MODULE 6: Performance Management Systems

• Performance Management => is a process by which managers and employees work together to plan, monitor and review an employee’s work objectives and overall contribution to the organization.
• Performance Appraisal => is the most easy identifiable, but it’s just part of a system that seeks to motivate employees to maximum performance by evaluating the employee’s effort on the job, comparing it to standards and using the results to help employees improve.
• PURPOSES OF A PERFORMANCE MANAGEMENT SYSTEM:

  • Feedback
  • Development
  • Documentation
• Feedback - let employees know how well they have done and allow for employee input.
• Development – identify areas in which employees have deficiencies or weaknesses.
• Documentation – a record of performance appraisal outcomes, (to meet legal requirements.)
• DIFFICULTIES IN PERFORMANCE MANAGEMENT SYSTEMS:

  • Focus on the individual
  • Focus on the process
• Focus on the individual – Discussions of performance may elicit strong emotions and may generate conflicts when subordinates and supervisors do not agree.
• Focus on the process – Company policies and procedures may present barriers to a properly functioning appraisal process. Additionally, appraisers may be poorly trained.
• THE APPRAISAL PROCESS:

  1. Establishing Performance Standards
  2. Communicate Expectations
  3. Measure Actual Performance
  4. Compare Actual Performance with Standards
  5. Discuss Appraisal with Employee
  6. Initiate Corrective Action if Necessary
• Establishing Performance Standards

  • The appraisal process begins with establishment of performance standards in accordance with the organization’s strategic goals.
  • The performance standards should be clear and objective enough to be understood and measured.
• Communicate Expectations

  • Managers should clearly communicate the expectations; employees should not have to guess what is expected of them.
• Measure Actual Performance

  Measure performance using information from:

  – Personal observation

  – Statistical reports

  – Oral reports

  – Written reports
• Compare Actual Performance with Standards

  • Note deviations between standard performance and actual performance.
• Discuss Appraisal with Employee

  • The appraisal discussion, an evaluation of one’s contribution and ability, has a strong impact on the self-esteem and subsequent performance of the employee.
• Initiate Corrective Action if Necessary

  • Immediate corrective action deals predominantly with symptoms.
  • – Described as “putting out fires.”
  • Basic corrective action deals with causes.
  • –Looks for source of deviation and seeks to adjust the difference permanently
• Evaluating Absolute Standards

  • Measuring an employee’s performance against establish standards and their evaluation is independent of any other employees in a work group.
• METHODS in Evaluating Absolute Standards:

  1. Critical Incident Appraisal
  2. Checklist Appraisal
  3. Forced-Choice Appraisal
  4. Behaviorally Anchored Rating Scales (BARS)
• Critical Incident Appraisal – Focuses the rater’s attention on critical or key behaviors that make the difference between doing a job effectively and doing it ineffectively.
• Checklist Appraisal – A performance evaluation in which a rater checks off applicable employee attributes.
• Forced-Choice Appraisal – A performance evaluation in which rater must choose between two or more specific statements about an employees work behavior.
• Behaviorally Anchored Rating Scales (BARS) – a performance appraisal techniques that generates critical incidents and develops behavioral dimensions of performance. The evaluator appraises behavior rather than traits.
• Relative Standards Methods

  • Employees are evaluated by comparing their performance to the performance of other employees.
• Relative Methods:

  1. Group Order Ranking
  2. Individual Ranking
  3. Paired Comparison
• Group Order Ranking – Employees are placed in a classification reflecting their relative performance, such as “top 20 percent.”
• Individual Ranking – Employees are ranked from highest to lowest.
• Paired Comparison – Ranking he individual’s performance by counting the times any one individuals is the preferred member when compared with all other employees.
• Management by Objectives (MBO)

  • It is a performance appraisal method that includes mutual objective setting and evaluation based on the attainment of the specific objectives.
• FACTORS THAT CAN DISTORT APPRAISALS:

  • Inappropriate substitutes
  • Leniency error
  • Halo error
  • Similarity error
  • Low appraiser motivation
  • Central tendency
  • Inflationary pressures
• Leniency Error - Performance appraisal distortion caused by evaluating employees against one’s own value system.
• Halo Error - The tendency to let our assessment of an individual on one trait influence our evaluation of that person on other specific traits.
• Similarity Error - Evaluating employees based on the way an evaluator perceives himself or herself.
• Low Appraiser Motivation – Evaluators may be reluctant to be accurate if important rewards for the employee depend on the results.
• Central Tendency – The reluctance to use the extremes of a rating scale and to adequately distinguish among employees being rated.
• Inflationary Pressures – Pressures for equality and fear of retribution for low ratings leads to less differentiation among rated employees.
• Inappropriate Substitutes for Performance – Effort, enthusiasm, appearance, and so forth, are less relevant for some jobs than others.
• Attribution Theory => A theory of performance evaluation based on the perception of who is in control of an employee’s performance.
• Use Behavior-Based Measures

  • Measures based on specific descriptions of behavior are more job-related and elicit more inter-rater agreement than traits, such as “loyalty” or “friendliness.”
• Combine Absolute and Relative Standards

  • Absolute standards tend to be positively lenient; relative standards suffer when there is little variability. Combining the standards tends to offset the weaknesses of each.
• Provide Ongoing Feedback

  • Expectations and disappointments should be shared with employees on a frequent basis.