Performance Management

 

PERFORMANCE MANAGEMENT 

 

WHA HAT T IS IT? 

Performance Appraisal 

A process, typically performed annually by a supervisor for a subordinate, designed to help employees understand roles, objectives, expectations, and performancetheir success.

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Performance Management 

The process of creating work environment people can perform to the abest of their abilities. in which

 

PURPOSES OF PERFORMANCE APPRAISAL  Developmental

Administrative

•Document personnel decisions •Provide performance feedback •Identify individual strengths and •Determine promotion candidates transfers and weaknesses •Determine ••Recognize individual performance Assist in goal identificatio identification n •Evaluate goal achievement •Identify individual training needs •Determine organizational training needs

assignments •Identify poor performance •Decide termination or retention •Decide on layoffs •Validate selection criteria •Meet legal requirements

•Reinforce authority structure •Allow employees to discuss concerns •Improve communication communication •Provide a forum for leaders to help

•Evaluate training programs/progress •Personnel planning •Make reward/compensation decisions

 

WHY DO APPRAISALS PROGRAMS FAIL? Inadequate preparation on the manager’s part.  Employee is not given clear objectives at the beginning of performance period. 

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Manager not be able to observe performance or have allmay the information.  Performance standards may not be clear.  Inconsistency in ratings among supervisors or other raters. Rating personality rather than performance.  The halo effect, contrast effect, or some other perceptual bias. 

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Inappropriate time span (too short or too long).

 

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Inflated ratings because managers do not want to deal with “bad news”.

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Subjective or vague language in written appraisals.

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Organizational politics or personal relationships cloud judgments.

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No thorough discussion of causes of performance problems.

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Manager may not be trained at evaluation or giving feedback.

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No follow-up and coaching after the evaluation.

 

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There is little face-to-face discussion between the manager and employee being appraised.

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Managers feel that little or no benefit will be derived

from the time and energy spent in the process.  Managers dislike the face-to-face confrontation of appraisal interviews. 

Managers are not sufficiently adept at rating employees or providing them with appraisal feedback.

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The appraisal is just a once-a-year event, and there is little follow-up afterward.

 

DEVELOPING AN EFFECTIVE  APPRAISAL PROGRAM  What are the performance standards?

Are you complying with the law?

Training Appraisers

Who should appraise performance?

 

RATER ERRORS  

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Halo error  – occurs when a manager focuses on one positive aspect about an employee and generalizes it into an overall good appraisal rating.

Horn negative error  – occurs a manager focusesand on one aspectwhen about an employee generalizes it into an overall poor appraisal rating.  Error of central tendency  – in which all employees are rated above average. or Strictness error  – in which the  Leniency appraiser tends to give employees either unusually high or unusually low ratings.

 

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Recency error  – in which the appraisal is based largely on the employee’s most recent behavior rather than on behavior throughout the appraisal

period.  Contrast error  – in which an employee’s evaluation is biased either upward or downward because of comparison with another employee just previously evaluated.  Similar-to-me error  – in which an appraiser inflates the evaluation of an employee because of a mutual personal connection. 

Stereotyping

 

PERFORMANCE APPRAISAL METHODS  

Trait methods 

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Are designed to measure the extent to which an employee possesses certain characteristics  – such as  – that dependability, initiative, are viewed as creativity, important for the joband andleadership the organization in general Are the most popular methods primarily because of the ease with which they can be developed

They include: 

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Graphic rating scale method Mixed-standard scale method Forced-Choice method Essay Method

 

(A) GRAPHIC RATING SCALE METHOD  

A trait approach to performance appraisal whereby each employee is rated according to a scale of characteristics

Graphic Rating Scale Knowledge of work: Understanding of all phases of his/her work and related matters Initiative: to originate orAbility develop ideas and get things started

Needs instruction or guidance

Has required knowledge of own and related work

Has exceptional knowledge of own and related work

Lacks imagination

Meets necessary requirements

Unusually resourceful

 

(B) MIXED-STANDARD SCALES  

A trait approach to performance appraisal similar to other scale methods but based on comparison with (better than, equal to, or worse than) a standard. Example of a Mixed-Standard Scale DIRECTIONS: Please indicate whether the individual’s performance is above (+), equal to (0) or lower than (-) each of the following standards.

 _____ Employee uses good judgment when addressing problems and provides workable alternatives; however, at times does not take actions to prevent problems (medium Problem Solving)  _____ Employee lacks supervisory skills; frequently handles employees poorly and is at times argumentative (low Leadership) Lea dership)  _____ Employee is extremely e xtremely cooperative; can be expected to take the lead in developing cooperation among employees; completes job tasks with a positive attitude (high Cooperation)

 

(C) FORCED-CHOICE METHOD  

A trait approach to performance appraisal that requires the rater to choose from statements designed to distinguish between successful and unsuccessful performance.

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The statements are designed to distinguish between successful and unsuccessful performance. The rater selects one statement from the pair without knowing which statement correctly describes successful job behavior. 1(a) Works hard

1(b) Works quickly

2(a) Shows initiative

2(b) Is responsive to customers

3(a) Produces poor quality

3(b) Lacks good work habits

 

(D) ESSAY METHOD  

A trait approach to performance appraisal that requires the rater to compose a statement describing employee behavior.

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It usually requires the appraiser to describe the employee’s strengths and weaknesses, and to make recommendations for his or her development.

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Is often combined with other rating methods.

 

BEHAVIORAL METHODS  

One way to improve a rating scale is to have descriptions of behavior along a scale, or continuum. These descriptions permit the rater to readily identify the point employee falls on the scale.

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where

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particular

Behavioral methods have been developed specifically to describe which actions should (or

should not) be exhibited on the job.  They include: 

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Critical Incident method Behavioral Checklist method Behaviorally Anchored Anchored Rating Scale (BARS)

 

(A) CRITICAL INCIDENT METHOD  

An unusual event that denotes superior or inferior employee performance in some part of the job.

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The manager keeps a log or diary for each employee throughout the appraisal period and notes specific critical incidents related to how well they perform.

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When completing the appraisal form, the manager refers to the critical incident log and uses this information to substantiate an employee’s rating of outstanding, satisfactory, or unsatisfactory in specific performance areas and overall.

 

(B) BEHAVIORAL CHECKLIST METHOD  

The rater checks the statements on a list that the rater believes are characteristics of the employee’s  performance or behavior.

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Example of a checklist for computer salespeople might include the following statements: 

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 _____ Is able to explain equipment clearly  _____ Keeps abreast of new developments developments in technology  _____ Tends Tends to be a steady worker  _____ Reacts quickly to customer needs  _____ Processes orders correctly

 

(C) BEHAVIORALLY ANCHORED RATING  SCALE (BARS) 

A behavioral approach to performance appraisal that consists of a series of vertical scales, one for each important dimension of job performance. Example of BARS for the job of firefighter Firefighting strategy: Knowledge of fire characteristics. This area of performance concerns the ability of a firefighter to use his/her knowledge of fire characteristics to develop the best strategy for fighting a fire. Observe fire and smoke conditions and locate source of fire. Etc. High

7 – finds the fire when no one else can 6 – correctly assesses best point of entry for fighting fire  – uses type of smoke as indicator of type of fire 5

 – understands basic hydraulics

Average

4 3 – cannot tell the type of fire by observing the color of flame  – cannot identify location of the fire

Low

2  – will not change firefighting strategy in spite of flashbacks and other signs that accelerants are present 1

 

RESULTS METHOD  

Rather than looking at the traits of employees or the behaviors they exhibit on the job, many organizations evaluate employee accomplishments  – the results

they achieve through their work.  Looking at results such as sales figures and production output involves less subjectivity and therefore may be less open to bias. 

Further, results appraisals often give employees responsibility for their outcomes, while giving them discretion over the methods they use to accomplish them (within limits). This is empowerment in action.

 

(A) PRODUCTIVITY MEASURES  

These measures directly link what employees accomplish and results that benefit the organization. 

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Salespeople are evaluated on the basis of their sales volume (no. of units sold and the dollar amount in revenues). Executives are evaluated on the basis of company profits or growth rate. Production workers are evaluated on the basis of the no. of units they produce and the scrap rate or no. of defects that are detected.

 

MANAGEMENT BY OBJECTIVES (MBO) 

A philosophy of management that rates performance on the basis of employee achievement of goals set by mutual agreement of employee and manager. manager.  

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Step 1: Organization goals and metrics Step 2: Department goals and metrics Step 3: Supervisor and subordinate discuss and mutually determine goals and metrics Step 4: Mutual agreement of goals and metrics Step 5: Interim review Step 6: Final review Step 7: Review of organization performance

 

THE BALANCED SCORECARD  Can be used to appraise individual employees, teams, business units, and the corporation itself. appraisal takes into account 4 related  The 

categories: Financial    

Customer Processes Learning

These internal processes  – product development, customer service, etc.  – are critical for creating customer satisfaction and loyalty. loyalty.  Customer value creation in turn is what drives financial performance and profitability. profitability. 

 

CONDUCTING THE APPRAISAL INTERVIEW   

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Ask for a Self-Assessment – prior to the appraisal interview Invite Participation  – initiate a dialogue with the employee to help them improve on their performance Express Appreciation – praise is a powerful motivator. motivator. Minimize Criticism Consider whether it is really necessary Do not exaggerate Watch your timing Make improvement your goal Change the behavior, not the person  – do not try to play psychologist. Focus on solving problems Be supportive   

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Establish Goals - together Follow up day to day

 

FACTORS INFLUENCING PERFORMANCE  MOTIVATION •Career ambition •Employee conflict •Frustration •Fairness/Satisfaction •Goals/Expectations

ENVIRONMENT •Equipment/materials •Job design •Economic conditions •Unions •Rules and Policies •Management Support •Laws & Regulations

ABILITY •Technical skills •Interpersona Interpersonall skills •Problem-solving skills •Analytical skills •Communication skills •Physical limitations