CH 7 Managing Employees' Performance

Performance management

Performance management is how managers make sure employees’ work supports the organization’s goals.
It includes knowing what is expected/ needed, checking progress, and giving feedback to help employees improve. It has been reported that when employees receive good feedback and fair reviews, they are more satisfied with their jobs.

Steps in the Performance Management Process (1-3)

Step 1: Identify Organizational Goals: identifying the organization’s strategic goals and objectives, which provide direction for all employee performance expectations.

Step 2: Develop Employee Goals and Actions: Goals, behaviours, and activities should be measurable and become part of the employee’s job description.

Step 3: Provide Organizational Support: Organizational support is provided by equipping employees with appropriate training, resources, tools, and continuous two-way feedback.

Steps in the Performance Management Process ( 4-6)

Step 4: Evaluate Performance: the manager and employee review and compare the employee’s goals and expected behaviours with their actual work results to see how well the employee is performing.

Step 5: Identify Development Opportunities: The manager and employee work together to identify strengths, improve weaknesses, and decide what actions, training, or changes are needed to improve performance.

Step 6: Provide Consequences: The organization provides rewards or corrective actions based on performance results, such as pay increases, bonuses, recognition, or improvement plans.

the three purposes of performance management

Strategic Purpose:
Performance management helps the organization achieve its goals by aligning employee behaviour and performance with the company’s business objectives.

Administrative Purpose:
Performance management provides information managers use to make decisions about pay, benefits, promotions, recognition, retention, or termination.

Developmental Purpose:
Performance management helps employees improve their skills and performance by providing feedback, coaching, and opportunities for learning and growth.

Top five changes organizations have made to their performance review systems

1. Shortened the performance review process

2. Increased the frequency of feedback

3. Added rating scales

4. Added peer or 360-degree reviews

5. Separated performance discussions from compensation discussions

AI uses in Performance MAnagement

• Write and give feedback

• Track and analyze performance

• Create reports and recommendations

• Identify talent and performance trends

Legal, Privacy & Ethical Issues

• If performance management systems lead to discrimination or unfair dismissal claims.

• Employee privacy can be affected by monitoring tools

• When employees misuse work time (“time theft”) or take on multiple jobs without disclosure (“over-employment”).

• When organizations fail to inform employees about the use of AI, especially when AI influences performance evaluations or decisions.

Over-Employment (OE) Survey

A survey of 1,272 remote workers found that many hold multiple jobs at the same time, especially in tech roles with flexible hours, and while some find managing multiple jobs easy, most find it somewhat difficult.

Ghostworking

• Ghostworking refers to employees pretending to be busy at work.

• Survey results show that many employees engage in behaviours like fake meetings, appearing engaged, or simulating work, with only a small percentage saying they never fake productivity.

Time theft Ruling

• A legal ruling confirmed that employers can require employees to repay wages for “time theft” when monitoring software shows they were paid for time not spent working

• Reinforcing that digital productivity tracking can be used as evidence in employment disputes.

AI- Augmented Performance

AI-augmented performance shows that when employees use GenAI, they can perform tasks outside their skill set more effectively, completing work faster and achieving significantly better results across data-related tasks.

Effective Performance Feedback

• Effective performance feedback should be provided frequently rather than annually, occur in a supportive and well-prepared context.

• Include employee self-assessment while involving ongoing collaborative discussions, and deliver balanced, accurate feedback that focuses on behaviour and goal setting.

Criteria for Performance management

• Valid – measures the right things

• Reliable – gives consistent results

• Fit with strategy – supports organizational goals and culture

• Acceptable – practical and fair to users

• Specific – clear expectations of what and how

What does performance improvement depend on

Most effective way to improve performance varies according to the employee’s level of ability and motivation.

How is performance measured? : Comparisons-Based Methods

Simple ranking: employees are ranked from the highest performer to the lowest performer.

Forced-distribution: Assigns a certain percentage of employees to each category

• [e.g. Outstanding (5%); Exceeds (20%); Meets (55%)]

Paired-comparison: compares each employee directly with every other employee to determine relative performance.

How is performance measured?: Rating Individuals Methods - Rating Attributions

Rate employee traits on a numerical scale; easy to use but often unreliable and unclear for improvement.

How is performance measured?: Rating Individuals Methods - Rating Behaviours

Critical-incident method: Records specific effective or ineffective behaviours; provides clear feedback but is time-consuming and hard to compare across employees.

BARS: Uses behaviour-based descriptions to anchor rating levels; improves reliability but can bias memory and is complex to develop.

BOS: Rates how often key behaviours occur; good for feedback and training but requires a lot of time and information.

How is performance measured? : Rating Individuals Methods - Results

OBM: Uses feedback and reinforcement to shape behaviour; effective for improving performance and safety but requires ongoing measurement and feedback.

Errors in Performance Measurement

Humans have limited ability to process information and therefore rely on mental shortcuts (heuristics) when evaluating people, which can lead to unconscious bias.

Sources of Performance Information

Performance information comes from managers, coworkers, self, customers, and technology.

Types of rating errors (5)

• Similarity bias: Raters give higher evaluations to people they see as similar to themselves, which can lead to unfair or discriminatory decisions.

• Contrast error: An employee is rated compared to coworkers instead of an objective standard, so good performers may be rated lower if surrounded by exceptional peers.

• Distributional errors: Raters misuse the rating scale by rating everyone too high (leniency), too low (strictness), or in the middle (central tendency), making comparisons unreliable.

• Halo error: A positive impression in one area causes the rater to judge all other areas positively.

• Horns error: A negative impression in one area leads to unfairly negative ratings across all areas.

Chart referring to Positive Stereotyping at Work

This chart shows that men are significantly more likely to be described with positive, ability-based traits at work than women or non-binary/gender-fluid people.

These terms signal competence and innate ability, which strongly influence promotion and leadership perceptions.

Chart referring to Personality Feedback by Gender

This chart shows that women and men receive fundamentally different kinds of feedback, even when doing similar work. The key takeaway was women receive personality-focused and often penalizing feedback, while men receive feedback that signals leadership potential.

How to reduce errors

• Comprehensive organizational strategy to address bias

• Rater training

• Mindfulness and unconscious bias training

• Calibration meetings

• Using data analytics & analysts

• Ratee training