1. CHAPTER 10:
PERFORMANCE MANAGEMENT AND FEEDBACK

2. Performance Management & Feedback
Organizations need broader performance measures to insure
Performance deficiencies addressed in timely manner through employee development programs
Employee behaviors channeled in appropriate direction toward performance of specific objectives
Employees provided with appropriate & specific feedback to assist with career development

3. Exhibit 10-2 Strategic Choices in Performance Management

4. Purposes of Performance Management Systems
Facilitate employee development
Determine specific training & development needs
Assess individual & team strengths & weaknesses
Determine appropriate rewards & compensation
Salary, promotion, retention, & bonus decisions
Employees must understand & accept performance feedback system
Enhance employee motivation
Employee acknowledgment & praise reinforces desirable behaviors & outcomes

5. Purposes of Performance Management Systems
Facilitate legal compliance
Documentation is strong defense against charges of unlawful bias
Facilitate HR planning process
Alert organization to deficiencies in overall level & focus of employee skills

6. Exhibit 10-3 Reciprocal Relationship Between T&D & Performance Management

7. Who Evaluates?
Problems with immediate supervisors conducting performance evaluations
Lacking appropriate information to provide informed feedback on employee performance
Insufficient observation of employee’s day-to-day work to validly assess performance
Lack of knowledge about technical dimensions of subordinate’s work
Lack of training or appreciation for evaluation process
Perceptual errors by supervisors that create bias or lack of subjectivity in evaluations

8. Perceptual Errors of Raters
Halo effect
Rater allows single trait, outcome or consideration to influence other measures of performance
Stereotyping
Rater makes performance judgments based on employee’s personal characteristics rather than employee’s actual performance
Recency error
Recent events & behaviors of employee bias rater’s evaluation of employee’s overall performance

9. Perceptual Errors of Raters
Central tendency error
Evaluator avoids higher & lower ends of rating in favor of placing all employees at or near middle of scales
Leniency or strictness errors
Evaluator’s tendency to rate all employees above (leniency) or below (strictness) actual performance level
Personal biases & organizational politics
Have significant impact on ratings employees receive from supervisors

10. Other Performance Feedback Systems
Peers
Only effective when political considerations & consequences are minimized, & employees have sense of trust
Subordinates
Insights into interpersonal & managerial styles
Excellent measures of individual leadership capabilities
Same political problems as peer evaluations
Customers
Feedback most free from bias

11. Other Performance Feedback Systems
Self-evaluations
Allow employees to participate in critical employment decisions
More holistic assessment of performance
Multi-rater systems or 360-degree feedback systems
Can be very time-consuming
More performance data collected, greater overall facilitation of assessment & development of employee
Costly to collect & process
Consistent view of effective performance relative to strategy

12. Behavior-based measures
What to Evaluate?
Traits measures
Assessment of how employee fits with organization’s culture, not what s/he actually does
Behavior-based measures
Focus on what employee does correctly & what employee should do differently

13. What to Evaluate? Results-based measures
Focus on accomplishments or outcomes that can be measured objectively
Problems occur when results measures are difficult to obtain, outside employee control, or ignore means by which results were obtained

14. How to Evaluate? Absolute measurement Relative assessment
Measured strictly by absolute performance requirements or standards of jobs
Relative assessment
Measured against other employees & ranked on distance from next higher to next lower performing employee
Ranking allows for comparison of employees but does not shed light on distribution of performance

15. Appraisal Methods: Alteration Ranking
This method involves ranking employees from best to worst on traits
Since it is easier to distinguish between the worst and best employees, an alteration method is quite popular
For the trait you are measuring, list all the employees you want to rank
On a form, indicate the employees who is the highest on the characteristics being measured and the one who is the lowest

16. Alternation Ranking Scale

17. Performance Appraisal Methods (cont.)
Forced distribution method
Similar to grading on a curve;
predetermined percentages of ratees are placed in various performance categories
Example:
Top 20% (high performers)
Middle 70% (average performers)
Bottom 10% (low performers)

18. Performance Appraisal Methods (cont.)
Sun Microsystems force-ranks its 43,000 employees.
Managers appraise employees in groups of 30
Those of bottom 10% of each group get 90 days to improve
If they are still in the bottom 10%, they can resign and take dismissal pay
Some prefer to resign and some stay
Those who stay must perform and if they fail, the firm fires them without dismissal

19. Performance Appraisal Methods (Cont.)
Arguments in favor of forced ranking
Best way to identify highest-performing employees
Data-driven bases for compensation decisions
Forces managers to make & justify tough decisions
Arguments critical of forced ranking
Can be arbitrary, unfair, & expose organization to lawsuits
Inherent subjectivity
Forced rankings tend to be more effective in organizations with high-pressure, results-driven culture

20. Appraisal Methods (Cont.)
Graphic Rating Scale Method
It is the simplest and most popular method
It lists traits (e.g. quality of work, quantity of work, efficiency, teamwork, communication, leadership) and a range of performance values (from “unsatisfactory” to “outstanding” or “below expectations” to “role model”) for each trait.

21. Graphic Rating Scale

22. Performance Appraisal Methods (cont’d)
Behaviorally anchored rating scale (BARS)
An appraisal method that anchors a numerical rating scale with specific narrative examples of good and poor performance.

24. Exhibit 10-8 Behaviorally Anchored Rating Scale (BARS)

25. Management by Objectives (MBO)
Involves setting specific measurable goals with each employee and then periodically reviewing the progress made.
Set the organization’s goals.
Set departmental goals.
Discuss departmental goals.
Define expected results (set individual goals).
Performance reviews.
Provide feedback.

26. Objectives-Based Performance Measurement
Enhanced employee motivation
Employees can far more committed to reaching performance objectives they have agreed to
When employee participates, his/her trust & dependability placed on line

27. Objectives-Based Performance Measurement
Three common oversights
Setting vague objectives
Setting unrealistically difficult objectives
Not clarifying how performance will be measured
Objectives selected must be valid

28. Reasons Managers Resist or Ignore Performance Management
Process is too complicated
No impact on job performance
Lack of control over process
No connection with rewards
Complexity & length of forms

29. Strategies for Improving Performance Management System
Involve managers in design of system
Hold managers accountable for performance & development of subordinates
Set clear expectations for performance
Set specific objectives for system
Tie performance measures to rewards
Gain commitment from senior managers

30. “There are only three measurements that tell you nearly everything you need to know about your organization’s overall performance: employee engagement, customer satisfaction, and cash flow. It goes without saying that no company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it.” – Jack Welch

31. Thank You!