HRM Ch 9: Performance Management

Performance Management

Process of ensuring employees' activities and outputs meet organizational goals

Performance Management Requirements

Know desired activities and outputs, observe performance, and provide feedback

Performance Management Benefits

Values top performers, improves communication, establishes standards, and identifies strong and weak employees

Performance Management Process

Define outcomes, develop goals and behaviors, provide support, evaluate performance, identify improvements, provide consequences

Strategic Purpose of performance management

Helps organization achieve business objectives through performance aligned with goals

Administrative Purpose

Provides information for day-to-day HR decisions

Developmental Purpose

Helps develop employees' knowledge and skills

Fit with Strategy

Performance measures support company strategy, goals, and culture

Validity

Measures relevant aspects of performance and excludes irrelevant ones

Reliability

Produces consistent results over time

Acceptability

Accepted by managers and employees who use the system

Specific Feedback

Provides clear expectations and guidance for improvement

Simple Ranking

Employees ranked from best to worst performance

Alternation Ranking

Rank best employee, then worst, then next best, then next worst

Forced Distribution

Assigns employees to performance categories using predetermined percentages

Paired Comparison

Compares each employee with every other employee

Disadvantage of Ranking Methods

Subjective and often not linked to organizational goals

Graphic Rating Scale

Lists traits and uses a scale to rate each trait

Mixed-Standard Scale

Uses statements describing traits and compares employee performance to those statements

Critical Incident Method

Records specific examples of effective and ineffective employee behavior

Behaviorally Anchored Rating Scale (BARS)

Uses behavioral examples to describe different performance levels

Behavioral Observation Scale (BOS)

Rates how frequently employees display critical behaviors

Organizational Behavior Modification (OBM)

Uses feedback and reinforcement to encourage desired behaviors

Productivity

Amount of output produced relative to resources used

Management by Objectives (MBO)

Managers and employees jointly set goals that become performance standards

MBO Component 1

Goals are specific, difficult, and objective

MBO Component 2

Managers and employees set goals together

MBO Component 3

Managers provide objective feedback

Total Quality Management (TQM)

Evaluates both employee performance and work processes using subjective and objective feedback

360-Degree Performance Appraisal

Uses information from managers, peers, subordinates, self, and customers

Customer Feedback

Performance information obtained from customers

Similar-to-Me Error

Rater gives higher ratings to employees similar to themselves

Contrast Error

Employee evaluated against other employees instead of an objective standard

Distributional Error

Rater does not properly use the full rating scale

Leniency Error

Rater gives everyone high ratings

Strictness Error

Rater gives everyone low ratings

Central Tendency Error

Rater gives everyone average ratings

Rater Bias

Opinion about one quality influences ratings of other qualities

Halo Error

Positive impression affects the entire evaluation

Horns Error

Negative impression affects the entire evaluation

Reducing Rating Errors

Train raters and use data analytics

Political Behavior in Appraisals

Raters intentionally distort evaluations for personal goals

Calibration Meetings

Managers discuss ratings and provide evidence to reduce bias and politics

Performance Feedback

Should be frequent, regular, and not surprise employees

Self-Assessment

Employee evaluates their own performance before feedback session

Tell-and-Sell Approach

Manager gives ratings and justifies them

Tell-and-Listen Approach

Manager gives ratings and listens to employee's perspective

Problem-Solving Approach

Manager and employee work together to solve performance problems and set goals

Performance Problems

May result from lack of ability, motivation, both, or neither

Diagnosing Performance Problems

Examine inputs, feedback, goals, and rewards

Legal Issues in Performance Management

Discrimination and unjust dismissal

Legally Defensible Performance Management System

Based on valid job analysis, evaluates behaviors, uses multiple raters, and provides feedback and training

Electronic Monitoring

Technology used to monitor employee performance that may improve productivity but raises privacy concerns