Test 3 - Performance Management (11)

Results-Based Methods: > Management by Objectives (MBO) - top management passes down company's strategic goals to managers to define goals - a philosophy of management that rates performance on the basis of employee achievement of goals set by mutual agreement of employee and manager. > Productivity Measurement and Evaluation System (ProMES) - goal is to motivate employees to higher levels of productivity from a team or company level productivity - Appraisals based on quantitative measures (e.g., sales volume) that directly link what employees accomplish to results beneficial to the organization.

Results Approach

Self-Appraisal: Appraisal done by the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview.

Self

Managers Peers Subordinates Self Customers

Sources of performance management info:

> Used by employees to identify causes of problems and potential solutions > Kaizen - practices participated in by employees from all levels of the company that focus on continuous improvement of business processes 1) Process flow analysis: each action and decision necessary to complete work=helps to id redundency that increase service or production time 2) Cause and effect: events or causes that result in undesirable outcomes are identified 3) Pareto Chart: most important cause of a problem 4) Control chart: collecting data at multiple points in time 5) Histogram: help in understanding the amount of variance between the outcome and expected value 6) Scattergram: relationship between two variables helps to determine weather the relationship between two variables is positive, negative, or zero.

Statistical Process - Quality Control Techniques

Acceptability: refers to whether the people who use the performance measurer accept it

Acceptability

A process whereby managers meet to discuss the performance of individual employees to ensure their employee appraisals are in line with one another

Calibration

- Must be based on job-related requirements derived from job analysis and reflected in job description and job specifications. - Help translate an organization's goals and objectives into job requirements that define acceptable and unacceptable performance levels.

Establishing Performance Standards (her notes)

Frame-of-reference training (rater accuracy 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

Frame-of-reference

Halo or Horns: a rating error in which an appraiser's evaluation of an employee's performance is biased/skewed because of the appraiser's overall impression of the employee as a good (halo error) or bad (horns error)

Halo or Horns

Similar-to-me Contrast Leniency Strickness Central Tendency Halo Horn

Identify the following rating errors that can influence performance ratings:

- Performance ratings must be job-related - Employees must be given a written copy of their job standards in advance of appraisals - Managers who conduct the appraisal must be able to observe the behavior they are rating - Supervisors must be trained to use the appraisal form correctly - Appraisals should be discussed openly with employees and counseling or corrective guidance offered - An appeals procedure should be established to enable employees to express disagreement with the appraisal

Legal Guidelines:

Leniency or Strictness: a rating error in which the appraiser tends to give all employees either unusually high or unusually low ratings

Leniency or Strictness

* most frequently used source - Appraisal done by an employee's manager and reviewed by a manager one level higher.

Managers (Supervisor)

Participation- Ask employees to speak freely and listen closely= participation leads to satisfaction

Participation

Peer Appraisal: - Appraisal by fellow employees, compiled into a single profile for use in an interview conducted by the employee's manager. - Why peer appraisals are not used more often: 1) Peer ratings may be a popularity contest. 2) Managers are reluctant to give up control over the appraisal process. 3) Those receiving low ratings might retaliate against their peers. 4) Peers rely on stereotypes in ratings.

Peers

- organization gets information on how well an employee is doing on the job

Performance Appraisal

Performance Management - a set of processes and managerial behavior that involve defining, monitoring, measuring, evaluating, and providing consequences for performance expectations. > managers ensure that employees' activities and outputs are congruent with organizational goals *Effective PM is a continual process

Performance Management

A PMS designed with a strong quality orientation can: - Assess both person and system factors in the measurement system. - Emphasize managers and employees working together to solve performance problems. - Involve both internal and external customers in setting standards and measuring performance. - Use multiple sources to evaluate person and system factors. > Sustainability is key element of quality approach. Customer orientation prevention approach to errors and continuous improvement - improving customer satisfaction is the primary goal

Quality

Appraiser communicates the strong and weal points of employee performance and then employee gets to respond

Tell and Listen Interviews

Ability to persuade an employee to change in a prescribed manner

Tell and Sell Interviews

Appraisal Politics - refer to evaluators purposefully distorting a rating to achieve personal or company goals. Appraisal politics are most likely to occur when raters are accountable to the employee being rated, there are competing rating goals, and a direct link exists between performance appraisal and highly desirable rewards

Appraisal Politics

Behavior - attempts to define the behaviors an employee must exhibit to be effective on the job

Behavior

Critical Incident Behaviorally Anchored Rating Scale (BARS) Behavior Observation Scale (BOS)

Behavior-based Methods

- Consists of a series of vertical scales, one for each dimension of job performance; typically developed by a committee that includes both subordinates and managers. *Vertical rating scale one for each important dimension of job performance

Behaviorally Anchored Rating Scale (BARS)

Calibration meetings - provides a way to discuss employees' performance with the goal of ensuring that similar standards are applied to their evaluations

Calibration meetings

Central Tendency: a rating error in which all employees are rated about average

Central Tendency

Comparative - compares performance with others

Comparative

- Competencies are sets of skills, knowledge, abilities and personal characteristics that enable employees to successfully perform their jobs. - A competency model identifies competencies necessary for each model and provides descriptions common for an entire occupation, organization, job family or specific job, useful for recruiting, selection, training and development.

Competency Model

Contrast: a rating error in which an employee's evaluation is biased either upward or downward because of comparison with another employee just previously evaluated

Contrast

- Critical incidents approach requires managers to keep record of specific examples of effective and ineffective performance - An unusual event that denotes superior or inferior employee performance in some part of the job - The manager keeps a log or diary for each employee throughout the appraisal period and notes specific critical incidents related to how well they perform.

Critical Incident Method

- in discrimination suits, the plaintiff often alleges that the performance measurement unjustly discriminated against the plaintiff because of age, race, or gender - in an unjust dismissal suit, the plaintiff claims that the dismissal was for reasons other than those the employer claims

Discuss the diversity and discrimination issues that managers should be aware of throughout the performance appraisal process:

- Provide an explanation of the performance appraisal system's objectives so that raters will understand the compensation and development purposes for which the appraisal is to be used. - Explain the mechanics of the rating system > How frequently the appraisals are to be conducted > Who will conduct them > What are the standards of performance. - Alert raters to the weaknesses and problems of appraisal systems so that they can be avoided.

Establishing an Appraisal Plan

Performance Appraisal - the process through which an organization gets information on how well an employee is doing his or her job. A good appraisal process ensures that all employees doing similar jobs are evaluated according to the same standards.

Explain the key purposes of performance appraisal in organizations:

- major purpose of the appraisal interview is to improve performance - emphasize strengths on which the employee could build - concentrate on opportunities for growth that exist within the framework of the present position - limit Plans for growth to a few items that can be accomplished in short period of time - establish specific action plans (who, what, when, where, and why) - end on a positive note

Goals

1) Give feedback frequently, not once a year 2) Create right context for discussion 3) Ask employees to rate performance before the session 4) Encourage employees to participate 5) Recognize effective performance through praise 6) Focus on solving problems 7) Focus feedback on behavior or results, not on the person 8) Minimize criticism 9) Agree to specific goals and set progress review date

Improve Performance Feedback - Outline recommendations for providing effective performance feedback to employees:

- comparative approach compares performance with others - ranking > simple ranking: ranks employees from highest to lowest performer within their department > Alternation ranking: crosses off best and worst employees - forced distribution ranks employees in groups certain percentage goes into each category - paired comparison - managers compare every employee with every other employee in work group. every time the employee gets the 1 "best employee" *Requires the rater to compare an individuals performance with that of others. Helps reduce leniency, central tendency, and strictness *10% get top ranking = 1 20% = 2 50% = 3 20% =4

Measuring Performance

- provides employees information regarding their performance effectiveness

Performance Feedback

Stimulates growth and development by discussing and employees problems, needs, on the job satisfaction and dissatisfaction

Problem Solving Interviews

Rater error training - attempts to make managers aware of rating errors and helps them develop strategies for minimizing those errors - observe other managers making errors - actively participate in discovering their own errors - practice job-related tasks to reduce the errors they tend to make Feedback Skills Training - Communicating effectively - Diagnosing the root causes of performance problems - Setting goals and objectives

Rater error training

Recency Error: rating error in which appraisal is based largely on an employee's most recent behavior rather than on behavior throughout the appraisal period

Recency Error

Reliability: a measure of the accuracy of a test or measuring instrument - getting all the same results consistently

Reliability

Results - focuses on managing the objective, measurable results of a job or working group Results-based Methods - productivity measures - management by objectives (MBO) Productivity Measures - appraisals based on quantitative measures (e.g. sales volume) that directly link what employees accomplish to results beneficial to the organization Management by Objectives (MBO) - a philosophy of management that rates performance on the basis of employee achievement of goals set by mutual agreement of employee and manager

Results

Starts the employee thinking about the process and gives them a feeling if inclusion it also gives them a preview of how they will be assessed= procedural justice

Self

Similar-to-me: an error in which an appraiser inflates the evaluation of an employee because of a mutual personal connection

Similar-to-me

Specificity: relevant and appropriate to the job - the extent to which a performance measurer tells employees what is expected of them and how they can meet these expectations

Specificity

Strategic Congruence: the extent to which a performance management system elicits job performance that is congruent with the organizations strategy (i.e. an organization emphasizes customers service then its performance management system should assess how well it's employees are serving the customers)

Strategic Congruence

Subordinate Appraisal: Appraisal of a superior by an employee, which is more appropriate for developmental than for administrative purposes.

Subordinates

Rater error training Frame-of-reference training (rater accuracy training) Calibration meetings

Summarize the methods raters can use to improve subjective performance appraisals:

Graphic Rating Scale-rated according to a scale of characteristics-most common form -managers circle the rating for the trait on a scale from 1 to 5 Mixed Standard Scale-combination of ranking and comments Essay Method- Compose Statements

Trait-based Methods

Validity: producing the desired results - the extent that a performance measurer assess all of the relevant aspects of performance

Validity

1) Conduct a valid job analysis related to performance. 2) Base system on specific behaviors or results. 3) Train raters to use system correctly. 4) Review performance ratings and allow for employee appeal. 5) Provide guidance/support for poor performers. 6) Use multiple raters. 7) Document performance evaluations.

Withstand Legal Scrutiny

Administrative Strategic Developmental *Make employee related decisions, justify a pay raise, promotion or new assignment *Strategic: Developing measures and feedback systems that push employees to engage in behaviors and produce results *Guide Employee Development: by assisting in identifying your strengths and weakness and highlighting training and development needs and sends strong messages

3 Purposes of Performance Management (PMS)

- financial: creating sustainable growth in shareholder value - customer: defines values for customers like service, quality, ect. - internal or operations: focus on process that influence customer satisfaction - learning and growth: focuses on a companies capasity to innovate and continuously improve

4 Perspectives of Performance

Strategic Congruence Validity Reliability Acceptability Specificity

5 Criteria of Performance Measures (SARVS) Describe the different standards we use to judge performance measures:

> Graphic rating scales - list of traits evaluated by 5-point rating scale - legally questionable > Mixed-standard scales - define relevant performance dimensions - develop statements representing good, average, and poor performance along each dimension

Attribute Approach

Attributes - focuses on the extent to which individuals have certain attributes (characteristics/traits like initiative, leadership, and competitiveness) considered desirable to the company

Attributes

- A performance appraisal that measures the frequency of observed behavior (critical incidents). - Preferred over BARS for maintaining objectivity, distinguishing good performers from poor performers, providing feedback, and identifying training needs. *Measure the frequency of observed behavior

Behavior Observation Scale (BOS)

- Critical incidents approach requires managers to keep record of specific examples of effective and ineffective performance. - Behaviorally anchored rating scales (BARS) - Behavioral observation scales (BOS) - Organizational behavior modification is a formal system of behavioral feedback and reinforcement. - Assessment centers are multiple raters who evaluate employees' performance on a number of exercises.

Behavioral Approach

- Ask for self assessment prior to the interview - Invite participation - Express appreciation - Minimize criticism-we can only take so much > It is really necessary > Consider the person > Be specific and do not exaggerate > Watch your timing > Make improvement your goal-Change the behavior not the person > Focus on solving the problem > Be supportive > Establish goals > Follow up Day to Day

Conducting the Appraisal Interview

Customer Appraisal: A performance appraisal that, like team appraisal, is based on TQM concepts and seeks evaluation from both external and internal customers

Customers

Comparative Attributes Behavior Results Quality

Describe and differentiate between the broad methods of employee performance appraisal:

these rating errors can influence performance ratings by being purposefully distorted to achieve personal or company goals (appraisal politics). Some employees can be stereotyped (similar-to-me) and the rater will have an expectation of how individuals with certain characteristics should perform.

Describe how each of the above rating errors can influence performance ratings:

Performance Management Process: 1) Define performance outcomes for company division and department - set goals and communicate performance expectations 2) Develop employee goals, behavior & actions to achieve outcomes 3) Provide support and ongoing performance discussions 4) Evaluate performance - measure and evaluate progress and outcomes 5) Identify needed improvements - deliver feedback and coaching 6) Provide consequences for performance results - deliver feedback and coaching

Describe the performance management process:

1) Solid performers - high ability and motivation; provide development 2) Misdirected effort - lack of ability but high motivation; focus on training 3) Under-utilizers - high ability but lack motivation; focus on interpersonal abilities 4) Deadwood - low ability and motivation; managerial action, outplacement, demotion, firing

Ways to Manage Performance