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MGMT20129/20124 People and Organisations

Master of Business Administration (MBA)

School of Business and Law

People and Organisations

Unit 11 Working with Others: Managing Performance

Table of Contents
Learning objectives
Perfromance Management
Causes of Poor Performance
Poor Perfromance vs Misconduct
The Potential Productivity Matrix
Managing Difficult People
Measuring Perfromance
Progressive Disicpline
The Legal Framework
Terminating the Employment Relationship
Related Competencies
Guided Readings
Journal Readings

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This topic discusses aspects of performance management, linking people
management to business performance and developing performance management
practices. Many of the concepts and strategies discussed in this unit rely on an
appreciation of the conceptual units that cover the topics of personality, individual
differences, motivation, emotions and the context in which we work, both the
organisational and the external environments.
Several critical units underpin this unit include the Developing Capability Units of:
Personality, Developing Others, Empathy and Trust and Conflict Management. In
addition the MBA Foundation Courses of Business Communication, which addresses
verbal and non-verbal communication, interviewing skills etc., addresses critical
skills in performance management, and Business Ethics and Sustainability that
emphasizes concepts related to process and treating people with respect and
The ability to discuss performance issues with employees, particularly poor
performers, is one of the greatest challenges for managers. The effectiveness of
our approach this will depend on not only our developed competencies mentioned
above but also our ability to accurately diagnose problems and our willingness to
plan for the various contingencies which may develop from performance
management interviews.

Learning objectives
This unit has the following learning objectives:
an appreciation of the significance of performance management in the
contemporary business context
a sound understanding of the relationship between strategy, performance
management and business performance
an appreciation of the difference between performance management and
performance measurement in an organisational context.
An understanding of the causes f poor performance and the implication for
Identification of different performance standards using the Potential
Productivity Matrix as a diagnostic tool
An understanding of the characteristics of difficult people and the
strategies that can be employed to manage these individuals.
Identify the key competencies required of managers to enable effective
performance management interviews

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Contemporary performance management is driven by responses to the pressures of
global competition, cost reduction, downsizing and restructuring, and the pressure
for greater employee accountability.
High-performance global organizations are placing a bigger emphasis on
performance management by translating and embedding the organizations business
objectives and strategy into individual job objectives and performance standards.
Such organizations regard performance management not only as a means by which
to reward high performing employees, but also a way to signal desired employee
behaviours and the type of organisational culture that will best suit the
organisational strategy and business objectives.
The prevailing view in contemporary business is that organizations that manage
employee performance will in turn outperform others in terms of greater
productivity, higher profits and better customer service. Increasingly, employee
performance measures are being tied to overall business objectives and strategy.
However, it is important to bear in mind that performance can mean different
things to different people and within different organizations.

Performance Management
Performance management is considered to be an ongoing process of managing
people with the aim of increasing job-related success. Armstrong (2000) suggests
that it is a means of getting better results from the organization, teams and
individuals by understanding and managing performance within an agreed
framework of planned goals, standards and attribute/competence requirements.
He suggests that Performance Management is a strategic and integrated process
that delivers sustained success to organizations by:

Improving the performance of people who work in them

Developing the capabilities of individual contributors and the team.
A record of outcomes achieved
A record of a persons accomplishments

purpose (Kane 1996). Performance means both behaviours and results. Behaviours
emanate from the performer and transform performance from abstraction to
action. Behaviours are outcomes in their own right the product of mental and
physical effort applied to tasks and can be judged apart from results (Brumbach

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Armstrong considers holistic Performance management to be everything that

people do at work at any level that contributes to achieving the overall purpose of
the organization. It is concerned with:

What people do (their work)

How they do it (their behaviour)
What they achieve (their results)

It includes all formal and informal measures adopted by an organization to

increase corporate, team and individual effectiveness and to continuously
develop knowledge, skills and competence.
Performance management consists of several stages, including the following:
identifying performance gaps
setting performance standards
monitoring performance
analysing and appraising performance
linking rewards to performance.
The above activities are all undertaken with the goal of improving performance.
The following reading is concerned with performance improvement, and takes the
view that planning and development are essential to performance.

The Causes of Poor Performance.

Poor performance is usually identified through what is termed the Performance
Gap- where a clear difference emerges between the Managers expectations
regarding outcomes, standards and behaviour and the Managers perception of
employee performance. One of the common mistakes made by managers is that the
cause of poor performance in an individual rests solely with the individual.
Managers need to do more than just categorize employee performance.
When problems occur they must analyzed and diagnosed the cause of the
performance problem.
There are three common sources of potential performance problems:

1. Internal to the individual:

This is were the performance problem does lie with the individual and it may be
due to low motivation levels, however there are also a range of other factors that
can cause performance to fall including a lack of self confidence and self esteem.
They may lack the ability to perform the task, be dissatisfied wit the reward, be
under stress or have health issues.

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2. Organisational and Managerial:

This is when the performance problem cause does not rest with the individual;
rather it rests with the manager or the organizations. Potential managerial or
supervisory causes include poor communication about standards and expectations,
poor delegation and unrealistic expectations. Managers and subordinates may also
experience conflict and unresolved tensions can lead to performance gaps
emerging in both manager and employee.
From an organisational perspective causes might include poor selection and
induction and the failure of the organisational to provide adequate resources, and:

3. External to the Organization:

In these situations the performance problem cause les external to the organisation.
In other words the manager and the organisation have little control over this
problem cause. It can include situations such as government employment policies,
union activities and campaigns, changing labour market conditions and external

Poor Performance vs. Misconduct.

It is important for managers to understand not only the cause of the poor
performance as detailed above, but to also distinguish these from behaviours which
can be described as misconduct.
Misconduct can include:
A conscious disregard or instructions, directions from supervisors.
Insubordination- the unwarranted challenging of managerial authority
Harassment & Bullying- the unwarranted targeting of other individuals with
unacceptable behaviour
Discrimination- behaviour targeted at others, which could include decision
making, which is based on non-work related issues such as gender, race,
language or sexual orientation.
Aggression- behavior







Managers need to be mindful that many of the behaviours that are classified as
misconduct are also illegal in many jurisdictions. It is not only employees who
may be guilty of misconduct but also managers and supervisors who often
misunderstand the concept of managerial authority or managerial prerogative to
mean that they can demand compliance from employees. It is important to
understand the limits to managerial authority as businesses, be they public or
private, are not usually military organisations and managers can only act within the
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limits of their positional power. As we identified in the topic on motivation,

employees still choose to follow directions. In addition managers need to be
attentive to the way they communicate and delegate work. As we identified in the
MBA foundation course, Business Communications, many people confuse being
aggressive with being assertive. This highlights the importance of diagnostic tools
such as the Johari Window and MBTI to increase our level of awareness regarding
how we come across to others.

The Potential Productivity Matrix

The Boston Consulting Groups Product-Analysis Model is a tool which most students
of marketing should be familiar with. It analysed a products market share vs. the
potential for market growth and established six different categories that enabled
managers and organizations t more effectively manage product life cycles and to
determine which products would be worth pursuing and which should be discarded.
The Potential Productivity Matrix utilises the same basic principle to identify
employees in terms of their current versus their potential performance and also
enable managers to develop performance related strategies:
The Six categories were developed which have been recast as follows:
1. The Outstanding Performer: These are people who consistently out perform
other employees due to superior skills and abilities. It is likely that they will
be in search of new challenges and may only stay for a limited period.
2. The Reliable Performer: These are people who consistently perform to and
can be relied upon to meet the required organization, however they rarely
exceed these and often cannot or will not perform above and beyond these
3. The Irregular Performer: These are people that consistently inconsistent with
their performance. At time they display characteristics similar to the
Reliable performer or even the outstanding performer- at other times they
fall below expectations, occasionally when you least expect them to.
4. The New Performer: These are people who are in reality new employees or
perhaps learning new skills or job requirements. Their performance should
be one of gradual improvement as time and skills and abilities are acquired.
5. The Problem Performer: These are people who can be extremely difficult
employee but may have the potential to be outstanding. They are extremely
time consuming for often inconsistent results
6. The Chronic Non-Performer: An unfortunate reality is that there are people
who, for whatever reason, are not able or capable of performing to
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standards. No matter what you or the organization tries to do to get these

people to improve they are unwilling or incapable of improvement. The
strategy for managing with these people is clear.

Working With others

Think of a situation when you have worked with and depended on the performance
of others to complete your task.

What type of performers did you work with?

Did performance remain constant or improve or decline over time?
How did you approach working with or managing these performers?
What would you do differently?

Prepare a brief summary of your workplace experience for discussion in class.

Managing Difficult People

In Unit 3 Understanding Personality and Difference, we identified people with
difficult personalities. Whilst some of these may exhibit the extreme behaviours of
a corporate psychopath, more common are the difficult and emotional people that
we will have to manage using the performance management system. People may
engage in behaviours, consciously or unconsciously that creates difficulty for
managers and colleagues for a number of reasons including:

Poor self image

Lack of self confidence
Power Issues
Mental Health Problems

As with all other performance problems, accurate diagnosis of the cause of the
problem is paramount. In the case of Difficult People it is important to distinguish
whether they are in distress as distinct from being difficult.
Wheeler (1994) provides more specific guidance on the different types of difficult
people and puts forward a range of strategies for managing these people.
As with the statement above,
Wheeler confirms the importance of diagnoses suggesting managers ask the
following questions:
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How often is this situation happening? Most of the time, frequently, rarely?
Do you have a personal prejudice against the person or situation?
Can you specific about what you want changed?

Types of Difficult People

Wheeler (1994) provides a comprehensive list of 17 difficult people identifying
their behavioural characteristics and suggesting a range of strategies for managing
1. Hostile Aggressives
2. Passive Aggressives
3. Silent Judges
4. Avoiders
5. Information Keepers
6. Procrastinators
7. Untruthfuls
8. Idlers
9. Perfectionists
12.Idea Destroyers
13.Guilt Givers
15.Credit stealers
16.Show Offs
Managing employee performance involves both extrinsic and intrinsic motivational
factors. Indeed, motivational theories in general have a number of implications for
managers and human resource practitioners.KMotivation of employees is a key issue
related to the design, implementation and operation of a performance
management system. The issue of motivation is a complex one, underpinned by a
number of theories and approaches, including the following:
extrinsic versus intrinsic motivation
content theories: i.e. Hierarchy of needs (Maslow, 1943); Three motives
theory (McClelland, 1987)
process theories: i.e. Expectancy theory (Vroom, 1964); Equity theory
(Adams, 1965); Goal setting theory (Locke, 1968); Reinforcement theory.

Measuring Performance
The general literature on performance management also refers to hard versus
soft approaches to HRM, and this applies to the area of performance management
as well. As human resources are increasingly seen as crucial to adding value and
enhancing business performance, there has been a growing trend toward
emphasising a harder, more measurement oriented approach to performance
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Such an approach is focused on tangible returns and linked to business goals,

financial indicators and related measures. Softer measures are focused more on
the management of performance, highlighting a perspective that values training,
learning and other non-financial indicators.
Cascio (2006) is one of the few Human Resource writers that recognises the
importance of being able to not only measure performance, but to express it in
quantifiable terms in the same way that marketing or strategic plans are
expressed in financial terms.
There is a body of literature that argues that performance management is a
broader concept than simple performance measurement. As we have seen,
performance management can take many forms, and can involve dealing with
issues across the internal and external organisational environment, as well as with
stakeholder concerns.
Such approaches take the view that performance management should involve the
use of both qualitative and quantitative techniques, thus focusing more on the
human or behavioural aspect of the enterprise.

Performance Interviewing and Progressive Discipline.

Most organisations with established Human Resource Management systems have
distinct processes for dealing with performance issues:

The Annual Performance Appraisal

Dessler et al (2007) define performance appraisal as a process that
identifies, evaluates and develops employee performance to meet organisational
goals. Similarly, Nankervis, Compton and McCarthy (1996) describe the process as
the evaluation of performance against organisational strategies and goals.
This type of interview seeks to evaluate a persons performance and
development needs over a substantial length of time, such as a six month or 12
month cycle. Its objective is to evaluate the employees, and or manage their
contribution to the organisation, across all their defined duties and responsibilities.
These types of appraisals may or may not be linked to salary reviews. HR literature
seems to waiver as to whether salary discussions, bonuses or other benefits should
be addressed in these interviews or should be a separate discussion. In many public
sector organisations, salary scales are predetermined and increments are limited to
within specific bands.

The Performance, counselling or discipline interview

Nankervis, Compton and McCarthy (1996) describe the counselling or disciplinary
interview as an informal discussion that is focused on work performance matters
only. This interview is a more specific meeting, typically linked to sub standard
performance in a particular task or project.

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They also note that that many HR texts and authors do not discuss the counselling
or disciplinary interview, and the link between this process and dismissal is often
overemphasised. Thus, insufficient attention is given to the approach managers
should take to ensure a positive and fair process. (This is discussed in more detail

The Grievance Procedure.

This type of interview s more correctly described as a counselling or mediation
session between employees or perhaps a manager and en employee. Typically the
cause of the problem is not directly work related but may be due to inter-personal
conflict issues.
Employees may have grievances that relate to disciplinary procedures, unfair
dismissal, complaints regarding performance appraisals, remuneration and
promotion or unfair dismissal or complaints about application of company polices
and procedures i.e. leave related polices, including maternity leave.
Finally, employees may have general complaints or grievances about relations with
other people in the workplace. A common mistake is for managers and employers
to treat grievances as a disciplinary process

360-degree Feedback
The 360-degree feedback process, which is also known as multi-rater feedback,
multisource feedback, or multisource assessment, is feedback process that uses all
inputs around an employee (Bracken, et al., 2001).
The term "360" refers to the 360 degrees of a circle which places the employee at
the centre of that circle with feedback assessments coming from a number of
work/job related stakeholders. These traditionally include: the employees
manager/supervisor, their peers, and their subordinates. Some 360-degree
assessments include customers and suppliers to gain a full picture of both internal
and external performance achievement (Maylett & Riboldi, 2007).
Research indicates a mixed picture with 360-degree feedback suggesting that it
should be applied with other forms of performance assessment to avoid any
potential organisational or individual biases (Vinson, 1996). Other research studies
have identified that self-ratings are generally significantly higher than the ratings
of others (Nowack, 1992; Yammarino & Atwater, 1993).
Some authors argue that 360 processes are much too complex to make broad
generalizations about their effectiveness (Bracken, Timmreck, Fleenor, & Summers,
2001b; Smither, London, & Reilly, 2005). Smither et al. (2005) have suggested that
the question for researchers and practitioners is not so much does multisource (360
degree) feedback work, as Under what conditions and for whom is multisource
feedback likely to be beneficial? (p. 60).

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In undertaking a meta-analysis of 24 longitudinal studies, Smither et al. (2005)

looked at individual and organizational moderators that point to many potential
determinants of behavior change. These moderators included positive feedback
orientation, positive reactions to feedback, goal setting, and taking action.

Progressive Discipline
Robbins, DeCenzo and Walter (2010) describe the immediate performance interview
process as progressive discipline.
They maintain that discipline needs to be applied in steps - progressively. It should
get more substantive-serious as or when an offence is repeated, thus the concept
of progressive. The logic of progressive disciplines is that stronger penalties for
repeated offences discourages repetition, that the actions taken must be
consistent with industrial rulings, and that mitigating factors need to be
They suggest that progressive disciplinary action commences with a verbal warning,
may proceed to written reprimands, through to suspension and finally, in the most
serious cases, dismissal.
The Performance or Discipline Interview should be part of a clear process that
escalates as performance problems escalate. Based on Australian Industrial courts,
and the NSW Employer Association Guidelines, the following is an example of a
formalised system.

An informal discussion
A first formal Interview
A second formal Interview with a written warning
A third Interview, with written confirmation of consequences of continued
poor performance
5. Termination
At all stages documentation must be maintained. Depending on the organisation
and the various state and federal legislations, as the process progresses, more
senior managers and employee advocates may become involved.

Process and Fairness: The Legal Framework of

Performance Management
Developing strategies for a perceived group of performance problems when the
cause lies elsewhere will not improve performance in a sustainable way. In fact
such actions on the part of managers and organizations will tend to be an
antecedent condition for conflict. In some societies that have developed regulated
or systems approaches to employment relations, such as Australia and New
Zealand, the misdiagnosis of a performance issue may lead to industrial action.
Invariably in such cases industrial courts will err on the side of the employee as the
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establishment of a robust performance management system is seen as an

organisational responsibility, and penalising or dismissing an employee for poor
performance when they are not the cause is typically seen as both as a violation of
due process and natural justice.
The implications of these more regulated approaches are that performance
management has also become more regulated within organisations. Typically most
large organisations will have well-developed policies and procedures, particularly
for settling grievances or dealing with poor performers requiring a disciplinary or
performance counseling interview. This may involve several steps that escalate as
the performance problem continues.
There are 3 key aspects that managers must acknowledge:
1. IR matters are often determined on procedural fairness
2. Employees are expected to be afforded natural justice
3. Internal organisational policies and procedures will be judged according
to legal tenants of due process and justice
Managers need to recognise that the way the talk and interact with others may
have industrial implications.

Terminating the Employment Relationship

Employers and managers need to be aware that dismissing an employee, whilst it
might be managerial prerogative, must happen according to the basic principles of
justice and procedural fairness.
In the Australian context, a failure to recognise this need for due process, may lead
to cases before the Industrial and civil courts ad may result and judgments being
made against an employer, despite valid reasons for the dismissal
An unfair dismissal is one that is considered harsh, unjust or unreasonable.
In determining whether a dismissal is unjust or unfair the Australian Industrial
courts seek to identify:
1. whether there was a valid reason for the termination relating to the
capacity or conduct of the employee, e.g. a demonstrated inability to
perform the job, gross misconduct, or theft;
2. whether there was a valid reason for the termination relating to the
requirements of the employer's undertaking, e.g. a genuine redundancy
where a particular job no longer exists;
3. whether the employee was notified of the reason; and
4. whether the employee was given an opportunity to respond.

Related Competencies
As identified in the Introduction to this Unit Performance Management involves
numerous activities and interpersonal skills and abilities, many of which are the
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subject of Units in the Course. The teaching team has therefore tried to identify a
range of competencies other than those examined in Units such as Empathy and
Trust and Developing Others and in the Business Communications Course dealing
with Verbal and Non-verbals, interviewing, assertiveness etc.
As noted above both Goleman et al. (2002) and Quinn et al (2015) identify conflict
management as key competency. Goleman notes that Negotiating and Resolving
Conflict as a competency with the Working with Others cluster whilst Quinns
model notes Managing Conflict as a competency within the Facilitator
Critical Competency 1: Analytical Problem Solving and Decision / Judgment
Making Abilities
As identified the discussion section of this unit, diagnosing the cause of a
performance problem is crucial in determining the appropriate approach, be it a
performance counseling interview or a more advance stage of the process. the
correct management or resolution strategy. Pedler et al. (2013) Analytical Problem
Solving and Decision / Judgment Making Abilities, which appears in the Level 2 Situation Specific Abilities and Response Tendencies group, is therefore advocated
as a critical competency. This would be similar to Boyatzis (1982) Diagnostic Use of
Concepts from the Goal and Action Management Cluster. Whilst not a direct
parallel, Quinn et al. (2008) Monitoring Individual Performance has a direct
relationship to performance management and it is this sort of data that assists
managers to identify performance gaps.
Critical Competency 2: Perceptual Objectivity
Boyatzis (1982) Perceptual Objectivity from the Focus on Others Cluster is
advanced as an important competency in managing performance. Clear when
dealing with poor performers managers, the issues are often unclear and a degree
of tension is usually present. Managers must therefore be able to maintain a degree
of objectivity about both the issue and the person. As identified the discussion
section of this unit, diagnosing the cause of a performance problem is crucial in
determining the appropriate approach, be it a performance counseling interview or
a more advance stage of the process.
Critical Competency 3: Emotional Resilience
Similar to Conflict scenarios Pedler et al. (2013) the competency of Emotional
Resilience which appears in the Level 2 - Situation Specific Abilities and Response
Tendencies group is suggested as an important management capability. As
mentioned above, performance management issues, particularly dealing with poor
performers, can be extremely stressful. The ability to remain calm assists with
Perceptual Objectivity and thus better decision-making. Boyatzis (1982) Focus on
Others Cluster, which identifies Stamina and Adaptability as a critical competency,
which is not dissimilar to Emotional resilience

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Critical Competency 4: Command of Basic Facts

As an additional competency, the Faculty would like to highlight an competency
which is critical to one of the fundamental errors made by managers when dealing
with performance issues- not knowing the policies and procedures that
organizations and in some cases the employment laws that apply to performance
management. Therefore Pedler et al (2013) is advanced as a critical competency.
Managers must know the basic facts in relation to these policies and procedures.

Required Reading
Reading 1
Carlopio, J. & Andrewartha, G. (2012) Developing Management Skills, 5th edn,
Pearson, Sydney. Chapter 14
Whetten DA & Cameron KS (2011) Developing Management Skills, 7th edn,
Prentice Hall, Englewood Cliffs. Supplement B.91

The chapter in the Carlopio and Andrawartha (2012) or its parallel international
text, the Whetten and Cameron 2011) deals with critical skills that are
fundamental to effective performance management. The discipline interview, the
performance appraisal interview, tools such as 360 Degree feedback all require the
manager to have well developed interview skills. As you read this chapter take note
that range of question styles are presented. Managers need to be able to structure
questions in such a way that key information is surfaced during the performance
management interview. They also provide a brief overview of performance-review
interviews and the range of formats that can be adopted.

Reading 2
Tovey, M. (2001) Managing performance improvement. Frenchs Forest: Prentice

For Tovey (2001), a performance improvement plan is essential to performance

management, and is viewed as the culmination of the performance appraisal
process. While improvement of performance is seen as a joint responsibility of both
employees and management, managers need to monitor the progress of
improvement just as they do for performance standards or objectives, in order to
ensure that improvement occurs.
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Working With others

Using Toveys (2001) performance improvement model (see Fig. 8.4, p. 240 of
Reading 3), apply the 10 steps to an issue or problem related to your own
organisational context.
Read the case study found on p. 254 of the above reading and answering the
accompanying questions on p. 256.

Often the success of a performance management system hinges on the extent to

which desired goals and objectives are articulated. If, for instance, a major
organisational objective is to foster innovation and knowledge creation, then
managers need to take a number of issues into consideration when engaging in the
performance management process.

Armstrong, M, 2004. Performance Management: Key strategies and practical
guidelines, Kogan Page, London.
Bracken, D.W., Timmereck, C.W., & Church, A.H. 2001a. The handbook of
multisource feedback. Jossey-Bass, San Francisco.
Bracken, D.W., Timmreck, C.W., Fleenor, J.W., & Summers, L. 2001b. 360 degree
feedback from another angle.Human Resource Management, Vol. 40, Iss. 1, pp. 320.
Brumbach GB, 1988.. Some ideas, issues and predictions, about performance
management. Public Personnel Management, Winter: pp. 387- 402.
Davis, K
& Newstrom, J, 1985, Human behavior at work: Organizational
Behaviour, McGraw Hill, New York
Dessler, G, Griffiths, J Lloyd-Walker, B, 2007. Human Resource Management, 3rd
edn, Pearson, Frenchs Forrest.
Kane, JS. 1996. The conceptualization and representation of total performance
effectiveness. Human Resource Management Review, Vol. 6, No. 2, pp.123-145.
Maylett, T. M., & Riboldi, J. (2007). Using 360 Feedback to Predict Performance.
Training + Development, September, 48-52.
Nankervis, AR, Compton, RL & McCarthy, TE 1996. Strategic Human Resource
Management, Nelson, Melbourne.
Nowack, K.M. 1992. Self-assessment and rater assessment as a dimension of
management developmen. Human Resource Development Quarterly, Summer, pp.
Robbins, SP, DeCenzo, DA Walter, R 2010. Supervision Today! 6 th edn, Pearson
Higher Education, Upper Saddle River
Rudman, R. 1995. Performance planning and review: Making employee appraisals
work. Pitman, South Melbourne.
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Segon, M. 2012. Potential Performance Productivity Matrix, RMIT GSBL.

Segon, M. & Booth, C. 2012. Potential Performance Productivity Matrix Diagram,
Smither, J.W., London, M., and Reilly, R.R .2000. Does performance improve
following multisource feedback? A theoretical model, meta-analysis and review of
empirical findings. Personnel Psychology, Vol. 58, pp. 33-66.
Stewart, D. 1993. The Power of People Skills, John Wiley & Sons, Boston.
Weiss, T & Hartle, F. 1997. Performance Management. St Lucie Press, Boca Raton,
Wheeler, M 1994. Problem People at Work, and How to Deal with them, Century
Books, London.
Yammarino, F. J., & Atwater, L. E. (1993). Self-perception accuracy: Implications
for human resource management. Human Resource Management, Vol. 32, Iss. 2&3,

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