Performance Reviews MANA 4328 Dennis C. Veit

Arguments Against Appraisals

 Managers generally do a poor job of actually evaluating performance.  Most people work hard and do their best  Poor evaluations perceived as unfair de-motivate employees.  Poor performance is rarely a motivation problem  Most problems lie in systems and work processes  Performance should be judged by output of groups not individuals.

Alternatives to Appraisals

 Replace reviews with regular feedback and coaching.  Emphasize the relationship between managers and direct reports.  How to determine raises?  Pay for seniority  Pay for skills  Pay for unit performance

The Appraisal Interview

Most Employees Believe They Perform Well “Is your performance above average at your organization?” Fortune Magazine 2007

How to Deal with Poor Performance  Appraisals seldom provide good support for termination.  Managers tend not to give poor reviews  Language in reviews is often ambiguous  Alternatives:  Document specific performance problems and incidents  Use a review system for only those ready to terminate.  Forced ranking systems?

Performance Appraisal Challenges Gender Bias  Managers tend to give women evaluations that are less critical and less straightforward. Attribution Theory  People tend to overestimate the influence of individual factors (such as motivation) and underestimate the influence of environmental factors when assessing others behavior. Frame of Reference

Attribution Theory “Don't confuse luck with skill when judging others, and especially when judging yourself.” Carl Icahn, billionaire investor

Conducting A Fair Appraisal 1. Collect appraisal data 2. Evaluate performance 3. Write the appraisal 4. Conduct an appraisal interview

Conducting A Fair Appraisal 1.Collect appraisal data  Objective data on job performance  Critical incidents (good and bad)  Behavioral observation 2. Evaluate performance  Before completing form – think about intended result  Avoid biases  Consider how the message will be viewed by employee  Consider circumstances beyond employee’s control  Consider past evaluations

Diagnosing Performance Problems Performance = f (Ability, Motivation, Environment) Ability Technical Skills Analytical Skills Interpersonal Skills Physical Limitations Business Knowledge Motivation Goals / Expectations Career Motivation Employee Conflict Employee Satisfaction Boredom / Frustration Environment Job Design Equipment / Materials Rules and Policies Economic Conditions Management Support

Diagnosing Performance Problems Source: Scott Snell, Cornell University.

Conducting A Fair Appraisal 3. Write the appraisal  Have courage to address poor performers  Be specific and use examples  Avoid nitpicking  Additional evidence needed for high/low performers  Tied to specific goals  Prioritize development needs

Providing Performance Feedback Location and timing  Quiet and private  “Neutral” seating arrangement  Scheduled well in advance  Avoids unrelated events Approaches to the Appraisal Interview  Tell and Sell  Tell and Listen  Problem Solving

Providing Performance Feedback Avoid Defensive Reactions:  Describe performance, not personality.  Avoid questioning motives.  Use specific examples and quantify if possible.  Avoid vague statements or unsubstantiated claims.  Give the employee a chance to respond.

Providing Performance Feedback Focus on Employee Development:  Limit plans for change, growth, and development to a few important items that are achievable.  Keep career discussions separate from performance feedback.  Create a development plan.

Dealing With Poor Performers Avoiding problems usually makes them worse.  “Why didn’t you tell me this before?” Approach the employee for mutual benefit – to solve the problem and maintain the relationship.  Threats and punishment increase compliance but.... Good intentions matter.

Identifying Performance Gap Assume an employee says: “I know you are not happy with something, but I am not sure what I am doing wrong. What exactly is it that concerns you?” OR “I want to make sure that I’m doing the job the way you want it done. What exactly should I do so that you will say I am doing a good job?”

Dealing With Poor Performers 1. Identify a specific gap between performance and expectations. 2. Determine business reasons why the problem must be solved. 3. Determine consequences if the situation is not corrected. 4. Determine appropriate action.

Dealing With Poor Performers Be prepared to answer questions like:  “What’s the big deal?”  “Why is this important?”  “That’s a dumb rule – you know I do a good job” Determine consequences and action  Be specific – no vague threats  Give time for employee to change  How critical is the problem behavior?

Dealing With Poor Performers Consider a range of action  Discuss during the appraisal without making a written reference.  Reference the issue in the appraisal narrative without lowering ratings.  Reference the issue and lower the performance rating for that particular area.  Reference the issue in performance summary and lower final appraisal rating. Use progressively stronger sanctions

HR Staffing  Legal Compliance  Determining HR needs  Projecting staffing levels  Job analyses  Managing competencies  Identifying and recruiting employees  Evaluating candidates  Selection tests  Interviewing  Strategic Staffing  Managing Retention

Performance Management  Performance management systems  Timing, forms, and outcomes  Managing for employee motivation  Goal setting  Pay for performance  Providing performance feedback