1. Performance Management I
HR Management
MBAO 6030
MBAO 6030 Human Resource Management

2. Performance Management I
Key Components of Performance Management Systems:
Goal Setting
Coaching and informal Feedback
Performance Evaluation
Performance-based Rewards
Appeal Mechanism
MBAO 6030 Human Resource Management

3. Performance Management I
Uses of Performance Evaluation
1. Feedback and Development Applications
Formal Performance Feedback
Control Performance of Subordinates
Assess Training Needs, Skill Gaps
Input to Goal Setting
MBAO 6030 Human Resource Management

4. Performance Management I
Uses of Performance Evaluation
2. Basis for Administration Decisions
Basis for pay increases based on performance
Basis for promotions (or demotions)
Basis for layoffs (or retention)
Basis for work assignments
Used for legal defense of HR practices
Validate useful (and useless) HR practices
MBAO 6030 Human Resource Management

5. Performance Management I
Contexts of Performance Evaluation:
Rational: According to our measures who are the best (and worst) performers?
Political: Do we have the evidence from performance evaluation to recognize our best and lowest performers?
Legal: Is this evidence from performance evaluation reliable & valid so we can discharge our worst performer without legal consequences?
MBAO 6030 Human Resource Management

6. Performance Management I
Critical Thinking Questions:
1. Most managers dislike giving performance evaluations to their employees. Why is this so?
2. What are the advantages of just using performance evaluation for feedback purposes and avoiding using it for administrative decisions? Any disadvantages?
MBAO 6030 Human Resource Management

7. Performance Management I
Sources of Feedback for Performance Evaluation:
Supervisor
Self
Peers
Subordinates
Customers
MBAO 6030 Human Resource Management

8. Performance Management I
Models of Performance Evaluation (Sources)
1. Direct supervisor only
2. Group of supervisors
3. Self
4. Supervisor and self
5. Supervisor and peers
6. Supervisor, peers and subordinates
7. Customers
8. Supervisors, peers, subordinates and customers
MBAO 6030 Human Resource Management

9. Performance Management I
Critical Thinking Questions
1. Which model(s) of Performance Evaluation do you prefer? Give your reason.
2. How useful is peer feedback as the source of information for performance evaluation? What are its drawbacks? Any caveats for the use of peer information?
MBAO 6030 Human Resource Management

10. Performance Management I: Measurement Issues
Criteria for Performance
Outcomes
Behaviors
Mix of outcomes and behaviors
Performance Scales
Absolute scale – compared to goals or standards
Relative scale – measure relative to peer comparisons (individuals, teams or units)
Mix of absolute and relative scales
MBAO 6030 Human Resource Management

11. Performance Management I: Measurement Issues
Distributions of Performance
Forced Distribution – individuals forced into categories based on relative ranking
Unspecified Distribution – gives evaluator more freedom to judge performance of employees
Precision of Performance Measures
Subjective/Qualitative Judgments
Objective/Quantitative Measures
MBAO 6030 Human Resource Management

12. Performance Management I: Measurement Issues
Critical Thinking Questions
1. Which approaches to measurement will be perceived as most procedurally fair by the employees? Justify your choice.
2. Should procedural fairness be the controlling factor in the selection of performance measures? Give an example to illustrate your point.
MBAO 6030 Human Resource Management

13. Performance Management I: Rater Errors
Rater Errors of Range Restriction
Central
Tendency
Leniency
Harshness 1 2 3 4 5
Low Score
High Score
MBAO 6030 Human Resource Management

14. Performance Management I: Rater Errors
Halo Effect Bias
Competence B
Halo Effect
Competence A
Competence B
True Score 1 2 3 4 5
Low Score
High Score
MBAO 6030 Human Resource Management

15. Performance Management I: Rater Errors
Recency Error
Biased score due to recent event
True Evaluation
Score 1 2 3 4 5
Low Score
High Score
MBAO 6030 Human Resource Management

16. Performance Management I: Rater Errors
Critical Thinking Questions
1. Do you think supervisor training can reduce or eliminate rater errors? What other causes might give rise to rater errors in performance evaluation?
2. If a supervisor uses performance evaluation as the basis for discharging an employee by reason of poor performance, what precautions should be made to avoid legal or other negative consequences?
MBAO 6030 Human Resource Management