1. Performance Management 1 MANA 3320 Dr. Jeanne Michalski michalski@uta.edu

2. Performance Management  The use of performance appraisals and the reasons they can sometimes fail.  The characteristics of an effective appraisal program.  Different sources of appraisal information.  Methods used for performance evaluation.  Conducting an effective performance appraisal interview.

3. Performance Appraisal Programs  Performance Appraisal  A process, typically performed annually by a supervisor for a subordinate, designed to help employees understand their roles, objectives, expectations, and performance success.  Performance Management  The process of creating a work environment in which people can perform to the best of their abilities.

4. Performance Ethic  High-performing companies place a premium on setting demanding standards and measuring performance against those tough-minded goals. Specifically, they:  Have a mission  Have challenging goals and clear accountability  Are excellent at performance feedback  Apply consequences, both positive and negative, to individual performance (McKinsey & Company, 1999)

5. Setting Objectives Coaching Performance Developing Capability Assessing Performance Providing Feedback

6. Reasons Appraisal Programs Sometimes Fail  Lack of top-management information and support  Unclear performance standards  Rater bias  Too many forms to complete  Use of the appraisal program for conflicting purposes.

7. Managerial Issues Concerning Appraisals 1. There is little face-to-face discussion between the manager and the employee being appraised. 2. The relationship between the employee’s job description and the criteria on the appraisal form isn’t clear. 3. Managers feel that little or no benefit will be derived from the time and energy spent in the process, or they are concerned only with bad performances. 4. Managers dislike the face-to-face confrontation of appraisal interviews.

8. Managerial Issues Concerning Appraisals (cont’d) 5. Managers are not sufficiently adept at rating employees or providing them with appraisal feedback. 6. The judgmental role of appraisal conflicts with the helping role of developing employees. 7. The appraisal is just a once-a-year event, and there is little follow-up afterward.

9. Possible Positive Outcomes  Motivation  Performance  Job definition  Communication  Development  Acceptance of organizational goals

10. Possible Negative Outcomes  Turnover  False data  Degraded supervisor / subordinate relationship  Damaged self-esteem  Low motivation and performance  Legal action  Wasted time

11. Performance Appraisal Appraisal Programs AdministrativeAdministrativeDevelopmentalDevelopmental CompensationCompensation Ind. Evaluation Job Evaluation EEO/AA Support TrainingTraining Career Planning

12. Purposes for Performance Appraisal  Developmental  Provide performance feedback  Identify individual strengths/weaknesses  Recognize individual performance  Assist in goal identification  Evaluate goal achievement  Identify individual training needs  Determine organizational training needs  Allow employees to discuss concerns  Improve communication  Provide a forum for leaders to coach

13. Purposes for Performance Appraisal  Administrative  Document personnel decisions  Determine promotion candidates  Determine transfers and assignments  Identify poor performance  Decide retention or termination  Decide on layoffs  Validate selection criteria  Meet legal requirements  Make reward/compensation decisions

14. Developing an Appraisal System GOAL SETTING  What type of work is examined?  Who sets the goals?  How difficult are the goals?  Team vs. individual goals?  What is measured? TYPE OF APPRAISAL  What rating scale is used?  Includes a self-appraisal?  360 degree feedback?  Uses a forced ranking system? ADMINISTRATION  How often?  Who conducts appraisals?  How frequent is feedback?  Is there an appeal process? PERFORMANCE AND PAY  Tied to rewards?  Linked to development?  How are the results used?

15. Developing an Effective Appraisal Program  Performance Standards  Must be based on job-related requirements derived from job analysis and reflected in job description and job specifications.  Help translate an organization’s goals and objectives into job requirements that define acceptable and unacceptable performance levels.

16. Performance is calibrated against peers.

17. Strategic Relevance Individual standards directly relate to strategic goals. Criterion Deficiency Standards capture all of an individual’s contributions. Criterion Contamination Performance capability is not reduced by external factors. Reliability (Consistency) Reliability (Consistency) Standards are quantifiable, measurable, and stable. Performance Standards Characteristics

18. Are You Complying with the Law?  Brito v Zia  The Supreme Court ruled that performance appraisals were subject to the same validity criteria as selection procedures.  Albemarle Paper Company v Moody  The U.S. Supreme Court found that employees had been ranked against a vague standard, open to each supervisor’s own interpretation.

19. Legal Issues Appraisal systems are more defensible if they:  Are based on job analysis (Validity)  Are consistent among multiple raters (Reliability)  Provide written instructions  Allow employees to review appraisal results  Train appraisers in the use of the system  Ensure managers who conduct the appraisal are able to observe the behavior they are rating.  Establish an appeals procedure to enable employees to express disagreement with the appraisal.

20. Sources of Performance Appraisal  Manager and/or Supervisor  Appraisal done by an employee’s manager and reviewed by a manager one level higher.  Self-Appraisal  Appraisal done by the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview.  Subordinate Appraisal  Appraisal of a superior by an employee, which is more appropriate for developmental than for administrative purposes.

21. Sources of Performance Appraisal  Peer Appraisal  Appraisal by fellow employees, compiled into a single profile for use in an interview conducted by the employee’s manager.  Why peer appraisals are not used more often: 1.Peer ratings can become a popularity contest. 2.Managers are reluctant to give up control over the appraisal process. 3.Those receiving low ratings might retaliate against their peers. 4.Peers not always trained to avoid rating errors.

22. Sources of Performance Appraisal  Team Appraisal  Based on TQM concepts; recognizes team accomplishment rather than individual performance  Customer Appraisal  A performance appraisal that, like team appraisal, is based on TQM concepts and seeks evaluation from both external and internal customers

23. 360 Degree Feedback  Evaluation method that incorporates feedback from the:  worker,  his/her peers,  supervisors,  direct reports, and  customers.  Results of these confidential surveys are tabulated and shared with the worker.  Interpretation of the results, trends and themes are discussed as part of the feedback.

24. 360 Degree Feedback Worker SupervisorPeersCustomers Direct Reports

25. Multi-rater Assessment  Advantages  Fair – less rating inflation, less adverse impact on diversity, and technology safeguards  Accurate – less bias and more balance  Credible: more believable because of respect for the opinions of multiple work associates  Valuable: more specific feedback and greater distinctions among performance criteria  Disadvantages  Requires more administration  Vulnerable to bias – highs and lows  Dependent on the amount of trust employees have that feedback will remain confidential

26. Key Questions to Consider When Receiving Feedback  Do I understand it?  Is it accurate/valid?  Is it important?  Do I want to change? At its heart feedback is only information. How you choose to think and feel about the feedback will determine the value you gain from it.

27. Possible Reactions To Feedback DENIAL ANGER / FLIGHT WITHDRAWAL ACCEPTANCE ANALYSIS ACTION PLANNING

28. Training Appraisers  Establishing an Appraisal Plan  Provide an explanation of the performance appraisal system’s objectives so that raters will understand the compensation and development purposes for which the appraisal is to be used.  Explain the mechanics of the rating system  How frequently the appraisals are to be conducted  Who will conduct them  What are the standards of performance.  Alert raters to the weaknesses and problems of appraisal systems so that they can be avoided.

29. Training Performance Appraisers Recency errors Leniency or strictness errors Error of central tendency Similar-to-me errors Contrast errors Common rater-related errors Halo errors

30. Rater Errors  Error of Central Tendency  A rating error in which all employees are rated about average.  Leniency or Strictness Error  A rating error in which the appraiser tends to give all employees either unusually high or unusually low ratings.  Recency Error  A rating error in which appraisal is based largely on an employee’s most recent behavior rather than on behavior throughout the appraisal period.

31. Rater Errors  Contrast Error  A rating error in which an employee’s evaluation is biased either upward or downward because of comparison with another employee just previously evaluated.  Similar-to-Me Error  An error in which an appraiser inflates the evaluation of an employee because of a mutual personal connection.

32. Rater Errors: Training and Feedback  Rating Error Training  Observe other managers making errors  Actively participate in discovering their own errors  Practice job-related tasks to reduce the errors they tend to make  Feedback Skills Training  Communicating effectively  Diagnosing the root causes of performance problems  Setting goals and objectives

33. Leadership courage is required to assess performance and provide candid, constructive and positive feedback and get the truth into performance appraisal.

34. How Not to Provide Feedback "I would not allow this employee to breed." "He would be out of his depth in a parking lot puddle." "This young lady has delusions of adequacy." "He sets low personal standards and then consistently fails to achieve them." "This employee should go far -- and the sooner he starts, the better." "Got a full six-pack, but lacks the plastic thing to hold it all together." "A gross ignoramus -- 144 times worse than an ordinary ignoramus." "I would like to go hunting with him sometime." "He's been working with glue too much." "He brings a lot of joy whenever he leaves the room." "When his IQ reaches 50, he should sell." "If he were any more stupid, he'd have to be watered twice a week."