Applied Psychology in Human Resource Management seventh edition Cascio & Aguinis PowerPoint Slides developed by Ms. Elizabeth Freeman University of South Carolina Upstate Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Chapter 5 Performance Management Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Performance Management Systematic evaluation. individual or group Performance Management Systematic evaluation individual or group strengths and results any given job or position within an organization Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Performance Management. Continuous process. identifying. measuring Performance Management Continuous process identifying measuring developing an employee or groups of employees Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Performance Management. Reviews (appraisals) Performance Management Reviews (appraisals) * occur at regular intervals * observations & judgments * include feedback Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Annual Performance Appraisals Annual Performance Appraisals Adult report cards Earn employees rewards Increases in hourly wages Increases in salary Renewal of contracts Increases in vacation time Recognition awards Profit sharing Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

To minimize observation and judgments bias To minimize observation and judgments bias Collect multiple observations Collect multiple judgments Train the raters Standardize the methods Rate the raters Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Performance Management supports 8 purposes Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

1st of 8 Strategic – links employee functions to organizations’ mission and goals Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

2nd of 8 Communication – employees know how well they are performing Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

3rd of 8 Employment decisions / predictions – promotions, transfers, training, terminations, discipline, merit recognition Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

4th of 8 Results can be used in test validation criteria as in Human Resources research Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

5th of 8 Developmental for identifying organizational training needs – help establish goals/objectives for training programs Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

6th of 8 Developmental for employees – provides a way to give & receive feedback Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

7th of 8 Developmental for the organization - diagnoses, maintains, and develops Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

8th of 8 Document & record HR decisions legal requirements Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

For performance appraisers 5 realities Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

1st reality Appraisals happen in all organizations. large/small 1st reality Appraisals happen in all organizations large/small public/private local/multinational Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

2nd reality Appraisals have personal and organizational consequences Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

3rd reality As job complexity increases, accuracy with ratings becomes more difficult Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

4th reality Appraisals are inherently political Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

5th reality. Implementation & administration. require time and effort 5th reality Implementation & administration require time and effort must be believed in by employees & by supervision Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Potential barriers Organizational Political Interpersonal Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Organizational Barriers. Common:. prior decisions,. material defects, Organizational Barriers Common: prior decisions, material defects, design flaws May be overcome through group cohesiveness Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Organizational Barriers Organizational Barriers Special: person, event, or subgroup may cause barriers May be overcome by adapting & compensating Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Political Barriers Accuracy – how important Motivation – how important Reward – how important Managers may use system to make themselves look good Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Interpersonal Barriers Misperception Interpersonal Barriers Misperception about actual standards Accurate ratings may intimidate rater Objection to superior - subordinate relationship Preference for continuous coaching Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Effective Performance Management Systems have 9 basic requirements Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

9 REQUIREMENTS 1. Congruence 2. Thorough 3. Practical 4. Meaningful 5. Specific 6. Discriminant 7. Reliable and valid 8. Inclusive 9. Fair & acceptable Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

1st of 9 Congruence with organizational goals Performance Management Systems should measure those behaviors that help the organization meet its goals Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

2nd of 9. Thoroughness. All employees. All organizational behaviors 2nd of 9 Thoroughness All employees All organizational behaviors Entire time period Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

3rd of 9. Practicality. Available. Plausible. Acceptable. Easy to use 3rd of 9 Practicality Available Plausible Acceptable Easy to use More benefits than costs Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

4th of 9 Meaningfulness. Measures behaviors that. employee controls 4th of 9 Meaningfulness Measures behaviors that employee controls Occurs at predictable intervals Adds to employee and evaluator skills Used to determine specific decisions Perceived organizationally as important Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

5th of 9 Specificity Rater & ratee know. what is expected 5th of 9 Specificity Rater & ratee know what is expected how expectations are measured Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

6th of 9 Discriminability Making it clear what the differences are between good performance and unacceptable performance Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

7th of 9 Reliability & Validity Consistent over time & raters Accurate measurement of past performance and of future expectations Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

8th of 9 Inclusiveness Raters & ratees 8th of 9 Inclusiveness Raters & ratees design the system Ratees allowed to rate own performance Rater & ratee actively participate Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

9th of 9 Fair & Acceptable Raters & ratees believe 9th of 9 Fair & Acceptable Raters & ratees believe process and outcomes are just and equitable Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Performance Appraisals. include 2 equally. important processes. 1 Performance Appraisals include 2 equally important processes 1. Observations of behaviors 2. Judgments about the value of behaviors Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

1st Observations detection perception recall recognition Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

2nd Judgments categorize integrate evaluate Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Performance Appraisals. are end result. 3-part sequence. Job Analysis Performance Appraisals are end result 3-part sequence Job Analysis Performance Standards Performance Evaluations Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

WHO SHOULD BE THE RATERS. Generally … the supervisor WHO SHOULD BE THE RATERS? Generally … the supervisor controls consequences (rewards / punishments) 360-degree systems increase information but supervisor makes ultimate decision Teams require different style Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

For teams or infrequent supervisor interactions Peer process Peer nominations – good for high & low performances Peer ratings – good for giving feedback Peer rankings – good for discriminating performance levels Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Other Peer advantages. Reliable. Valid Other Peer advantages Reliable Valid Free from various biases Peer disadvantages Friendship bias Impacts cohesiveness, satisfaction & future ratings (revenge ratings) Common method variance Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

What is Common Method Variance. Variation in performance What is Common Method Variance? Variation in performance ratings due to method rather than actual performance Can minimize by improving: Procedures Statistical manipulations Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

When subordinates rate managers. Delegation. Planning & organizing When subordinates rate managers Delegation Planning & organizing Communication Leadership style Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

When subordinates rate managers Add strength by averaging Anonymity very important Purpose of ratings important Salary & promotions Accurate for development Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Self ratings Improve motivation & acceptance Self ratings Improve motivation & acceptance of process May show more bias, leniency May show less variability, less agreement with other rating sources Cultural influence may be present Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

To strengthen self ratings. Rate relative to others in their. position To strengthen self ratings Rate relative to others in their position Allow practice with self ratings Assure confidentiality Focus on the future Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Clients as raters. Can rate service. Determine promotions, Clients as raters Can rate service Determine promotions, training, transfers Assist with HR research Assist with development planning Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

When other sources or groups rate May influence supervisory ratings May raise high ratings higher May lower a good rating May remember specifics better May show more response bias Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Remember When groups rate groups, the purpose of the group and the purpose of the rating impact which rating method is most useful Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Agreement & Equivalence of Ratings across Sources Validity statistics Agreement & Equivalence of Ratings across Sources Validity statistics for agreement & equivalence are not high (.14 to .22) Important to note definition of what is to be measured will increase the agreement of ratings Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Judgmental biases in rating? Leniency versus severity Central Tendency Halo Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

To minimize occurrence of leniency & severity: To minimize occurrence of leniency & severity: force normal distributions require rank ordering of subordinates schedule frequent feedback sessions hold supervisors accountable for results Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Others fear being too lenient or severe and opt for a middle ground…everyone is average To minimize occurrence of central tendency: Make sure raters understand meanings of the rankings Assist raters’ beliefs in usefulness of the ratings Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Another potential bias Haloing – general impression Another potential bias Haloing – general impression rather than fact based Research mixed as to occurrence and to rating accuracy Some believe type of scale will impact the haloing effect Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Performance Measurement Categories Objective Performance Measurement Categories Objective versus Subjective Relative versus Absolute Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Objective versus Subjective Objective. Production Data – Objective versus Subjective Objective Production Data – performance outcomes Employment Data – may not exist Weaknesses Performance variations Situational influence Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Objective versus Subjective Subjective. May reflect judgment biases Objective versus Subjective Subjective May reflect judgment biases May classify as relative or absolute Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Relative versus Absolute Relative – compared to others Simple rankings Alternation rankings Paired comparisons Forced distributions Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Relative versus Absolute Absolute – compared to self. Narrative essay Relative versus Absolute Absolute – compared to self Narrative essay Behavioral checklist Forced choice system Critical incidents Graphic rating scale Behaviorally anchored scale Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Team Performances Individual performance important Types of Team important Work or service – routine Project – specific work Network – technology dependent Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Team Performances If social loafing exists, commitment to team disappears Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Final Points 1. Rater Training goals. Improve observational skills Final Points 1. Rater Training goals Improve observational skills Reduce judgmental biases Improve communication skills One of best Rater Training Methods Frame of Reference (FOR) Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Final Points 2. Personal Development – Goal Setting Final Points 2. Personal Development – Goal Setting Communicate Frequently Get Training in Appraisal Judge Self First Encourage Allow Subordinate Participation Use Priming Information Be Warm & Encouraging Judge Performance Tie Rewards to Performance Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall