1. Human Resource Management: Gaining a Competitive Advantage Chapter 7 Performance Management Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. Learning Objectives  Identify the major determinants of individual performance.  Discuss three purposes of performance management.  Identify five criteria for effective performance management systems (pms).  Discuss four approaches to performance management, specific techniques used in each approach, and the way these approaches compare with criteria for effective performance management systems. 8-2

3. Learning Objectives  Choose the most effective approach to performance measurement for a given situation.  Discuss advantages and disadvantages of different sources of performance information.  Choose the most effective sources for performance information.  Distinguish types of rating errors and explain how to minimize each in a performance evaluation.  Conduct an effective performance feedback session.  Identify the cause of a performance problem. 8-3

4. Introduction  Performance management is the process through which managers ensure that employees’ activities and outputs are congruent with the organization's goals. (congruent=Similar)  Performance Appraisal is the process through which an organization gets information on how well an employee is doing his or her job.  Performance Feedback is the process of providing employees information regarding their performance effectiveness. 8-4

5. Performance Management Model, (The 3 must go together) Individual Behaviors Situational Constraints Org. culture & economic conditions Individual Attributes (skills, abilities) Organizational Strategy long & short term goals&values Objective Results, ex: sales 8-5

6. 3 Purposes of Performance Management, P273-274 Strategic Developmental Administrative 8-6

7. Recommendations - Developing an Effective Performance Management System,P276  Mirror the corporate culture and values  Link job descriptions to the performance management system.  Train managers in performance management.  Communicate the total rewards system.  Require managers to search, offer and acquire regular performance feedback. 8-7

8. 5 Performance Measures Criteria,P277-281 Strategic Congruence Validity ReliabilityAcceptability Specificity 8-8

9. 5 Approaches to Measuring Performance: Comparative Approach  Ranking –Simple ranking ranks employees from highest to lowest performer. –Alternation ranking - crossing off the best and worst employees.  Forced distribution –Employees are ranked in groups.  Paired comparison –Managers compare every employee with every other employee in the work group. 8-9

10. Attribute Approach  Graphic rating scales, see P.286 –A list of traits is evaluated by a 5-point rating scale.  Mixed-standard scales, see P.287 –define relevant performance dimensions –develop statements representing good, (H) average (M), and poor (L) performance along each dimension. 8-10

11. Behavioral Approach  Critical incidents approach - requires managers to keep record of specific examples of effective and ineffective performance.  Behaviorally anchored rating scales (BARS) scale 1- 7=(highest)see P.290  Behavioral observation scales (BOS)P291 (use commonly on surveys)  Organizational behavior modification (OBM) - a formal system of behavioral feedback and reinforcement.  Assessment centers - multiple raters evaluate employees’ performance on a number of exercises. 8-11

12. Results Approach  Management by Objectives (MBO) –top management passes down company’s strategic goals to managers, workers to define the goals.  Productivity Measurement and Evaluation System (ProMES) –goal is to motivate employees to higher levels of productivity. Goals Hierarchy 8-12

13. Quality Approach  A performance management system designed with a strong quality orientation can: 1.Assess both person and system factors in the measurement system. 2.Emphasize managers and employees work together to solve performance problems. 3.Involve both internal and external customers in setting standards and measuring performance. 4.Use multiple sources to evaluate person and system factors. 8-13

14. 6 Statistical Process Quality Control Techniques 1.Process-flow analysis 2.Cause-and-effect diagrams 3.Pareto chart 4.Control chart 5.Histogram 6.Scattergram 8-14

15. 5 Performance Information Sources CustomersPeers Self Subordinates Managers 8-15

16. 5 Performance Measurement Rater Errors 1.Similar to Me 2.Contrast 3.Distributional Errors 4.Halo and Horns 5.Appraisal Politics 8-16

17. Reducing Rater Errors and Politics  Approaches to Reducing Rater Error:  Rater error training  Rater accuracy training  Calibration Meetings- attended by managers to discuss employee performance ratings. 8-17

18. Improve Performance Feedback 1.G ive feedback frequently, not once a year. Create the right context for discussion. 2.Ask employees to rate performance before the session. 3.Encourage the employee to participate. 4.Recognize effective performance through praise. 5.Focus on solving problems. 6.Focus feedback on behavior or results, not on the person. 7.Minimize criticism. 8.Agree to specific goals and set progress review date. 8-18

19. Employee Characteristics Performance Standards/ Goals Feedback Consequences Input 5 Factors to Consider When Analyzing Poor Performance 8-19

20. Managing Performance of Marginal Performers  Solid performers  High ability and motivation; provide development  Misdirected effort  Lack of ability but high motivation; focus on training  Underutilizers  High ability but lack motivation; focus on interpersonal abilities Deadwood  Low ability and motivation; managerial action, outplacement, demotion, firing. 8-20

21. Performance Management: Electronic Monitoring  Electronic tracking systems include:  Hand and fingerprint recognition systems  Global positioning systems (GPS)  Systems thattrack employees using handheld computers and cell phones  Potential increased efficiency and productivity benefits  These systems present privacy concerns. 8-21

22. Summary Measuring and managing performance are key to gaining competitive edge.  Performance management systems (PMS) serve strategic, administrative, and developmental purposes.  PMS should be evaluated against the criteria of strategic congruence, validity, reliability, acceptability and specificity.  Effective managers need to  be aware of the issues involved in determining best methods.  feed performance information back to employees  take action based on causes for poor performance: ability, motivation or both.  be sure that PMS can meet legal scrutiny 8-22