Managing Employee Performance PDF

Chapter 7: Managing Employees Performance Performance Management: Process where managers ensure that employees activities & outputs contribute to organizations goals → Effective: Employees perceive them as fair, and when employees participate in development implementation of performance management...

Chapter 7: Managing Employees Performance Performance Management: Process where managers ensure that employees activities & outputs contribute to organizations goals → Effective: Employees perceive them as fair, and when employees participate in development implementation of performance management system Purpose of Performance Management 3 Purposes of PMS: Strategic, administrative, developmental Strategic Purpose: Effective performance mgmt helps organization achieve its business objectives How? Link employee behavior w organizational goals -> define expectations -> measure performance against them Administrative Purpose: Use the systems to provide info for day-today decisions (salary, benefits, recognition programs) or (employee retention, termination for poor performance, and hiring/layoffs) Developmental Purpose: serves as a basis for developing employees knowledge/skills How? Successful employees can improve when receive + discuss performance feedback -> make aware of strengths/weaknesses Criteria for Effective Performance Management Fit with Strategy: Should achieve employee behavior/attitudes that supports organization's strategy,goals + culture - Define required behaviors + whether employee meeting standards -> feedback to improve Validity: Whether appraisal measures only relevant aspects of performance - Info in performance appraisal vs relevant measures of job performance -> valid only if fails into both categories - Contamination: Info gathered but irrelevant → eg. comparing sales ppl based on how many calls they made - Deficiency: Info not gathered but relevant → eg. measuring attendance records but not work if they work efficiently Performance measures should MINIMIZE both contamination and deficiency Reliability: Consistency of performance measure results - Interater reliability: consistency of results when 1+ ppl measure performance (Low: asking supervisor to rate employees performance on a scale of 1 to 5; rating differs depending on who is assessing employee) - Test-retest reliability: Consistency of results over time(Low: If a performance measure lacks test-retest reliability, determining whether an employee's performance has truly changes over time will be impossible) Acceptability: Acceptable to ppl who use it -- need to believe fair + not time consuming Specific Feedback: State expectations + how to meet them - Help support strategy + develop employees + define quantitative measures The Process of Performance Management Effective Performance Management can: Tell top performances they are valued, encourage communication between managers & employees, establish evaluation standards, identify highest performers Contributes to company's overall competitive advantage Performance Evaluation meet an “ethical obligation of leadership” - Provides information that all member of organization want to know so they can succeed Process: Define → measure → provide feedback on relevant aspects of performance Define feedback: specifies based on job analysis MEasure feedback: Conduct performance appraisals Provide Feedback: if performance gaps, provide problem solutions/rewards Methods for Measuring Performance Making Comparisons: Compare one individual's performance with another (rankin) Simple Ranking: managers rank employees in group from highest to lowest performer alternation ranking: Managers works from a list of employees (highest,lowest, 2nd highest, 2nd lowest) ★ Downside: Validity + fairness issue: can't exactly define what is (best vs worst) Forced-Distribution Method: Assigns certain % of employees to each category in a set of categories - Outstanding (5%), Exceeds Expectations (20%)...Below Expectations (5%) - manager would rate 5% of employees as outstanding, and so forth ★ Works best if members of group really do vary this much in terms of performance ★ But if all employees high performers - lower categories, may be inaccurate/hurt morale Paired-Comparison Method: Compares each employee's w/each other employees to establish rankings ★ Most time consuming method if lots of employees ★ Counteracts rating everyone favorable/middle of scale + eliminated managers who rate more strictly Drawbacks: Often are not linked to organizational goals Rating Individuals: Can rate employees performance against set of standards instead of against other employees - Eg. attributes (characteristics, traits, competencies, behaviors) Rating Attributes Graphic Rating Scale: Lists attributes + provides a rating scale for each; employer indicates employee performance on scale - Low reliability: leaves manager up to decide what is “exceeds expectations” Rating Behaviors Overcome drawbacks of rating attributes → define behavior associated w/ job success Critical Incident Behaviour: Based on managers records of specific examples of the employee behaving in effective/ineffective ways - Gives employees specific feedback - Keeping track critical incident takes effort from managers + may be unique - cant compare among employees Behaviourally Anchored Rating Scale (BARS): Rate behaviors in terms of scale showing specific statements of behavior that described diff levels of performance - Define performance dimensions based on data about past performance - may be based on past critical incidence - Improve inter rater reliability - Bias managers memory Behavioural Observation Scale (BOS): Variation of BARS, uses all behaviors necessary for effective performance to rate - Developed from critical incident - may use many diff behaviors to define levels of performance - Also rated on frequency of behaviors demonstrates - Ease of use, providing feedback, maintaining objectivity, and suggesting training needs - Amount of information required Behaviorism: individuals future behavior is determined by past experiences + ways past experiences have been reinforced Organizational Behaviour Modification (OBM): plan for managing the behavior through formal system of feedback/ reinforcement 1. Define set of behaviors necessary for job performance 2. Use measurement system to assess whether employee exhibits key behaviors 3. Inform employees of behaviors, in terms of goals for how often to exhibit the behaviors 4. Provide feedback and reinforcement based on employees behavior Benefits: Links companies goals to specific behavior required to achieve goals → (Valid) generates specific feedback + guidance, high acceptance (ppl being measured help develop measures) → (Reliability) raters highly trained Drawbacks: Don't work well for complex jobs → hard to see link between behavior and results Measuring Results → Measurement of productivity & management by objectives Productivity: getting more done with fewer resources - Identify outcomes employees expected to accomplish + decide desired level of performance + keep records - Time Consuming to set up Management by Objectives (MBO): system where ppl at each level of organization set goals that flows from top to bottom - employees of all levels are contributing to organizations overall goals, goals become standards for evaluating performance 3 Components  1. Goals = specific, difficult, and objective 2. Managers + employees work together to set goals 3. Managers gives objective feedback through rating period to monitor progress toward goals Benefits: Staff members involved in setting goals (highly acceptable), positively affects performance when mgmt committed to MBO TDrawbacks: Validity - results may be affected by circumstances beyond performance - If only final results measured - doesn't measure signf performance not directly related to final results - If employees only focus on skills measure, other important skills neglected Event Capturing: Enables managers to make short descriptive entries (limit number of characters) to capture behaviors, outcomes or performance on a ongoing basis throughout the year Balanced Scorecards: performance mgmt approach that integrates strategic perspectives (financial, customer, internal business processes, adn learning,growth - Managers go beyond financial targets - recognize + monitor progress of other goals (customer/employee satisfaction) - Allows to align strategy at all levels + guide performance measurement of all employees Sources of Performance Information All methods of performance mgmt require decisions about who collects/analyzes performance info - Need understanding of job requirements + able to see employee doing job Using 1 person as source of info: Encourages biases (people tend to like some people more than others) and one person is likely to see an employee in a limited number of situations Multi Rater: Combining information from most or all possible sources 360-degree Performance Appraisal: Combies information from employees,managers,peers,direct reports + customers Benefits: Increased accuracy and perceived fairness -> 1 source = personal biases Drawbacks: Process is time, cost and energy consuming Managers - Traditionally + most used source = managers → assume know job reqs and are able to watch employees - Incentive to provide accurate and helpful feedback → own success depends on employees - feedback can improve performance → employees tend to perceive appraisal as accurate Drawbacks: but for some jobs → managers don't have enough opportunities to observe employees Peers - peers/coworkers = have most opportunity to oversee employee + Expert knowledge of job requirements - Different perspective → valid assessments of performance Drawbacks: subject to bias → friendships/rivalries, rating other employees might affect themselves - More willing to review if used for employee development > ratings (for promos) Direct Reports - Ppl reporting to manager → source of info for evaluating managers + treatment of employees Drawbacks: power relationships → unwilling to report negative about managers - Prefer to provide feedback anonymously but managers react more + if employee identified - Direct reporting by employees → managers put more emphasis on employee satisfaction Self - Rarely used alone, can be useful → occurs before feedback session, compare discrepancies between self eval and other eval Drawbacks: inflated assessments of performance Customers Often the only person who directly observes services = best source of performance info 2 situations appropriate for customer evaluations: 1. Employees job requires direct service to customer/linking customer to other services within organization 2. Organization wants info to determine what products/services wanted by customers Drawbacks: Issuing surveys is expense Crowdsourcing Performance Appraisal Crowdsourcing: - Gathering and using data from all an employees co workers or all of a managers employees to develop an appraisal - Information is more complete, results in more accurate and fair appraisal - Employees may not be motivated to provide careful feedback about co workers, creates legal requirements Errors in Performance Measurement Unconscious Bias: A judgment outside our consciousness that affects decisions based on background, culture, and personal experience Types of Rating Errors Similar to Me: giving higher evaluation to ppl who seem similar to oneself - Think of self as effective → if similar = also effect (eg. sex, race) Contrast Error: Comparing employee performance to co-workers instead of an objective standard - Employee could be competent, but co worker is outstanding, makes employee look worse Distributional Errors (Rater only uses one part of of the rating scale) Strictness: giving low rating to all employees, holding them to unreasonable high standards Leniency: giving high ratings to all employees Central Tendency: incorrectly rating all employees at/near middle of rating scale Halo & Horns Ant provide specific info needed for useful feedback w these errors → inaccurate measures Halo: Rater reacts to one positive aspect by rating positively in all areas of performance Horns: Rater responds to one negative aspect by rating low in other aspects Recency Emphasis: annual rating based on only most recent work performance Focus on activities: assessed on how busy they appear rather than how effective they are achieving results Appraisal Politics: Evaluators purposefully destroying a rating to achieve personal or company goals Most likely occurs: - Raters = accountable for employee being rated - Goals of rating not compatible w another - Performance appraisal directly linked to high rewards - Top exec tolerate/ignore distorted rankings What Can Be Done to Reduce Errors? Rater Error Training: make managers aware of rating eros + helps develop strategies for minimizing those errors Rater Accuracy Training (performance dimension training/frame of reference): Emphasize multidimensional nature of performance, get raters to understand and use that same idea of high, medium, and low performance when making evaluations - Increases accuracy (Given: raters held accountable for rating, job related rating scales used, raters keep records of behaviors observed) Unconscious Bias Training: Requiring employees to participate in programs to reduce potential influence of unconscious bias in performance evaluations and work related decisions An Important Way to Help Ensure Performance is Evaluated Consistently: Calibration Meetings: Meeting where managers discuss employee performance ratings, provide evidence supporting their ratings in order to eliminated influence of rating errors - Eliminates politics, Increase accurate evaluations Using Data Analytics, Analysts, and Rattee Training Data Analytics: mobile apps/wearable devices track employees activities → patterns in what employees do Analysts: look for evidence of bias in performance evaluations (Ex. is the word abrasive being used more frequently to describe women than men?) Rater Training: Improves rating accuracy and acceptance of the performance management system Performance Feedback Productive & Meaningful = both parties need to feel heard, understood, and respected Effective Performance Feedback → Feedback should be given frequently, not once a year  1. Annual feedback not enough to support employees to maintain high levels of performance/deal with performance gaps 2. Feedback most effective when information does not surprise the employee Social Performance Management: Systems similar to facebook, linkedin and apps that allow employees to quickly exchange information, talk to each other, provide coaching, and receive recognition Preparing for Feedback Session Create right context (well prepared,distraction free, opensess), employee prepared (self-assessment), ongoing performance conversations (reduce anxiety/uncertainty), provide balanced feedback (emphasized behavior and goal setting) - Feedback should emphasize behavior not personalities (“Why was the deadline missed?” not “you're not motivated”) Performance Improvement If performance below/meeting expectation, feedback should identify ways to improve in specific areas (most effective depends on ability + motivation) Lack of Ability: Motivated employee lacks knowledge, skills, or abilities in some area - Offer training, more detailed feedback, restructure job Lack of Motivation: Deliver positive feedback, referral for counseling/stress management Lack of Both: if lack both, employee may not be good fit (Performance improvement plan) Performance Improvement Plan: Summary of performance gaps + action plan mutually agreed to by employee + manager w/ specific dates to review progress Legal, Ethical, and Privacy Issues for Performance Management → regards to discrimination on the basis of the protected ground in HR legislation (age, gender, ethnicity) - PMS needs to provide evidence to support employment decision (system should be based on valid job analysis) - Multiple raters (self appraisals) and train raters in how to use system → cant go beyond “reasonable criticism” - System for employees to appeal - Include process of feedback, coaching, training to improve rather than dismissing Employee Monitoring and Employee Privacy Companies GPS, handprint/fingerprint systems, wearables, smartphones) to monitor employee locations, work habits, and health data - Increases productivity, efficiency, data to coach - Some say employers should monitor for no reason - no dignity Privacy & Ethical Concerns: Privacy invasion - employees may feel constantly surveilled, reducing autonomy Employee morale - constant monitoring increase stress, demotivated workers Data Security - wearables (devices that collect personal data) isn't always secure Conducting Feedback Session 3 approaches - “Tell-and-sell”: managers tell employees rating + justify - “Tell-and-listen”: Managers tell employees ratings + let employees explain their side - “Problem-solving”: Managers + employees work tgt to solve performance problems (improve satisfaction, open communication)