3.1. Perfromanace Management Admin

Performance Management
Ishwar K. Karki
Apex College
ADMINISTRATION OF
PERFORMANCE
APPRAISALS
Stages of PMP
Key Result Areas
Objectives
Competencies, skills,
and knowledge
Development plan
Reaching agreement
End-of-Year
Review
Continuous
progress
and
developmen
t
Tracking
Feedback
Coaching
Mid-Year
Reviews
Administration Process
Stage
Actions
Planni
ng
1. Performance
Management Process
Manuals (Formats, tools,
procedural guidelines,
Corporate strategy etc.)
2. Communication memo
3. Rollout sessions
4. Meeting between staff
and managers / align
with corporate goals
5. Staff decide performance
plan (KRA /SMART goals)
6. Discuss with immediate
supervisor , plan for
expectation & gaps
7. Agreement & Sign off
8. Follow up for completion
9. Forward to HR
10.Compilation of Training
Responsibilities
1. HRD / Top
management
2. HRD
3. HRD /Line
Managers
4. Staff and
Immediate
Supervisor
5. Staff
6. Staff and
Immediate
Supervisor /
HOD
7. Staff &
Time line
Beginning of
the Review
period / Year
Administration Process
Stage
s
Actions
Responsibilities
Time
line
Tracki
ng
1. Coaching / Mentoring
2. Periodic Review and
feedback
3. Note down critical incidents
4. Realign, if required.
5. Trainings (in-house/
external)
1. Immediate
Supervisor
2. ---- do ---3. ----- do ---4. Staff & Supervisor
5. HRD / Supervisor /
HOD
During
the
Review
period /
Year
Revie
w
1.
2.
3.
4.
1.
2.
3.
4.
5.
6.
7.
8.
9.
End of
the
Review
period /
Year
Preparatory meeting
Self review by staff
Discuss with Supervisor
Agreement & Sign off
(achievement and gaps
identified)
5. Forward to next level and
HR
6. Tracking and compilation
7. Revert if, anomalies
observed
Supervisor / HOD
Staff
Staff & Supervisor
Staff & Supervisor
Supervisor / HOD
HRD
HRD
HRD
Management /
Committee
10.HRD /
INITIATING THE PERFORANCE MANAGEMENT PROCESS
SETTING GOALS AND

EXPECTATIONS
Goal setting
Goal Alignment
The Plan: Goals and Success

Criteria
In order to goals to be measured, a critical component in
writing effective goals, one has to consider the following
measurement or success criteria
Types of Individual Goal
Values and
Competencies
DEVELOPMENT PLANNING
Linkage
Performance
Management
Management = getting work
done through others
Managers performance is only
as good as his/her employees
performance
Managers job =
performance
management of others
Performance
Management
Organizational system
Focusing on employee
performance
Consistently applied throughout
organization
With a supporting structure
Names of Systems
Performance Appraisals
Evaluation Systems
Job Review Systems
360 Degree Feedback Systems
Performance
Management
Ensuring appropriate
performance by all employees
through:
-Reinforcement
-Rewards
-Modeling
-Coaching
-Training
-Development
Using a consistent feedback
Working of Performance
Management
Managers Speaks with Employee regarding
performance
Continuously
Once per Year
Formal goals
Organizational Reporting System
Tied to Organizational Outcomes
Examples of System
Output
Words and What They Mean
Exceptionally well qualified

Made no major errors
yet
Active socially
Parties & drinks too
much
Family is active socially
Family drinks too much
Plans for advancement
Buys drinks for all of
the boys
Aggressive
Obnoxious
Uses logic on difficult jobs
Gets someone
else to do it
Expresses himself well
Speaks the local
language
Has Leadership qualities
Is tall or has a loud
voice
Keen sense of humour
Knows lots of dirty
jokes
Career-minded
Back-stabber
Relaxed attitude
Sleeps at work
PERFORMANCE =
Doing present job at a
certain level (high or low)
as measured by a formal
system
POTENTIAL =
Includes future service,
learning interest,
motivation level
PROBLEM =
Deviation from expectations
Do something in different way
Not do something
o something not expected/neede
Opportunity
Reinforce/Reward Behavior
Change Behavior
Model Behavior
Establish Culture
PERFORMANCE
MANAGEMENT
-Based on Scientific Management

concepts
-Focus on observable performance
-Goal directed
-Planning required and formalized
-Consistent, continuous collection,
analysis,
and collection of data
-Value of feedback reinforced
-Facilitates benchmarking
Trends
Shift from viewing financial
figures as main criteria to one
of multiple indicators
More weight on indicators of
efficiency and effectiveness
Change to viewing PM as ongoing, evolving process
Associated Costs
Staff Costs
Production and Processing
Costs
Training Costs
Action Costs
Opportunity Costs
Key PM Questions
1.
2.
3.
4.
Why assess performance

What performance to asses
How to assess performance
Who do assess
performance
5. When to assess
performance
6. How to communicate
performance assessment
The WHY of Performance

Management Systems
-Administer Salary & Wages
-Correct Performance/Behavior
-Plan for Future (promotion, transfer, career dev)
-Facilitate Decision-Making (counseling,
terminations)
-Facilitate Human Resource

Planning
-Create Culture
-Building Good Relationships
-Increase Organizational Loyalty
-Determine Effectiveness of
WHAT to Assess
Skills/Abilities/Needs/Traits of
Individuals
That Interact with the
Organization to Produce
Behaviors Which
Skills/Abilities/
Needs/Traits
Behaviors
Results
Job Knowledge
Perform Tasks
Sales
Strength
Obey Instructions
Production Levels
Coordination
Report Problems
Production Quality
Business Knowledge Maintain Equipment
Scrap/Waste
Desire to Achieve
Follow Rules
Accidents
Dependability
Submit Suggestions
Equipment Repairs
Creativity
Follow-up
Customers Served
Leadership
Write Reports
Customer
Satisfaction
Honesty
Completes Reviews
Feedback
Measures Focus
Consistent indicators across
industry or similar
organizations
Comparison of indicators
over time in organization
Comparisons with predetermined standard
Approaches to PM
Comparative
Attribute
Behavioral
HOW to Assess
Performance
Traditional
Management-by-Objective
Assessment Center
Peer Review Panel
Critical Events
Upward Feedback
360 Degree
Techniques of PM
Essay (open-ended)
Management by Objective
Ranking
Paired Comparisons
Forced Choice
Forced Distribution
Ratings:
-Checklist
-Scales
-Behaviorally Anchored
Ratings (BARS)
Essay Technique
Describe in detail the quantity and quality
of the
employees performance during the past
twelve
months.
Describe the employees strength and
weakness.
How do you describe the employees
potential
within the company?
What leadership skills does the employee
bring
Morgan Stanleys Essay

System
Consider objectives identified in prior years Summary as well
as this years objectives.
Evaluation:
Strengths
1.
2.
3.
Development Areas
1.
2.
3.
Comments
Comments
Examples of essays on
PMs.
His men would follow him anywhere, but only out of curiosity.
I would not suggest breeding for this person.
When she opens her mouth, it seems that it is only to change
the foot that was previously there.
He has carried out each of his duties to his entire satisfaction.
He would be out of his depth in a car park puddle.
This person is like a gyroscope: always spinning at a fast pace,
but not really going anywhere.
This person has delusions of adequacy.
Continued examples.
Since my last report, he has reached rock bottom and is
digging.
She sets low personal standards and then consistently fails
to
meet them.
He has the wisdom of youth & the energy of old age.
This person should go far. And, the sooner he starts, the
better.
In my opinion, this pilot should not be authorized to fly
below
250 meters.
This person works well under constant supervision and when
cornered.
This man is depriving a village somewhere of its idiot.
Management-by-Objective
Examples
Employee will contribute to organizat

profit margin by lower costs in depa
by 3.5percent.
To implement new recruitment system

employee will evaluate the effective
the advertisements placed during t
Ranking Example
Manager ranks all employees from be

Overall performance
On specific criteria (communicatio

customer relations skills, etc.)
Paired Comparisons
Example
Rank each employee grouping overal

on a characteristic:
Employee
Employee
Employee
Employee
Employee
Employee
etc.
A and Employee B
B and Employee C
A and Employee C
C and Employee D
D and Employee A
D and Employee B
Forced Distribution
Example
Pace each of the employees in your
department in the following
categories based upon overall or
specific category performance:
Top 10 percent:
percent:
50 89 percent:
percent:
Outstanding:
10-49
Bottom 10
Average:
General Electrics
Distribution
The Vitality Curve
High
Top Performers
10%
Highly Valued
70%
Least Effective
20%
Promotability
Medium
Limited
Ratings Example:
Checklists
Program Auditor:
_____ 1. Unable to separate important from irrelevant
data.
_____ 2. Omits important info from summaries.
_____ 3. Cross-references to improve reporting.
_____ 4. Produces summaries which lead to good
reports.
_____ 5. Requires excessive instruction to produce
work.
_____ 6. Unable to reduce data to manageable form.
_____ 7. Communicates well with peers on reports.
_____ 8. Fails to meet deadlines.
_____ 9. Provides detailed, professional work.
_____ 10. Protects confidentiality of information.
Ratings Example: Scales

Rate the employees behavior on the scale provided.
Excellent Good Fair Poor N/A
4
3
2
1
___
Reasoning ability
___
Decisiveness in Decision-making
Imagination & originality
Ability to plan and control
Cooperation with peers
4
Cooperation with management 4
Professionalism
4
Interpersonal skills
4
4
4
3
3
3
4
3
3
3
2
2
2
1
1
1
___
___
___
___
2
2
2
1
1
1
3
___
___
___
2
Citibanks Performance
Scorecard
Measurements
Standards
Managers assessment
Leadership,
Ethics/Integrity
Customer Interaction
Community Involvement
Contribution to Overall Business
People
Managers assessment
Performance
Teamwork
Training & Development
Employee Satisfaction
Control
Audit
Legal
Regulatory
Auditors standards
Below
Par
Par
Above
Par
Citibanks Performance
Scorecard..
Measurements
Customer Satisfaction
External company survey

Goal of 80%
Strategy Implementation
Objective standards
Households
Cross-sell, splits, mergers
Retail asset balances
Market share
Financial
Revenue
Expense
Margin
Objective stadards
Below
Par
Par
Above
Par
Citibanks Link to
Compensation
Ratings
Bonus
Above Par
30%
Par
15%
Below Par
0%
Microsofts PA System
Overall Employee Rating:
5
= Exceptional performance rarely achieved; precedent setting

results
4.5 =Consistently exceeds all requirements & expectations work
highly valued
4 =Consistently exceeds position requirements and expectations;
work often noteworthy
3.5 =Exceeds position requirements; successful in all objectives
3 =Meets position requirements and expectations; meets most
or all objectives; needs some development for quality
2.5 =Falls below performance standards and expectations; has
performance deficiencies
1.0-2.0 =Does not meet minimum requirements in critical aspects of
job
Microsoft:
Adding Distribution to
Rankings
4.0 +
= 35% of
employees
3.5
= 40% of
employees
3.0 or lower = 25% of
employees
Ratings Example: BARS

Indicate the appropriate level of performance on each factor:
Quantity of work
Volume low &
erratic
Satisfactory steady Volume above

expectations
volume
Quality of work
Results accurate and

Results generally
Results always accurate;
thorough
inaccurate
model work
and not thorough
Judgment
Systematic,
analytical, good
with complex
problems
Practical
judgment,
solves problems,
difficulty with
Does not always

show good
judgment; problem
analysis
not always adequate
Microsoft Competency Toolkit

FACTOR:
COMPETENCY:
Level 1
Individual Excellence
Intellectual Horsepower (is bright, intellectual sharp, le
Level 2
Level 3
Level 4
Structures basic
info accurately; draws
informed conclusions
Analyzes & organizes

complex info from specific
content area, identifying
key issues, assessing
impact, drawing reasonable
conclusions
Analyzes, explains & draws

logical conclusions based
upon complex data from
multiple content areas
Rapidly identifies the

significance of info &
insightfully determines
strategic action.
With guidance, learns

quickly on the job
Learns new skills & ideas

rapidly
Rapidly learns &

assimilates complex info
involving unfamiliar
situations & circumstances
Rapidly learns new

concepts & ideas; integrates
& assimilates highly
complex info across broad,
multi-functional content
areas
Picks up new skills &

understands ideas when
structured
Quickly adjusts thinking for

new info or ideas
Learns effectively from

experience
Is able to apply & explain

logic related to problems
Microsoft Competency Toolkit

FACTOR:
COMPETENCY:
Long-term Approach
Developing people (provides job-relevant learning, devel
exercises, and feedback to enhance individual performance)
Level 1
Level 2
Level 3
Level 4
Assigns challenging tasks

and assignments that will
help people develop their
skills
Takes time to learn about

and understand direct
reports; career goals
Actively coaches direct

reports how to get the most
learning from their current
assignments
Holds managers
accountable for developing
people in their group/
organization
Provides direction in
correct performance of
tasks and assignments
Provides stretch jobs and

assignments for direct
reports to help them
develop their skills
Gives direct reports

candid, thoughtful
feedback on their strengths
and weaknesses
Identifies key people in

his/her organization to
assume high-level
management
responsibilities, and is an
advocate for them when
opportunities for
advancement occur
Critical Incident Example

Employee Name:___________________________________
Date of Incident:__________________
Type of Incident:___________________________________
Individuals Involved:
Description of Incident:
Outcome of Incident:
Recommendations:
Date Discussed with Employee:____________

Supervisor Signature:______________________________
Employee Signature: ______________________________
Focus
Judgmental
Developmental
Time
orientation
Past performance
Preparation for
future performance
Method
Improving
performance by
changing behavior
through rewards
Improving
performance by selflearning & personal
growth
Supervisors
Role
Judge who appraises
Counselor who
listens, helps,
encourages & guides
Subordinates
Role
Listener, reactor to,

defender of past
performance
Actively involved in
charting future plans
Criteria for Performance

Measures
Relevant
Reliable
Discriminating
Practical
Problems with Performance

Measures
Controllability
Motivational impact
Fallout
Role Modeling Impact
Reliability
Relevance
Control
WHO Should Assess

Performance
Superior Only
Subordinate(s)
Peers/Coworkers
Self
Customers
Others
Subordinates
All Stakeholders
WHEN to Assess
Performance
Probation Period
Annually (anniversary date, assigned
date, set date for all)
Semi-annually
For Cause
On-going
As needed
How to Communicate
PM Info
Orally
In Writing
Formally
Informally
Public
Private
Handling Performance
Issues
What to do
Where to start
How to do it
Thank you
PROBLEM =
Deviation from expectations
Do something differently
Not do something
o something not expected/neede
Performance Problems
Research shows that there is a huge performance
gap between high and low performers in any
organisation
between 30%-50% for unskilled jobs
and up to 100% for highly technical ones.
From : Why people do not get fired: the psychology of discipline avoidance
- http://www.workrelationships.com/site/articles/performance_management.htm
PROBLEM ID
PRELIMINARY SCAN
What shouldnt be happening?
Impact of this?
Worth pursuing?
ORGANIZATIONAL SCAN
Match strategic plan?
Critical functions missing?
Culture and performance gaps?
FUNCTIONAL JOB ANALYSIS

Specific job deficiencies?
Job knowledge and training?
CAUSAL ANALYSIS
ID:
When problem began
What else has changed
PARETOS LAW: Rule of
20/80
80% of any problem is
caused by 20% of possible
CAUSES OF
PERFORMANCE
PROBLEMS
-Lack of ability
-Low motivation
-Poor work ethic
-Substance abuse
-Personal problems
-Lack of time
-Poor peer relationships
-Unfamiliarity with equipment or
process
Perf
Poor Perf
Excellent
PERFORMANCE
OPPORTUNITIES
No/Low Knowledge
High Knowledge
---
OK
Training
Org
Development
Perf
Poor Perf
Excellent
PERFORMANCE
OPPORTUNITIES
No/Low Knowledge
High Knowledge
ALTERNATIVE
SOLUTIONS
1.Return to old system

2.Fire, transfer, hire new
3.Train
4.Reassign or isolate
RATE EACH BY:
-Contribution to Objectives
(high, medium, low)
-Cost to fix and to ignore
(high, medium, low)
RANK IN ORDER
Training & Development

Definition: planned, continuous effort by
management to improve employee
competency levels and org performance.
TRAINING: provide learners with
knowledge & skills for job
DEVELOPMENT: prepare organization and
employees to keep pace with industry
and fields of expertise
T
&
D
TRENDS
Skill requirements change with more work complexity
Workers more educated
Workers more diverse
Org restructuring continues
Training often outsourced
More technology use in Training
Training Departments = Brokers
J-I-T and J-W-I-N Training Grow
Increase on human performance
Factors Influencing T &

D
Top management
support
Commitments from Specialists and
Generalists
Technological Advances
Organizational Complexity
Behavioral Science Knowledge
Learning Principles
Performance of Other Human Resource
TRAINING & DEVELOPMENT

METHODS
Coaching
Mentoring
Business Games
Case Studies
Role Playing
Videotapes
In-Basket Training
Internships
Job Rotation
Computer-
Methods (continued)
Cyberlearning:
-Internet/Intranet
-Virtual Reality
-Distance Learning
-Video Conferencing
Classroom Programs
Corporate Universities
Colleges & Universit
On-the-Job Training
Apprenticeship Train
Simulators
Vestibule Training
DEVELOPMENT
1. HARDWARE
-equipment
-money
-people
-space
-transportation
2. SOFTWARE
-policies & procedures
systems
-communication systems
3. BEHAVIORAL
-supervision
relationships
-reward
-structure
-peer
EMPLOYEES PERFORMANCE :
CATEGORIES AND STRATEGIES
DEADWOOD:
No training; demotions or removal;
remedial
work; training to prevent loss;
orientation to
lower job; divest
WORKHORSES:
Training stressing improvement,
orientation or
maintaining skills; career counseling on
limits
PROBLEM CHILDREN:
IMPLEMENTATION PLAN
Priorities Options
Budget Development
Selection of Methods
Plan with Benchmarks
Pilot Program
Evaluation
Adjustments and New Plan
Full Implementation
On-Going & Periodic Evaluations
(Is it working? If no, why not?)
Why PM Is Difficult
Job/Outcomes not quantified
Personal relationships with employees
Unable to give criticism
Personality biases
Poor communication
Conflicting Goals
Playing God
Errors in Performance
Measurement
Strictness or Leniency
Central Tendency
Halo Error
Recency Error
Supervisor Bias
Overall Ratings
Correcting PM Errors
Isolate Job Areas

Observe Regularly
Minimize Number of Ratings Completed
Train Raters
Define Dimensions Better
Give Feedback
Use Continual Feedback
Include Other Sources
Decrease Generalities, Include Specifics
Effective PM Systems
System acceptable to employees
Managers use system regularly & correctly
Perception of being treated fairly by system
Useful feedback provided
Focus on problem solving, not blame
Serve to increase productivity & satisfaction
System used by organization
Training for PM
Interviews
Have documentation
Be objective
judge job, not
individual
Use specific examples
Share control
Training.continued
Solicit & give feedback

-Clear
-Constructive
-Descriptive, not judgmental
Avoid arguments
Strive for consistency
Get it down in black and
white
By-the-book
PRIOR TO PM
INTERVIEW
Decide on best
time
Decide on best
place
Prepare facilities
Gather info and
materials
Prepare employee
Plan the opening
After PM Interview
Meet deadlines
Solicit input
Reinforce, reward, punish
(follow through)
Review regularly
How to Destroy PM
System
Do not follow policies
Be inconsistent in application
Treat it as unimportant
Do not follow-up
Reprimand in public; Reward
in private
Conduct when angry
The WHY of Performance

Management Systems
-Administer Salary & Wages
-Correct Performance/Behavior
-Plan for Future (promotion, transfer, career dev)
-Facilitate Decision-Making (counseling,
terminations)
-Facilitate Human Resource

Planning
-Create Culture
-Building Good Relationships
-Increase Organizational Loyalty
-Determine Effectiveness of
PERFORMANCE
MANAGEMENT
Effective performance management
systems enable an organization to
objectively and systematically rate
employee performance, while providing
the tools necessary to take that
performance level and equate it to
compensation actions.
PERFORMANCE MANAGEMENT
Overview:
The core of any organization is its staff. How

effectively an organization maintains a
quality team of employees is linked to its
ability to manage its staff and recognize
the contributions of each player.
Overview:
Employees have always expressed the desire
for open feedback regarding their
performance. More and more companies are
embracing the pay for performance concept
and its tie to compensation. A well-executed
performance management plan enables an
organization to achieve critical goals:
Goals:
Recognize the efforts and contributions of current staff
Reward staff with compensation directly linked to
performance
Motivate staff to improve performance
Orient staff towards goal achievement
Retain key employees through the use of competitive
compensation programs
Attract quality employees with an effective
performance management system
Goals:
The key elements of a Performance
Management System include the
following:
1.
A formal Compensation Philosophy Statement
2.
Salary Administration Program
3.
A Formal Audit/Success Rating overview on an annual or

periodic basis with disclosure of results to management.
The Key Elements of a

Performance Management System
1. A Formal Compensation Philosophy Statement
It is the policy of the Robert Heeley Construction to develop and

implement a fair, consistent and industry competitive
Compensation Program so as to attract, motivate and retain
qualified employees. This program is specifically designed to
compensate employees on the basis of their performance,
consistent with the Company's business needs and financial
capabilities.
The Company will administer its compensation programs without

regard to race, religion, national origin, color, sex, age or disability.
The Company will adhere to all federal and state and city laws and
regulations regarding job classification, amount of pay, and
equitable compensatory treatment of employees.
We will design an overall Salary Administration Program that will

provide the Company with a competitive, easy to use,
performance-driven pay delivery system. This will include the
necessary guidelines for determining salary increases based on
performance, as well as all related administrative procedures.

2. Salary Administration Program
Elements:
Job Evaluations
Pay-for-Performance Salary Programs
Group Incentive Plans
Individual Incentive Programs
Reward Programs
Compensation Communications

3.
A Formal Audit/Success Rating on an annual or

periodic basis with disclosure of results to key
management.
This is most effectively performed by an outside
HR consultant or consulting firm, whose
objectivity allows them to observe and identify
strengths and weaknesses that are not always
observable from within.
2. Salary Administration Program
Job Evaluations
Reward Programs

Job Evaluations
Job evaluation is the process that establishes every position's
internal relative worth to a company by measuring a
position's potential fulfillment of duties against the amount
of value being given by the present employee. Job
evaluation measures job worth in an internal sense, as well
as in an economic one.
Determines:
Job Description
Job responsibilities of this job description (position)
Tasks, skills and knowledge that fall under job responsibilities

(from this formula comes all training that applies to every
company position)

Refers to the evaluation of an employee's job-related
performance with the primary objective being the
improvement of the individual's performance. It also
provides justification for determining an employee's
compensation and promotability.
A Performance Evaluation Tool (PET) should be utilized for
this purpose. A key element of the PET is the establishment
of individual performance objectives at the beginning of
each. An employee's performance may be evaluated into
one of four (4) levels of performance as follows, for the
purposes of determining personnel actions:

A Performance Evaluation Tool (PET)
Outstanding: Performance substantially and consistently above

required standards for the position.
Competent: Consistently meets objectives and produces the desired

results that are expected for a qualified employee in this position.
Performance meets required standards for the position.
Needs Improvement: Areas of improvement are noted. Performance is

less than expected, and below required standards for the position.
Consideration must be given to probationary status pending
improvement of performance.
Unsatisfactory: Does not meet objectives. Performance substantially

and consistently below required standards for the position. If significant
improvement is not made, termination will follow.

The
performance
evaluation
is
conducted
between
the
employee and his/her immediate supervisor, in which the

supervisor evaluates the performance of the employee.
The supervisor provides feedback to the employee
regarding his/her performance and areas of concern. The
evaluated performance level during the evaluation will be
used
for
justifying
personnel
actions
promotion, transfer, and salary adjustments.
relative
to

1.
It is the intent of the Company to make salary increases

and related personnel actions based on an employee's
evaluated performance in his/her assigned position, and
the individual's overall contribution. Performance
evaluations are to be conducted at the completion of the
introductory period, on an as-needed basis during the
year, and no less than two times every twelve (12)
months. It is intended that this should provide adequate
feedback, allows for corrective action, and substantiate
salary increases and related personnel actions.

2. The prime consideration in the performance appraisal
system is enhancement in overall performance. The
process is expected to enhance the development of
meaningful communication between the employee and
his/her supervisor, which in turn should lead to such
improvement in the employee's overall performance.
Job Evaluations
Annual Incentive Programs
Reward Programs

A program which provides small increases to most employees
based on changes in the labor market, but with large,
meaningful increases granted to a limited number of
exceptional employees.
Increases are based on realistic performance evaluations with
some employees not receiving any increase.

Design Features:
Performance standards are established for activities that

employees can impact or control.
Traditional Cost of Living and Seniority increases are

eliminated.
Increases are withheld from poor performers until their

evaluated performance improves.
Increases may take the form of additional salary and/or cash

bonuses.

Advantages:
Increases are tied to productivity and results, rather than

length of service, etc.
Improves employee communication and teamwork.
Provides greater job satisfaction.
Additional compensation dollars result in attainment of

desired results.

Disadvantages:
Requires considerable effort to install and monitor.
Is based on a foundation of trust and credibility between

management and employees.
Requires an accurate and well-accepted Performance

Evaluation System.
Eliminates length of service as a significant pay

determinant. This initially negatively impacts the concept
of "loyalty because it diminishes the impact of the everpresent Good OlBoy system.
Job Evaluations

1) Group Incentive Plans
2) Individual Incentive Programs
3) Reward Programs

A Group Incentive Plan is a type of team-based Alternative
Reward Program, but differs from the others in its
features, advantages, and disadvantages. In Group
Incentive Plans, all employees in the company share in
rewards based on performance gains tied to corporate
profitability.

Design Features:
Performance targets are established; requiring that

standards be established and the planning process is well
documented.
Funding requires a systematic mechanism for setting
aside sufficient monies to fund rewards.
Includes a consistent and acceptable method for
allocating rewards among eligible participants.

These work best for management and supervisors
Advantages:
Focuses the group on specific performance targets.

Since rewards are controllable by individuals, the
programs can be very motivational.
The program can be integrated with other corporate
initiatives (i.e., quality, product/service introduction, cost
savings, etc.).
Leads to improved communication and employee
relations.

Disadvantages:
Group Incentive Plans can be costly to install and

administer.
De-emphasizes individual performance which can result

in excessive peer pressure.
Requires open communication with employees on costs,

profitability, etc. (although this can be a sensitive issue,
there are alternatives available).
If the performance targets are not carefully selected,

adverse results may occur
Job Evaluations

3) Reward Programs

These work best for first-level and non-supervising employees.
Individual Incentive Programs are plans that provide incentive
pay based on short-range performance (typically
performance over 12 months or less).
Annual Incentive Programs may consist of short-term
incentives, and may include a component tied to longterm incentives, such as completion of a training program
or programs. The form of payment of these incentives
may be promotion-based, cash-based, or a combination of
both.
Job Evaluations

3) Reward Programs

Reward Programs
The following information provides an overview of alternative
reward approaches, including a definition of each approach,
and the inherent advantages and disadvantages.
Traditional alternative reward programs fall into one of two
categories:
Individual Employee
Oriented Programs:
Pay-For-Performance
Broad Banding
Skill-Based Pay
Special Awards
Team Based Programs:

Group Incentives
Group Sharing
Gain sharing
Long-Term Capital Accumulation

Reward Programs - Individual Employee Oriented
Programs:
Pay-for-Performance Salary/Hourly Programs provide

small increases to most employees based on
changes in the labor market, with large, meaningful
increases granted to a limited number of
exceptional employees. Increases are based on
realistic performance evaluations with some
employees not receiving any increase.

Reward Programs - Individual Employee Oriented Programs:
Design Features:
Performance standards are established for activities that employees can impact or control.
Traditional Cost of Living and Seniority increases are eliminated.
Increases are withheld from poor performers until their evaluated performance improves.
Increases may take the form of additional salary and/or cash bonuses.

Advantages:
Increases are tied to productivity and results, rather than length of service, etc.
Improves employee communication and teamwork.
Provides greater job satisfaction.
Additional compensation dollars result in attainment of desired results.

Disadvantages:
Requires considerable effort to install and monitor.
Is based on a foundation of trust and credibility between management and employees.
Requires an accurate and well-accepted Performance Evaluation System.
Eliminates length of service as a significant pay determinant. This negatively impacts the concept of "loyalty".

Reward Programs Broad-banding:
Broad Banding is a type of salary program that replaces multiple grades and ranges with a limited number of wide ranges. Employees move through salary ranges without traditional
promotions or job delineation, based on individual skill attainment, and expansion of duties, rather than on any prescribed time pattern.

Reward Programs - Broad banding:
Design Features:
Substantially fewer grade levels and titles.
Multiple job levels are combined into a single range.
Large range spreads, e.g., 75%, 100% or more vs. 40% to 50%.
Provides a method to recognize dual career tracks (management and professional).

Advantages:
Better accommodates a flat organizational hierarchy.
Emphasizes skill development rather than vertical promotions.
Eliminates need to establish artificial job titles and hierarchy.
Provides greater organizational flexibility since the organization is not encumbered by narrowly focused job titles.
Simplifies salary administration by eliminating promotions that are not bona fide changes in duties and responsibilities.

Disadvantages:
May not be compatible with the organization's culture and is less successful in highly structured organizations.
Loss of control points for salary planning and may result in overpaid employees, requiring greater emphasis on monitoring.
Difficult to use as management tool for determining relationship between jobs.
Limits promotional opportunities

Reward Programs - Skill Based Programs:
A program that rewards employees for attainment of additional skills and knowledge on a formalized basis.
Design Features:
Establishes an environment in which attainment of skill and knowledge is considered to be highly desirable.
Provides increased compensation and/or rewards for skill attainment
Clarifies career path for each position and the associated educational support.

Advantages:
Encourages skill acquisition and commitment by individual employees.
Permits flexibility in worker assignments which may result in reduced staffing requirements.
Typically results in increased job satisfaction and lower turnover of skilled employees

Disadvantages:
Very complicated program to install and maintain, requiring considerable time, resources, and money.
Training is very expensive and can easily be underestimated.
Emphasis is on attainment of skills and knowledge, and is not necessarily results oriented.
Unless carefully monitored, may end up with too many high skilled, high priced employees.
Does not enhance teamwork .

Reward Programs
The success of any Individual Reward Program (IRP) requires that a number of different areas be addressed:
Elements that must be present:
Open communication
Capacity to administer
Commitment to success
Patience and perseverance

Management commitment
Clear-cut objectives and strategy
Good management and employee relations
Recognition of resources: time, expense, manpower

Reward Programs
Key Design Steps of Alternative Reward Programs
Initial analysis and problem definition
Review of alternatives
Selection of plan elements
Test and finalize
Review and approval
Implementation
Monitoring and refinement

Reward Programs
Limitations of Alternative Reward Programs
Imagination
Fear of new and untested
Ability to accurately forecast or budget
Administrative ability of organization
State of employee/management relations
Job Evaluations

3) Reward Programs

It is a company's responsibility to commit to effective
communication of salary administration plans and their
modifications. At the minimum, a company is responsible for:
providing each employee with applicable salary information

regarding his/her own total compensation level, salary range,
position in range (PIR), the method for determining salary
increases, and other pertinent aspects of the total
compensation package.
communicating changes to policies and procedures to the

appropriate personnel in a timely manner, and for ensuring
that the staff understands and can effectively implement the
changes
The goal is to design a customized

alternative reward and recognition
program.
Th e p lan ob jec t iv es fo r t h is p rog r am wou ld b e t o :
Re co g n iz e ex t r aord in a ry e m p lo yee c on t ri b u t io n s in t h e are as of e ff ec t ive n e ss , q u a lit y of wo rk , co st sa vin g s , a n d p rod u c t iv it y.
S t re n g t h en c om m u n ica t io n s b e t w e en em p l oye es an d ma n a g e m en t .
Pro vi d e a s ys t em at ic m et h od o f id en t i fyin g o u t st a n d i n g in d iv id u a l c on t rib u t ion s .
Pro vi d e fi n a n c ial rew ard s t o em p lo ye es wh o h a ve d e m on s t r at e d p e rfo rm an ce or c on t rib u t ion in exc es s o f t h ei r as si g n ed d u t ies an d res p o n s ib il it i es .
E n h a n ce t h e Com p a n y s a b il it y t o m eet or exc eed i t s t arg e t g oal s.
The goal is to design a customized

alternative reward and recognition
program.
To understand the employees likely perception of this program, lets take a look at a motivational theory that is about
60 years old:
Before an
employee is
likely to perceive
training as a goal
(the need to
know and
understand),
they must have
all of their other
perceived needs
met satisfactorily.
Or the training
itself can be
perceived
(presented) as
meeting some of
the other lower
First Level: Food and water, protection from exposure to

elements
Second Level: Freedom from physical danger or freedom from

a situation that endangers food, water, shelter
Third Level: Friendships and family relationships that provide

the security of mutual emotional and physical support
Fourth Level: To be well-regarded by others or given status

within the family and social group (employees will seek this in
the workplace)
Fifth Level: The ability to satisfy the natural and learned

inclination to explore to increase knowledge and
understanding of your surroundings
Sixth Level: The desire to be surrounded by or to have access

to things that you perceive to be of quality. symmetry, order,
and beauty
Seventh Level: The ability to be unafraid of the unknown,

willing to set aside fear in search of new experiences and
rewards, with the knowledge that all that has been achieved
Eighth Level: Certain that basic physiological and safety needs

will be met, and not considering of great value the benefits of the
interim levels, this person devotes their energies solely to
providing for those whose needs are not being met and who
appear to be unable to fend for themselves, typically supported
Performance Management Cycle

Planning
the
Performan
Agreeing
to job
ce
deliverables and
performance
expectations
Reward
s
Needs
Developme
nt
Supporting
the
Performanc
Delegation
eEmpowerment
Coaching
Reviewing the
Performance
(Ongoing &
Informal & formal
Cyclic)
feedback against
performance
Formal Performance
Appraisal
I.
II.
Purposes of Performance Appraisal

Approaches to Performance
Appraisal
III. Phases in Performance Appraisal
IV. Sources of information for
Performance Appraisal
V. The factors that make Performance
Appraisal less effective
I.
Purposes of Performance
Appraisal
1. Administrative Purpose.
Organizations use performance

appraisal information in many
administrative decisions:
salary administration
promotions
retention/termination
rotation
layoffs
2. Developmental Purposes
Performance management seeks to

improve performance of the employees.
The feedback given during a
performance evaluation process
identifies the employees strengths and
weaknesses, that enables the managers
to plan for removing the weaknesses
through various HRD interventions.
II.
Approaches
Trait Approach
Behavioral Approach
Results Approach
Trait Approach
(Qualitative)
The trait approach to performance
management focuses on the extent
to which individuals have certain
attributes / characteristics / traits
believed to be desirable for the
companys success; such as:
intelligence, cleverness, initiative
taking, leadership, and
competitiveness----and evaluate
individuals on these basis.
Merits of Trait Approach

Traits are quite easy to develop and
are generalizable across a variety
of jobs, strategies, and
organizations.
Demerits of Trait Approach

1. Appraisals based on Trait Approach
are highly subjective. Performance
standards based on this approach
are extremely vague that are open
to different raters for providing
substantially different ratings and
rankings.
2. Existence of certain traits does not

mean that they necessarily will be
utilized for high performance.
3. This approach tends to create
defensiveness among the
employees. For example, how
would one feel if one were told that
on a 5-point scale, one was at 2 in
maturity?
The Behavioral Approach

(Qualitative)
This approach attempts to define the
behaviors an employee must exhibit to be
effective on the job, and requires the
managers to assess the extent to which
employees exhibit them.
For instance, regularity, punctuality and
conformity with the norms and values of
the organization are the desired behaviors
against which the managers may be
assessing the employees.
Merits of Behavioral
Approach
The behavioral approach can link

the
companys strategy to the
specific types
of behavior
necessary for implementing that
strategy.
It provides specific guidance and

feedback for employees about the
performance expected of them.
Demerits of Behavioral Approach

But, this approach assumes that there is
one best way to do the job and that the
behaviors that constitute this best way
can be identified.
So it allows little leeway and latitude to
the employees to use their own discretion
in adopting the suitable method of doing
the job according to the situation.
Above all, display of certain desired
behavior does not necessarily result into
The Results Approach

(Quantitative)
The results approach focuses on
measuring the measurable results of
a job.
It assumes that:
results are the closest indicator of
ones contribution to organizational
effectiveness and not the traits and
behaviors; and
only focusing on results can minimize
subjectivity from the performance
appraisal.
Merits of Result Approach

1. It minimizes subjectivity, relying on
objective, quantifiable indicators of
performance, making the
performance appraisal more
transparent.
2. It links individuals performance
with the company strategy and
goals
Demerits of Results Approach

1. Objective measurements can be
contaminated because they are affected by
things that are not under the employees
control.
2. Individuals may focus only on those
aspects of their performance that are
measured by the seniors, neglecting those
that are not; like objective performance
goals may lead to higher performance but
mostly they lead to less helping the coworkers.
Phases of Performance Appraisal

1.
2.
3.
4.
Preparing Phase
Writing Phase
Delivering Phase
Producing Phase
Preparing Phase
The preparation process comprises:
1. Reviewing own observation by
going through the employee work
record of the current review cycle
vis--vis the employee JD and the
goals set.
2. Gathering information from
different sources.
Writing Phase
The writing phase of the

performance appraisal process
comprises completing the
Performance Appraisal Form.
Before filling the form, the
appraiser should be sure that s/he
has got proper training in that
regard.
Key
Measures
Time
Frame
Rating
Factor
Objectives
Salaries to be
paid in time
Bank
reconciliation
made
Implementing
learning
contract of the
subordinates
Distributing the
cash correctly
Preparation of
trial balance
Assessment
Un-
Satisfa
-ctory
(1)
Withi
n
first
07
days
Withi
Montly
n 3rd
of
each
mont
h
Within
Biennial the
ly
prescrib
/quarter ed
ly
period
Average
Good
(3)
(2)
Month
ly
Always
Within
5 days
of the
new
month
(4
1
5
Month
ly
Whene
ver
require
d
V.
Good
Delivering Phase
Delivery phase involves exposing the
appraisal report to the employee through a
one-to-one private meeting. It involves:
1. meeting the employee in private;
2. discussing the employee's strengths first,
covering each point in detail in order to set
a positive tone to start the discussion.
3. apprising the employee of the weaknesses
surfaced during the review period and
discussing with her/him their reasons and
proposing the strategy for improvement
with keen interest;
4. making necessary changes in the

report, if felt appropriate, during
the discussion;
5. allowing the employee to read the
final report through ample time
offered to do so.
Producing Phase
This phase comprises:
1. Asking the employee to sign the
Performance Appraisal Form;
2. Assure the employee that his or her
signature indicates that he or she has
read the appraisal and that a discussion
has taken place, and does not signify
that the employee agrees with the
appraisal.
4. The employee may take a few days

before signing the appraisal form.
However, if after a reasonable period
of time the employee still refuses to
sign the form, the appraiser may note
on the form that the employee has
refused to sign.
5. A copy of the final signed performance
appraisal should be given to the
employee for his or her record.
III. Sources of information for

Supervisor
Peers
Subordinates
Customers
IV.
What makes Performance

Appraisal less effective
RELUCTANCE TO APPRAISE
Many managers see the
performance appraisal process only
as a necessary evil they must go
through to fulfill their job
requirements.
They feel uncomfortable evaluating

others and feeding them back with
the evaluation. Especially when the
feedback requires improvement in
employees performance.
Thus, they tend to rate everyone
high, or at least equal. As a result, the
performance appraisal exercise
becomes relatively useless.
HALO EFFECT
Halo effect refers to judging the target
persons total performance on the basis
of a single trait such as degree of
intelligence, punctuality, honesty,
appearance, and dependability.
Because of the halo effect, the
perceiver neither explores other
dimensions of the personality and
performance of the target nor gives any
feedback to him/her for improvement.
STEREOTYPING
Stereotyping refers to the tendency
of generalizing about others through
perceiving them as belonging to a
particular class or category and
ignoring variation among them.
Categories upon which stereotypes
generally are based include age,
gender, race, ethnic background,
occupation, social class etc.
CONTRAST EFFECT
Contrast effect is the biased
perception that results when
perception about a target person is
distorted by the receivers
comparative perception about others
in the situation.
ATTRIBUTIONS
Making an attribution means to assign
causation for anothers behavior.
For example, if a supervisor attributes an
employees good performance to external
causes, such as luck, holding an easy job,
or receiving help from co-workers, then
the performance evaluation will not be as
positive as if the supervisor had attributed
good performance to internal causes,
such as effort or ability.
Similarly, if the supervisor attributes poor
performance to external causes rather
than internal causes, the performance
PRIMACY AND RECENCY EFFECTS

Primacy effect refers to our
tendency to rely on the cues that we
encounter early in a relationship ---first impression is the lasting one.
Recency effect , on the other hand,
refers to giving undue weight to the
most recently encountered behaviour
---- last impression counts most.
CENTRAL TENDENCY ERROR

Central tendency error occurs when
the rater avoids the extremes of the
performance scale and evaluates
most employees somewhere near the
middle of the scale.
This error results in most employees
being rated as average.
This tendency limits the ability of the
performance appraisal to discriminate
the high performers from the rests.
Taking the appraisal as a tool of

punishment and / or reward
In our environment particularly,
performance appraisal is taken as
best opportunity to settle the scores
or reward the cherished, that mars
the spirit of the performance
appraisal like trusted management
activity.
Contamination and deficiency
Discussion Questions
1. Discuss purposes of formal performance
appraisal highlighting their importance in
managerial effectiveness.
2. Discuss Trait Approach/Behavioral
Approach/Result Approach to
performance evaluation with their merits
and demerits.
3. Discuss Supervisor/Peers/Customers/
Subordinate as source of information for
performance appraisal with their merits
and demerits.
4. Discuss various phases of the

formal Performance Appraisal
process.
5. Discuss at least five factors that
may make the performance
appraisal exercise less effective.
fundamentals of
Human Resource Management 4th
edition
by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright
CHAPTER 8
Managing Employees
Performance
What Do I Need to Know?

1. Identify the activities involved in
performance management.
2. Discuss the purposes of performance
management systems.
3. Define five criteria for measuring the
effectiveness of a performance
management system.
4. Compare the major methods for
measuring performance.

(continued)
5. Describe major sources of

performance information in terms of
their advantages and disadvantages.
6. Define types of rating errors and
explain how to minimize them.
7. Explain how to provide performance
feedback effectively.

(continued)
8. Summarize ways to produce

improvement in unsatisfactory
performance.
9. Discuss legal and ethical issues that
affect performance management.
Introduction
Performance management: the
process through which managers ensure
that employees activities and outputs
contribute to the organizations goals.
This process requires:
Knowing what activities and outputs are
desired
Observing whether they occur
Providing feedback to help employees meet
expectations
Test Your Knowledge

If the performance management
system created competition among
team members, I would
A. Make collaboration a criterion to be
evaluated.
B. Nothing, competition is good.
C. Increase the specificity of the feedback.
D. Focus on personal traits rather than
behaviors.
Figure 8.1: Stages of the

Performance Management Process
Purposes of Performance
Management
Strategic Purpose means effective
performance management helps the
organization achieve its business objectives.
Administrative Purpose refers to the
ways in which organizations use the system
to provide information for day-to-day
decisions about salary, benefits, and
recognition programs.
Developmental Purpose means that it
serves as a basis for developing employees
knowledge and skills.
Employees Want More Feedback
Criteria for Effective

Figure 8.2: Contamination and

Deficiency of a Job Performance
Measure
Test Your Knowledge

Sarah is a computer programmer
whose job mainly consists of
independently coding software.
Interpersonal and teamwork skills are
included on performance appraisal.
Measuring these skills most closely
represents:
A. Criterion contamination
B. Criterion deficiency
C. Unreliability
Methods for Measuring

Performance
Table 8.1:
Basic Approaches to Performance
Measurement
Measuring Performance:
Making Comparisons
Rating Individuals - Attributes
Graphic Rating Scale
Lists traits and
provides a rating scale
for each trait.
The employer uses the
scale to indicate the
extent to which an
employee displays
each trait.
Mixed-Standard Scale
Uses several
statements describing
each trait to produce a
final score for that
trait.
Figure 8.3:
Example of a Graphic Rating Scale
Figure 8.4:
Example of a
MixedStandard
Scale
An employees performance measurement

differs from job to job. For example, a car
dealers performance is measured by the
dollar amount of sales, the number of new
customers, and customer satisfaction
surveys.
Rating Individuals - Behaviors
Critical-Incident Method
Based on managers
records of specific
examples of the
employee acting in ways
that are either effective
or ineffective.
Employees receive
feedback about what they
do well and what they do
poorly and how they are
helping the organization
achieve its goals.
Behaviorally Anchored
Rating Scale (BARS)
Rates behavior in
terms of a scale
showing specific
statements of
behavior that describe
different levels of
performance.
Figure 8.5:
Example of
Task- BARS
Rating
Dimension
for a Patrol
Officer
Rating Individuals Behaviors
(continued)
Behavioral Observation Scale

(BOS)
A variation of a BARS
which uses all behaviors
necessary for effective
performance to rate
performance at a task.
A BOS also asks the
manager to rate the
frequency with which
the employee has
exhibited the behavior
during the rating period.
Organizational Behavior
Modification (OBM)
A plan for managing
the behavior of
employees through a
formal system of
feedback and
reinforcement.
Figure 8.6: Example of a

Behavioral Observation Scale
(BOS)
Measuring Results
Management by Objectives
(MBO): people at each level of the
organization set goals in a process
that flows from top to bottom, so that
all levels are contributing to the
organizations overall goals.
These goals become the standards
for evaluating each employees
performance.
Table 8.2: Management by

Objectives Two Objectives for a
Bank
Test Your Knowledge

The performance management system
at XYZ company currently is perceived
as unfair and is time-consuming for
managers. Which of the following
systems is the most likely and least
likely used, respectively.
A.
B.
C.
D.
Paired comparisons; Results

Results; Forced distribution
Behavioral; Attributes
Attributes; Comparative
Measuring Quality
The principles of total quality
management (TQM), provide methods
for performance measurement and
management.
With TQM, performance measurement
combines measurements of attributes
and results.
Subjective feedback
Statistical quality control
Coaches provide feedback to their team

just as managers provide feedback to their
employees.
Feedback is important so that individuals
know what they are doing well and what
areas they may need to work on.
Sources of Performance
Information
360-Degree Performance
Appraisal: performance
measurement that combines
information from the employees:
Managers
Peers
Subordinates
Self
Customers
Performance management is critical for

executing a talent management system
and involves one-on-one contact with
managers to ensure that proper training
and development are taking place.
Types of Performance
Measurement
Ratingthe
Errors
Contrast errors:
rater compares
an individual, not against an objective
standard, but against other employees.
Distributional errors: the rater tends
to use only one part of a rating scale.
Leniency: the reviewer rates everyone near the top
Strictness: the rater favors lower rankings
Central tendency: the rater puts everyone near the middle of
the scale
Types of Performance
Measurement
Rating
Errors
(continued)
Rater bias: raters often let their
opinion of one quality color their
opinion of others.
Halo error: when the bias is in a favorable direction.
This can mistakenly tell employees they dont need to
improve in any area.
Horns error: when the bias involves negative ratings.
This can cause employees to feel frustrated and
defensive.
Test Your Knowledge

Bill rates all of his employees very low
except for Jan. Jan gets above average
ratings because she consistently comes
to work on time. The rating errors Bill
makes are _______ and _______,
respectively.
A.
B.
C.
D.
Leniency; Horn
Strictness; Halo
Similar-to-me; Central Tendency
Horn; Strictness
Political Behavior in Performance

Appraisals
Distorting a performance evaluation
to advance ones personal goals
A technique to minimize appraisal
politics is a calibration meeting:
Meeting at which managers discuss
employee performance ratings and
provide evidence supporting their
ratings with the goal of eliminating the
influence of rating errors
Giving Performance
Feedback
Scheduling Performance Feedback

Performance feedback should be a regular, expected
management activity.
Annual feedback is not enough.
Employees should receive feedback so often that they
know what the manager will say during their annual
performance review.
Preparing for a Feedback Session

Managers should be prepared for each formal feedback
session.
When giving
performance
feedback, do it in
an appropriate
meeting place.
Meet in a setting
that is neutral and
free of
distractions.
What other
factors are
important for a
feedback session?
Giving Performance
Feedback
(continued)
Conducting the
Feedback Session
During the feedback session, managers can take any of

three approaches:
1. Tell-and-Sell managers tell employees their ratings and
then justify those ratings.
2. Tell-and-Listen managers tell employees their ratings
and then let the employees explain their side of the story.
3. Problem-Solving managers and employees work
together to solve performance problems.
Figure 8.7: Improving

Performance
Legal and Ethical Issues in

Legal
Performance management processes
are often scrutinized in cases of
discrimination or dismissal.
Ethical
Employee monitoring via electronic
devices and computers may raise
concerns over employee privacy.
Legal Requirements for

Lawsuits related to performance
management usually involve charges
of:
Discrimination
Unjust dismissal
To protect against both kinds of

lawsuits, it is important to have a
legally defensible performance
management system.
Legal Requirements for

Performance Management (continued)
A legally defensible performance
management system includes:
Based on valid job analyses, with requirements for job
success clearly communicated to employees.
Performance measurement should evaluate behaviors or
results, rather than traits.
Multiple raters (including self-appraisals) should be used.
All performance ratings should be reviewed by upper-level
managers.
There should be an appeals mechanism for employees.
Summary
Performance management is the process
through which managers ensure that
employees activities and outputs
contribute to the organizations goals.
Organizations establish performance
management systems to meet three broad
purposes:
Strategic purpose
Administrative purpose
Developmental purpose
Performance measures should fit with the

organizations strategy by supporting its
goals and culture.
Summary
(continued)
Performance information may come from

an employees self-appraisal and from
appraisals by the employees supervisor,
employees, peers, and customers.
Using only one source makes the appraisal
more subjective.
Organizations may combine many sources
into a 360- degree performance appraisal.
Summary
(continued)
Organizations can minimize appraisal

politics by establishing a fair appraisal
system, involving managers and employees
in developing the system, allowing
employees to challenge evaluations,
communicating expectations, and having
open discussion.
Performance feedback should be a regular,
scheduled management activity, so that
employees can correct problems as soon as
they occur.
Summary
(continued)
The performance feedback discussion should

focus on behavior and results rather than on
personalities.
Managers must make sure that performance
management systems and decisions treat
employees equally, without regard to their
race, sex, or other protected status.
A system is more likely to be legally
defensible if it is based on behaviors and
results, rather than on traits, and if multiple
raters evaluate each persons performance.

3.1. Perfromanace Management Admin

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3.1. Perfromanace Management Admin

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Performance Management

INITIATING THE PERFORANCE MANAGEMENT PROCESS

SETTING GOALS AND

The Plan: Goals and Success

Types of Individual Goal

Exceptionally well qualified

o something not expected/neede

-Based on Scientific Management

Why assess performance

The WHY of Performance

-Facilitate Human Resource

Morgan Stanleys Essay

Employee will contribute to organizat

To implement new recruitment system

Manager ranks all employees from be

On specific criteria (communicatio

Rank each employee grouping overal

Ratings Example: Scales

External company survey

= Exceptional performance rarely achieved; precedent setting

Ratings Example: BARS

Satisfactory steady Volume above

Results accurate and

Does not always

Microsoft Competency Toolkit

Analyzes & organizes

Analyzes, explains & draws

Rapidly identifies the

With guidance, learns

Learns new skills & ideas

Rapidly learns &

Rapidly learns new

Picks up new skills &

Quickly adjusts thinking for

Learns effectively from

Is able to apply & explain

Microsoft Competency Toolkit

Assigns challenging tasks

Takes time to learn about

Actively coaches direct

Provides stretch jobs and

Gives direct reports

Identifies key people in

Critical Incident Example

Date Discussed with Employee:____________

Judge who appraises

Listener, reactor to,

Criteria for Performance

Problems with Performance

WHO Should Assess

o something not expected/neede

FUNCTIONAL JOB ANALYSIS

1.Return to old system

Training & Development

Factors Influencing T &

TRAINING & DEVELOPMENT

Isolate Job Areas

Solicit & give feedback

The WHY of Performance

-Facilitate Human Resource

The core of any organization is its staff. How

A formal Compensation Philosophy Statement

Salary Administration Program

A Formal Audit/Success Rating overview on an annual or