Performance Management Managing People in a Global Environment Wayne F. Cascio October 10, 2008

Challenges of Performance Review In forced ranking, all employees are ranked against each other and grades are distributed along a bell-shaped curve Do you support the use of forced rankings? If the criteria used to determine an employee’s rank are more qualitative than quantitative, does this undermine the forced-ranking system? Suppose all the members of a given team are superstars. Can forced ranking deal with that situation?

Facts About Performance Appraisals Employees are often less certain where they stand after the appraisal interview than before it Employees tend to evaluate their supervisors less favorably after the interview than before it Employees feel that the authoritarian, “tell-and-sell” approach to appraisal is out of sync with today’s democratic business structure

What is Performance Management? A willingness and a commitment to focus on improving performance at the level of the individual or team every day

Key Elements of a P. M. System Sr. Management involvement in the process Employee involvement in the process Common performance measures An emphasis on coaching and feedback

Why Do P. M. Systems Fail? Focusing on the wrong things Ignoring sr. managers, operating managers, and employees Poor communication about the process and changes in it Making the process difficult Implementing “flavor-of-the-month” programs

Hewitt Assoc. Study of 437 Firms Firms with successful P. M. systems outperformed those without them on every financial and productivity measure used in the study: Profits Cash flow Stock market performance

Firms with Successful P. M. Systems Measure what really matters Foster open communication among employees about what really counts

Performance Appraisal Systematic description of job-relevant strengths and weaknesses of an individual or group

How Often? Once or twice a year is not enough Difficult to remember specifics over a 6- or 12-month period Many organizations require more frequent, informal “progress” reviews 90-day plans

Effective Appraisal Systems Are Relevant Acceptable Sensitive Reliable Practical

Acceptability Do raters use standardized procedures? Do employees believe results are fair & accurate? Does the form accommodate special or unique circumstances? Do you get feedback

Acceptability Does the rater suggest how you could improve? Do you get resources to improve? Does management care about how appraisals are done?

Legal Issues in Appraisal ID essential functions using job analysis Base all ratings on essential job functions Train supervisors Have formal appeal mechanisms + higher-level review Document appraisals + any reasons for termination Provide counseling for poor performers

Strategic Dimension of Appraisal What kind of behavior do you want to encourage? Short-term: bottom-line results for current quarter Long-term: customer satisfaction, market share Remember: Managers get the kind of performance they reward!

Alternative Methods Essay Ranking/paired comparisons Forced distribution Behavioral checklist Critical incidents Graphic rating scales Behaviorally-anchored rating scales Management by objectives

Which Method Is Best? None is an unqualified success when used for merit pay or promotion

Who Should Evaluate? Immediate supervisor Peers Subordinates Self-appraisal Customers Computers

To Improve 360-Degree Feedback Be clear about the purpose of the appraisal – employee development Train raters to understand the overall process, show them how to complete forms, and to avoid common rating errors Seek a variety of types of information about performance Make all raters accountable to upper-level review

To Improve 360-Degree Feedback Help employees interpret and react to the ratings, and include goal setting. Implement 360-degree reviews regularly, so employees can track their progress over time Take the time to evaluate the overall system

Managers Who Excel in This Area Do the Following Listen well Relinquish control, encourage employee participation + open communication Approach “negative” information slowly and with caution

Managers Who Excel in This Area Do the Following Focus on observable behavior & give specific examples Avoid arguments; allow the employee to save face Focus on problems and solutions, not on the employee’s personality

Things to Do Before Appraisal Communicate frequently with subordinates about their performance Get training in appraisal interviewing Use a problem-solving approach, not “tell and sell” Encourage subordinates to prepare for review sessions

Things to Do During Appraisal Encourage participation Judge performance, not personality and mannerisms Be specific Be an active listener Set goals for future improvements Avoid destructive criticism

Things to Do After Appraisal Communicate frequently with subordinates about their performance Periodically assess progress toward goals Tie rewards to performance

How to Give Feedback Develop an agenda Take the time to listen; no interruptions Communicate that you genuinely want to help Be accepting and non-judgmental Watch for verbal and non-verbal cues

How to Give Feedback Focus on the future Summarize what was said Record responses immediately Never betray a confidence

Basic Rules of Performance Counseling Be prepared Be factual Support the employee’s good performance Help the employee improve performance Plan for the future

How to Document Performance-Related Incidents Describe what led up to the incident - the problem & the setting What actually happened that was so effective or ineffective? (Names, dates, times, facts) Describe the consequences of the effective or ineffective behavior

Managing Your Boss Recognize that your boss needs you in order to do his or her job well Understand his or her goals + how you can help the boss reach them Appreciate the pressures & problems the boss faces Tell the boss your aspirations & goals

Managing Your Boss Learn how the boss likes to receive information Keep the boss informed about your successes & problems Making working with you efficient & enjoyable for the boss Make it easy for the boss to discuss problems & conflicts

Managing Your Boss Assess yourself + your needs: Your strengths & weaknesses Your personal style Are you a dependent or an independent person?

Managing Your Boss Develop & maintain a relationship that: Fits both your needs & styles Includes mutual expectations Keeps your boss informed Is based on dependability & honesty Uses your boss’s time & resources selectively

Do Not Assume That: The boss knows your aspirations, problems, & needs You can talk to your boss only when he/she asks The boss will start a discussion when there are problems The boss gets paid so well that he/she doesn’t have to be thanked