Performance Management Chapter 10 PDF

Chapter 10 Performance Management Pressmaster/Shutterstoc Learning Objectives 10.1 Explain the strategic value and importance...

Chapter 10 Performance Management Pressmaster/Shutterstoc Learning Objectives 10.1 Explain the strategic value and importance of performance management. 10.2 Differentiate between performance management and performance appraisals. 10.3 Discuss the five steps in the performance management process. 10.4 Define contextual and task-based performance and how they differ. 10.5 Describe five performance appraisal methods and the pros and cons of each. 10.6 Discuss the major problems inhibiting effective performance appraisals. 10.7 Discuss the various sources of performance appraisal including the 360-degree appraisal. 10.8 Describe guidelines for legal and ethical performance management. 186  Performance Management 187 WhereAre WeNow... Chapters 69 explained selecting, training, and developing employees. After employees have been on the job for some time, you should appraise their performance. The pur-pose of this chapter is to show you how to do that. The main topics we cover include the basics of performance appraisal, tools for appraising performance, dealing with rater error appraisal problems, the appraisal interview, employee engagement guide for managers, and performance management. TheStrategicImportance of Performance Management 10.1 Explain the strategic value and importance of performance management. 10.2 Differentiate between performance management and performance appraisals. Few things supervisors do are fraught with more peril than appraising subordinates performance. Employees tend to be overly optimistic about their ratings. And they know their raises, careers, and peace of mind may hinge on how you rate them. Asif thats not enough, few appraisal processes are asfair as employers think they are. Many obvious and not-so-obvious problems (such asthe tendency to rate everyone average) distort the process.1 However, the perils notwithstanding, performance appraisal plays a big role in managing people. Performance appraisal means evaluating an employees current and/or past per-formance performance appraisal relative to his or her performance standards. Effective performance appraisals Evaluating an employees are the basis for successful performance management. Although performance appraisal current and/or past is a difficult interpersonal task for managers, it cannot be eliminated. performance relative to his or In any organization, achieving strategic objectives requires employee productivity her performance standards. above all else because organizations strive to create a high-performance culture by using a minimum number of employees. Thus, it has been suggested that better performance management represents a largely untapped opportunity to improve.2 While both man-agement and employees may feel uncomfortable during the performance appraisal process, this chapter presentsideas and research to help build and execute both more effective performance appraisals and performance management systems. Performance management is a broader and more strategic activity than perform-ance performance management appraisals, and represents a process encompassing all activities related to The process encompassing all improving employee performance, productivity, and effectiveness. It includes goal activities related to improving setting, payfor performance,training and development,career management,and disciplinary employee performance, action. The performance management system must provide an integrated network of productivity, and effectiveness procedures across the organization that will influence all work behaviour.3 This involves assessing a number of elements regarding an employees performance, as highlighted in Table 10.1. While individual objectives and goals are elements of performance appraisals in 97 out of 337 companies, significantly less consideration is given to the assessment of values, skills, or team objectives. There are three major purposes of per-formance management: it aligns employee actions with strategic goals, it is a vehicle for culture change, and it provides input into other HRsystems such as development and remuneration.4 Managers need some wayto review employees work-related performance. Despite the difficulties involved, performance management is still the basis for fostering and managing employee skills and talents, and it can be a key component of improved organizational effectiveness. Performance management techniques in high-and low-performing organizations are essentially the same, but managers in high-performing organizations tend to manage performance on a daily basis moreeffectively.5 188 Chapter 10 Table 10.1 Elementsof PerformanceAppraisals(Used by 337 Canadian Organizations) Individual objectives and goals 97% Training and professional development 70% Competencies 69% Behaviours 61% Organizational objectives and goals 53% Team objectives and goals 53% Skills enhancement plan 41% Values 35% Other (e.g., self-appraisal, results) 4% SOURCE: The Conference Board of Canada. Performance Management: Turning Individual Stress to Organizational Strategy, June 2012, p. 2., 2012, Reprinted with permission from The Conference Board of Canada. Recent research indicates that effective performance management involves: linking individual goals and business strategy; showing leadership and accountability at all levels of the organization; ensuring close ties among appraisal results, rewards, and recognition outcomes; investing in employee development planning; and having an administratively efficient system with sufficient communication support.6 Effective appraisals are essential to managing the performance required of an organizations employees to achieve that organizations strategic objectives. The key success factor for effective performance appraisal that will lead to optimum employee performance is the quality of the performance appraisal dialogue between a manager and an employee.7 Managers need to engage in training on an ongoing basis to ensure that they are in a position to engage in high-quality formal appraisal discussions. The Performance ManagementProcess 10.3 Discuss the five steps in the performance management process. 10.4 Define contextual and task-based performance and how they differ. Performance management is of considerable strategic importance to todays organiza-tions because the most effective way for firms to differentiate themselves in a highly competitive, service-oriented, global marketplace is through the quality of its employ-ees.8 The performance management process contains five steps,9 as highlighted in Figure 10.1. Performance appraisals in Canada are legal documents. While they should be used for planning promotions, career development, training, and performance improvement plans, they can also be required in courts when assessing wrongful termination cases. A recent survey by the Conference Board of Canada indicates that 96 percent of companies conduct performance management activities regularly, but many companies are still dealing with the reality that their performance management systems are ineffective.10 For example, although they need to downsize poor performers, performance appraisal records indicate that all employees are performing adequately. Dr. Robert Thorndike researched performance management processes and sug-gests that employment decisions (such as a performance appraisal system) must be valid, practical, reliable, and free from bias.11 Failure to measure and use appraisa  Performance Management 189 Figure 10.1 Performance ManagementProcess 1. Defining 2. Providing ongoing 3. Conducting 4. Determining 5. Conducting performance feedback and performance appraisal performance development and expectations and coaching and evaluation rewards/ career opportunities goals discussions consequences discussions results effectively in human resource decision making and career development negates the primary purpose of performance evaluations. Effective performance management thus begins with defining the job and its performance standards, which will now be discussed. WhyAppraisePerformance? There are five reasons to appraise subordinates performance. First, most employers base pay, promotion, and retention decisions on the employ-ees appraisal.12 Appraisals play a central role in the employers performance management process. Performance management means continuously ensuring that each employees per-formance makes sense in terms of the companys overall goals. The appraisal lets the manager and subordinate develop a plan for correcting any deficiencies, and to reinforce the subordinates strengths. Appraisals provide an opportunity to review the employees career plans in light of his or her exhibited strengths and weaknesses. We address career planning in Chapter 9. Finally, appraisals enable the supervisor to identify if there is a training need and the remedial steps required. Step 1: Defining Performance Expectations Defining performance expectations and goals is a critical step in employees under-standing of how their work makes a contribution to achieving business results. Over the last 30 years there has been more recognition that job performance is a multidimen-sional construct which can be split into what has become widely acknowledged as task versus contextual performance.13 Task performance reflects an individuals direct contribution to their job-related task performance processes. Focusing on tasks means that performance expectations are grounded in An individuals direct realistic job demands and align with the organizations strategic objectives and imple-mentation contribution to their job-related plans. They may also be partially based on previous performance processes evaluations. However, as part of the movement toward more corporate social responsibility, expectations are beginning to extend beyond job skills and skills required for promotion  190 Chapter 10 to addressing the concept of whole person development (aligned with the direction, attitudes, motivation, and advancement opportunities of the employee). In addition to task performance, contextual performance is often evaluated as a second factor contributing to an employees overall work-related performance. Contextual performance reflects an indi-viduals indirect contribution to the organization by improving the organizational, social, and psychological behaviours that contribute to organizational effectiveness beyond those speci-fied Cartoonresource/Fotoli for the job. This includes extra-role behaviours and con-textual factors, such as demonstrates a positive attitude and contextual performance pitches in to help others when needed, which have surfaced as contextual perform-ance An individuals indirect expectations.14 These goals may be informally known, but not formally defined, contribution to the which can become problematic in performance management. Employees also need to organization by improving be aware of which behaviours are expected and which are discretionary to maintain the the organizational, social, and legitimacy of the performance management system. psychological behaviours that Ultimately, the performance management process cannot be separated from per-formance contribute to organizational measurement. Performance expectations need to be developed in a legally effectiveness beyond those defensible (correlated with job activities), clear, and measurable way. In addition, they specified for the job. must be communicated and supported as such by the organization. Aligned with the sales associate example, a personal selling activity can be measured in terms of how many dollars of sales the associate is to generate personally. Keeping customers away from executives can be measured with a standard of no more than 10 customer com-plaints per year being the sales associates target. In general, employees should always know ahead of time how and on what basis they will be appraised. It is important to note that expectations cannot discriminate directly or indirectly against anyone on protected grounds (gender, age, disability, and so on). In global companies, performance appraisal criteria may need to be modified to be consistent with cultural norms and values. In the West, where individuals have an inalienable right to choose their own lifestyles and moralities, performance criteria can-not be based on personal character, but instead need to focus on more objective criteria, such as job competence, abilities, and achievements. However, global values change perceptions of performance management, as highlighted in the Expert Opinion box. Confucian values (used in parts of Asia including China) lead to an emphasis on appraisals that are based upon personal attitudes and moral characteristics that appear to reflect traditional values, such as hard work, and loyalty and respect toward senior staff. Some specific examples are accepting overtime work; being punctual, careful, helpful, loyal, and respectful toward senior staff; as well as being persistent, adaptable, dedicated, and hard working. Researcher found three performance appraisal factors that were very acceptable to Chinese employees: work dedication, work efficiency, and teamwork. Work dedication behaviours, such as punctuality, loyalty, working hard, and dedication toward ones work, exist in both Eastern and Western cultures.15 Employee efficiency has long been considered important to good job performance, as it is considered to be a means to achieve organizational goals. Chinese employees appear to recognize this managerial objective since they were willing to be evaluated on criteria that assess the efficiency of their work. Teamwork is a behavioural manifestation of the group orientation in Eastern cultures. Step 2: Providing Ongoing Coaching and Feedback Traditionally, performance appraisals were conducted annually, in formalized processes. Some businesses environments are more dynamic and need to engage in more frequent or timely assessments of employee performance. There is an ongoing evolution in  Performance Management 191 Expert Opinion: ACADEMIC VIEWPOINT Identification: Dr. Mila global HRM issue rather than a mobility issue. Thus, Lazarova, PhD, Associ-ate the concept of managing employees globally needs to Professor & Canada be part of alarger strategy with integration throughout Research Chair in Global the organizations policies and practices. Workforce Management In terms of trends in research, recent studies are less preoccupied with issues such as expatriate adjust-ment Affiliation: Beedie and have started looking into matters such as cal-culating School of Business, ROI on expat assignments (a very challenging Simon Fraser University task) or managing knowledge transfer during and after assignments. 2. What performance management challenges are associated with international assignments? This is highly dependent on the role. Higher-level Dr. Mila Lazarova employees usually report to head office, but mid-level employees might have a lack of clarity regarding 1. What are some of the significant challenges when what performance criteria apply to them (home or host managing people globally that HR managers should country). In terms of higher-level expatriates evaluated be aware of? by headquarters, research shows that local or context-dependent The key challenges have changed over the years. Cur-rently, issues might not be considered fully in their availability of talent is critical. Companies are performance review. For example, their jobs mayinvolve reporting that it is difficult to recruit people to under-take unique challenges such as delay in decision mak-ing assignments. Also,the demographics ofthose who dueto the need to consult withlocal constituents do go abroad is changing. We now see more women, (e.g., unions) and this may not be well understood by younger people, and people without families who are their superiors. The criteria regarding performance more willing andinterested in international mobility. evaluation may vary based on whois conducting the What hasnt changed is that families that accom-pany performance evaluation. expatriates are still struggling to adjust to foreign Research has documented that in the slight major-ity locations. It becomes a catch-22 situation, given that its of situations, a local or subsidiary company repre-sentative hard for employees to adjust without their families (they is engaged in performance evaluations of are a great source of social support), but family adjust-ment those on international assignment and in a smaller frac-tion can also be a source of concern or stress for the of the cases, the evaluation is conducted by the employee when family members themselves struggle to head office manager alone. adjust. On that note, the traditional pattern of interna-tional 3. Are there options for employees who are unable to employee mobility was focused around three to work abroad, but want global experience? five year assignments. Now, multiple alternatives such Generally, given that many of us work in a global as short-term assignments or commuter assignments environment, having global experience is a plus for (MondayFriday) are being introduced, partly with the every employee. However, one can get such experience intent of enabling employees to overcome personal or without working across borders. Rather than through family challenges that come along with global mobility. physical mobility, employees can gain some global There are also other issues such as attracting experience through working on teams that are global or employees with competencies required for managing highly diverse, or through interacting with global cus-tomers an international workforce, while simultaneously reduc-ing or suppliers. Even if the employee cannot work many of the perks that used to be associated with or travel abroad, such work can provide international corporate mobility. Now, it is not uncommon that jobs exposure. Being able to work with people from different abroad are now one-way moves rather than expatri-ate countries can be very helpful even in a purely domestic assignments. Beyond mobility, new issues have settings, especially in countries like Canada that has a emerged and they vary by country. For example, an large and growing immigrant population. extremely challenging issue is integrating migrants and refugees into the workplacebut this is a broader SOURCE: Reprinted by permission from Dr. Mila Lazarova  192 Chapter 10 performance management in Canadian companies, with more than 50 percent of organ-izations making changes to their performance management systems in the last three years. The performance management changes that are taking place include an increased focus on coaching and provision of ongoing feedback, more recognition of individ-ual development and performance while also recognizing team performance, and a decreased focus on ratings and ranking. Afew of the companies surveyed indicated updated performance management systems delinked performance from pay.16 In 2015, Deloitte realized that its once-a-year performance management process for the more than 65 000 employees in the company was consuming more than two million hours a year. They found that the once-a-year goals and year-end ratings were less valu-able than more frequent, real-time conversations about actual performance.17 By 2015, Accenture, PWC, and KPMG made announcements axing annual performance reviews in favour of employee development coaching strategies.18 In this process, managers are increasingly asked to assume the role of a coach or mentor. coaching Coaching is defined as a process for improving work performance in a frequent A process for improving work contact, hands-on process aimed at helping employees improve performance and capa-bilities.19 performance, in a frequent It requires the manager giving guidance, encouragement, and support to an contact, hands-on process employee, and the employee assuming the role of a learner. Afocus on developing peo-ple aimed at helping employees requires more frequent and information conversations and coaching by managers, improve performance and rather than annual reviews. Effective managerial coaching required thinking, informing, capabilities. empowering, assessing, advising, being professional, caring, developing others, and challenging employees for continuous improvement.20 Some managers might not have the skills to effectively coach or struggle with the role of a manager as a coach. Throughout the performance management process, managers and their reports should continue to discuss progress. It is important to have open two-way communica-tion, and both the employee and the manager need to check in frequently throughout the performance management process to talk about progression toward goals. It is critical to note that informal performance management systems or coaching requires a culture that supports continuous feedback on different dimensions. As organ-izations attempt to move away from annual performance reviews, employment law experts correctly identify that the development and assessment of employees against standardized practices and objective criteria are needed to legally defend employment related decisions in the judicial system. There is also a challenge of modifying goals as a project unfolds, and some employees do not value that level of ambiguity. In addi-tion, without appraisals, managers do not have a relatively objective way to reward performance, which can lead to subjective or biased decision making. Lastly, without documentation, HR and managers have difficulty identifying and dealing with poor performers.21 HRin the News FREQUENCYOFPERFORMANCEEVALUATIONS The traditional model of annual performance reviews, with a movement that is not limited to HR, but is part of the employees graded on relatively static, long-term goals, is in broader level management system and leadership impera-tives. decline. Instead, there has been some movement toward more Some of the newer performance management sys-tems meaningful, ongoing and frequent (monthly or quarterly) per-formance allow gamification to track employee performance, feedback to employees, supported by new evalu-ation offering incentives, such as gift cards, points, or tokens to software that provide real-time metrics to managers. employees who populate the required information in a timely The process of setting objectives, aligning work, evalu-ating manner.2 performance, and getting feedback more regularly is  Performance Management 193 Step 3: Conduct Performance Appraisal and Evaluation Discussion The appraisal itself is generally conducted with the aid of a predetermined and formal method, such as one or more of those described next. This includes a discussion of the options of multiple formal appraisal methods and common performance appraisal problems (with solutions) in detail. However, in recent years, the use of electronic performance management systems has created an evolution in how we manage and appraise employee performance. Over the past few years, web-based performance management has moved from being aleading-edge approach adopted by only large companies to a mainstream prac-tice that is quickly becoming an industry standard among medium and small organiza-tions.23 It enables managers to keep computerized notes on employees, combine these with ratings on several performance traits, and then generate written text to support each part of the appraisal. But the true value in web-based performance management goes beyond sim-ply automating time-consuming, tedious tasks, such as tracking down paper-based appraisal forms. They ultimately improve the overall performance management pro-cess, starting with higher completion rates, which can dramatically increase the value of performance management within organizations of all sizes. Performance management systems provide employees with a clear development path and a better understanding of how their goals are aligned with those of the organization, which in turn increases their support of the process. With effective performance management systems, man-agers have the information they need to ensure development plans are relevant and executed and executives have a clear picture of the organizations talent strategy and how it ties into the bottom line. Most web-based performance management systems provide advanced reporting capabilities, which allow managers to track the status of performance management initiatives easily. Goal management functions enable organizations to link individual goals to strategic corporate goals, meaning that executives have insight into the pro-gress being made on corporate objectives. Succession planning tools provide executives with a clear plan to build a talent pool to meet the organizations business needs and address potential attrition. In a relatively short time, employee performance management has undergone a rapid evolution with the development of powerful web-based tools. HR profession-als are no longer mired in paperwork and other mundane administrative tasks. They have more time to focus on meeting strategic objectives, better tools to implement best practices programs, and access to critical workforce metrics they can share with their executive team. Electronic performance monitoring (EPM) is in some respects the ultimate in com-puterized electronic performance appraising. Electronic performance monitoring means having supervisors monitoring (EPM) electronically observe the employees output or whereabouts. This typically involves Having supervisors using computer networks and wireless audio or video links to monitor and record electronically monitor the employees work activities. It includes, for instance, monitoring a data clerks hourly amount of computerized data keystrokes, tracking via GPS the whereabouts of delivery drivers, and monitoring the an employee is processing per day and thereby his or her calls of customer service clerks. performance. Formal Appraisal Discussions The essence of a performance appraisal is the feedback provided in a one-on-one conversation called the formal appraisal discussion. This formal appraisal discussion is an interview in which the supervisor and employee review the appraisal and make Aninterview in which the plans to remedy deficiencies and reinforce strengths. Unfortunately, surveys show that supervisor and employee less than half of companies describe their performance appraisal systems as effective or review the appraisal and make very effective because of weak execution due to managers abdicating their responsibil-ity plans to remedy deficiencies for screening out poor performers.24 This discussion is often avoided by supervisors and reinforce strengths 194 Chapter 10 and managers who have not been trained to provide constructive feedback and to deal with defensive employees. Ultimately, feedback should be ongoing, making the formal appraisal discussion one of many performance discussions. Types of Appraisal Outcomes There are three basic types of formal appraisal discus-sions, each with its own objectives.25 SatisfactoryPromotable Here, the persons performance is satisfactory and there is a promotion ahead. This is the easiest of the three formal appraisal discussions. The objective is to discuss the persons career plans and to develop a specific action plan for the educational and professional development that the person needs to move to the next job. SatisfactoryNot Promotable This interview is for employees whose performance is satisfactory but for whom promotion is not possible. Perhaps there is no more room in the company; some employees are happy where they are and do not want a pro-motion.26 The objective here is not to improve or develop the person but to maintain satisfactory performance. This situation is not easy. The best option is usually to find incentives that are important to the person and are enough to maintain satisfactory performance. These might include extra time off, a small bonus, additional authority to handle a slightly enlarged job, and verbal reinforcement in the form of Well done! UnsatisfactoryCorrectable versus Uncorrectable When the persons performance is unsatisfactory but correctable, the interview objective is to lay out an action plan for correcting the unsatisfactory performance. If the employees performance is unsatisfac-tory and the situation uncorrectable, there is usually no need for any formal appraisal discussion because the persons performance is not correctable anyway. Either the per-sons poor performance is tolerated for now, or he or she is dismissed. Preparing for the Formal Appraisal Discussion An important component of the performance management process is the effective use of feedback. This often happens in a formal appraisal discussion after the performance has been evaluated. There are three things to do in preparation for the interview.27 First, assemble the data. Study the persons job description, compare the employees performance to the standards, and review the files of the employees previous apprais-als. Next, prepare the employee. Give the employee at least a weeks notice to review his or her own work, read over his or her job description, analyze problems he or she may be dealing with, and gather questions and comments for the interview. Finally, find a mutually agreeable time and place, and allow plenty of time for the interview. Interviews with non-supervisory staff should take no more than an hour. Appraising management employees often takes two or three hours. Be sure that the interview is conducted in a private place where there will be no interruptions. It is important to keep in mind what is said and how it is said. The Strategic HR box provides an example of how management teams in a global company were guided on managing the formal appraisal discussion. How to Conduct the Interview Constructive feedback is considered a positive and motivating experience.28 There are four things to keep in mind when conducting a formal appraisal discussion to ensure the feedback is constructive.29 1. Be direct and specific. Talk in terms of objective work data. Useexamples, such as absences, tardiness, quality records, inspection reports, scrap or waste, orders processed, productivity records, material used or consumed, timeliness of tasks or projects, control or reduction of costs, numbers of errors, costs compared wit  Performance Management 195 Strategic HR JAGUAR LAND ROVERFORMAL APPRAISAL DISCUSSION TRAINING In 2008, an Indian conglomerate (Tata) took over the Jaguar Communicate nonverballydemonstrate body lan-guage Land Rover car maker. This triggered a new set of manage-ment that suggests and elicits open and honest infor-mation behaviours, including the redesign of the performance sharing management process. Management was coached on tech-niques Speak rationally, clearly, and calmlyconsider the for managing behaviour during the formal appraisal conversation a mutual exchange of information, per-spectives, discussion, including the following suggestions: and challenges without being irrationally or emotionally overwhelmed or skewed Verbally acknowledge your observationsproviding verbal feedback based on observations allows the indi-vidual The training program is viewed as a success by man-agement receiving feedback to reflect on cause and effect and participants alike. Jaguar Land Rover believes Be empatheticdemonstrating sincere concern and that managers are now equipped with the skills to implement ability to put yourself in the others position the performance management system successfully. Listen activelyaccurately and clearly listen to the comments being made and reflect on the main content of the issues SOURCE: Based on J. Hicks, Jaguar Land Rover Bosses Get to Grips with Questioningelicit information using a variety of prob-ing Performance Management: Program Teaches Practical Skills for the Workplace, Human Resource Management International Digest (2011), volume 19, issue 4, questions (open-ended and close-ended) pp. 1012. budgets, customers comments, product returns, order processing time, inventory level and accuracy, accident reports, and so on. 2. Do not get personal. Do not say, You are too slow in producing those reports. Instead, try to compare the persons performance with a standard (These reports should normally be done within 10 days). Similarly, do not compare the persons performance with that of other people (He is quicker than you are). 3. Encourage the person to talk. Stop and listen to what the person is saying; ask open-ended questions, such as, What do you think we can do to improve the situation? Use phrases such as, Go on, or Tell me more. Restatethe persons last point as a question, such as, You do not think that you can get the job done? 4. Develop an action plan. Do not get personal, but do make sure that by the end of the interview you have (1) provided specific examples of performance that does and does not need attention or improvement, (2) made sure the person under-stands how he or she should improve his or her performance, (3) obtained an agree-ment from the person that he or she understands the reasons for the appraisal, and (4) developed an action plan that shows steps to achieving specified goals and the results expected. Besure that a timeline is included in the plan. How to Handle Criticism and Defensive Employees When a supervisor tells some-one his or her performance is poor, the first reaction is often denial. Denial is a defence mechanism. By denying the fault, the person avoids having to question his or her own competence. Understanding and dealing with defensiveness is an important appraisal skill that requires the following:30 1. Recognize that defensive behaviour is normal. 2. Never attack a persons defences. Do not try to explain someone to himself or her-self by saying things, such as You know the real reason you are using that excuse is that you cannot bear to be blamed for anything. Instead, try to concentrate on the actitself (sales are down) rather than onthe person(you are not selling enough) 196 Chapter 10 3. Postpone action. Sometimes it is best to do nothing at all. People frequently react to sudden threats by instinctively hiding behind their masks. Given sufficient time, however, a more rational reaction usually takes over. 4. Recognize human limitations. Do not expect to be able to solve every problem that comes up, especially the human ones. More importantly, remember that a supervi-sor should not try to be a psychologist. Offering employees understanding is one thing; trying to deal with deep psychological problems is another matter entirely. Step 4: Determine Performance Rewards/ Consequences Ensuringthat the Formal Appraisal DiscussionLeads to Improved Performance It is important to clear up performance problems by setting goals and a schedule for achieving them. However, even if you have obtained agreement from your employees about the areas for performance improvement, they may or may not be satisfied with their appraisals. In one study, researchers found that whether employees expressed satisfaction with their formal appraisal discussions depended mostly on three factors: (1) not feeling threatened during the interview, (2) having an opportunity to present their ideas and feelings and to influence the course of the interview, and (3) having a helpful and constructive supervisor conduct the interview.31 Ultimately, the main objective of performance appraisals is to improve employee performance, keeping performance expectations clear and targeted on activities that build value for the organization. In dealing with employee performance issues, legal experts suggest that management follow seven steps to ensure that performance appraisals have the desired effect and are legally defensible: 1. Let the employee know that his or her performance is unacceptable and explain your minimum expectations. 2. Ensure that your expectations are reasonable. 3. Let employees know that warnings play a significant role in the process of estab-lishing just cause; employees must be warned and told that discharge will result if they continue to fail to meet minimum standards. 4. Ensure that you take prompt corrective measures when required; failure to do so could lead to a finding that you condoned your employees conduct. 5. Avoid sending mixed messages, such as a warning letter together with a satisfac-tory performance review. 6. Provide the employee with a reasonable amount of time to improve performance. 7. Be prepared to provide your employees with the necessary support to facilitate improvement.32 How to Handle a Formal Written Warning There will be times when an employees performance is so poor that a formal written warning is required. Such written warn-ings serve two purposes: (1) They may serve to shake the employee out of his or her bad habits, and (2) they can help the manager defend his or her rating of the employee, both to his or her boss and (if needed) to a court or human rights commission. Written warnings should identify the standards under which the employee is judged, make it clear that the employee was aware of the standard, specify any violation of the standard, indicate that the employee has had an opportunity to correct his or her behaviour, and specify what the employee must now do to correct his or her behaviour. Sometime after the performance review has taken place, the manager should use the salary planning guidelines to determine the appropriate rewards or consequences, comparing actual performance against the defined levels. Performance rewards are given through merit pay or extra payment such as a cash bonus. The two mos  Performance Management 197 important aspects used to determine the appropriate reward/consequence are achieve-ment of goals and how the employee meets the defined standards. Further detail on compensation and rewards is provided in Chapters 11 and 12. Step5: CareerDevelopmentDiscussion During this discussion, the manager and employee discuss opportunities for develop-ment to strengthen or improve the employees knowledge, skills, and abilities. Business needs must be balanced with the employees preferences. These opportunities may focus on actions to boost performance in the area of current goals or to develop new knowledge aimed at a future career plan. Details on career planning and development was provided in Chapter 9. Formal Appraisal Methods 10.5 Describe five performance appraisal methods and the pros and cons of each. Comparative Methods Graphic Rating Scale The graphic rating scale is the simplest and most popular tech-niquegraphic rating scale for appraising performance. Figure 10.2 shows a typical rating scale. It lists traits A scale that lists a number of (such as reliability) and a range of performance values (from unsatisfactory to outstanding) traits and a range of perform-ance for each one. The supervisor rates each employee by circling or checking the score that for each. The employee is best describes his or her performance for each trait. The assigned values are then totalled. then rated by identifying the Instead of appraising generic traits or factors, many firms specify the duties to score that best describes his or her level of performance for be appraised. For a payroll coordinator, these might include being the liaison with each trait accounting and benefits staff, continually updating knowledge regarding relevant Figure 10.2 Alternation Ranking Scale ALTERNATION RANKING SCALE For the Trait: For the trait you are measuring, list all the employees you want to rank. Put the highest-ranking employees name on line 1. Put the lowest-ranking employees name on line 20. Then list the next highest ranking on line 2, the next lowest ranking on line 19, and so on. Continue until all names are on the scale. Highest-ranking employee 1. 11. 2. 12. 3. 13. 4. 14. 5. 15. 6. 16. 7. 17. 8. 18. 9. 19. 10. 20. Lowest-ranking employee  198 Chapter 10 legislation, maintenance of payroll records, data entry and payroll calculations, and ongoing responses to employee inquiries regarding payroll issues. Alternation Ranking Method Ranking employees from best to worst on a trait or traits is another method for evaluating employees. Because it is usually easier to distinguish alternation ranking method between the worst and best employees than to rank them, an alternation ranking Ranking employees from best method is popular. First, list all employees to be rated, and then cross out the names of to worst on a particular trait. any not known well enough to rank. Then, on a form such as that shown in Figure 10.2,