PERFORMANCE

MANAGEMENT

Group 5
Bulut, Kyle
Cano, Jeffrey
Gregorio, Gabby
Manguba, Mike
Tan, Kim

OBJECTIVES
Identify the major determinants of individual
performance.
Discuss the three general purposes of
performance management.
Identify the five criteria for effective performance
management systems.
Discuss the four approaches to performance
management.
Discuss the pros and cons of the different sources
of performance information.
Identify the cause of a performance problem.

WHAT IS PERFORMANCE MANAGEMENT?

Employees outputs and activities = Companys

goals

DEFINING PERFORMANCE
Specifies which aspects of performance are
relevant to the organization through job analysis
Job Analysis- getting detailed information about
jobs

MEASURING PERFORMANCE

Measures those specified aspects through

performance appraisal
Performance Appraisal- method for managing
employee performance

FEEDING BACK PERFORMANCE

INFORMATION

Provides feedback to the employees through

performance feedback

Performance feedback- process of providing

employees information about their performance
effectiveness

PRACTICE OF PERFORMANCE
MANAGEMENT
Frequency of Reviews= 76% Annually
Use: Individual performance management (82%),
Pay decisions (66%), Setting individual
development needs (52%), Establishing training
priorities (17%), Succession planning (21%)
Many companies are moving to more frequent,
streamlined performance reviews.

MODEL OF PERFORMANCE MANAGEMENT

PURPOSES OF PERFORMANCE
MANAGEMENT

Strategic

Administrative

Developmental

STRATEGIC

Link employee activities with the organizations

goals

ADMINISTRATIVE

Administrative decisions like salary, pay raises,

promotions, retention, terminations, layoffs

DEVELOPMENTAL

Develop employees who are effective at their jobs

RECOMMENDATIONS FOR
DEVELOPING AN EFFECTIVE
PERFORMANCE MANAGEMENT
SYSTEM
Mirror the corporate culture and values

Have visible CEO and senior management support.

Focus on the right company performance measures.
Link job descriptions to the performance management system.
Differentiate performance fairly and effectively.
Train managers in performance management.
Communicate the total rewards system.
Require managers to search, offer and acquire regular
performance feedback.
Set clear expectations for employee development.
Track effectiveness of the performance management system.
Adjust the system as required.

PERFORMANCE MEASURES
CRITERIA

STRATEGIC CONGRUENCE
- the extent to which the performance management
system elicits job performance that is
consistent with the organizations strategy,
goals and culture.

VALIDITY
- the extent to which a performance measure
assesses all the relevant and only the
relevantaspects of job performance.

RELIABILITY
- the consistency of a performance measure; the
degree to which a performance measure is free
from random error.

ACCEPTABILITY
- the extent to which a performance is deemed to
be satisfactory or adequate by those who use
it.

SPECIFICITY
- the extent to which a performance measure gives
detailed guidance to employees about what is
expected of them and how they can meet
those expectations.

APPROACHES TO MEASURING
PERFORMANCE

COMPARATIVE APPROACH
- the comparative approach to performance measurement
requires the rater to compare an individuals
performance with that of the others. This approach
usually uses some overall assessment of an individual
performance or worth, and seeks to develop some ranking
of the individuals within a work group.

THERE ARE THREE (3) KINDS:

1. Ranking

Simple Ranking the employer ranks every one from the

highest performer or the poorest performer (or best to
worst).
Alternative Ranking rater picks first the best employee,
then keeps him. The left names would slowly taught
about who the worst performer was and crosses his name
off the list, and so on.

2. Forced Distribution

This technique requires the manager to put certain

percentages of employees into predetermined categories.

3. Paired Comparison

This method requires managers to compare every

employee with every other employee in the work group,
giving an employee a score of 1 every time he or she is
considered the higher performer. In the end, the manager
computes for the number of times each employee received a
favorable decision, making it their evaluation.

EVALUATING THE COMPARATIVE

APPROACH
PROS:

Effective tool in differentiating employee performance

Eliminates problems of leniency, central tendency, and strictness

Good basis for pay raises and promotions

Easy to develop, easy to use

CONS:

If not enough evaluators, personal biases and opinions would

greatly affect the ratings
Lack for specificity for feedback purposes, as employees arent
aware of what they should improve on for their ranking
individually

ATTRIBUTE APPROACH

- This approach focuses on the characteristics and traits

of the people that are geared towards the success of the
company. The techniques that use this approach define a
set of traits such as initiative, leadership, and
competitivenessand evaluate individuals on them.

EVALUATING THE ATTRIBUTE

APPROACH
PROS:

Easy to develop

Generalizable across variety of jobs

If much attention is devoted in identifying attributes related to job

performance, it would be reliable and valid
CONS:

Little congruence between the techniques and the companys strategy

Could be vague due to different interpretations by different raters

BEHAVIORAL APPROACH

CRITICAL INCIDENTS

Requires managers to keep a record of specific

examples of effective and ineffective performance
on the part of each employee.

BEHAVIORALLY ANCHORED RATING

SCALES

BEHAVIORAL OBSERVATION SCALES

ORGANIZATIONAL BEHAVIOR
MODIFICATION

Entails managing the BAHAVIOR of employees

through a formal system of BEHAVIORAL
feedback and reinforcement.

ASSESSMENT CENTERS

A process in which multiple raters evaluate

employees performance on a number of exercises.

RESULT APPROACH

MANAGEMENT BY OBJECTIVES

QUALITY APPROACH

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.

DIFFERENCES FROM TRADITIONAL

APPROACH
Most existing systems measure performance in
terms of quantity, not quality
Employees are held accountable for good or bad
results to which they contribute but do not
completely control
Companies do not share the financial rewards of
successes with employees according to how much
they have contributed to them
Rewards are not connected to business results

STATISTICAL PROCESS CONTROL

TECHNIQUES
Process-flow analysis
Cause and effect diagrams
Pareto chart
Control charts
Histograms
Scattergrams

PARETO CHART

CONTROL CHART

HISTOGRAM

SCATTERGRAM

PERFORMANCE INFORMATION
SOURCES
Managers

Customers

Self

Peers

Subordinates
8-44

HEURISTICS
Research consistently reveals that humans have
tremendous
limitations
in
processing
information.
Because we are so limited, we often use
heuristics, or simplifying mechanisms, to make
judgments, whether about investments or about
people.
These
heuristics, which appear often in
subjective measures of performance, can lead to
rater errors.
Performance
evaluations
may
also
be
purposefully distorted to achieve personal on
company goals (appraisal politics).

PERFORMANCE MEASUREMENT
RATER ERRORS
1. Similar to Me
2. Contrast
3. Distributional
Errors
4. Halo and Horns
5. Appraisal Politics

8-46

REDUCING RATER ERRORS AND

POLITICS

Approaches to Reducing Rater Error:

Rater error training
Rater accuracy training
Calibration Meetings - attended by
managers to discuss employee performance
ratings

8-47

PERFORMANCE FEEDBACK
It is necessary to feed performance information
back to employees so they can correct any
deficiencies.
The performance feedback process is complex and
provokes anxiety for both the manager and the
employee.

PERFORMANCE FEEDBACK (CONT.)

To provide effective performance feedback managers

should consider the following recommendations:

Feedback should be given frequently, not once a year.

Create the right context for the discussion.
Ask the employee to rate his/her performance before the
session.
Encourage the subordinate to participate in the session.

Tell-and-sell
Tell-and-listen
Problem-solving approach

Recognize effective performance through praise.

Focus on solving problems.
Focus feedback on behaviour or results, not on the person.
Minimize criticism.
Agree on specific goals and set a date to review pro

WHAT MANAGERS CAN DO

Diagnose the causes of poor performance.

Input

Employee
Characteristics

Performance
Standards/
Goals

5 Factors to
Consider
When Analyzing
Poor Performance

Feedback

Consequences

WHAT MANAGERS CAN DO (CONT.)

Marginal employees are those employees who
are performing at a bare minimum level because
of lack of ability and/or motivation to perform
well.
Four different types of employees:

Solid

performers
Underutilizers
Misdirected effort
Deadwood

DEVELOPING SYSTEMS
Because performance measures play a central
role in such administrative decisions such as
promotions, pay raises, and discipline, employees
who sue an organization primarily attack
measurement systems on which the decisions
were made.
Two types of cases have dominated:

Discrimination

Uniform Guidelines on Employee Selection Procedures

Unjust

dismissal

CHARACTERISTICS OF A SYSTEM
THAT WILL WITHSTAND LEGAL
SCRUNITY

Developed by conducting job analysis that

ascertains the important aspects of job
performance.
Based on either behaviours or results.
Raters should be trained.
Reviewed by upper-level management; employees
should be able to appeal.
Provide some form of performance counseling or
corrective guidance for poor performers.
Engages multiple raters. Employees should be
asked to comment on their appraisals.

USE OF TECHNOLOGY
Electronic tracking systems include hand and
fingerprint recognition systems, global
positioning systems (GPS), computer software,
and systems that can track employees using
handheld computers and cellphones.
To avoid the potential negative effects of
electronic monitoring, managers must
communicate why employees are being
monitored.

SUMMARY
Performance management is one of the key
factors in gaining competitive advantage.
These systems serve strategic, administrative,
and developmental purposes.
Deciding on which approach and which source of
performance information are best depends on the
job in question.
Performance information has to be sent back to
employees in a way that results in improved
performance rather than defensiveness and
decreased motivation.

MINI-QUIZ

________ systems seek to tie the formal

performance appraisal process to the companys
strategies by specifying at the beginning of the
evaluation period the types and level of
performance that mush be accomplished to
achieve the strategy.
A.) People Development System
B.) Performance Planning and Evaluation
C.) Strategic Congruence
D.) Organizational Behaviour Modification

Managers find that out of all the primary sources

for performance information, _____ helps them
make more appropriate performance ratings
based on the discussion and feedback they receive
from employees.
A.) peer evaluation
B.) subordinate evaluation
C.) self-evaluation
D.) customer evaluation

Employees with poor performance resulting from

lack of ability but not motivation.
A.) Underutilizers
B.) Solid Performers
C.) Deadwood
D.) Misdirected efforts

VIDEOS TO WATCH:

http://www.youtube.com/watch?v=6GufMa-J8cI
http://www.youtube.com/watch?v=DgiHW10tRe4&
feature=related

THANK YOU!