Performance Management

SMART goals are:

1. Specific, and clearly state the desired results 2. Measurable in answering "how much" 3. Attainable; not too tough or too easy 4. Relevant to what's being achieved 5. Timely in reflecting deadlines and milestones

List of norm-based approaches

Rank ordering Graphic Rating Scale Alternation Ranking Methods Paired Comparison Method Forced distribution method

Forced distribution method

o Similar to grading on a curve; predetermined percentages of ratees are placed in various performance categories. o Pros -Helps eliminate rating errors like halo and leniency -Helps control budgets o Cons: -Does not always represent reality -Neither supervisor nor subordinate like using it o Force ratings into normal distributions -Example: · 15% high performers · 20% high-average performers · 30% average performers · 20% low-average performers · 15% low performers

360 degree feedback

· Performance information is collected all around an employee, from his or her supervisors, subordinates, peers, and internal or external customers. · Generally done for development rather than for pay raises

Steps in achieving an effective Performance Evaluation System

1. Establishing what is expected 2. Communicating what is expected 3. Observing, recording 4. Evaluating 5. Giving informal and formal feedback 6. Human Resource Action

How do we measure performance?

Rating attributes (traits) Rating behaviors Measuring results Making comparisons

Disparate impact

o Improper performance appraisal systems are those that do not fairly or adequately evaluate performance, but, instead, perpetuate (make) stereotypes that have and adverse impact on protected classes. o Where a performance appraisal system has a disparate impact on a protected class, it is subject to high scrutiny (critical observation) by the courts o Determined by the 4/5ths rule The selection rate (for any employment decision) of the protected group is less than 80 percent of the selection rate of the minority group. o For example, if the number of males and females at a firm is equal, but performance evaluation system results in promotion for 85 percent of males and only 3 percent of females, the court will presume discrimination. o Employer may need to state and prove that the performance appraisal is job related o If a checklist is being used, the employer must show that the person doing the checking is reasonably free of bias, and that the list itself is a fair representation of what is to be expected of the reasonable or "common" employee. (this is called validation)

Who should do the appraising?

· Appraisals by the immediate supervisor are still the heart of most appraisal processes. Getting a supervisor's appraisal is relatively straightforward and also makes sense. · The supervisor should be - and usually is - in the best position to observe and evaluate his or her subordinate's performance. · Sole reliance on immediate supervisor's appraisal is not always advisable because they might not understand how people such as customers and colleagues who depend on the employee rate the person's performance. They may also be biased for or against the employee

Why do poor performers often receive good ratings?

· Manager does not want to hurt relationship with employee (so they give high ratings) · Manager is aware employee rated themselves high, and if there is a feedback meeting, the manager tends to rate the employee high as well. -avoid conflict in the workplace

How to receive a performance evaluation

Be prepared with facts Avoid debating about minor issues Be clear about future expectations

Absolute Approach

Fixed standard - how you rate one person does not affect how you rate another person, they are all independent of each other. Examples: Objective measures Trait measures Behavior-based measures

What is the simplest way to avoid leniency and severity?

Shift to a NORM-based rating process instead of using an absolute rating process. · For example, use a forced distribution model

Critical incident method

entails keeping a record of uncommonly good or undesirable examples of an employee's work-related behavior and reviewing it with the employee at predetermined times.

performance appraisal

evaluating an employee's current and/or past performance relative to his or her performance standards (one aspect to the performance management process) Appraising performance assumes that performance standards have been set, and also that you'll give the employee feedback and incentives to help him or her eliminate performance deficiencies or continue to perform above par

Performance Management

the continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning their performance with strategic organization's goals The process through which managers ensure that employees' activities and outputs contribute to the organization's goals

Role of performance management - Strategic

Achieve business goals

What are the 3 roles of Performance Management?

Administrative Information/Developmental Strategic

Behaviorally anchored rating scales (BARS)

Combines the benefits of both narrative critical incidents and quantitative ratings, by anchoring a quantified scale with specific narrative examples or good and poor performance. (example: 9 points for a navy recruiter who didn't give up when a prospect said he did not qualify)

Results/Outcomes: Management by Objectives (MBO)

Involves setting specific goals with each employee and then periodically reviewing the progress made toward the goals 1. Set the organization's goals -Establish an organization wide plan for next year and set goals 1. Set department goals -Department heads and their superiors jointly set goals for their departments 2. Set individual goals; define expected results -Department heads and their subordinates set short-term performance targets 3. Performance reviews -Department heads compare the actual performance of each employee with expected results 4. Provide Feedback/ Renew cycle

Performance and Career Management

Once performance appraisal is completed, it is necessary to address career related issues and communicate these issues to subordinates Career management: a process for enabling employees to better understand and develop their career skills and interests, and to use these skills and interests most effectively both within the company and after they leave the firm

Purposes of Performance Management

Promotions or demotions Feedback -Where does an employee need to improve? Motivational Tool -If an employee has not been performing well, they will be informed, and if they want to keep their employment, they may be motivated to improve Layoffs Training Need Identification (person analysis) Criterion for validation -Compare selection tests with measure of performance (correlation determines whether or not the selection procedure is valid) Communicate objectives Potential for advancement Legal Merit Pay -Pay raises

Norm-based approach

Rater evaluates employees compared to one another. You compare Person 1 to Person 2 and Person 3 and Person 4. They are interrelated

Role of performance management - Administrative

Specific decisions we make based on performance appraisal (e.g., merit (pay raise), promotion, retention/termination)

Roles in career development

The employee, the manager, and the employer all play roles in planning, guiding, and developing the employee's career. However, the employee must accept full responsibility for his or her own career development and career success. Career oriented appraisals - in which the manager is trained not just to appraise the employee but also to match the person's strengths and weaknesses with a feasible career path and required development work Job rotation can help the person develop a realistic picture of what he or she is not good and good at, and sort future career moves that might be best.

Disparate Treatment

o A performance appraisal may also result in disparate treatment, such as where a female employee is rated subject to different criteria than are the male employees. o Hopkins v Price Waterhouse o A woman accountant denied to partner based on her performance evaluation o She had been told that she needed more social grace and walk and talk like a woman o Although the employer offered evidence of nondiscriminatory bases, The Supreme Court ruled in favor of the employee. o The court found that, as long as the sexual stereotype and discriminatory appraisal were "motivating factors" in the employer's denial, the motive was illegitimate. o Raters are often influenced by physical or other traits or attributes such as national origin, age, accent, and so on. Also, physical attractiveness and body type o An employee disputing the performance appraisal may also prove a case using the disparate treatment analysis from McDonnel Douglas v Green o The employee must show that he or she o Is a member of a protected class o Suffered an adverse impact employment decision as a result of a performance evaluation o Was actually qualified to perform the responsibilities of the position o Was replaced by someone with similar qualification who is not a member of a protected class. o (applied, qualified for the job, protected, rejected)

Paired comparison method

o Complicated when many employees o Ranking employees by making a chart of all possible pairs of the employees for each trait and indicating which is the better employee of the pair o Assuming there are five employees to be rated. It will show all possible pairs of employees for each trait. Then for each trait, the supervisor indicates (with a plus or minus) who is the better employee of the pair. o Next, the number of times an employee is rated better is added up o In the example below, Maria ranked highest for quality of work and Art ranked highest for creativity

Defamation

o Defamation may exist where the employer: o States false and defamatory words concerning the employee o Negligently or intentionally communicates these statements to a third party without the employee's consent o Thereby subjects the employee to harm or loss of reputation o In other words, if the employer makes a false statement during the course of an employee evaluation, and that evaluation is transmitted to a third party (such as future employer) the employee may have a claim for defamation o An evaluation may also be considered false where the rater does not include information that would explain or justify a poor appraisal, such as the fact that the employee's poor task completion rate was due to a sight disorder, which has since been corrected. o A false evaluation may exist where a rater revises a prior evaluation in an attempt to justify subsequent adverse action taken against the employee o Truth is a complete defense to defamation, and truth and honesty by raters should be ensured throughout the appraisal process

Rating error - bias

o Employees' personal characteristics (such as age, race, and sex) can affect their ratings, often quite apart from their actual performance

Why appraise performance?

o First, appraisals provide important input on which the supervisor can make promotion and salary raise decisions. o Second, the appraisal lets the boss and subordinate develop a plan for correcting any deficiencies the appraisal might have unearthed, and to reinforce the things the subordinate does correctly. o Third, appraisals can serve a useful career-planning purpose, by providing the opportunity to review the employee's career plans in light of his or her exhibited strengths and weaknesses

Graphic Rating Scale method

o Lists a number of traits and a range of performance for each. Traits such as (quality and reliability) and a range of performance values (in this case, unsatisfactory to outstanding) for each trait. o Supervisor rates each subordinate by circling the score that best describes the subordinate's performance for each trait, then totals the scores for all traits

Leniency or Strictness (severity)

o The tendency to assign higher or lower ratings that is warranted by actual performance o Some supervisors tend to rate all their subordinates consistently high or low · Reasons 1. Gain promotions for subordinates 2. Poorly rated subordinates reflect poorly on the supervisor 3. Poor ratings hurt the relationship with employee (so they give high ratings) 4. Reflects manager's attitude toward people (if a manager thinks people are good, they assign high ratings. On the other hand, if they think people are bad, they will give overall bad ratings. 5. Managers may give low ratings to keep good employees (if they have really good performers that they don't want to leave their department, they purposely give low ratings in order for them to stay and not get promoted to a different department).

Alternation ranking methods

o Used to indicate the employee who is highest on the trait being measured and also the one who is lowest, alternating between highest and lowest until all employees to be rated have been addressed o Ranking employees from best to worst on a particular trait, choosing highest, then lowest, until all are ranked

Types of Performance Appraisal Measures - Trait

· A graphic rating scale is a commonly used method to measure traits · It displays rating scale from high to low (or from low to high) o Examples: integrity, initiative, dependability, work attitude, etc. (select A for excellent, B for good, etc.) · Advantages? o If accurate, employee's will gain an understanding of how their traits contribute to the job · Disadvantages? o Ambiguity o Does not describe behavior (not specific enough, which becomes a problem when giving feedback. o Can foster mistrust and resentment when raters cannot justify their opinions or judgements o Often rejected by the courts o Standards are unclear (what is the difference between "excellent" or "good"?) -It is based on human opinion o Performance dimensions are often not clearly defined -If you ask two raters to define "manner and appearance" they may have two completely different answers

Peer appraisals

· An appraisal of an employee by his or her peers. Effective. Researchers found that peer appraisals had "an immediate positive impact on improving perception of open communication, task motivation, social loafing, group viability, cohesion, and satisfaction."

Vaughn v. Edel

· Disparate treatment · During a retrenchment, a black female was terminated for poor performance. · She alleged race discrimination in that her employer intentionally determined not to give her necessary feedback about her performance which would have helped her perform better and perhaps avoid dismissal. o She was considered a good performer o He performance dropped o She had closed door discussions with black employees o Her manager began to become suspicious o They first marked her as "satisfactory" to avoid issues o Other employees were put into a performance employment plan, but she was not given the same opportunity · The court upheld the employee's claim in violation of Title VII · Ruled in favor of Vaughn, the black female attorney

Self Ratings

· Employee's self-ratings of performance are also sometimes used, usually in conjunction with supervisors' ratings. · Problem is that employees rate themselves higher than their supervisors or peers would rate them

Types of Performance Appraisal Measures - Behavior-based

· Focuses on behavior instead of traits (what the person does on the job) · Example of behaviors of a supervisor foreman: Explains job requirments to new employees in a clear manner (more shown below) · We can measure performance through BARS - behavior based measure · Advantages? o Easier for supervisor to give specific feedback o Seen as more accurate than trait approach o Court prefers behavior based over trait based · Disadvantages?

Legally defensible appraisal

· Job Analysis to determine performance standards · Develop appraisal criteria from documented job analysis · Avoid subjective traits; focus on behaviors/results · Rater training/written instructions · Documentation (critical incidents) · Upper-level management review · Feedback to employees · Document performance standards in writing · Chance to improve poor performance

How to conduct the appraisal interview

· Keep in mind that the interview's aim is to reinforce satisfactory performance or to diagnose and improve unsatisfactory performance · Space out meetings (1 per day) · Focus on objective work data; avoid halo error · Encourage the employee's perspective · Be direct about performance concerns (objective work data, such as absences, tardiness, etc.) · Base review on 12-month period · Develop action plans to address deficiencies (decide how things will be improved and by when) · Offer the necessary support for development and change · Set goals for next year

Why do good performers sometimes receive poor ratings?

· Managers may give low ratings to keep good employees (if they have really good performers that they don't want to leave their department, they purposely give low ratings in order for them to stay and not get promoted to a different department).

Negligent Performance Evaluation

· Negligence: the omission (failure) to do something a reasonable person would do, when guided by those considerations that ordinarily regulate human affairs, or something that a prudent and reasonable person would not do. · An employee may have a claim against an employer for the employer's negligence in conducting a performance evaluation. · The employee must be able to show a contract existed that provided for a performance evaluation. · This may either be in the form of a formal employment contract or merely an agreement to include an evaluation in the criteria for promotion or merit salary increase. · A unique legal issue arises in connection with performance appraisals of individuals with disabilities. o An employer is not required to lower quality or quality standards to accommodate a disabled employee, but it must do what is possible to enable the employee to perform her or his essential responsibilities, while not subjecting itself to an undue burden or hardship.

Appraisal by subordinates

· Some firms let subordinates evaluate their supervisor's performance, a process called upward feedback · This feedback can help top managers understand their subordinates' management styles, identify potential people problems, and take corrective action with individual managers.

Rowe vs. GM

· This case represents disparate impact because there was a substantial different rate of selection of African Americans were denied · In addition, GM's actions were not intentional o General Motors employees brought a charge of racial discrimination based on GM's practice of reaching promotion decisions by relying on the recommendations of foremen. This practice operated to discriminate against African-Americans and was held to be unlawful, even though the practice appeared to be fair on its face and General Motors had no intention to discriminate. o Among other things, they base their charge of racial discrimination on the foreman referral system and claim that because they are Black, they have been hindered in obtaining the required recommendation of their immediate foreman and have therefore been unable to secure promotion · The court ruled in favor of Rowe because GM violated Title VII

Experimental Design

· Undergrads assume role of "supervisor" · Evaluate another student · Student performed moderately poorly on job task · "supervisor" told: o Student rated themselves high or low o "Supervisor" will meet with student to discuss their performance (or told nothing Conclusions: The Perfect Storm 1. High self-ratings inflate supervisor ratings of employee 2. Feedback meeting inflates supervisor ratings of employee

Rating committees

· Usually composed of the employee's immediate supervisor and three or four other supervisors Can help cancel out problems such as bias on the part of individual raters

Jensen v. Hewlett-Packard

·Disparate treatment was the type of discrimination involved in this case because an individual person claimed they were wrongfully appraised An employee who did not agree with his performance evaluation filed suit against the employer for defamation. · The lawsuit involves a difference of opinions between the employer and employee about the quality of the employee's work. · It documented one manager's assessment of Jensen's work habits, interpersonal skills, and level of effort, and it outlined the employer's expectations with regard to Jensen's improvement · The court DISAGREED with Jensen because his managers rated him on SUBJECTIVE measures such as "work habits, interpersonal skills, level of effort" · Despite that they are subjective in nature, managers are SUPPOSED to make judgements about the employee's performance

Preparing for the appraisal interview

*This is where the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths 1. Give the subordinate at least a week's notice to review his or her work, and to read over his or her job description, analyze problems, and compile questions and comments. 2. Study his or her job description, compare the employee's performance to his or her standards, and review the files of the person's previous appraisals. 3. Choose the right place for the interview and schedule and enough time for it. (should be done in a private area where you won't be interrupted by phone calls or visitors.

Central Tendency

A tendency to rate all employees the same way, such as rating them all average · The rater is unwilling to give extremely high or extremely low ratings · Can distort evaluations and make them less useful for promotion, salary, and counseling purposes · Reasons: · Organizational norm (raters are instructed not to give high ratings because it may not encourage them to perform better. Example: An employee who gets a 4 will be motivated to get a 5 next year) · Conflict avoiding strategy --> if everyone is rated average, there will not be much conflict · Takes little thought · Raters lacks information about the person's performance · Consequence - little variability in performance ratings 1. If someone needs to get laid off, it will be difficult to decide who gets laid off because everyone has been rated averagely · Controlling · How to solve? 1. Use forced distribution

Rating error - unclear standards

An appraisal that is too open to interpretation · Different supervisors would probably define "good" performance differently. · Develop and include descriptive phrases that define each trait and degree of merit

McDonald v. Santa Fe Trail Transportation

Disparate treatment - the two white employees are fired o Reverse discriminatory treatment Two white employees and one black employee misappropriated (STOLE) 60 gallons of antifreeze cargo from one of the employer's shipments. The two white employees were discharged and the black employee was not. The white employees sued the employer for race discrimination. · The court held that Title VII is not limited to discrimination against members of any particular race and applies equally to whites and blacks. · Title VII prohibits the discharge of "any individual" o Its terms are not limited to discrimination against any particular race.

Types of Performance Appraisal Measures - Objective

Measures: -Production data - quantity and quality -Personnel data - absences, tardiness, grievances, accidents, turnover Advantages? -No human judgement involved (unbiased) -Employees are aware of how they will be evaluated Disadvantages? -Some jobs can't be objectively measured -Not appropriate for highly interdependent jobs -Work situation can influence performance (example: A sales job, usually a new hire is given a sales territory that is less desirable than those employees who have been there for a while -May miss important aspects of the job, such as effort

Halo effect

Occurs when a supervisor's rating of a subordinate on one trait biases the rating of that person on other traits Rater has a generally favorable or unfavorable impression of the ratee and assigns consistent with this impression · Reasons: o May reflect the way we encode information in our brains o A few critical incidents (we see the individual do really good or bad things on the job) may help us form a general impression and subsequent information is used to support the initial impression o Supervisor doesn't observe subordinate's performance very much · Controlling o Rate all employees on one trait/behavior at a time o Supervisor keeps written records o Supervisor justifies ratings with example

Role of performance management - Information/Developmental

Provide feedback to individual regarding their performance and hopefully the individual will undertake any steps necessary to address their underperformance such as additional training (e.g., feedback, communicate expectations, developmental actions/coaching)

Rank Ordering

Rank employees from best to worst (simplest way) o Example: Rank order 15 employees from best to worst o Pro: Helpful for decision making (raises, promotions o Con: All employees may be poor or good performers

Relative Measurement: norm-based

Raters compare employees and rank them to one another (not to a fixed standard) RANKINGS (not ratings) Pros? -Helpful for making decisions (raises, promotions) -Helps eliminate rating errors like halo and leniency -Helps control tight budgets Cons? -Complicated when many employees -All employees are classified as either good or poor performers -Doesn't always represent reality

Political Appraisals: Rater Motivation

What motivates raters to give lenient ratings? -Fear of having to hire and train someone new -Avoid unpleasant reaction from the ratee -Don't want to harm the employee -Help employee get promoted