Performance Management & Evaluation (#1)

Factors that affect your perceptions of feedback

*Accuracy* *Credibility of the source:* If you don't trust the person, you will be suspicious of their intentions and discount the value *Fairness of the system:* If you perceive the process or outcomes are unfair, you are likely to discount the feedback *Performance-reward expectancies* Reasonableness of the goals or standards: challenging is good, unattainable bad. ex) If is possible for you to earn a bonus 50% of your salary. ask if anyone has actually achieved that

Test-retest reliability

*Consistency of results over time.* If a test lacks this kind of reliability, determining whether an employee's performance has truly changed over time will be impossible

Interrator reliability

*Consistency of results when more than one person measures performance* Ex) asking a supervisor to rate an employee's performance on a scale of 1-5 would have low interrator reliability, the rating will differ depending on who is scoring

Rating BEHAVIORS -Critical Incident Method -Behaviorally Anchored Rating Scale -Behavioral Observation Scale -Organizational Behavior Modification

*Critical Incident Method*: Based on managers' records of specific examples of the employee acting in ways that are either effective or ineffective ALL BELOW ARE DERIVED FROM CRITICAL INCIDENT METHOD *Behaviorally Anchored Rating Scale*: Rates behavior in terms of a scale showing specific statements of behavior that describe different levels of performance -Statements are anchors of the performance levels *Behavioral Observation Scale*: Uses behaviors necessary for effective performance to rate performance at a task --Different from BARS because it uses more examples when creating the scale --Drawback is that it is much more complicated *Organizational Behavior Modification*: Comes from behaviorism, plan for managing the behavior of employee through a formal system of feedback and reinforcement. 4 components - Define key set of behaviors necessary for job performance - use measurement system to assess whether the employee exhibits the behaviors - Inform employees of the key behaviors -Provide feedback and reinforcement

4 categories of intermittent reinforcement schedules

*Fixed ratio* -Ex) Price-rate pay, bonus tied to the sale of a fixed number of units -Advantage: Clear/predictable link between behavior and the reinforcer -Dis: Costly to omintor performance, reinforces lose effect over time *Variable Ratio* -Ex) Slot machines that pay after a variable number of pulls. Lotteries that pay after a variable number of tickets sold -Advantage: Strong motivation to continue until reinforcer is recieved, less costly Dis: Some desired behaviors will not be rewarded *Fixed Interval* - Ex) Paychecks every 2 weeks, annual bonuses Adv: Clear link between behavior and reinforced, less costly Dis: Inconsitent effort and performance over the interval *Variable Interval* -Ex) Random supervisor pats on the back, spot rewards, random drug tests, pop quizzes -Adv: Strong motivation to perform over time, least costly Dis: Some behavior will not be reinforced, potentially long periods between

Rating ATTRIBUTES -Graphic Rating Scale -Mixed Standard Scales

*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 Low reliability because managers are likely to arrive at different judgements *Mixed Standard Scales*: uses several statements describing each trait to produce a final score for that trait. Manager scores the employee based on how the employee compares to each statement

Methods of measuring performance: Making Comparisons -Simple Ranking -Forced-Distribution Method -Paired comparison method

*Simple Ranking:* Requires managers to rank employees in their group from the highest performer to the poorest performer (variation of this approach is alternation ranking: manager works from a list of employees and crosses the best and worst off, then 2nd best and 2nd worst, so on.) *Forced Distribution Model:* Assigns a certain percentage of employees to each category in a set of categories Ex) Exceptional employees must be 5%, Meets standards must be 55%, etc *Paired Comparison Method:* Compares each employee with each other employee to establish ranking --Point system, employee with most points is considered the top-ranked employee

3 components of a MBO

1) Goals are Specific, difficult, and objective 2) managers and employees work together to set the goals 3) manager gives objective feedback through the rating period to monitor progress

3 general rules for distributing rewards

1) Results: Tangible outcomes such as quantity and quality. Commonly some type of accounting measure. May also include customer satisfaction, are rewarded 2) Behavior and actions: Teamwork, cooperation, risk taking, are rewarded 3) Nonperformance consideration: Customary or contractual, type of job, nature of work, tenure, are rewarded

4 steps to follow when implementing a goal-setting program

1) Set Goals -SMART 2) Promote Goal Commitment -Write goals down, identify obstacles, whats in it for you?, break it down, organize, reward yourself 3) Provide Support and Feedback 4) Create action plans

Performance management cycle

1) Setting Accountabilities 2) Developmental Review (Informal, quarterly update) 3) Performance Review (Formal) 4) Rewards (Merit increases, etc) Now the cycle restarts, you set accountabilities for the next cycle Example: In school, Performance review is the exam, and the reward is your grade

Using customer evaluations of employees performance is appropriate in 2 situations

1) employees job requires direct service to the customer or linking the customer to other services within the organization 2) organization is interested in gathering information to determine what products and services the customer wants Customer surveys are actually expensive

3 common sources of feedback

1) others 2) task 3) self

Process of Performance Management (6 Steps)

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 (provide employees with training, necessary resources, ongoing feedback, etc.) 4) Evaluate Performance 5) Identify improvements needed 6) Provide consequences for performance results (achieving or failing, things like pay increases, bonuses, or action plans) -this comes after step 4. step 4 proceeds directly to step 5 and 6 in 2 different paths

Most common Uses of Performance Management

1: Make employee-related decisions (pay raise, promotion justify termination) 2: Guide employee development: highlight training and development needs 3: Send strong signals to employees (about what they are supposed to do and how to advance their career)

Overcoming Bias and Other Errors with 360 degree feedback

360 Degree Feedback: individuals compare perceptions of their own performance with behaviorally specific (and anonymous) performance information from their managers and peers. Collecting performance information from a variety of sources helps a person being evaluated to get a broad view of his/her performance

you don't have to train a lot of people, what is expected of them is outlined (?)

A benefit of behaviorally anchored rating scales is

How good are organizations at sending the right messages to the right people?

Almost every organization can be better at this, some need to do much better

Graphic Rating Scales Critical Incidents (rating based on stand out incidents) Behaviorally Anchored Rating Scales (BARS) -- Ex) "5: talks with every customer, happy to be around." Set of behaviors that provide an anchor for rating Behavioral Observation Scales Results vs Accountabilities Approaches

Approaches to Performance Evaluation

Y axis: Behavioral Competencies (How it gets done) from low to high X axis: Actual results (what gets done) from low to high Bottom Left: *Poor Performers* (low results, low behavioral competencies) Bottom Right: *Loose Cannons* (high results, low behavioral competencies. --Do a good job but cause devastation from not doing it right) Top left: *Value driven low performers:* Low results, high behavioral competencies Top Right: *Star Performers* (High results, high behavioral competencies)

Assessing "What Gets done" vs "How it gets done"

A key take away is to

Be sure that your performance management systems produce the desired outcomes and be mindful of undesirable side-effects

Thorndikes "The Law of Effect"

Behavior with favorable consequences tends to be repeated, while behavior with unfavorable consequences tends to disappear This was a dramatic departure from previous notions that behavior was the product of inborn instincts Ex) Cat placed in a box would behave randomly and wildly until it pressed a lever to escape, and then when it was placed in the box again, it would go straight to the lever

Contingency approach for setting goals: Behavioral Goals Objective Goals Task/Project Goals

Behavioral: used for most jobs, most relevant for knowledge work. Ex) treat others with professionalism and respect Objective goals: best for jobs with clear and readily measured outcomes, measure what matters, not just what can be measured. Ex) Sales quota, production rates, error rates Task/Project Goals: Best for jobs that are dynamic, but in which nearer-term activities and milestones can be defined. Similar to SMART goals. Ex) Complete your portion of the team project by Tuesday

What is a way of discouraging appraisal politics?

Calibration meeting

Coaching

Customized process between two or more people with the intent of enhancing learning and motivating change

3 General outcomes from rewards

Desired outcome: more of what you intended and for which you are rewarded Nothing: Reward can have no effect Undesired side effects: Rewards reinforce or motivate the wrong behaviors

Do: Be direct Listen/Take notes Clarify Pinpoint sources of disagreement Provide concrete examples Provide a reality check when expectations are unrealistic Don't: Interrogate Hide your thoughts Dominate Become too emotional during any disagreements!

Dos and Dont's of Development Reviews

Benefits of Performance Management -Allows Employees to -Allows managers to

Employees: - Identify their strengths and recognize ares to improve -Work with their manager to identify contributions to the team -Establish a plan to develop skills Managers: - Build stronger working relationships with employees -Show employees their commitment to helping them meet job standards -Encourage employees to improve job skills -Identify and solve job performance issues

Continous Reinforcement

Every instance of a target behavior is reinforced, then a continuous reinforcement schedule is in effect (CRF) Ex) get paid every time you make a sale. This is a CRF schedule Useful for making early links between desired behaviors and outcomes Susceptible to perceptions of entitlement and rapid extinction if the link is broken Especially useful when employees learn a new task or skill (like feeding a dog treats for tricks)

T of F. Performance management is doing performance reviews

False. Doing MORE than just performance reviews, its about *sending the right messages to people*

Coaching comes after

Goals and expectations are determined, performance is monitored, and feedback is collected Coaching can either follow or encompasss these other steps of performance managment

Graphic: Rate each student from 1 to 5 (1= Very Low, 2= Low, 3= Average, etc) Behaviorally Anchored Rating Scale: Given each level of engagement a behavioral anchor that can serve as an example to the raters Ex) 5= Attends almost every class, makes insightful contributions 4= Attends most classes, makes good contributions etc. Faculty have a common set of behaviors to evaluate on, accounts for consistent evaluation and judgement by all professors

Graphic Rating Scales vs BARS Example Situation: Faculty across OSU (all campuses) have been asked to rate each of their student's level of engagement in class. What are some different ways this could be done? Graphic rating scale vs behaviorally anchored rating scale

Characteristics of good accountabilities

Grounded in and aligned with strategic objectives of the organization Stretch, but achievable goals Limited number (no more than 8-10) including a focus on self development SMART (specific, measurable, attainable, relevant, time-based) Review on a quarterly basis at all levels of the organization (informally)

Performance management is about SENDING THE RIGHT MESSAGES TO THE RIGHT PEOPLE. Why is this important? What kind of messages do you want to send to the people in your organization that are weak performers?

If you give everyone the same reward/evaluation, it will show top performers that their performance doesn't matter. They will LEAVE, not get lazy

Behaviorism

Individuals future behavior is determined by their past experiences, specifically the way the past behaviors were reinforced

Feedback

Information about (individual or collective) performance shared with those in a position to improve the situation

Intermittent Reinforcement

Involves reinforcement of some but not all instances of target behavior 4 categories

Is training/development part of the performance management cycle?

It is not formally part of the cycle but hopefully you are getting that

Problems in employee performance usually stem from

Lack of ability, lack of motivation, or both. lack of ability: manager should provide coaching and training, consider reconstructing the job lack of motivation: manager should investigate whether the outside problems are a distraction, refer the employee for help. If it has to do with not feeling appreciated, should deliver more praise. Lacking both: consider whether they are a good fit for the position. Withholding rewards my spur improvement

Ongoing & visible support from senior leadership Clearly communicate total rewards system Ensure managers provide regular and informal/formal feedback Set clear expectations *Use performance management to send the right message to different people*

Making performance management work well

Provide feedback frequently (informally and formally) Ask for self-assessment Encourage active participation Provide a balance of positive vs constructive feedback *Focus feedback on behaviors, NOT personal characteristics* Agree on goals *Above all else, accurately rate performance*

Manager's Role in Performance Evaluation

Definition of performance management:

Means through which managers ensure that employee's activities and outputs are congruent with (and contribute to) the organization's goals The use of organizational systems, tools, procedures, to help ensure a given organizational member is performing his/her highest potential and level effectiveness

Calibration meeting

Meeting where managers discuss employee performance ratings and provide evidence supporting their ratings with the goal of eliminating the influence of rating errors

Benefits and cons of attribute rating

Most popular way to measure performance Easy to develop and can be applied to a wide variety of jobs in the organization Method can be reliable and valid if organization is careful to determine which attributes are associated with high performance However, attribute ratings usually fail to meet this standard Measurement of attributes is rarely linked to the organization's strategy

Discussion of: Strengths and weaknesses Career interests and goals (short term and long term) Potential career planning Potential next roles

Objective of a Development Review (Remember a development review is different from a performance review, it is informal)

Effective feedback

Only information, it is not an evaluation. Subjective assessments like "you have a bad attitude" or "you're lazy" are not effective feedback. Hard data like units sold, dollars saved, projects completed, are all effective feedback programs

What goes wrong with performance management?

PM practices are impractical (don't fit the situation and don't motivate the appropriate behaviors) Pitfalls of performance management frequently are due to focusing on only one part of the process (such as rating tools and only using measures that are available rather than appropriate measures) Ex) Amount of time spent with each customer is easy to measure but means less than the measure of customer satisfaction

Companies with the best pay-for-performance results

Paid top performers substantially higher than other employees Reduced gaming of the system by increasing transparency Utilized multiple measures of performance Calibrated performance measures to assure accuracy and consistency

Ranking Forced Distribution (remember from last exam, they make it so a certain percentage of people have to be in one section) Calibration

Performance Evaluation Procedural Issues

Which do managers usually over-emphasize?

Performance goals and ignore learning goals. They do this while they try to "motivate" greater effort and achieve final results

Performance goal vs learning goal

Performance: Targets a specific end result Learning Goal: Involves enhancing your knowledge or skill

Skinner's Behaviorism

Pointless to explain behavior in terms of unobservable inner states such as needs. Different from Thorndike's law of effect, which thought behavior was controlled by consequences.

Pay for Performance:

Popular term for monetary incentives linking at least some portion of one's pay directly to results or accomplishments AKA incentive pay

Evaluating performance

Process of comparing performance at some point in time to a previously established expectation or goal

Punishment

Process of weakening behavior through contingent presentation of something displeasing or contingent withdrawal of something positive Ex) US department of transportation fines airlines for passengers on planes that are delayed more than 3 hours

Other things about performance management

Provides a system for rewarding (in an EQUITABLE way) varying levels of performance to motivate and retain high performers Fundamental means of helping each organizational member maximize his/her current effectiveness and potential Starting point for career discussions and movement

Ethical issue of performance management: electronic monitoring

Provides detailed and accurate information, but employees may find it demoralizing and degrading More likely to accept electronic monitoring if the organization explains its purpose and links it to improving performance

Top Quality managment

Provides methods for performance measurement and management. Differs from traditional performance measurement, assesses both individual performance and the system within which the individual works Employees and customers work together to set standards and measure performance, goal being to improve customer satisfaction 2 types of feedback: -Subjective feedback about the employee's personal qualities -Objective feedback based on the work process

Types of Rating Errors

Research shows there is an error of giving a higher evaluation to people we consider similar to ourselves (we think of ourselves as effective so if others are like us, they are effective too) *Contrast errors:* rater compares an individual against other employees, instead of an objective standard *Distributional error:* use only one part of the rating scale. Leniency is when the reviewer rates everyone near the top, strictness is when they rate everyone near the bottom, central tendency is when they put everyone in the middle of the scale *Halo & Horn* errors result from raters letting their opinion of one quality color their opinion of the others. One quality either creates a good or bad impression, and the rest are ignored. --*Halo error:* Raters bias favorable influences their rating. Can end up in mistakenly telling employees they don't need to improve --*Horns error:* Raters bias negatively impacts their rating

What can an executive or high-level manager do to receive feedback?

Seek feedback from others by creating an enviornment in which employees feel they can be honest Separating feedback from the performance review, helps for executives who typically are not reviewed formally at all Create a mechanism to collect feedback anonymously

Criteria for Performance Management

Selecting methods for measuring performance must be good. Several criteria determine the effectiveness of performance measures: *-Fit with strategy/ Strategic* (should aim at achieving employee behavior and attitudes that support the organization's strategy and culture. *-Validity:* Extent to which measurement tools actually measure what it is intended to *-Reliability:* consistency of the results that the performance measure will deliver. ---Interrater reliability ---Test-retest reliability *Acceptability:* Whether or not a measure is valid and reliable *Specific Feedback*: Performance measure should specifically tell employees what is expected of them and how they can meet those expectations

Allows employees to: Describe results for the year (success and disappointment) Rate themselves against competencies Give themselves an overall performance rating Give employees a say in their review, helps provide a more realistic perspective on performance, generally leads to a more effective performance discussion Adds a bit of complexity but the benefits are worth it

Self Assessment

Operant Behavior

Skinner Learned when one operates on the enviornment to produce desire consequences. Some call this the response-stimulus (R-S) taught pigeons how to pace figure eights by reinforcing behavior with food

Skinner- Respondent behavior

Skinner Unlearned reflexes or stimulus-response (S-R) connections. Describes a small portion of adult human behavior, such as shedding tears while peeling onions

Electronic monitoring

Store records of employee's performance ratings, disciplinary actions, work-rule violations. Monitor productivity and other performance measures electronically.

Organizations establish performance management systems to meet 3 broad purposes:

Strategic - Effective performance management helps the organization achieve its business objectives. Links employees behavior with organization's goals Administrative -Ways in which organizations use the system to provide information for day-to-day decisions about salary, benefits, and recognition programs Developmental - Services as a basis for developing employees' knowledge and skills. Even employees who are meeting expectations can become more valuable when they hear and discuss performance feedback

What should you consider when you develop your accountabilities?

Strategic objectives of the organization Objectives for your subgroup of the organization Goals/objectives established by your manager Tactical objectives you have for the year

Management by Objectives (MBOs)

System where people at each level of the organization set goals in a process that flows from top to bottom, so employees at all levels are contributing to the organization's overall goals. These goals become the standards for evaluating each employee's performance Have a very positive effect on an organization's performance Results can be less subjective than other kinds of performance managment

Tell and sell approach Tell and listen approach Problem solving approach

Tell and sell: tell the employees their rating and justify the rating Tell and listen: tell the employees their rating and let the employee explain their side of the story problem solving: managers and employees work together to solve performance problems

4 other types of measures for goals

Timeliness Quality Quantity Financial Metrics

Extinction

Weakening a behavior by ignoring it or making sure it is not reinforced Ex) Getting rid of a boyfriend by refusing to answer his phone calls Ex) Stopping watering your plants. Like a plant without water, a behavior without occasional reinforcement eventually dies.

Performance evaluation is the period

at the end of the sentence of performance management, just the summary

Contingency approach is

based on what the situation requires, rather than applying a one-size-fits-all approach and doing what has always been done

Lawsuits related to performance management usually involve charges of

discrimination or unjust dismissal Organizations must establish valid performance measures and train raters to evaluate performance accurately

The most important thing about accountabilities is that they should

have a strong alignment within the organization

2 functions of feedback

instructional: clarifies roles or teaches new behavior ex) accountant is advised to handle a certain entry as a capital item rather than an expense item motivational: serves as a reward or promises a reward ex) you've completed the project ahead of time, take a day off!

The bottom line of performance management, is that

it allows the organization to improve and be successful

One way to look at coaching is

it is a form of individualized and customized performance managment

MBO stands for

management business objectives

Rating Individuals is different from ranking individuals, in the way that

rating individuals focuses on looking at each employee's performance relative to a uniform set of standards, instead of focusing on arranging a group of employees from best to worst

How you measure goals should match

the type of goal (behavioral, objective, task/project)

Specific performance/job accountabilities are important because:

they are a "roadmap" for success in the given fiscal year, and the basis for update discussions to review progress provide a clear line of sight and linkage between what each individual does and the overall business objectives guides decision making Roll clarity Help ensure the team is focused on critical objectives Included in performance management assessments at the end of the fiscal year *Think of it as the relationship between knowing/defining your goals and your success*