1. Welcome to Performance Management!

2. A little about me, Dr. Natalie Wright
Undergraduate degree in psychology from Colorado State University
M.S. and Ph.D. in industrial and organizational psychology from North Carolina State University

3. My research My research focuses on several different areas:
Psychometric evaluation of psychological measures
Particular interest in item response theory (IRT)
Work analysis
Use of O*NET to understand work across time and cultures
Humanitarian work psychology
Development of work analytic and selection tools for disaster response

4. Things I enjoy Running Hiking Riding horses My dog Freya
Picture pending until I’m good enough to bother with a picture…
My dog Freya

5. Learning about you What is your name?
What year are you in the program?
What is your undergraduate degree? Where did you graduate?
Where are you from?
What are your primary interests in I/O?
What are you hoping to get out of this class?

6. The syllabus

7. Performance management systems in context

8. What is performance management?
Continuous process of identifying, measuring, and developing performance of individuals and teams and aligning performance with the strategic goals of the organization

9. Good Performance management Systems:
Increase motivation to perform
Know how you’re doing
Increase self-esteem
Feel recognized and valued
Managers gain insight about subordinates
Understand how individual contributes to organization
Understanding of performance style and needs
Definition of job and performance criteria identified
Know what you’re supposed to be doing

10. Good Performance Management Systems:
Self-insight and development enhanced
Understanding of strengths and weaknesses and how to improve
Administrative actions more fair and appropriate
Evidence of performance for personnel actions
Organizational goals made clear
Understand link between individual performance and organizational success
Employees become more competent
Helps to create development plans for improvement

11. Good Performance Management Systems:
Employee misconduct minimized
Problems can be identified early
Better protection from lawsuits
Well-defined performance criteria and appraisal process provide evidence to protect organization in case of lawsuit
Better differentiation between good and poor performers
Identify who might need help before their poor performance becomes a problem
Supervisors’ views of performance communicated effectively
More accountability in expectations and feedback

12. Good Performance Management Systems:
Organizational change facilitated
Align performance goals with new organizational strategy
Motivation, commitment, and intentions to stay with organization enhanced
Know what’s expected and how performance can be improved, and see system as objective rather than arbitrary
Voice behavior encouraged
Voice behavior-suggestions for changes or improvements
Employee engagement enhanced
Engaged employee=involved, committed, passionate, empowered

13. Bad Performance Management Systems:
Increased turnover
If process isn’t seen as fair, likely to leave or withdraw
Use of misleading information
Possible to fabricate performance information or obtain it from inaccurate source
Lowered self-esteem
Inaccurate feedback problematic
Wasted time and money
Resources for system not being used effectively

14. Bad Performance Management Systems:
Damaged relationships
Poor supervisor-employee or employee-employee relationships
Decreased motivation to perform
Don’t know what’s required and don’t see clear rewards for good performance
Employee burnout and job dissatisfaction
Performance isn’t rewarded, so why bother?
Increased risk of litigation
More likely to view personnel actions as unfair

15. Bad Performance Management Systems:
Unjustified demands on managers’ and employees’ resources
Eat up time and other resources without offering clear benefit
Varying and unfair standards and ratings
Standards and ratings may vary across individuals and organizational units
Emerging biases
Values, biases, and relationships may affect ratings more than performance
Unclear ratings system
Uncertainty about how ratings are made and what they’re used for

16. Rewards System
Rewards system: set of mechanisms for distributing tangible and intangible returns
Tangible returns: cash compensation, benefits
Intangible returns: recognition, status, employment security, challenging work, learning opportunities

17. Types of Returns Base pay: given for work performed
Determined based on requirements of position, not individual contribution to organization
Cost-of-living adjustments: given to compensate for inflation-given regardless of individual performance
Contingent pay (merit pay): Given in addition to base pay: performance-based
Short-term incentives: temporary pay increase based on performance (commissions, bonuses, etc.)
Long-term incentives: attempt to improve performance for longer time span (stock options, etc.)

18. Types of Returns
Income protection: Backup to salary if employee can no longer work (i.e., Social Security, medical insurance, pension plans, etc.)
Work-life focus: help employee balance work and nonwork activities (flexible work schedules, onsite daycare, etc.)
Allowances: cover housing, transportation, and other needs-common for expatriate workers
Relational returns: any benefit not related to money or other tangible entity: relationships, status, learning opportunities, etc.

19. Purposes of PM Systems
Strategic purpose: help management achieve business objectives
Linking individual and organizational goals reinforces appropriate behavior: reward appropriate behavior that aligns with organizational objectives
Example: if company moving towards customer service orientation, PM system should reward exemplary customer service
Teaches new employees what is required of them
Need to know what organization values most

20. Purpose of PM systems
Administrative purpose: provides accurate information for personnel decisions
Informational purpose: tell employees how they are doing and what they need to improve, provide information to employees about supervisor’s and organization’s expectations
Developmental purpose: performance feedback helps employees improve their performance

21. Purpose of PM systems
Organizational maintenance purpose: helps with workforce planning
Workforce planning: set of systems that allow organizations to anticipate and respond to needs emerging within and outside organization, to determine priorities, and to allocate human resources where they will do most good
Documentation purpose:
Documentation for administrative actions
Organizational research, such as validation of new selection assessment

22. Ideal PM System
Strategic congruence: individual goals should align with unit goals which should align with organizational goals
Reward behaviors that fit with organization’s goals
Context congruence: should be congruent with organizational and country/regional culture
Reward systems which don’t fit culturally won’t be effective
Example: 360-degree feedback system in hierarchical organization or country

23. Ideal PM System
Thoroughness: four dimensions that need to be included:
All employees should be evaluated
All major job responsibilities should be evaluated
Should cover entire review period
Feedback should include positive and negative aspects of performance
Practicality: should be relatively inexpensive and easy to use

24. Ideal PM System Meaningfulness:
Standards should be relevant for each job
Should emphasize only things under employee’s control
Evaluations need to happen at regular intervals
Specificity: should provide concrete information about expectations
Identification of effective and ineffective performance: needs to make distinctions between employees

25. Ideal PM System
Reliability: Measures of performance should be consistent and as error-free as possible
Validity: Measures of performance should only measure relevant aspects of performance
Acceptability and fairness: should be perceived as fair
Distributive justice: are outcomes allocated fairly?
Procedural justice: are organizational processes fair?
Interpersonal justice: are employees treated well by decision makers?
Informational justice: is information disseminated appropriately, and does information make sense?

26. Ideal PM system
Inclusiveness: should include input from multiple sources
Participants should be given voice in process
Openness: standards of performance should be clear, and feedback should be honest
Correctability: need way in which employees can contest ratings and decisions
Standardization: should function same way across time, people, and units
Ethnicality: only relevant aspects of performance for which the supervisor has sufficient information are evaluated

27. Integration of PM systems with other Org Activities
Training: what areas of performance need to be improved across organization?
Selection: What aspects of performance are the most important? How do selection tools tie in with those aspects?
Workforce planning: What skills will organization require in future? Are those available internally?

28. Cleveland, Murphy, & Williams (1989)
Purposes of study:
Assess ways in which performance appraisal information used
Assess whether performance information is used for multiple, potentially conflicting purposes
Assess organizational characteristics associated with performance appraisal use
Method:
Sent survey out to 243 I/O psychologists working in personnel departments/functions
110 surveys returned

29. Cleveland et al. (1989) Results:
Performance appraisal information used most often for salary administration, performance feedback, and developmental purposes
Identified 4-factor structure of performance appraisal uses:
1. Between-individual comparisons
2. Within-individual comparisons
3. Systems maintenance
4. Documentation
Substantial correlations between factors: indicates performance appraisal often used for multiple purposes
Organizations with low complexity and high coordination more likely to use performance appraisal information for within-individual comparisons and systems maintenance

30. Cawley, Keeping, & Levy (1998)
Purpose of study: use meta-analysis to evaluate whether participation in performance appraisal process related to employee reactions
Key outcome variables:
Satisfaction with appraisal interview (feedback meeting)
Satisfaction with appraisal system
Utility of performance appraisal feedback: how useful is it?
Motivation to improve
Fairness of ratings

31. Cawley et al. (1998) Key participation variables:
Value-expressive participation: voicing one’s thoughts about appraisal process without expectation that they will influence outcomes
Instrumental participation: voicing one’s thoughts about appraisal process with expectation that they will influence outcomes
Proportion of time talked (during appraisal meeting)
Self-ratings of performance

32. Cawley et al. (1998) Meta-analysis
Found all articles related to performance appraisal participation and reactions since 1967
Included in meta-analysis only articles that took place in field setting, measured relevant variables, and reported sufficient statistics to calculate effect size
Final sample included 27 studies with 32 distinct samples

33. Cawley et al. (1998) Results:
All types of reactions were highly correlated with participation in the appraisal process
Strongest relationship was between participation and satisfaction
Stronger relationship between value-expressive participation and reactions than instrumental participation and reactions
Self-appraisal and time spent talking not very strongly related to reactions

34. Putting it Together In groups of 3:
Discuss the performance management systems that you have experienced.
What characteristics of these performance management systems did you like?
How do these align with the characteristics of good PM systems discussed?
What characteristics of these performance management systems did you dislike?
How do these align with the characteristics of poor PM systems discussed?