2. Performance Management © Nancy Brown Johnson, 2002

3. Performance Management Ensure that employee’s activities congruent with organizational goals Ensure that employee’s activities congruent with organizational goals Includes Includes defining performance defining performance measuring performance measuring performance feedback feedback

4. What is Performance Appraisal? The ongoing process of evaluating and managing employee effectiveness.

5. Why is it Difficult? Difficult to Conduct Correctly Difficult to Conduct Correctly Personal Relationships Interfere Personal Relationships Interfere May Rate Irrelevant Factors May Rate Irrelevant Factors Appraisers not Trained Appraisers not Trained Appraiser not Familiar with Job Appraiser not Familiar with Job Appraiser not Familiar with Performance Appraiser not Familiar with Performance Subjective Subjective

6. What Managers Say…. One Manager from DEC Suggested he would rather: “...Kick bricks with his bare feet than do Performance Appraisals” Deming calls it one of the “Deadly Diseases of Management”

7. Objectives of Appraisals Strategic Strategic Developmental Developmental Administrative: Evaluation Administrative: Evaluation

8. Criteria for Judging Appraisal Effectiveness Validity: Are we measuring what we want to measure? Reliability: consistency Acceptability: Do people accept it? Specificity: Guidance for improving performance Cost: Is the cost of the appraisal yielding increased performance results

9. ©a Times Mirror Higher Education Group, Inc., company, 1997 IRWIN Job Performance Measure Actual Job Performance Deficiency Contamination Validity Contamination & Deficiency

10. Performance Appraisal Criteria Attributes: Traits Attributes: Traits Behaviors Behaviors Results: Output Results: Output Management by Objectives (MBO) Management by Objectives (MBO)

11. Traits Characteristics of the Person: Dependable, Loyal Subjective: Poor Inter-rater Reliability Subjective: Poor Inter-rater Reliability Vague: Unclear as to How These Traits Relate to Job Vague: Unclear as to How These Traits Relate to Job Ineffective: Does not Tell the Employee How to Improve Ineffective: Does not Tell the Employee How to Improve Difficult to pay Difficult to pay

12. Behaviors: Relates Job-Specific Tasks & Responsibilities Relatively Objective Criteria Relatively Objective Criteria Identifies Specific Behaviors for Effective Performance Identifies Specific Behaviors for Effective Performance Provides Specific Feedback Provides Specific Feedback Informative: Conveys the Employer’s Expectations Informative: Conveys the Employer’s Expectations Diagnostic: Identifies Training and Development Needs Diagnostic: Identifies Training and Development Needs

13. Output Measurable Performance: Production, Sales, Quantifiable Measures Objective: If Measures Exist Objective: If Measures Exist Unequal: May Have Unequal Inputs Unequal: May Have Unequal Inputs Ineffective: Does not Tell Employee How to Improve Ineffective: Does not Tell Employee How to Improve Exclusive: Tends of Focus on the Measurable Output Exclusively Exclusive: Tends of Focus on the Measurable Output Exclusively Easy to tie to pay Easy to tie to pay

14. Management by Objectives Employee & Supervisor jointly set goals Employee & Supervisor jointly set goals Employee and supervisor then review goal achievement at the end of the year Employee and supervisor then review goal achievement at the end of the year Research show that if goals are difficult but achievable, motivation increases Research show that if goals are difficult but achievable, motivation increases Difficult to tie to pay Difficult to tie to pay

15. Errors in Performance Appraisal Leniency Leniency Central Tendency Central Tendency Strictness Strictness Halo/Horns Effect Halo/Horns Effect Similar-to-Me Similar-to-Me Primacy and Recency Primacy and Recency

16. Organizational Justice Affects Organizational Citizenship Behaviors Distributive Justice: Satisfaction with the Outcomes Distributive Justice: Satisfaction with the Outcomes Procedural Justice: Satisfaction with the Process Procedural Justice: Satisfaction with the Process Interactional Justice: Satisfaction with Interpersonal Relations During the Performance Appraisal Process Interactional Justice: Satisfaction with Interpersonal Relations During the Performance Appraisal Process

17. Appeals Process Objectives: Gives the Employee a Voice Gives the Employee a Voice Enhances Employees’ Organizational Commitment Enhances Employees’ Organizational Commitment Legal Support for Appraisal Procedures Legal Support for Appraisal Procedures Evidence that Existence of Appeals Process Leads to a Decline in Lawsuits Evidence that Existence of Appeals Process Leads to a Decline in Lawsuits

18. Why You May Want to Skip PAs Legal liability – people don’t tell the truth and then later get you in trouble in court. Legal liability – people don’t tell the truth and then later get you in trouble in court. Time consuming – they take a lot of time and many question the benefit. Time consuming – they take a lot of time and many question the benefit. Don’t need them for discipline Don’t need them for discipline Value – what are you getting? Value – what are you getting?

19. Summary Individual employee performance is just one determinant of organizational performance Individual employee performance is just one determinant of organizational performance Focus on behaviors, not personality Focus on behaviors, not personality It is limited in its ability to measure performance differences which makes it difficult for compensation. It is limited in its ability to measure performance differences which makes it difficult for compensation.

20. Total Quality Management & PA TQM Against PA TQM Against PA Calls it one of the Calls it one of the “Deadly Diseases of Management” “Deadly Diseases of Management” Performance Variation Function of Systems - not Individuals Performance Variation Function of Systems - not Individuals Blame Unfairly Placed on Individuals Blame Unfairly Placed on Individuals Quality Information is for Problem Solving Quality Information is for Problem Solving

21. Summary MGT 422 MGT 422 Exam II Essay Exam II Essay Fall, 2003 Fall, 2003 The drawing below is of a pay structure. Identify The drawing below is of a pay structure. Identify