Performance Management

critical success management factors

(CSFs) key performance indicators (KPIs) into their performance mangement systems. CSFs are factors in a companys business strategy that give it a competitive edge.

Steps of performance management process

1. Define performance outcomes for company division and department. 2. Develop employee goals, behavior, and actions to achieve outcomes. 3. Provide support and ongoing performance discussions. 4 evaluate performance. 5. Identify improvements needed. 6. Provide consequences for performance results. Refer to page 323 for test

Performance management systems three parts

Defining performance, measuring performance, and feeding back performance information.

Purposes of performance management

Strategic, administrative, and developmental

Performance management connection to talent management

To identify employees strengths and weaknesses, Drive employee engagement, link employees to appropriate training and development activity, and reward good performance with pay and other incentives.

the behavioral approach

attempts to define the behaviors an employee must exhibit to be effective in the job.

rater accuracy training (frame-of-reference training)

attempts to emphasize the multidimensional nature of performance and to get raters to understand and use the same idea of high, medium,and low performance when making evaluations.

deadwood

chronic poor performance by employees with low ability and motivation

alternation ranking

consists of a manager looking at a list of employees, deciding who is the best employee, and crossing that person's name off the list. from the remaining names, the manager decides who the worse employee is and crosses that name off the list- and so forth.

importance

defined as the frequency with which that cause is resulted in a problem.

subordinates and performance measures

especially valuable source of performance information when managers are evaluated. subordinates often have the best opportunity to evaluate how well a manager treats employees.

cause-and-effect diagrams

events or causes that result in undesirable outcomes are identified.

internal consistency reliability

evidence seems to indicate that most subjective supervisory measures of job performance exhibit low reliability. with some measures, the extent to which all the items rates are internally consistent is important.

feedback should be given frequently

first, managers have a responsiblity to correct performance defiecienices immediately on becoming aware of them. second, a major determinant of the effectiveness of a feedback session is the degree to which the subordinate is not surprised by the evaluation.

the results approach

focuses on managing the objective, measurable results of a job or work group. this approach assumes that subjectively can be eliminated from the measurement process and that results are the closest indicator of one's contribution to organizational effectiveness

competency model

identify and provide descriptions of competencies that are common for an occupation, organization, job family, or specific job.

the use of objectives

in a results-based system, the top management team first defines the company's strategic goals for the coming year. these goals are passed on to the next layer of management, and these managers define the goals they must achieve for the company to reach it's goals. this goal-setting process cascades down the organization so that all managers set goals that help the company achieve its goals.

encourage the employee to participate in the session

in the "tell-and-sell" approach, managers tell the employees how they have rated them and then justify these ratings. in "tell-and-listen" approach, managers tell employees how they have rated them and then let the employees explain their side of the story. in the "problem-solving" approach, managers and employees work together to solve performance problems in an atmosphere of respect and encouragement.

control charts

involve collecting data at multiple points in time.

evaluation of behavioral approach

it can link the company's strategy to the specific behavior necessary for implementing that strategy. it provides specific guidance and feedback for employees about the performance expected of them. most of the techniques rely on in-depth job analysis, so the behaviors that are identified and measured are valid. weaknesses have to do with the organizational context of the system. although the behavioral approach can be closely tied to a company's strategy, the behaviors and measures must be constantly monitored and revised to ensure that they are still linked to the strategic focus. this approach also assumes that there is "one best way" to do the job and that the behaviors that constitute this best way can be identified.

sources of performance measures

managers, peers, subordinates, self, and customers

challenges in using objective performance measures

objective measurements can be both contaminated and deficient- contaminated because they are affected by things that are not under the employee's control and dificient because not all the important aspects of job performance are amenable to objective measurement.

peers and performance measures

peers are an excellent source of information in a job such as law enforcement., where the supervisor does not always observe the employee. peers have expert knowledge of job requirements, and they often have the most opportunity to observe the employee in day-to-day activities. also, peers are often in the best position to praise and recognize each other's performance on a daily basis.

legal issues

pg 366-367

PDCA

planning, doing, checking, and acting

poor performance causes

poor performance can be due to lack of employee ability, misunderstanding of performance expectations, lack of feedback, or the need for training an employee who does not have the knowledge and kills needed to meet the performance standards.

misdirected effort

poor performance resulting from lack of ability but not motivation

feedback zone

prompts employees twice a year to request feedback but also allows them to request feedback at any time.

forced distribution systems

provide a mechanism to help align company performance and employee performance and compensation. employees in the bottom 10% cause performance standards to be lowered, influence good employees to leave, and keep good employees from joining the company. a forced distribution system helps managers tailor development activities to employees based on their performance. the use of a forced distribution system is seen as a way for companies to increase performance, motivate employees, and open the door for new talent to join the company to replace poor performers.

test-retest reliability

reliable over time. a measure that results in drastically different ratings depending on when the measures are taken lacks test-retest reliability.

simple ranking

requires managers to rank employees within their departments from highest performer to poorest performer (or best to worst)

person-based outcomes

sales, profit margins, and behavioral ratings are often collected by mangers to evaluate employees performance.

services

services is something which can be bought and sold but which you cannot drop on your foot.

competencies

sets of skills, knowledge, abilities, and personal characteristics that enable employees to successfully perform their jobs.

scattergrams

show the relationship between two variables, events or different pieces of data.

interrater reliability

the consistency among the individuals who evaluate the employee's performance. a performance measure has interrater reliability if two individuals give the same (or close to the same) evaluations of a person's job performance.

reliability

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

problems to comparative approach

their common failure to be linked to the strategic goals of the organization. although raters can evaluate the extent to which individuals performances support the strategy, this link is seldom made explicit. in addition, because of the subjective nature of the ratings, their actual validity and reliability depend on the raters themselves.

behavioral anchors advantages and disadvantages

they can increase interrater reliability by providing a percise and complete definition of the performance dimension. a disadvantage is that they can bias information recall- that is, behavior that closely approximates the anchor is more easily recalled than other behavior.

focus on solving problems

to improve poor performance, a manager must attempt to solve the problems causing it. this entails working with the employee to determine the actual cause and then agreeing on how to solve it.

behaviorally anchored rating scale

(BARS) designed to specifically define performance dimensions by developing behavorial anchors associated with different levels of performance.

behavioral observation scale

(BOS) a variation of a BARS. like a BARS, a BOS is developed from critical incidents. however, a BOS differs from a BARS in two basic ways. first, rather than discarding a large number of the behaviors that exemplify effective or ineffective performance, a BOS uses many of them to more specifically define all the behaviors that are necessary for effective performance. a second difference is that rather than assessing which behavior best reflects an individuals performance, a BOS requires managers to rate the frequency with which the employee has exhibited each behavior during the rating period.

people development system

(PDS) designed to ensure that learning and development alight with business strategy and drive business results while ensuring employees have the skills to succeed in their current and future jobs. the PDS includes the performance management process, learning and career development processes, and succession planning process.

productivity measurement and evaluation system

(ProMES) to motivate employees to improve team or company-level productivity. it is means of measuring and feeding back productivity information to employees. first, people in an organization identify the products, or the set of activities or objectives, the organization expects to accomplish. second, the staff defines indicators of the products. third, the staff establishes the contingencies between the amount of the indicators and the level of evaluation associated with that amount. fourth, a feedback system is developed that provides employees and work groups with information about their specific level of performance on each of the indicators.

managers should also:

1. build top management support for the appraisal system and actively discourage distortion. 2. give raters some latitude to customize performance objectives and criteria for their ratees. 3. recognize employee accomplishments that are not self-promoted. 4. provide employees with access to information regarding which behaviors are desired and acceptable at work. 5. encourage employees to actively seek and use feedback to improve performance. 6. make sure constraints such as budget do not drive the process. 7. make sure appraisal processes are consistent across the company. 8. foster a climate of openness to encourage employees to be honest about weaknesses.

to effectively use non financial performance measures managers need to:

1. develop a model of how nonfinancial performance measures link to the companys strategic goals. identify the performance areas that are critical to success. 2. using already exisiting databases, identify data that exists on key performance measures (customer statisfaction, employee satisfaction surveys) if data are not available, identify a performance area that affects the companys strategy and performance. develop measures for those performance areas. 3. use statistical and qualitative methods for testing the relationship between the performance measures and financial outcomes. regression and correlation analysis as well as focus groups and interviews can be used. 4. revisit the model to ensure that the nonfinancial performance measures are appropriate and determine whether new measures should be added. 5. act on conclusions that the model demonstrates. 6. audit whether the actions taken and the investments made produced the desired result.

a performance management system design with a strong quality orientation can be expected to

1. emphasize an assessment of both person and system factors in the measurement system. 2. emphasize that managers and employees work together to solve performance problems. 3. involve both internal and external customers in setting standards and measuring performance. 4. use multiple sources to evaluate person and system factors.

technology influences performance management

1. many companies are moving to web-based online paperless performance management systems. 2. social media tools similar to Facebook and Twitter are increasingly being used to deliver timely feedback. 3. companies are starting to use gamification in performance management. 4. companies are relying on electronic tracking and monitoring systems to ensure that employees are working when and how they should be and top block access to visting certain websites.

reasons that the quality philosophy is incompatible with performance management systems

1. most existing systems measure performance in terms of quantity, not quality. 2. employees are held accountable for good or bad results to which they contribute but do not completely control. 3. companies do not share the financial rewards of successes with employees according how much they have contributed to them. 4. rewards are not connected to business results.

two types of feedback

1. subjective feedback from managers, peers, and customers about the personal qualities of the employee 2. objective feedback based on the work process itself using statistical quality control methods.

Use of technology in performance appraisals

Can reduce the administrative burden of performance appraisal, improve the accuracy of performance reviews, and ensure that employees get frequent feedback about their performance.

Performance management information used in many administrative decisions:

Salary administration (pay raises), promotions, retention-termination, layoffs, and recognition of individual performance.

Performance management

The means through which managers ensure that employees activities and outputs are congruent with the organizations goals

Performance feedback

The process or providing employees information regarding their performance effectiveness

performance appraisal

The process through which an organization gets information on how well an employee is doing his or her job

graphic rating scale

a list of traits is evaluated by a five-point rating scale. the manager considers one employee at a time, circling the number that signifies how much of that trait the individual has. graphic rating scales can provide a number of different points or a continuum along which the rater simply placesa check mark.

360-degree appraisal

a performance appraisal process for mangers that includes evaluations from a wide range of persons who interact with the manager. the process includes self-evaluations as well as evaluations from the managers boss, subordinates, peers and customers.

appraisal politics

a situation in which evaluators purposefully distort ratings to achieve personal or company goals.

minimize criticism

an effective manager should resist the temptation to reel off a litany of offenses. having been confronted with the performance problem, an employee often agrees that change is in order.

comparative approach

an effective tool in differentiating employee performance; it virtually eliminates problems of leniency, central tendency, and strictness. this is especially valuable if the results of the measures are to be used in making administrative decisions such as pay raises and promotions.

rater error training

attempts to make managers aware of rating errors and helps them develop strategies for minimizing those errors.

similar to me error

based on stereotypes the rater has about how individuals with certain characteristics are expected to perform.

third purpose of performance management

developing employees. when employees are not performing as well as they should, performance management seeks to improve their performance.

histograms

display distributions of large sets of data

Kaizen

employee practices that emphasize continuous improvement of business processes.

solid performers

employees with high ability and motivation include likely good and outstanding performers

contaminated measure

evaluates irrelevant aspects of performance or aspects that are not job related. the performance measure should seek to minimize contamination, but its complete elimination is seldom possible. an example; the use of actual sales figures for evaluating sales persons across very different regional territories. often sales are highly dependent upon the territory rather than the actual performance of the sales person.

the attribute approach

focuses on the extent to which individuals have certain attributes (characteristics or traits) believed desirable for the company's success. the techniques that use this approach define a set of traits- such as initiative, leadership, and competitiveness- and evaluate individuals on them.

the quality approach

fundamental characteristics of the quality approach include a customer orientation, a prevention approach to errors, and continous improvement. Improving customer satisfaction is the primary goal of the quality approach.

gamification

game-based strategies applied to performance management to make it a fun, effective, transparent, and inclusive process for employees and managers.

ask the employee to rate his or her performance before the session

having employees complete a self-assesment before the feedback session can be very productive. it requires employees to think about their performance over the past rating period and it encourages them to think about their weaknesses.

Pareto chart

highlights the most important cause of a problem. in a Patero chart, cause are listed in decreasing order of importance

process-flow analysis

identifies each action and decision necessary to complete work, such as waiting on customer or assembling a television set.

managers and performance measures

it is usually safe to assume that supervisors have extensive knowledge of the job requirements and that they have adequate opportunity to observe their employees- in other words, that they have the ability to rate their employees.

upward feedback

managerial performance appraisal that involves subordinates evaluations of the managers behavior or skills.

create the right context for the discussion

managers should choose a neutral location for the feedback session. the managers office may not be the best place for it because the employee may associate the office with unpleasant conversations. managers should descrive the meeting as an opportunity to discuss the role of the employee, the role of the manager, and the relationship between them.

underutilizers

managers with employees who have the ability but lack motivation

balance scorecard

measures performance. the balanced scorecard includes four perspectives of performance including financial, customer, internal, or operations, and learning and growth. the financial perspective focuses on creating sustainable growth in shareholder value, the customer perspective defines value for customers, the internal or operations perspective focuses on processes that influence customer satisfaction, and the learning and growth perspective focuses on the company's capacity to innovate and continuously improve.

calibration meetings

meetings attended by managers in which employee performance ratings are discussed and evidence supporting the ratings is provided. the purpose of the meetings is to reduce the influence of rating errors and politics on performance appraisals.

self in performance measures

obviously, individuals have extensive opportunities to observe their own behavior, and they usually have access to information regarding their results on the job. self-evaluations have lessened the fear and anxiety associated with the old appraisal process. one problem with self ratings, is a tendency toward inflated assessments.

focus feedback on behavior or results, not on the person

one of the most important things to do when giving negative feedback is to avoid questioning the employees worth as a person. this is best accomplished by focusing the discussion on the employees behaviors or results, not on the employee.

paired comparison

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. once all the pairs have been compared, the manager computes the number of times each employee received the favorable decision (counts up the points), and this becomes the employee's performance score.

social performance management

social media and microblogs similar to Facebook, LinkedIN and Yammer that allow employees to quickly exchange information, talk to each other, provide coaching, and receive feedback, and recognition in the form of electronic badges.

"A players"

some individuals who are outstanding or good performers may be candiates for leadership positions within the company.

major drawback of a BOS

that it may require more information than most managers can process or remember. a BOS can have 80 or more behaviors, and the manager must remember how requently an employee exhibited each of these behaviors over a 6- or 12-month rating period.

customers in performance measures

the customer is often the only person present to observe the employees performance and thus the best source of performance information. using customer evaluations of employee performance is appropriate in two situations. first, is when an employee's job requires direct service to the customer or linking the customer to other services within the company. second, customer evaluations are appropriate when the company is interested in gathering information to determine what products and services the customer wants.

validity

the extent to which a performance measure assesses all the relevant- and only the relevant- aspects of job performance. often referred to as "content validity"

specificity

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

acceptability

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

strategic congruence

the extent to which the performance management system elicits job performance that is consistent with the organization's strategy, goals, and culture.

agree to specific goals and set a date to review progress

the importance of goal setting cannot be overemphasized. it is one of the most effective motivators of performance.

recognize effective performance through praise

the purpose of this session is to give accurate performance feedback, which entails recognizing effective performance as well as poor performance.

evaluation of the results approach

the results approach minimizes subjectivity, relying on objective, quantifiable indicators of performance. thus it is usally highly acceptable to both mangers and employees. another advantage is that it links an individuals results with the organizations strategies and goals.

negatives for attribute approach

there is usually little congruence between the techniques and the company's strategy. these methods are used because of the ease in developing them and because the same method (list of traits, comparisons) is generalizable across any organization and any strategy. in addition, these methods usually have very vague performance different raters often provide extremely different ratings and rankings. the result is that both the validity and reliability of these methods are usually low.

results-based systems have three components

they require setting effective goals. the most effective goals are SMART goals. that is, the goals that are specific, measurable, attainable, relevant, and timely.

forced distribution

uses a ranking format, but employees are ranked in groups. the technique requires the manager to put certain percentages of employees into predetermined categories. most commonly, employees are grouped into three, four, or five categories usually of unequal size indicating the best workers, the worst workers, and one or more categories in between. see page 333 for example

developing BARS

we first gather a large number of critical incidents that represent effective and ineffective performance on the job. these incidents are classified into performance dimensions, and the ones that experts agree exactly represent a particular level of performance are used as behavorial examples (or anchors) to guide the rater. the managers task is to consider an employee's performance fits using the behavorial anchors as guides. this rating becomes the employers score for that dimension.

mixed-standard scales

were developed to get around some of the problems with graphic rating scales. to create a mixed-standard scale, we define the relevant performance dimensions and then develop statements representing good, average, and poor performance along each dimension. these statements are then mixed with the statements from other dimensions on the actual rating instrument. example: whether the employee's performance is about (+), at (0) or below (-) the statement. a special scoring key is then used to score the employee's performance for each dimension. thus, an employee performing above all three statements receives a 7. if the employee is below the good statement, at the average statement, and above the poor statement, a score of 4 is assessed.