Performance Management I HR Management MBAO 6030 MBAO 6030 Human Resource Management

Performance Management I Key Components of Performance Management Systems: Goal Setting Coaching and informal Feedback Performance Evaluation Performance-based Rewards Appeal Mechanism MBAO 6030 Human Resource Management

Performance Management I Uses of Performance Evaluation 1. Feedback and Development Applications Formal Performance Feedback Control Performance of Subordinates Assess Training Needs, Skill Gaps Input to Goal Setting MBAO 6030 Human Resource Management

Performance Management I Uses of Performance Evaluation 2. Basis for Administration Decisions Basis for pay increases based on performance Basis for promotions (or demotions) Basis for layoffs (or retention) Basis for work assignments Used for legal defense of HR practices Validate useful (and useless) HR practices MBAO 6030 Human Resource Management

Performance Management I Contexts of Performance Evaluation: Rational: According to our measures who are the best (and worst) performers? Political: Do we have the evidence from performance evaluation to recognize our best and lowest performers? Legal: Is this evidence from performance evaluation reliable & valid so we can discharge our worst performer without legal consequences? MBAO 6030 Human Resource Management

Performance Management I Critical Thinking Questions: 1. Most managers dislike giving performance evaluations to their employees. Why is this so? 2. What are the advantages of just using performance evaluation for feedback purposes and avoiding using it for administrative decisions? Any disadvantages? MBAO 6030 Human Resource Management

Performance Management I Sources of Feedback for Performance Evaluation: Supervisor Self Peers Subordinates Customers MBAO 6030 Human Resource Management

Performance Management I Models of Performance Evaluation (Sources) 1. Direct supervisor only 2. Group of supervisors 3. Self 4. Supervisor and self 5. Supervisor and peers 6. Supervisor, peers and subordinates 7. Customers 8. Supervisors, peers, subordinates and customers MBAO 6030 Human Resource Management

Performance Management I Critical Thinking Questions 1. Which model(s) of Performance Evaluation do you prefer? Give your reason. 2. How useful is peer feedback as the source of information for performance evaluation? What are its drawbacks? Any caveats for the use of peer information? MBAO 6030 Human Resource Management

Performance Management I: Measurement Issues Criteria for Performance Outcomes Behaviors Mix of outcomes and behaviors Performance Scales Absolute scale – compared to goals or standards Relative scale – measure relative to peer comparisons (individuals, teams or units) Mix of absolute and relative scales MBAO 6030 Human Resource Management

Performance Management I: Measurement Issues Distributions of Performance Forced Distribution – individuals forced into categories based on relative ranking Unspecified Distribution – gives evaluator more freedom to judge performance of employees Precision of Performance Measures Subjective/Qualitative Judgments Objective/Quantitative Measures MBAO 6030 Human Resource Management

Performance Management I: Measurement Issues Critical Thinking Questions 1. Which approaches to measurement will be perceived as most procedurally fair by the employees? Justify your choice. 2. Should procedural fairness be the controlling factor in the selection of performance measures? Give an example to illustrate your point. MBAO 6030 Human Resource Management

Performance Management I: Rater Errors Rater Errors of Range Restriction Central Tendency Leniency Harshness 1 2 3 4 5 Low Score High Score MBAO 6030 Human Resource Management

Performance Management I: Rater Errors Halo Effect Bias Competence B Halo Effect Competence A Competence B True Score 1 2 3 4 5 Low Score High Score MBAO 6030 Human Resource Management

Performance Management I: Rater Errors Recency Error Biased score due to recent event True Evaluation Score 1 2 3 4 5 Low Score High Score MBAO 6030 Human Resource Management

Performance Management I: Rater Errors Critical Thinking Questions 1. Do you think supervisor training can reduce or eliminate rater errors? What other causes might give rise to rater errors in performance evaluation? 2. If a supervisor uses performance evaluation as the basis for discharging an employee by reason of poor performance, what precautions should be made to avoid legal or other negative consequences? MBAO 6030 Human Resource Management