1. 8-1 McGraw-Hill/IrwinCopyright © 2011 by The McGraw-Hill Companies, Inc. All Rights Reserved. fundamentals of Human Resource Management 4 th edition by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright CHAPTER 8 Managing Employees’ Performance

2. 8-2 Introduction Performance management: the process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals. This process requires: – Knowing what activities and outputs are desired – Observing whether they occur – Providing feedback to help employees meet expectations

3. 8-3 Figure 8.1: Stages of the Performance Management Process

4. 8-4 Purposes of Performance Management Strategic Purpose – means effective performance management helps the organization achieve its business objectives. Administrative Purpose – refers to the ways in which organizations use the system to provide information for day-to-day decisions about salary, benefits, and recognition programs. Developmental Purpose – means that it serves as a basis for developing employees’ knowledge and skills.

5. 8-5 Employees Want More Feedback

6. 8-6 Criteria for Effective Performance Management Fit with strategyValidityReliabilityAcceptabilitySpecific feedback

7. 8-7 Figure 8.2: Contamination and Deficiency of a Job Performance Measure

8. 8-8 Methods for Measuring Performance METHOD ComparativeAttributeBehaviorResultsQuality

9. 8-9 Table 8.1: Basic Approaches to Performance Measurement

10. 8-10 Measuring Performance: Making Comparisons Simple Ranking Requires managers to rank employees in their group from the highest performer to the poorest performer. Forced Distribution Assigns a certain percentage of employees to each category in a set of categories. Paired Comparison Compares each employee with each other employee to establish rankings.

11. 8-11 Measuring Performance: Rating Individuals - Attributes Graphic Rating Scale Lists traits and provides a rating scale for each trait. The employer uses the scale to indicate the extent to which an employee displays each trait. Mixed-Standard Scale Uses several statements describing each trait to produce a final score for that trait.

12. 8-12 Figure 8.3: Example of a Graphic Rating Scale

13. 8-13 Figure 8.4: Example of a Mixed-Standard Scale

14. 8-14 Measuring Performance: Rating Individuals - Behaviors Critical-Incident Method Based on managers’ records of specific examples of the employee acting in ways that are either effective or ineffective. Employees receive feedback about what they do well and what they do poorly and how they are helping the organization achieve its goals. Behaviorally Anchored Rating Scale (BARS) Rates behavior in terms of a scale showing specific statements of behavior that describe different levels of performance.

15. 8-15 Figure 8.5: Example of Task- BARS Rating Dimension for a Patrol Officer

16. 8-16 Measuring Performance: Rating Individuals – Behaviors (continued) Behavioral Observation Scale (BOS) A variation of a BARS which uses all behaviors necessary for effective performance to rate performance at a task. A BOS also asks the manager to rate the frequency with which the employee has exhibited the behavior during the rating period. Organizational Behavior Modification (OBM) A plan for managing the behavior of employees through a formal system of feedback and reinforcement.

17. 8-17 Figure 8.6: Example of a Behavioral Observation Scale (BOS)

18. 8-18 Measuring Performance: Measuring Results Management by Objectives (MBO): people at each level of the organization set goals in a process that flows from top to bottom, so that all levels are contributing to the organization’s overall goals. These goals become the standards for evaluating each employee’s performance.

19. 8-19 Table 8.2: Management by Objectives – Two Objectives for a Bank

20. 8-20 Measuring Performance: Measuring Quality The principles of total quality management (TQM), provide methods for performance measurement and management. With TQM, performance measurement combines measurements of attributes and results. – Subjective feedback – Statistical quality control

21. 8-21 Sources of Performance Information 360-Degree Performance Appraisal: performance measurement that combines information from the employees’: – Managers – Peers – Subordinates – Self – Customers

22. 8-22 Types of Performance Measurement Rating Errors Contrast errors: the rater compares an individual, not against an objective standard, but against other employees. Distributional errors: the rater tends to use only one part of a rating scale. – Leniency: the reviewer rates everyone near the top – Strictness: the rater favors lower rankings – Central tendency: the rater puts everyone near the middle of the scale

23. 8-23 Types of Performance Measurement Rating Errors (continued) Rater bias: raters often let their opinion of one quality color their opinion of others. – Halo error: when the bias is in a favorable direction. This can mistakenly tell employees they don’t need to improve in any area. – Horns error: when the bias involves negative ratings. This can cause employees to feel frustrated and defensive.

24. 8-24 Political Behavior in Performance Appraisals Distorting a performance evaluation to advance one’s personal goals A technique to minimize appraisal politics is a calibration meeting: – Meeting at which managers discuss employee performance ratings and provide evidence supporting their ratings with the goal of eliminating the influence of rating errors

25. 8-25 Giving Performance Feedback Scheduling Performance Feedback – Performance feedback should be a regular, expected management activity. – Annual feedback is not enough. – Employees should receive feedback so often that they know what the manager will say during their annual performance review. Preparing for a Feedback Session – Managers should be prepared for each formal feedback session.

26. 8-26 When giving performance feedback, do it in an appropriate meeting place. Meet in a setting that is neutral and free of distractions. What other factors are important for a feedback session?

27. 8-27 Giving Performance Feedback (continued) Conducting the Feedback Session – During the feedback session, managers can take any of three approaches: 1.“Tell-and-Sell” – managers tell employees their ratings and then justify those ratings. 2.“Tell-and-Listen” – managers tell employees their ratings and then let the employees explain their side of the story. 3.“Problem-Solving” – managers and employees work together to solve performance problems.

28. 8-28 Figure 8.7: Improving Performance

29. 8-29 Legal and Ethical Issues in Performance Management Legal – Performance management processes are often scrutinized in cases of discrimination or dismissal. Ethical – Employee monitoring via electronic devices and computers may raise concerns over employee privacy.

30. 8-30 Legal Requirements for Performance Management Lawsuits related to performance management usually involve charges of: – Discrimination – Unjust dismissal To protect against both kinds of lawsuits, it is important to have a legally defensible performance management system.

31. 8-31 Legal Requirements for Performance Management (continued) A legally defensible performance management system includes: – Based on valid job analyses, with requirements for job success clearly communicated to employees. – Performance measurement should evaluate behaviors or results, rather than traits. – Multiple raters (including self-appraisals) should be used. – All performance ratings should be reviewed by upper-level managers. – There should be an appeals mechanism for employees.