Morgan Stanley - Firm-wide 360˚ Performance Evaluation Managers and professionals selected pertinent data 360˚ feedback: superiors, peers, subordinates, internal clients Self-assessment Broad evaluation criteria/detailed feedback Market/professional skills Management and leadership Commercial orientation Teamwork/One Firm contribution (cross-selling)

Strategic Importance of Performance Assessment Consistency between organizational strategy, values and job behavior Including: Defining performance Appraisal process Measuring performance Feedback and coaching

Figure 10.1 Performance Management Cycle

Table 10.1 Multiple Organizational Uses for Performance Appraisal Information Source: J.N. Cleveland, K.R. Murphy, and R.E. Williams, “Multiple Uses of Performance Appraisal: Prevalence and Correlates,” Journal of Applied Psychology, Vol. 74. 1989, pp. 130-135. Copyright © 1989 by the American Psychological Association. Adapted with permission.

Functions of Performance Assessment Performance Assessment as an Administrative Tool Linking Rewards to Performance Salary & bonuses Promotion/layoff/transfer/discipline Evaluation of HRM Policies and Programs

Functions of Performance Assessment Performance Assessment as an Employee Development Tool Goal Setting Reinforcing and Sustaining Performance Improving Performance Determining Career Progression Goals Determining Training Needs

Criteria for a Good Appraisal System Validity Content: measures important parts of job Construct: actually measures performance Relevance: measures important characteristics Contamination: not influenced by extraneous factors Deficiency: encompasses whole job

Criteria for a Good Appraisal System Reliability Inter-rater (more likely when raters come from same level of organization) For subjective measures, know: What type of measure was used? Who used it?

“Just” Appraisal Systems Distributive: rewards and punishments fairly distributed Procedural: Consistency: consistent across persons, time Bias suppression Accuracy: correct information Correctability: decisions can be modified Ethicality: based on prevailing moral and ethical standards

Criteria for a Good Appraisal System Freedom from Bias Legal Issues of Fairness Race Differences Age Differences Freedom from Rating Errors Leniency Errors Severity Errors Central Tendency Errors Halo Errors Why Do Rating Errors Occur? Unintentional Errors Cognitive Information Processing (CIP) Schemas Practicality: costs must outweigh benefits

Criteria for Avoiding Discrimination Rating content must be: Job related (valid) Developed from thorough job analysis Raters must observe job performance Rater’s evaluations are based on objective, specific factors Ratings are collected and scored under standardized conditions

Table 10.2 Why Supervisors Inflate and Deflate Ratings Source: Based on C.O. Longnecker, H.P. Sims, and D.A. Gioia, “Behind the Mask: The Politics of Employee Appraisal,” Academy of Management Executive, Vol. 1, 1987, pp. 183-193.

Deciding What Types of Performance to Measure Trait-Based Appraisals Abilities Personal characteristics Behavior-Based Appraisals Specific, well-defined job behaviors Results-Based Appraisals “Bottom-line” Outcomes/outputs (quantity) Quality

Methods of Appraising Performance Objective Measures Production Measures Dollar Sales Opportunity Bias Personnel Data Personnel Measures Contamination Performance Tests Business Unit Performance Measures Overall Value

Methods of Appraising Performance (cont’d) Subjective Measures Comparative Procedures Ranking Straight Ranking Alternate Ranking Paired-Comparison Ranking Forced Distribution Advantages and Disadvantages of Comparative Procedures Absolute Standards Graphic Rating Scales Mixed Standard Scales

Figure 10.6 Examples of Typical Graphic Rating Scales

Methods of Appraising Performance (cont’d) Subjective Measures (cont’d) Weighted Checklists Critical-Incident Technique Behaviorally Anchored Rating Scales (BARS) Behavioral Observation Scales (BOS) Management by Objectives

Raters of Employee Performance Self-Evaluation Peer Evaluation Subordinate Evaluation Customer Evaluation 360-Degree Assessment Self-Managed Teams

Enhancing the Measurement of Employee Performance Training Evaluators Rater Error Training (RET) Frame-of-Reference (FOR) Training Information-Processing Approaches Observation Training Decision-Making Training Which Training Method is Best? Feedback to Evaluators

Feedback of Results: The Performance Appraisal Interview Types of Feedback Interviews Tell and Sell Tell and Listen Problem Solving Problems with the Appraisal Interview Disagreement and Defensiveness Multiple Purposes Impression Management in the Feedback Process

Feedback of Results: The Performance Appraisal Interview Improving the Performance Appraisal Interview Feedback Specificity Subordinate Acceptance Setting Clear Goals

Performance Feedback (Hill and Gabarro) Timely Descriptive/specific Without subjective, general attributes (i.e., objective and specific) Oriented toward problem solving and action

Coaching (Hill and Gabarro) Be as specific as possible Take advantage of critical incidents Identify specific developmental agendas Identify resources available Adapt coaching style to the individual

Managing Performance (Hill and Gabarro) Show interest in long-term career development Provide supportive autonomy Set high, attainable goals Hold subordinates accountable Give problem-solving feedback Serve as a role model