Chapter 7: Managing Employees' Performance

What are the Steps in the Performance Management Process?

1. Define performance outcomes for company, division and department

2. Develop employee goals, behaviours, and actions to achieve outcomes

3. Provide support and ongoing performance discussions

4. Evaluate Performance

5. Identify improvements needed

6. Provide Consequences for performance results

What are the three broad purposes of performance management systems?

strategic, administrative, and developmental

Strategic Purpose of Performance Management

Effective performance management helps the organization achieve its business objectives

Administrative Purpose of Performance Management

ways in which organizations use the system to provide information for day-to-day decisions about salary, benefits, and recognition programs.

Developmental Purpose of Performance Management

serves as a basis for developing employees' knowledge and skills

Criteria for Effective Performance Management

fit with strategy, validity, reliability, acceptability, specific feedback

Simple Ranking

Method of performance measurement that requires managers to rank employees in their group from the highest to the lowest performer.

forced-distribution method

Method of performance measurement that assigns a certain percentage of employees to each category in a set of categories.

paired-comparison method

Method of performance measurement that compares each employee with each other employee to establish rankings.

graphic-rating scale

Method of performance measurement that lists attributes and provides a rating scale for each attribute; the employer uses the scale to indicate the extent to which an employee displays each attribute.

critical-incident method

Method of performance measurement based on managers' records of specific examples of the employee behaving in ways that are either effective or ineffective.

Behaviourally Anchored Rating Scale (BARS)

Method of performance measurement that rates behaviour in terms of a scale showing specific statements of behaviour that describe different levels of performance.

Behavioural observation scale

A variation of BARS, which uses all behaviours necessary for effective performance to rate performance at a task.

Performance Management

Process through which managers ensure employees' activities and outputs contribute to the organization's goals. Requires:

inter-rater reliability

A measure of how similarly two different test scorers would score a test.

test-retest reliability

a method for determining the reliability of a test by comparing a test taker's scores on the same test taken on separate occasions

Similar to me error bias

Judging based on shared (or not shared) personal characteristics

contrast error (rating error)

A rater compares an individual not against objective standard but against other employees

leniency error

occurs when ratings of all employees fall at the high end of the scale

strictness error

Occurs when ratings of all employees fall at the low end of the scale.

central tendency error

error in which raters choose a middle point on the scale to describe performance, even though a more extreme point might better describe the employee

halo error

rater gives employee high ratings on all aspects of performance because of an overall positive impression of the employee

horns error

Rating error that occurs when the rater responds to one negative aspect by rating an employee low in other aspects

Recency emphasis error

Rating error that occurs when an annual rating is based only on most recent work performed

Management by objectives

A system in which people at each level of the organization set goals in a process that flows from top to bottom, so employees at all levels are contributing to the organizations overall goals; these goals become the standards for evaluating each employees performance

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