Chapter 8

Performance Management

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Learning Objectives

1. Identify major determinants of effective performance management.

2. Discuss three purposes of performance management.

3. Identify five criteria for effective performance management systems (PMS) .

4. Discuss four approaches to performance management, specific techniques used in each approach and ways these approaches compare with criteria for effective PMS.

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Learning Objectives, cont.

5. Choose the most effective approach to performance measurement for a given situation.

6. Discuss advantages and disadvantages of different sources of performance information.

7. Choose the most effective sources for performance information.

8. Distinguish types of rating errors and explain how to minimize each in a performance evaluation.

9. Conduct an effective performance feedback session.

10. Identify the cause of a performance problem.

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Introduction

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Performance Management Process

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3 Purposes of Performance Management (PMS)

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5 Criteria of Performance Measures

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Measuring Performance

Comparative approach compares performance with others.

RankingSimple ranking ranks employees from highest to lowest

performer.Alternation ranking crosses off best and worst

employees.

Forced distribution ranks employees in groups.

Paired comparison - managers compare every employee with every other employee in work group.

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Attribute Approach

Graphic rating scaleslist of traits evaluated by 5-point rating scale.legally questionable.

Mixed-standard scalesdefine relevant performance dimensions develop statements representing good,

average, and poor performance along each dimension.

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Example of a Graphic Rating Scale Performance Rating Dimensions 5 Distinguished 4 Excellent 3 Commendable 2 Adequate 1 Poor

Knowledge 5 4 3 2 1

Communication 5 4 3 2 1

Judgment 5 4 3 2 1

Managerial skill 5 4 3 2 1

Quality performance 5 4 3 2 1

Teamwork 5 4 3 2 1

Interpersonal skills 5 4 3 2 1

Initiative 5 4 3 2 1

Creativity 5 4 3 2 1

Problem solving 5 4 3 2 1

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Behavioral Approach

Critical incidents approach requires managers to keep record of specific examples of effective and ineffective performance.

Behaviorally anchored rating scales (BARS)

Behavioral observation scales (BOS)

Organizational behavior modification is a formal system of behavioral feedback and reinforcement.

Assessment centers are multiple raters who evaluate employees’ performance on a number of exercises.

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Competency Model

Competencies are sets of skills, knowledge, abilities and personal characteristics that enable employees to successfully perform their jobs.

A competency model identifies competencies necessary for each model and provides descriptions common for an entire occupation, organization, job family or specific job, useful for recruiting, selection, training and development.

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Results Approach

Management by Objectives top management passes down company’s

strategic goals to managers to define goals.

Productivity Measurement and Evaluation System (ProMES) goal is to motivate employees to

higher levels of productivity.

Goals

Hierarchy

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Balanced Scorecard Approach

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Quality Approach

A (PMS) designed with a strong quality orientation can: Assess both person and system factors in the

measurement system. Emphasize managers and employees working together

to solve performance problems. Involve both internal and external customers in setting

standards and measuring performance. Use multiple sources to evaluate person and system

factors.Sustainability is key element of quality approach.

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Statistical Process Quality Control Techniques

1.Process-flow analysis2.Cause-and-effect diagrams3.Pareto chart4.Control chart5.Histogram6.Scattergram

Kaizen - practices participated in by employees from all levels of the company that focus on continuous improvement of business processes

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5 Performance Information Sources

360

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3 Ways Technology Influences PMS

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Typical Rater Errors

1. Similar to Me

2. Contrast

3. Leniency

4. Strictness

5. Central Tendency

6. Halo

7. Horns

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Reducing Rater Errors and Politics

Appraisal politics - evaluators purposefully distorting a rating to achieve goals.

3 Approaches to Reducing Rater Error: rater error training frame-of-reference or rater accuracy training calibration meetings

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Improve Performance Feedback

1. Give feedback frequently, not once a year.

2. Create right context for discussion.

3. Ask employees to rate performance before the session.

4. Encourage employee to participate.

5. Recognize effective performance through praise.

6. Focus on solving problems.

7. Focus feedback on behavior or results, not on the person.

8. Minimize criticism.

9. Agree to specific goals and set progress review date.

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EmployeeCharacteristics

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Ways to Manage Performance

1. Solid performersHigh ability and motivation; provide development

2. Misdirected effortLack of ability but high motivation; focus on training

3. UnderutilizersHigh ability but lack motivation; focus on interpersonal

abilities

4. DeadwoodLow ability and motivation; managerial action,

outplacement, demotion, firing

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Withstand Legal Scrutiny

1. Conduct a valid job analysis related to performance.

2. Base system on specific behaviors or results.

3. Train raters to use system correctly.

4. Review performance ratings and allow for employee appeal.

5. Provide guidance/support for poor performers.

6. Use multiple raters.

7. Document performance evaluations.

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Summary Measuring and managing performance are key to gain competitive

edge.

Performance management systems (PMS) serve strategic, administrative and developmental purposes.

PMS should be evaluated against criteria of strategic congruence, validity, reliability, acceptability and specificity.

Effective managers need to be aware of the issues involved in determining best methods and

legal scrutiny. feed performance information back to employees take action based on causes for poor performance: ability,

motivation or both

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