Week 7 Part B: Workplace Psychology: Performance Management

Learning Objectives

• Discuss the concept of performance management.
• Describe the performance management process.
• Identify the six purposes of performance management systems.
• Outline attributes of a legally defensible performance appraisal system.
• Recognize major rating errors and biases.
• Discuss performance rating systems and their types.
• Explain the purpose and types of rater training.
• Understand bases of rater motivation.
• Describe peer assessment, self-assessment, and 360° feedback.
• Analyze the role of giving, seeking, and reactions to feedback in performance management.
• Evaluate the arguments for and against traditional performance ratings.

Performance Management vs. Performance Appraisal

• Performance Management: A continuous process where an organization manages resources to achieve goals. It involves:

  • Setting goals
  • Observing, evaluating, and giving feedback
  • Aligning employee and organizational goals.

• Performance Appraisal: A periodic evaluation of an employee's performance identifying strengths and weaknesses, typically a part of the performance management process.

The Performance Management Process

1. Define Performance: Set goals and expectations, communicate clearly, and provide necessary consequences.
2. Evaluate Performance: Monitor progress and give feedback on strengths and weaknesses.
3. Review Performance: Consolidate and communicate evaluations effectively.
4. Provide Performance Consequences: Implement decisions based on the evaluations.

Purposes of Performance Management Systems

1. Strategic: Maximize contributions to organizational goals.
2. Administrative: Facilitate administrative functions like promotions and salary adjustments.
3. Communication: Clarify expectations and current performance levels.
4. Developmental: Identify skills for improvement and training needs.
5. Organizational Maintenance: Assist in workforce and succession planning.
6. Documentation: Provide data for performance evaluations, helping with training and legal compliance.

Importance of a Legally Defensible Performance Appraisal System

• A systematic review should ensure fairness to avoid:
  • Wrong promotions or terminations
  • Employee dissatisfaction leading to counterproductive behaviors.

Who Performs the Appraisal?

• Immediate Supervisor: Most common.
• Higher Management: Provides additional oversight.
• Self-Appraisals: Employees assess their own performance, but may have biases (e.g., Dunning-Kruger effect).
• Peer Reviews: Co-workers provide insights, which could enhance accuracy but may be influenced by personal relationships.
• 360-Degree Feedback: Comprehensive feedback from various sources including supervisors, peers, and subordinates.

Strengths and Weaknesses of Self and Peer Appraisals

• Self-Appraisal:

  • Strengths: Can highlight overlooked self-insights.
  • Weaknesses: Often overly positive, fails to recognize shortcomings.

• Peer Appraisal:

  • Strengths: Generally reliable and reflective of performance; helpful for identifying extremes.
  • Weaknesses: May be biased by interpersonal relationships.

360° Feedback

• Involves input from multiple sources to provide a fuller picture of performance.
• Assumptions:
  • Awareness of discrepancies increases self-awareness.
  • Self-awareness drives performance.
• Disadvantages: Can be invasive and produce stress, potential biases can distort results, and may become excessively burdensome.

Rater Errors and Biases

• Types of Errors:

  • Primacy vs. Recency Effect: Better recall of first/last impressions.
  • Halo Effects: Positive (or negative) bias based on general impressions rather than specific behaviors.
  • Leniency Errors: Higher (or lower) assessments than warranted.
  • Central-Tendency Error: Avoiding extreme ratings leads to an 'everyone is average' outcome.

• Recognizing these biases is crucial for increasing accuracy in evaluations.

Feedback in Performance Management

• Giving Feedback: Necessary but often resisted due to discomfort.
• Seeking Feedback: Motivated by self-improvement, self-affirmation, or social image.
• Reactions to Feedback: Influenced by perceptions of control, fairness, and performance ability.

Future of Performance Management

• Current debate around retaining or abolishing traditional performance ratings.
• Evolving practices include:
  • Conventional: Supervisor-led with minimal input.
  • Transitional: Input from peers and use of 360-degree feedback.
  • Cutting-edge: Rating-less systems focusing on continuous feedback.

Recommendations for Effective Appraisal Systems

1. Standardization: Ensure consistent procedures across all employees.
2. Communication: Clearly inform employees about standards and documentation.
3. Training: Equip all raters to minimize biases and errors.
4. Employee Involvement: Encourage input and transparent discussions during the evaluation process.