Management Principles Performance Management Craig W. Fontaine, Ph.D.

Identifying and Measuring Employee Performance Performance Management System Processes used to identify, encourage, measure, evaluate, improve, and reward employee performance. Performance What an employee does and does not do. Quantity of output • Quality of output Timeliness of output • Presence at work Cooperativeness Job Criteria Important elements in a given job

Linkage Between Strategy, Outcomes, and Organizational Results

Types of Performance Information Trait-based Information Behavior-based Information Results-based Information Job Performance?

Performance Standards Expected levels of performance Benchmarks Goals Targets Characteristics of Well-defined Standards Realistic Measurable Clearly understood

Terms Defining Standards on One Company

Uses of Performance Appraisal Performance Appraisal (PA) The process of evaluating how well employees perform their jobs when compared to a set of standards, and then communicating the information to employees. Informal Appraisal Day-to-day contacts, largely undocumented Systematic Appraisal Formal contact at regular time intervals, usually documented

Uses of Performance Appraisal (cont’d) Giving Performance Feedback Administering Wages and Salaries Identifying Strengths and Weaknesses

Conflicting Roles for Performance Appraisal

Uses of Performance Appraisal (cont’d) Criticisms of Performance Appraisal Focus is too much on the individual and does little to develop employees. Employees and supervisors believe the appraisal process is seriously flawed. Appraisals are inconsistent, short-term oriented, subjective, and useful only at the extremes of performance.

Traditional Performance Appraisal: Logic and Process

Newest Best - 360 Degree Appraisals

Potential Issues – Peer Ratings Advantages Peers have opportunity to observe other peers. Disadvantages Can negatively affect working relationships. Potential Issues - Employee Rating of Managers Advantages Helps in identifying competent managers Serves to make managers more responsive to employees Can contribute to the career development of managers Disadvantages Negative reactions by managers to employee ratings Subordinates’ fear of reprisals may inhibit them from giving realistic (negative) ratings

Performance Appraisal Methods

Category Rating Methods Graphic Rating Scale A scale that allows the rater to indicate an employee’s performance on a continuum. Job criteria scales Behavioral scales Drawbacks Restrictions on the range of possible rater responses Differences in the interpretations of the meanings of scale items and scale ranges by raters Poorly designed scales that encourage rater errors Rating form deficiencies that limit the effectiveness of the appraisal

Category Rating Methods (cont’d) Checklists A performance appraisal tool that uses a list of statements or work behaviors that are checked by raters. Can be quantified by applying weights to individual checklist items. Drawbacks Interpretation of item meanings by raters Weighting creates problems in appraisal interpretation Assignment of weights to items by persons other than the raters

Comparative Methods Ranking Listing of all employees from highest to lowest in performance. Drawback Does not show size of differences in performance between employees Implies that lowest-ranked employees are unsatisfactory performers. Becomes an unwieldy process if the group to be ranked is large.

Comparative Methods (cont’d) Forced Distribution Performance appraisal method in which ratings of employees are distributed along a bell-shaped curve. Drawbacks Assumes a normal distribution of performance. Resistance by managers to placing individuals in the lowest or highest groups. Providing explanation for placement in a higher or lower grouping can be difficult. Is not readily applicable to small groups of employees.

Forced Distribution on a Bell-Shaped Curve Figure 11–9

Narrative Methods Critical Incident Manager keeps a written record of highly favorable and unfavorable employee actions. Drawbacks Variations in how managers define a “critical incident” Time involved in documenting employee actions Most employee actions are not observed and may become different if observed Employee concerns about manager’s “black books”

Narrative Methods (cont’d) Essay Method Manager writes a short essay describing an employee’s performance. Drawbacks Depends on the managers’ writing skills and their ability to express themselves. Field Review Outside reviewer interviews the manager about the performance of each employee and develops a rating for the employees from the interview notes.

Behavioral/Objective Methods Behavioral Rating Approach Assesses employees’ behaviors instead of other characteristics Consists of a series of scales created by: Identifying important job dimensions Creating statements describing a range of desired and undesirable behaviors (anchors) Types of behavioral scales Behaviorally anchored rating scales (BARS) Behavioral observation scales (BOS) Behavioral expectation scales (BES)

Customer Service Skills (BOS)

Management by Objectives Specifying the performance goals that an individual and his or her manager agree to try to attain within an appropriate length of time. Key MBO Ideas Employee involvement creates higher levels of commitment and performance. Encourages employees to work effectively toward achieving desired results. Performance measures should be measurable and should define results.

Common Rater Errors

Performance Appraisals and the Law Legally Defensible PA System Appraisal criteria based on job analysis Absence of disparate impact and evidence of validity Formal evaluation criterion that limit managerial discretion Formal rating instrument linked to job duties and responsibilities Personal knowledge of and contact with ratee Training of supervisors in conducting appraisals Review process to prevent undue control of careers Counseling to help poor performers improve

Performance Management System Effective PMS systems are: Consistent with the strategic mission of the organization Beneficial as development tool Useful as an administrative tool Legal and job-related Viewed as generally fair by employees Effective in documenting employee performance

Effective PMS systems are: Competency Models Effective PMS systems are: Consistent with the strategic mission of the organization Beneficial as development tool Useful as an administrative tool Legal and job-related Viewed as generally fair by employees Effective in documenting employee performance

Competency Models Competency Modeling: A process of systematically identifying a set of competencies that are necessary for successful performance in a particular job or job family. Behavioral indicators are associated with each competency. Behavioral Indicators: The observable actions an employee uses to achieve job-specific results.

Competency Example SPEAKS EFFECTIVELY - The ability to express and present thoughts and complex ideas clearly, succinctly, and in an understandable manner individually and in groups including adjusting language or terminology to the characteristics and needs of the audience. Speaks frankly and clearly and insures that others understand the meaning of what is being communicated Listens to and responds to the ideas of others Is direct and to the point in communication delivery Listens to questions; anticipates impact of decision before providing a factual answer or recommended options Balances courtesy with being firm Demonstrates effective nonverbal communication Makes the subject as interesting as possible for the audience

Competency Example - 2 ANALYSYS/REASONING: Examines data to grasp issues, draw conclusions, and solve problems. Identifies key facts in a range of data. Notices when data appear wrong or incomplete, or need verification. Distinguishes information that is not pertinent to a decision or solution. Breaks down complex information into component parts. Sorts and groups data, and applies causal relationships. Sees underlying principles, patterns, or themes in an array of related information. Applies logic and complex layers of rules to analyze and categorize complicated information. Sees relationships between information in varied forms and from varied sources. Goes beyond analyzing factual information to develop a conceptual understanding of the meaning of a range of information. Integrates diverse themes and lines of reasoning to create new insights or levels of understanding for the issue at hand. Thinks in terms of generalized models rather than concrete details.

Competency Assessment Tool Guide _________________________________ For Human Resource Business Partners

How to Use the Tool Be sensitive to raters (peers and/or direct reports) who have multiple assessments. The number following the rater’s name indicates the number of open assessments they have to complete.

How to Use the Tool You can Edit Raters, Clear Raters and even Delete an Assessment for a ratee if necessary.

How to Use the Tool You can check on the progress of your assessments by using any one of these three search criteria: Employee, Competency Model/Close Date Range, or Supervisor. Click on “Submit” after data entry. The status of assessments appears here.

How to Use the Tool You can check for your own results, assessments for you to complete, and also initiate an assessment for yourself.

How to Use the Tool (What “raters” see) Raters will see the selected competency model with rating choices on a “1-5” scale plus a N/A choice. They enter choices by clicking on the scale radio buttons. There is room for comments. Raters may save the assessment as Draft until they are ready to “Save as Final.”

Working with the Results

Working with the Results Employee clicks here to get started on the Employee Development Plan

The Employee Development Plan Begin the Employee Development process here

The Employee Development Plan MSWord alternate version of EDP

Creating an Employee Development Plan Summarize what each respondent is saying. Consider what single theme or idea is expressed in the feedback from your supervisor, peers, direct reports and other stakeholders. Choose a starting point for development. Keep it simple. For the short term, focus only on one or two areas for development. Don’t be overwhelmed by too many goals.

Employee Development Plan Once employees have identified “strengths and gaps,” they can consider priority areas for development. They can select from a learning resource database mapped to each competency within a competency model or even from learning resources not mapped to that particular model. They can select from instructor-led courses, intranet courses, readings and suggested on-the-job activities. From these they can build their development plan. They should review this plan with their manager to ensure their agreement and support.

Employee Development Plan When you select a learning resource area for a competency, as in the “Courses” area above, a list will appear. To select an item for your development plan, just place a check mark in the “Add Resource” column. Then click “Save” to add it to your development plan for that competency.