MGT-555 PERFORMANCE AND CAREER MANAGEMENT LECTURE NO

RECAP – Measuring Results and Behaviors Measuring Results Determining Accountabilities Determining Objectives Characteristics of Objectives Determining Performance Standards Characteristics of Good Performance Standards 2

Agenda of Today’s Lecture Measuring Behavior Indicator Components of Competency Comparative Systems Advantages of Comparative Systems Disadvantages of Comparative Systems Absolute System 3

Measuring behaviors Results measure past performance. Behavior points to future performance. Clearly, measuring both employee and organizational behavior is of strategic importance. A behavior approach to measuring performance includes the assessment of competencies. Competencies are measureable clusters of knowledge, skills and abilities that are critical in determining how results will be achieved. Example of competencies are customer services, written or oral communication, creative thinking, and dependability. 4

Measuring behaviors (Contd.) We can consider two types of competencies: Differentiating competencies: – which are those that allow us to distinguish between average and superior performers. Threshold competencies: – which are those that everyone needs to display to the job to a minimally adequate standard. 5

Measuring behaviors (Contd.) As an example, for the position of Information Technology (IT) Project Manager, a differentiating competency is process management. Process management is defined as the "ability to manage project activities. For the same position, a threshold competency is change management. The change management competency includes knowledge of behavioral sciences, operational and relational skills, and sensitivity to motivators. 6

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Indicator To understand the extent to which an employee possess a competency, we measure indicators. An indicator is a behavior that if displayed suggests that the competency is present. 8

Case Study An owner-manager of a fast-growing business in Zimbabwe recently explained how his company severed ties with a well-known software developer who had been contracted to install and support enterprise resource planning (ERP) software. When asked if the reason for ditching this well-known supplier had anything to do with lack of competency (technical skills and knowledge), he surprisingly told that when it came to technical proficiency the supplier was unrivalled but the problem was of behavior. He revealed that he had a problem with a senior technician assigned to deal with his company, though the technician could do his job very well, he had a big attitude problem and because he do not want to listen and discuss with anyone about anything we cut business ties with the supplier and opted for another supplier, whom in his words “you enjoy working with”. 9

Case Study(Contd.) Here is a company that perhaps prides itself in superior technical competency as its competitive advantage. Perhaps, in their performance management system, the ERP supplier measures their technicians on their ability to successfully install and maintain a client’s software. They could be tracking that by measuring the number of requests to rectify installation and maintenance-related problems. Perhaps our technician is considered a high- performer on the basis that his clients do not request for re-works — he gets things right first time. After all, by a consistent record of right-first-time installations, is he not saving the company on fuel costs and unbilled re-work time? 10

Case Study(Contd.) However, what the first supplier in this situation might be oblivious of is that the behavioral side of the technician is posing a serious business risk. It might take a while for the company to realize the damage to future business prospects the brilliant but behaviorally risky technician is causing. 11

Indicator (Contd.) Five indicators whose presence would indicate the existence of consideration competency are the following; – Support subordinates project – Ask about the well being of employees lives outside of work – Encourage subordinates to reach their established goals – Get to know employees personally – Show respect for employees work and home lives. 12

Components of Competency In describing a competency, the following components must be present; – Definition of competency – Description of specific behavioral indicators that can be observed when someone demonstrates a competency effectively – Description of specific behaviors that are likely to occur when someone does not demonstrates a competency effectively. – List of suggestions for developing the competency in questions. 13

Competency Systems Two types of systems are used to evaluate competencies Comparative system: this system base the measurement on comparing employees with one others. Absolute system: this system base the measurement on comparing employees with a pre-specified performance standard. 14

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Comparative system Comparative system of measuring behavior imply that employees are compared to one another. Simple rank order system: – in this system, employees are simply ranked from the best performer to the worst performer. 16

Comparative system (Contd.) Alteration rank order procedure: – in this system, the supervisor initially list all the employee. – Then the supervisor selects the best performer and the worst performer. – Then the second best and second worst – And so forth, alternating from top to bottom of the list until all employees have been ranked. 17

Comparative system (Contd.) Paired comparison: – in this explicit comparisons are made between all pairs of employees to be evaluated. – In other words, supervisors systematically compare the performance of each employee with all other employees. 18

Comparative system (Contd.) Forced distribution: – in this system, employees are apportioned according to an approximately normal distribution. – For example, 20% of the employees must be classified as Exceeding expectations 70% must be classified as meeting expectations And 10% must be classified as not meeting expectations. 19

Comparative system (Contd.) General Electric (GE) is one organization that has adopted a forced distribution system. Former GE CEO Jack Welch labeled GE's forced distribution system the "vitality curve." In his view, forced ranking enables managers to manage low- achieving performers better. GE's success in implementing a forced ranking system is cited as the model by many of the 20% of U.S. companies that have adopted it in recent years. At GE, each year 10% of managers are assigned the "C" grade, and if they don't improve they are asked to leave the company. 20

Advantage of Comparative systems Advantages of uses of comparative system are These type of measurements are easy to explain Decision resulting from these type of systems are fairly straightforward. They tend to control certain biases and errors made by those rating performance better than do those in absolute system.(e.g leniency, giving high scores to most employees) 21

Advantage of Comparative systems (Contd.) Central tendency (i.e not giving any above expectations or below expectations ratings) 22

Disadvantages of Comparative System Disadvantages associated with use of comparative system are Employee usually are compared in terms of a single overall category. Because the resulting data are based on ranking and not on actual scores, there is no information about the relative distance between employees. 23

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Absolute system In absolute system, the supervisor provide evaluation of an employees performance without making direct reference to others employees. In the simplest absolute system, supervisors write an essay describing each employees strengths and weaknesses and make suggestions for improvement. 26

Absolute system (Contd.) One advantage of essay is that the supervisors have the potential to provide detailed feedback to employees regarding their performance. On the other hand, essays are almost totally unstructured, so some supervisors may choose to be more detailed than others. 27

Absolute system (Contd.) A second type of absolute system involves a behavioral checklist, which consist of a form listing behavioral statements that are indicators of various competencies to be measured. 28

Absolute system (Contd.) The supervisors task is to indicate statements that describe the employee being rated. When this type of measurement system is in place, supervisors are not so much evaluators as they are reporters of employee behavior. Example: 29

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Summary of Today’s Lecture Measuring Behavior Indicator Components of Competency Comparative Systems Advantages of Comparative Systems Disadvantages of Comparative Systems Absolute System 36

Thank You 37