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

McGraw-Hill/Irwin Copyright 2011 by The McGraw-Hill Companies, Inc. All Rights Reserved. 8-1
 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.
8-2
 What Do I Need to Know? (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.

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 What Do I Need to Know? (continued)

8. Summarize ways to produce improvement in

unsatisfactory performance.
9. Discuss legal and ethical issues that affect
performance management.

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 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

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 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.

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Figure 8.1: Stages of the Performance
Management Process

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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.

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Employees Want More Feedback

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 Criteria for Effective
Performance Management
Fit with strategy

Validity

Reliability

Acceptability

Specific feedback
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Figure 8.2: Contamination and Deficiency
of a Job Performance Measure

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 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

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Methods for Measuring Performance

Comparative

Quality Attribute

METHOD

Results Behavior

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Table 8.1:
Basic Approaches to Performance
Measurement

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 Measuring Performance:
Making Comparisons
Forced Paired
Simple Ranking
Distribution Comparison
Requires Assigns a Compares
managers to certain each employee
rank percentage of with each
employees in employees to other
their group each category employee to
from the in a set of establish
highest categories. rankings.
performer to
the poorest
performer.

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 Measuring Performance:
Rating Individuals - Attributes
Graphic Rating Scale Mixed-Standard Scale
Lists traits and provides a Uses several statements
rating scale for each trait. describing each trait to
The employer uses the scale produce a final score for
to indicate the extent to that trait.
which an employee displays
each trait.

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Figure 8.3:
Example of a Graphic Rating Scale

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Figure 8.4:
Example of a
Mixed-Standard
Scale

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 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.

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 Measuring Performance:
Rating Individuals - Behaviors
Behaviorally Anchored Rating
Critical-Incident Method Scale (BARS)
Based on managers records
Rates behavior in terms of a
of specific examples of the
employee acting in ways that scale showing specific
are either effective or statements of behavior that
ineffective. describe different levels of
Employees receive feedback performance.
about what they do well and
what they do poorly and how
they are helping the
organization achieve its
goals.

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Figure 8.5:
Example of
Task- BARS
Rating
Dimension for
a Patrol Officer

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

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Figure 8.6: Example of a Behavioral
Observation Scale (BOS)

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 Measuring Performance:
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.

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 Table 8.2: Management by Objectives
Two Objectives for a Bank

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 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. Paired comparisons; Results
B. Results; Forced distribution
C. Behavioral; Attributes
D. Attributes; Comparative

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 Measuring Performance:
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

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 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.

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 Sources of Performance Information

360-Degree Performance Appraisal:

performance measurement that combines
information from the employees:
Managers
Peers
Subordinates
Self
Customers

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 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.
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 Types of Performance Measurement
Rating Errors
Contrast errors: the 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
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 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.

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 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. Leniency; Horn
B. Strictness; Halo
C. Similar-to-me; Central Tendency
D. Horn; Strictness

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 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

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 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.
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 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?

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 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.
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Figure 8.7: Improving Performance

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 Legal and Ethical Issues in
Performance Management
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.

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 Legal Requirements for
Performance Management
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.

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 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.
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 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.

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 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.

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 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.

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 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.

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