2/1/2012

PERFORMANCE MANAGEMENT

Instructor: LTT Xun 1

Content

Instructor: LTT Xun 2

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Introduction
Performance
What an employee does and does not do.
Quantity of output Quality of output
Timeliness of output Presence at work
Cooperativeness

What is performance management?

Processes used to identify, encourage, measure, evaluate,
improve, and reward employee performance
Provide information to employees about their performance.
Clarify organizational performance expectations.
Identify the development steps that are needed to enhance
employee performance.
Document performance for personnel actions.
Provide rewards for achieving performance objectives.
Instructor: LTT Xun 3

Introduction
Individual Performance Factors
Individual ability to do the work
Effort level expended
Organizational support

Performance (P) = Ability (A) x Effort (E) x Support (S)

Instructor: LTT Xun 4

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Introduction
Why performance management?
Strategic purpose link employee activities with the
organizations goals
Administrative purpose salary administration, promotions,
retention-termination, lay-offs and recognition of individual
performance
Developmental purpose - to develop employees; to improve
performance

Instructor: LTT Xun 5

Introduction

Organizational
Strategy
Long and short
term goals
and values

Individual
Attributes Individual Objective
(skills, abilities) Behaviors Results

Situational
Constraints
Culture and
economic
conditions

An Organizational Model of Performance Management

Instructor: LTT Xun 6

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Introduction

Components of Effective Performance Management

Instructor: LTT Xun 7

Approaches to measuring performance

Category Rating Approach
A simplest approach, but not providing any specific guidance on
how an employee can support the companys goals or correct
performance deficiencies
Need to define a set of traits and evaluate individuals on them
Common techniques: graphic rating scales, checklist

Instructor: LTT Xun 8

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Approaches to measuring performance

Category Rating Approach - Graphic rating scales
A scale that allows the rater to indicate an employees performance
on a continuum of job behaviors.
Aspects of performance measured:
Descriptive categories, job duties, and behavioral dimensions
Behavioral rating scales (e.g., BARS)
Drawbacks
Restrictions on the range of possible rater responses
Differences in the interpretations of the meanings of scale items
and scale ranges by raters
Poorly designed scales that encourage rater errors
Rating form deficiencies limit effectiveness of the appraisal

Instructor: LTT Xun 9

Approaches to measuring performance

Category Rating Approach - Checklists
A performance appraisal tool that uses a list of statements or work
behaviors that are checked by raters.
Can be quantified by applying weights to individual checklist
items.
Drawbacks
Interpretation of item meanings by raters
Weighting creates problems in appraisal interpretation
Assignment of weights to items by persons other than the raters

Instructor: LTT Xun 10

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Approaches to measuring performance

Sample
2005 Southwestern College Publishing. All rights reserved.

Performance
Appraisal Form

Figure 118

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Approaches to measuring performance

Terms Defining Standards at One Company

Figure 119

2005 Southwestern College Publishing. All rights reserved. Instructor: LTT Xun 12

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Approaches to measuring performance

Comparative approach
Need the rater to compare an individuals performance with
that of others
3 techniques: ranking, forced distribution, and paired
comparison
Paired comparison
Comparing every employee with every other employee in the
work group and scoring

Instructor: LTT Xun 13

Approaches to measuring performance

Comparative approach - Ranking
Listing of all employees from highest to lowest in performance.
Drawback
Does not show size of differences in performance between
employees
Implies that lowest-ranked employees are unsatisfactory
performers.
Becomes an unwieldy process if the group to be ranked is
large.

Instructor: LTT Xun 14

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Approaches to measuring performance

Comparative approach - Forced Distribution
Performance appraisal method in which ratings of employees
are distributed along a bell-shaped curve.
Drawbacks
Assumes a normal distribution of performance.
Resistance by managers to placing individuals in the lowest
or highest groups.
Providing explanation for placement in a higher or lower
grouping can be difficult.
Is not readily applicable to small groups of employees.

Instructor: LTT Xun 15

Approaches to measuring performance

Forced Distribution on a Bell-Shaped Curve

Figure 119
2005 Southwestern College Publishing. All rights reserved. 16

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Approaches to measuring performance

Behavioral Approach
Define the behaviors to be effective in the job
Narrative approach - Critical incident method
Manager keeps a written record of highly favorable and
unfavorable employee actions.
Drawbacks
Variations in how managers define a critical incident
Time involved in documenting employee actions
Most employee actions are not observed and may become
different if observed
Employee concerns about managers black books

Instructor: LTT Xun 17

Approaches to measuring performance

Results approach MBO
Focusing on managing the objective, measurable results of a job
or work group

What Is Management by Objectives?

Organizational
Objectives

Divisional
Objectives

Departmental
Objectives

Individual
Objectives

Instructor: LTT Xun 18

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Approaches to measuring performance

Quality Approach
A performance management system designed with a strong
quality orientation can be expected to:
Emphasize an assessment of both person and system factors
in the measurement system.
Emphasize that managers and employees work together to
solve performance problems.
Involve both internal and external customers in setting
standards and measuring performance.
Use multiple sources to evaluate person and system factors.

Instructor: LTT Xun 19

Performance Information

Who provides performance information?

Manager
Peers
Subordinates
Self
Customers

Instructor: LTT Xun 20

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Performance Information
360-degree appraisal
A appraisal system for managers including evaluations from a
wide range of persons who interact with manager
Upward feedback

Instructor: LTT Xun 21

DISCUSSION QUESTION

What are advantages and disadvantages of sources for

performance information?

Instructor: LTT Xun

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Rater errors in performance measurement

Types of errors
Similar to me
Contrast
Distributional Errors
Halo and Horns
Reducing Rater Errors
Rater error training
Rater accuracy training
Appraisal Politics
A situation in which evaluators
purposefully distort ratings to achieve
personal or company goals.

Instructor: LTT Xun 23

Performance feedback
Effective Performance Management Systems (PMS) are:
Consistent with the strategic mission of the organization
Beneficial as development tool:
Review process to prevent undue control of careers
Counseling to help poor performers improve
Useful as an administrative tool:
Formal evaluation criterion that limit managerial discretion
Formal rating instrument linked to job duties and
responsibilities
Legal and job-related (Appraisal criteria based on job analysis)
Viewed as generally fair by employees
Effective in documenting employee performance

Instructor: LTT Xun 24

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Performance feedback
Managers role in an Effective Performance Feedback process
Feedback should be given every day, not once a year.
Create the Right Context for Discussion.
Ask employees to rate their performance before the session.
Encourage the subordinate to participate in the session.
Recognize effective performance through praise.
Focus on solving problems.
Focus feedback on behavior or results, not on the person.
Minimize criticism.
Agree to specific goals and set a date to review progress.

Instructor: LTT Xun 25

Performance feedback
Creating Effective Performance Management Systems

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Instructor: LTT Xun

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DISCUSSION QUESTION

What are differences between performance management and

performance appraisal?

Instructor: LTT Xun

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