carefully defining them on the rating instrument, they can be as reliable and valid as more elaborate measurement techniques. However, these techniques fall short on several of the criteria for effective performance management. There is usually little congruence between the techniques and the company’s strategy. These methods are used because of the ease in developing them and because the same method (list of traits, comparisons) is generalizable across any organization and any strategy. In addition, these methods usually have very vague performance standards that are open to different interpretations by different raters. Because of this, different raters often provide extremely different ratings and rankings. The result is that both the validity and reliability of these methods are usually low.  Behavioral Approach  Attempts to define the behaviors an employee must exhibit to be effective in the job.  Techniques used are the following: 1. Behaviorally Anchored Rating Scales - performance dimension has a number of examples of behaviors that indicate specific levels of performance along the dimension 2. Behavioral Observation Scales - is designed to specifically define perfor mance dimensions by developing behavioral anchors associated with different levels of performance 3. Competency Models - identifies and provides descriptions of competencies that are common for an entire occupation, organization, job family, or a specific job  Evaluating the Behavioral Approach The behavioral approach can be very effective. It can link the company’s strategy to the specific behavior necessary for implementing that strategy. It provides specific guidance and feedback for employees about the performance expected of them. Most of the techniques rely on in-depth job analysis, so the behaviors that are identified and measured are valid. Because those who will use the system develop the measures, the acceptability is also often high. Finally, with a substantial investment in training raters, the techniques are reasonably reliable. The major weaknesses have to do with the organizational context of the system. Although the behavioral approach can be closely tied to a company’s strategy, the behav iors and measures must be constantly monitored and revised to ensure that they are still linked to the strategic focus. This approach also assumes that there is “one best way” to do the job and that the behaviors that constitute this best way can be identified. One study found that managers seek to control behaviors when they perceive a clear rela tionship between behaviors and results. When this link is not clear, they tend to rely on managing results.The behavioral approach might be best suited to less complex jobs (where the best way to achieve results is somewhat clear) and least suited to complex jobs (where there are multiple ways, or behaviors, to achieve success).  Results Approach Focuses on managing the objective, measurable results of a job or work group. Management by objectives - top management passes down company’s strategic goals to next layer of management, and these managers define the goals they must achieve. Approaches used are: 1. Balanced score card 2. Productivity Measurement and Evaluation System (ProMES)  Results Approach  Balanced score card – employee performance is linked with the business strategy through communicating and educating employees on the elements of the balanced scorecard, translating strategic objectives into measures for departments and employees, and linking rewards to performance measures 1. Financial Perspective 2. Customer Perspective 3. Internal or Operations Perspective 4. Learning and Growth Perspective  ProductivityMeasurement and Evaluation System - goal is to motivate employees to higher levels of productivity.  Evaluating the Result Approach The results approach minimizes subjectivity, relying on objective, quantifiable indicators of performance. Thus, it is usually highly acceptable to both managers and employees. Another advantage is that it links an individual’s results with the organization’s strategies and goals. However, there are a number of challenges in using objective performance measures. Objective measurements can be both contaminated and deficient—contaminated because they are affected by things that are not under the employee’s control and defi cient because not all the important aspects of job performance are amenable to objective measurement. For example, consider how an economic recession can influence sales goals or, for a teacher, parental support for studying can influence student’s achievement test scores. Another disadvantage is that individuals may focus only on aspects of their performance that are measured, neglecting those that are not. For example, if the large majority of employees’ goals relate to productivity, it is unlikely they will be concerned with customer service. A final disadvantage is that, although results measures provide objective feedback, the feedback may not help employees learn how they need to change their behavior to increase their performance. If baseball players are in a hitting slump, simply telling them that their batting average is.190 may not motivate them to raise it. Feedback focusing on the exact behavior that needs to be changed (like taking one’s eye off the ball or dropping one’s shoulder) would be more helpful.  Quality Approach Fundamental characteristics of the quality approach include a customer orientation, a prevention approach to errors, and continuous improvement. Improving customer satisfaction is the primary goal of the quality approach. Customers can be internal or external to the organization  Quality Approach (cont.) Techniques used to improve processes to attain quality: 1. Process-flow analysis. identifies each action and decision necessary to complete work, such as waiting on a customer or assembling a television set. Process-flow analysis is useful for identifying redundancy in processes that increase manufacturing or service time. 2. Cause-and-effect diagrams. 3. Pareto chart 4. Control chart 5. Histogram 6. Scattergram  Evaluating the Quality Approach The quality approach relies primarily on a combination of the attribute and results approaches to performance measurement. However, traditional performance appraisal systems focus more on individual employee performance, while the quality approach adopts a systems-oriented focus. Many companies may be unwilling to completely abandon their traditional performance management system because it serves as the basis for personnel selection validation, identification of training needs, or compensation decisions. Also, the quality approach advocates evaluation of personal traits (such as cooperation), which are difficult to relate to job performance unless the company has been structured into work teams. In summary, organizations can take five approaches to measuring performance: comparative, attribute, behavioral, results, and quality. Effective performance evaluations involve a combination of approaches including assessment of objectives and behaviors  Sources for Performance Information Supervisors/ Managers Customers Peers Self Subordinates  Use of Technology in Performance Measurement Technology in performance management could make big different in the process, implementation, cost, and appraisal. Social media tools are increasingly being used to deliver timely feedback Gamification- game-based strategies that are applied to make it a fun, effective, transparent, and inclusive process for employees and managers Companies are relying on electronic tracking and monitoring systems to ensure that employees are working when and how they should be and to block access to visiting certain websites  Performance Feedback Importance of Performance Feedback 1.Increases motivation – through improved employee observation, managers can gain a full understanding of an individual’s strength and weaknesses and help them to grow and develop and thus, increase their motivation to succeed. 1.Enhances performance – feedback is critical to improving performance. Although it can be often be mistaken as criticism, well-delivered constructive criticism can help produce better decisions and improve performance  Performance Feedback Importance of Performance Feedback 3.Feedback elevates engagement – consistent communication between employees and the manager is typically connected to higher engagement. 4.Feedback is a tool for career development – an effective performance management systems empowers managers to set expectations, provide regular informal feedback and support employee development. When done well, a performance management program along with consistent communication between employees and managers, contributes to employee growth as well as achieving the agency's mission.  Performance Feedback 1. Feedback Should Be Given Frequently, Not Once a Year 2. Create the Right Context for the Discussion 3. Ask the Employee to Rate His or Her Performance before the Session 4. Encourage the Employee to Participate in the Session 5. Focus on Solving Problems 6. Recognize Effective Performance through Praise 7. Minimize Criticism 8. Focus Feedback on Behavior or Results, Not on the Person 9. Agree to Specific Goals and Set a Date to Review Progress Diagnosing the Cause of Poor Performance Managing Performance of Marginal Performers 1. Solid performers - High ability and motivation; managers should provide development opportunities 2. Misdirected effort - Lack of ability but high motivation; managers should focus on training 3. Underutilizers - High ability but lack motivation; managers should focus on interpersonal abilities 4. Deadwood - Low ability and motivation; managerial action, outplacement, demotion, firing.