Chapter 8

When do we use MBO?

-One of the best methods in developing employees -Like CIM, employees get constant feedback on how they are doing. -Can work properly if we commit to the process and truly involve employees rather than trying to make them believe that our objectives are theirs. -One difficult part is most employees may have different goals

Setting Objectives Model

Action Verb + Specific Measurable Result + Target Date

The bottom line test also called the

"Blanchard test" -Does everyone understand why they are assessed at a specific level and what it takes to get a higher rating? We should only assess traits that meet the bottom line test of having direct and obvious objective relationships between the traits and success in the job.

Performance management v. Performance Appraisals

PM- the larger picture; figuring out how well employee perform and ultimately improve their performance level. PA- used in performance management; just one piece of performance management

Narrative based on critical incidents and MBO results is clearly the best basis for the written assessment

TRUE

Is the results-based performance evaluation valid and reliable?

Usually highly valid and reliable, assuming that we were able to take into account factors outside of the individual's control that nonetheless affect job performance.

Performance management

the process of identifying, measuring, managing, and developing the performance of the human resources in an organization. -systematic analysis and measurement of worker performance that is used to improve performance over time

Avoiding Problems in Evaluation

-An effective manager who is a good coach will generally never identify a weakness that the employee has not previously been made aware of during the formal appraisal interview. (no surprises in a well run evaluation) -Should only be a review of what the employee already knows and should be willing to hear. -More balanced approach to minimize risk of them raising their shields -The debrief must be a well-rounded look at the individual employee and should identify both positive and negative factors in the employee's behavior and results within the job. -As the manager we want to tell the employees what they did right but also where they have room for improvement

Effective and Legal Performance Appraisal System is:

-Based on a job analysis -Properly administered (formal, standardized) -Provide specific feedback (focus on behaviors rather than traits, ratings documented) -Use appropriate raters (trained, relevant)

Coming Problems within the Performance Appraisal Process

-Bias -Stereotyping -Halo Effect -Distributional Errors -Similarity Errors -Proximity Errors -Recency Errors -Contrast Errors -Attribution Errors

Which of the three options concerning evaluation are best?

-Certainly results and behavior based evaluations are more defensible due to the fact that they are more reliable and valid than trait based evaluations. -Depends on a large number of factors in order to select which option is best in a particular situation -No one method is superior to the other

Formal Performance Appraisal (step 4)

-Common to have a formal performance review with the boss once or twice a year

Various Purposes of an Appraisal

-Developmental -Administrative

How will the performance be appraised?

-Employee comparisons -Objective results -Subjective ratings

Identifying Potential Limitations

-Environmental -Cultural -360 degree ratings may decrease group cohesiveness *Vital to not evaluate performance for merit pay increases if the organization doesn't have the $$$to award those increases*

Should we measure behavior?

-Evidence shows that most individuals are very comfortable with the evaluation of their performance being based on "what they do" not "who they are." -The most useful and therefore most acceptable feedback to employees is feedback on specific job-related behaviors

Separating Evaluation and Development

-First meeting is to evaluate the employee's PAST performance-pointing out strengths and areas for improvement -Second meeting employee and manager jointly come up with a developmental plan that should lead to increased performance, which in turn will result in a higher future evaluative rating during the next formal appraisal

Motivating Development

-Managers need to provide opportunities for employees to improve their performance over time (need to be told how to fix their problems) -Provide employees with tools, training, or other methods that will allow them to improve to the point where their behavior is sufficient the continually strive to get them to perform at an above-average level and become superior performers. -Don't focus on past negative results but on positive future potential results -Performance appraisals can be motivating if they are properly used and debriefed

Can we accurately measure behaviors that affect job performance?

-Much better to use than trait appraisals because physical actions and behaviors can be directly observed and are more likely to be a valid assessment of the individual's performance

Valid/ Reliable

-OUCH test (Objective, Uniform, Consistent, Has job relatedness) Valid means a measure is true and correct; factual that measures the process that you wanted to measure Reliable means the measure is consistent and it works generally the same way each time we use it

Problems in Evaluation

-Overpowering an employee during the evaluation debrief with large amount of negative information that they have not heard during coaching--> leads to employees to "turn off" or stop listening as the manager explains what is wrong. -Employees may consider the process unfair or one-sided and not an accurate measure of their performance -May become useless as a motivator that develops the employee

Types of Rating Scales

-Performance based -Normative based -Frequency based

Examples of Administrative Appraisal purposes

-Raises -Promotions (keeping "Peter principle" in mind) -Demotions -Termination decisions

Informal Performance Appraisal (step 3)

-Should not be done just once or twice a year but rather an ongoing process -People need regular feedback on their performance -Involves coaching

Determining WHO gives the appraisal performance

-Supervisor(s)- more traditional -Peers -Subordinates -Customers -Self

To be an accurate measure of performance, our measure must be:

-Valid -Reliable -Acceptable -Feasible -Specific -Based on the mission and objectives

Accurate Performance Measures (step 2) -- Uses ANSI

-Valid and Reliable (OUCH test) -Acceptable and Feasible -Specific -Based on the mission and objectives

Why do we conduct performance appraisals?

-communicating (informing) -decision making (evaluating) -motivating (engaging)

How can we avoid performance appraisal process problems?

-develop accurate performance measures -train evaluators -use multiple raters

How do we use critical incidents?

-important employee actions not minor ones which help or hurt performance. -every time an employee beats a tough deadline...etc. a note goes into the employee's file as well as when they do something to hurt performance

Acceptable/ Feasible

Acceptability means that the use of the measure is satisfactory or appropriate to the people who must use it Feasibility means it can be reasonably applied in a particular case and is not too complex or lengthy to work well. Example: A 25 page form that has very little to do with the job being evaluated may not feel acceptable or feasible due to its length

Decision Making (Evaluating)

Allows management to make decision about employees within the organization based on good communication -Accurate (valid & reliable) information is necessary and critical to allow the manager to improve organizational productivity -Decisions concerning pay raise, demotions, promotions, training, development, and termination

BARS v. Graphic Rating Scale

BARS -overcome the problem of subjectivity by providing an actual description of the performance for each rating alone the continuum rather than one simple word (excellent, good, bad...etc) -makes it more objective and accurate -have to be customized to every different type of job (lots of money, expertise, and time) Example: Attendance- excellent, good, average, fair, poor TURNS INTO= Attendance- number of days missed 1,2,3,4,5,6 or more

Should we measure traits?

Dr. Ken Blanchard said that there are too many evaluation items that can't be objectively measured- such as attitude, initiative, and promotability. Therefore, it's important to ask whether both managers and employees will agree with the measured rating as being accurate.

Example for behavior based evaluation

Employees work on assembly line, we may need to evaluate behaviors such as punctuality and attendance because everyone on the assembly lines depends on everyone else.

Evaluating and Motivating= Development

Evaluating past performance to motivate future performance Evaluative decisions should lead to development of employees.

Why/When use the narrative method

Manager can: -give the evaluative assessment in a written form that can go beyond simply checking boxes -write up a developmental plan of how the employee will improve performance in the future Can be used alone but often used in addition to another method or form. Commonly used during formal review with professionals and executives.

Motivation (Engaging)

Motivate the employees to improve the way they work, which in turn will improve organizational productivity overall. Motivation- the willingness to achieve organizational objectives.

Communication (Informing)

Provides an opportunity for formal communication between management and employees concerning how the organization believes each employee is performing -Employees have the opportunity and ability to provide feedback to their employers to make sure their communication is understood (provides two-way communication--very critical) -provides complete understanding

Specific

Specific means that something is explicitly identified or defined well enough that all involved completely understand the issue. -in performance appraisals, it provides enough information for everyone to understand what level of performance has been achieved by an employee

The Performance Appraisal Process

Step 1: Job Analysis Step 2: Develop standards and measurement methods Step 3: Informal performance appraisal- Coaching or discipline Step 4: Prepare for and conduct formal performance appraisal

Problems with certain people performing the appraisal

Subordinates- problem if only a few, fear of retribution Self- problems with the degree of agreement with others

Decision making based on good communication is a very large part of why we take the time to do annual performance appraisals

TRUE

Evaluating is about assessing PAST performance and motivating is about developing employees to improve their FUTURE performance

TRUE

Human resources are typically one of the few resources we can leverage to create a sustainable competitive advantage for the firm. Based on that, we need to ensure that our HR perform at as high a level as possible.

TRUE

It is very difficult for trait based measures to meet the objective requirement of the OUCH test as well as the consistent in effect

TRUE

Many people in organizations do not like performance appraisal systems and do not think that these systems have the ability to improve employee performance

TRUE

Netflix is one company that has completely done away with formal performance appraisals however they still do informal 360 degree appraisals

TRUE

Performance appraisals can be motivational if they are properly used and debriefed

TRUE

Very difficult to show that personal traits are valid and reliable measures of work performance

TRUE

Developing accurate performance measures

Use multiple criteria- ensure that we use one or two criteria to evaluate an individuals performance -Minimize the use of trait-based evaluations- tend to be more subjective in nature and only be used when we have a specific reason for trait based evaluations -Give the measures the OUCH and Blanchard tests

Can we accurately measure traits that affect job performance?

YES -Evidence shows that particular types of traits are valuable in jobs that require management and leadership skills (Inquisitiveness, conscientiousness, general cognitive ability) -Many traits we would be likely to focus on (physical attractiveness, height, extroversion) have been shown to have little bearing on job performance. *If we use trait-based evaluations, we have to focus on traits that have a direct relationship to the essential functions of the job being done, and they have to be accurate measures* *Very difficult to show that personal traits are valid and reliable measures of work performance*

Based on the mission and objectives

You want to make sure that your performance management system leads to the accomplishment of your organizational mission and objectives. It will also allow us to identify employee behaviors that they may be doing actively or unintentionally that may harm our ability to reach these goals.

Ranking Method

a performance appraisal method that is used to evaluate employee performance from best to worst -often not actual standard used and don't always have to rank all employees

Behaviorally Anchored Rating Scale (BARS) Form

a performance appraisal that provides a description of each assessment alone a continuum

Bias

a personality based tendency either toward or against something -make evaluations subjective rather than objective

Management by Objectives (MBO) Method

a process in which managers and employees jointly set objectives for the employees, periodically evaluate performance, and reward employees according to the results. -three step process but still not standardized so its a method -referred to as work planning and review, goals management, goals and controls, and management by results.

360 Appraisal

analyzes individual's performance from all sides -most valuable if used for purposes of individual development -"multisource" -developed by DuPont in 1973 -Can be from a combination of supervisor, self, customer(if possible), peers, & subordinates

Performance based

exceeds expectations v. meets expectations

Recency Errors

occurs when the rater uses only the last few weeks of a rating period as evidence when putting together performance ratings. -To avoid this using the critical method evaluation helps us assess employee performance more objectively for the entire period

Contrast Errors

the rater compares and contrasts performance between two employees, rather than using absolute measures of performance to measure each employee. -Avoid this by objectively evaluating the individual based on their actual performance

Distribution Errors

these errors occur in three forms: severity or strictness, central tendency, and leniency. -based on a standard normal distribution or the bell curve Severity or strictness error -the rater evaluates everyone or nearly everyone below average Central tendency errors -errors occurs when nobody is rated either really good or really bad Leniency errors -occurs when the rater evaluates everyone above average (grade inflation)

How do we management performance within the organization?

through performance appraisals/ evaluations

How to avoid supervisor problems

to have others in addition to the supervisor assess performance as well as multiple measures

Forced Distribution

used by companies to evaluate their employees. The system requires the managers to evaluate each individual, and rank them typically into one of three categories (excellent, good, poor). The system is thought to be relatively widely-used, but remains somewhat controversial due to the competition it creates, and also the reality that not all employees will fit neatly into one of the categories and might end up in a category that does not reflect their true performance.

Three primary options for what to evaluate:

-Traits -Behaviors -Results

The no-form narrative method

-can be the only assessment method used during the formal review process.

Developmental objectives

MBO, critical incidents, and narrative methods work best.

In Role v. Extra Role Performance

Extra role behaviors- certain behaviors of employees, which are not part of the formal job requirements (throwing former employee retirement party) - Can sometimes take away from them performing their actual formal job requirements and ultimately hurt the organization In role behaviors- certain behaviors of employees and their commitment within an organization to his or her contractual tasks

Steps of MBO

Step 1: Set individual objectives and plans Step 2: Give feedback and evaluate performance Step 3: Reward according to performance

Normative based

above average v. average

Factors in a job that employers may not know about without good communication include:

-lack of training -poorly maintained equipment -lack of necessary tools -conflict within work groups -many other things management may not see on a daily basis *can only resolve these problems if they know about them through communication

Problems with supervisor evaluations

-may not see employee often -personality conflicts/personal bias -doesn't know you exact job responsibilities

Problems with self-assessments

-overestimating/underestimating the individual's ability to do a job

Problems with peer evaluations

-personality conflicts -personal biases

Problems with subordinate evaluations

-potential for biases -personality conflicts -may inflate the capability of their superiors because of lack of understanding

Problems with 360 Degree Evaluations

-time & money -only way to avoid is to simply not conduct them

Examples of Developmental Appraisal purposes

-training purposes -instructive feedback purposes

Problems with customer evaluations

-use simple rating scales which can be very subjective -not trained to do an accurate assessment -bias -popular opinion thinks always skewed negative, however some situations actually exceed internal evaluations

Give results the OUCH test

-very objective measure of what has happened in that particular job -apply the same results-bade measure to each similar job do that it is uniform -by being uniform the measure of results among different groups of employees would most likely be consistent -measuring the results of what happens in a job provide that it is job-related *meets the OUCH test better than the other two options*

How do you go about conducting a performance appraisal??

1. Determine the purpose 2. Identify environmental & cultural limitations 3. Determine who will evaluate performance 4. Select appraisal method 5. Train raters 6. Observe & document performance 7. Evaluate performance 8. Communicate appraisal results to employee

Effective and Legal Performance Appraisal Systems

Are based on job analysis Are properly administered -Formal -Standardized Provide specific feedback -Focus on behaviors rather than traits -Ratings are documented Use appropriate raters -Trained -Relevant

Attribution Errors

Attribution- a process in which an individual makes assumptions about the reasons or motivations for an observed behavior Attribution errors- occurs when the rater observes an employee action and assumes that the individual has a negative attitude toward their job and is a poor performer. To avoid this, we should not assume when know why the employee did or didn't do something. We should investigate actions so that we can objectively evaluate employees based on their actual performance.

6 Performance Appraisal Measurement Methods and Forms

Critical Incidents Method (most developmental decisions) Management by Objectives Method (MBO) Narrative Method/Form Graphic Rating Scale Form Behaviorally Anchored Rating Scale Form (BARS) Ranking Method (most evaluative decisions) Forced Distributed

Purpose of the Appraisal

Developmental -Training -Feedback Administrative -Raises -Promotions- "Peter Principle" -Termination decisions

Result Appraisals

Evaluate the results or outcomes of the work progress -Using results as an evaluation measure provides management with an assessment of the goals that were achieved in a particular job over time. -The final organizational measurement of success -The results produced through organizational progress provide the company with its return on investment- so organizations really like to measure results.

Behavioral Appraisals

Evaluating employees based on their behaviors (things they do and say)

Trait Appraisals

Evaluating employees based on their traits (both physical and psychological)

Train Raters

Frame-of-Reference Training -Tells raters what to look for -Enhances rater agreement people are given standards to compare performance to

Would behavioral evaluations be defensible in the situation of our fired employee?

If we choose to measure job related behaviors if becomes much easier to the organization to defend the validity and reliability of the appraisal process.

Example for results based evaluation

If we have individuals who don't do their actual work where managers can see and measure traits & behaviors- for example, people who work from home and independent outside salespeople- then we would need to rely on results-based measures. It doesn't matter if they are at the office or not as long as they get their work done.

Give traits the OUCH test

Objective Uniform Consistent Has job relatedness

Give the behavior the OUCH test

Objective- directly observing and evaluating an action is more objective than traits Uniform- if applied evaluation of behaviors to all of the individuals in the same type of job Consistent- same as uniform Job relatedness- would have to be sure to evaluate behaviors that are directly related to the essential functions to successfully complete a task.

Can we accurately measure results that affect job performance?

Results are certainly concrete measures of what has happened in the organization however, the results could have been skewed based on factors that were outside of the control of the individual who is performing that job. Example: Standards could be set too low and be too easy to achieve or they could be set too high and thus be impossible to achieve.

Job Analysis (step 1)

Should realize that the job must be based on the organizational mission and objectives, the department, and the job itself; if we don't know what a job consists of, how can we possibly evaluate a performance in the job accurately?

Are traits commonly used to measure performance?

Sometimes. -If you go to a local office supply store and look at standard evaluations usually list many traits as part of an evaluation. (because at least some traits- physical or physiological- are fairly easy to identify and we assume that they are related to how the individual will perform on the job) -If a former employee got fired based on the appraisal process that was unreliable and not valid, then it would be difficult to defend trait-based evaluation forms due to their subjective nature.

Should we measure traits?

We should on assess traits that meet the bottom line test of having a direct and obvious objective relationship between the trait and success in the job.

Should we measure the results?

YES -Are very acceptable for both the employee and the manager -Many feel it is among the fairest methods of evaluating their performance -Very concrete, results were wither achieved or not -Can defend this more easily than the other two options in court because you can show the results being lower than others

Graphic Rating Scale Form

a performance appraisal checklist form on which a manager simply rates performance on a continuum such as excellent,good, average, fair, and poor. -numerical scale level 1 to 5 (1 being the lowest) -more size fits all and can be used in many different types of jobs. -are not very accurate measure of performance because the selection of one rating over another is very subjective Example: rating a professor all 1s on bias rather than actually reading and checking the most accurate rating for each performance *to help the problem we can word the questions several different times and reverse the scales.

Critical Incidents Method

a performance appraisal method in which a manager keeps a written record of the positive and negative performance of employees throughout the performance period -there is no standard form used, so it is a method. -coaching is a major part that involves helping employees succeed by monitoring their performance through giving feedback to praise progress and to redirect inappropriate behavior as often as needed.

Frequency based

always v. sometimes

Proximity Errors

error states that similar marks may be given to items that are near (proximate) to each other on the performance appraisal form, regardless of differences in performance on those measures. -Can avoid this by objectively evaluating employee's actual performance on each and every item on the assessment form.

Primary purpose of performance appraisals:

help employees to continuously improve their performance

Stereotyping

mentally classifying a person into a affinity group and then identifying the person as having the same assumed characteristics as the group

When are critical incident methods used?

most FORMAL reviews only take place once or twice a year but employees need to constantly know what they are doing right or wrong. -When managers don't keep a record of critical incidents which leads to the problem of inaccurate measures during the formal review meeting. -commonly used for development decisions but can be used for evaluative decisions as well

Similarity Errors

occurs when raters gives better evaluations to subordinates whole they consider more similar to themselves and poorer evaluations to subordinates whom they consider to be different from themselves. -In order to avoid this we can embrace diversity and objectively evaluating each employee based on their actual performance, even if they are different from us and don't do things the same way we do

Halo Effect

occurs when the evaluator forms a generally positive impression of an individual and then artificially extends that general impression to many of that individual's categories of performance to create an overall evaluation of the individual that is positive. -can avoid this by remembering that employees are often strong in some areas and weaker in others and we need to objectively evaluate each employee based on their performance & every item of assessment

American National Standards Institute (ANSI)

outlines the minimum required elements of a performance management system for goal setting, performance review, and performance improvement skills.

Administrative decisions

ranking method based on evaluative decisions, graphic rating scales, and BARS forms work best.

Narrative Method or Form

requires a manager to write a statement about the employee's performance -often no standard used but there can be a form so it can be method or form

Results definition

simply a mature of the goals achieved through a work progress.

Performance Appraisal

the ongoing process of evaluating employee performance -Should not be just once or twice a year, routine and candid is better

Trait definition

the physical or psychological characteristics of a person