Class 17 and 18 - Perf Management

What is performance management?

What are the three major purposes of performance management?

All activities related to improving employee performance, productivity, and effectiveness, including goal setting, pay for performance, training and development, career management, and disciplinary action.

1. Align employee actions with strategic goals

2. Serve as a vehicle for culture change

3. Provide input into other HR systems (such as development and compensation)

What are the five steps in the performance management process?

1. Define performance expectations

2. Provide ongoing feedback and coaching

3. Conduct performance appraisal and evaluation discussions

4. Determine performance rewards or consequences

5. Conduct development and career opportunity discussions

Step 1: Defining Performance Expectations

Why is defining performance expectations important?
What does it mean that job performance is multidimensional?
What is task performance?
What is contextual performance?

It helps employees understand how their work contributes to achieving business results.

Job performance includes multiple components, primarily task performance and contextual performance.

The direct contribution to job-related processes, such as completing assigned duties and responsibilities.

The indirect contribution to the organization’s social and psychological environment, such as:

• Demonstrating a positive attitude

• Helping coworkers when needed

• Behaviors that go beyond job descriptions

Step 2: Ongoing Coaching and Feedback

Why is ongoing coaching and feedback important?

What is the employee’s responsibility in ongoing feedback?
What is the manager’s responsibility in ongoing feedback?

It ensures open two-way communication between employees and managers to improve performance.

• Monitor their own performance

• Ask for help when needed

• Communicate changing strategies and objectives

• Provide guidance and support

Step 3: Performance Appraisal and Evaluation

Q: What are the two main ways to assess performance and explain.

1. Performance as effort/behavior:

• Fits many types of jobs

• Monitoring costs are high

• Often subjective

• Helps control inappropriate behavior

2. Performance as results:

• Fits jobs with measurable outputs

• Monitoring costs are low

• Typically objective

• Behavior is harder to control

Performance Appraisal Methods Graphic Rating Scale

What is a graphic rating scale?
What are key characteristics of the graphic rating scale?

A performance appraisal method where:

• A scale lists traits and performance levels

• The employee receives a rating for each trait.

• Simplest and most popular method

• Rates employees across several performance traits

What is the alternation ranking method?

What is the paired comparison method?

A ranking method where the evaluator:

1. Selects the highest and lowest employees on a trait

2. Then chooses the next highest and next lowest

3. Continues alternating until all employees are ranked

• Each employee is compared with every other employee on a specific trait

• A “+” is given to the higher-ranked employee and “–” to the lower-ranked one

• Rankings are based on the total number of “+” scores

What is the forced distribution method?

What is an example of the forced distribution method (GE’s Bell Curve)?

A performance appraisal system where predetermined percentages of employees are placed into performance categories.

• Top 10–20%: Exceed expectations; receive highest pay increases and advancement opportunities

• Bottom 10%: Not meeting expectations; focus on coaching or possible termination

• Middle majority: Receive moderate raises and development opportunities

What are other formal performance appraisal methods?

• Critical incident method - Managers keep records of particularly effective or ineffective employee behaviours.

• Narrative forms - written description of an employee’s strengths, weaknesses, and performance.

• Behaviourally Anchored Rating Scales (BARS) - A rating system that combines elements of rating scales and critical incidents by anchoring (provide clear behavioral descriptions, which helps reduce subjectivity. ratings with specific behavioural examples.)

• Management by Objectives (MBO) - A system where managers and employees jointly set measurable goals and performance is evaluated based on goal achievement

Performance Appraisal Problems:

What is the halo effect?

What is leniency bias?
What is strictness bias?
What is central tendency bias?
What is recency bias?

When a manager’s overall impression of an employee influences ratings on specific traits.

When managers rate employees too generously.

When managers rate employees too harshly.

When managers rate most employees in the middle of the scale, avoiding very high or low ratings.

When ratings are based mostly on recent events instead of the entire evaluation period.

Step 4: Rewards and Consequences

What happens in Step 4 of performance management?

Organizations link performance appraisal results to rewards or consequences, such as:

• Pay increases

• Bonuses

• Promotions

• Discipline

What happens in Step 5 of performance management?

What is the purpose of a performance review meeting?
What makes performance reviews effective?

Managers and employees discuss career development and future opportunities, including:

• Training

• Skill development

• Career paths

To discuss performance results, provide feedback, and identify improvement strategiestrategies

• Focus on specific behaviors and results

• Encourage two-way communication

• Set clear goals for improvement