Copyright © 2014 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
CHAPTER 8 MANAGING
EMPLOYEES’
PERFORMANCE
FUNDAMEN
TALS OF
HUMAN RESOURCE
MANAGEMENT
5TH ED
ITION
BY R.A. N
OE, J.R. H
OLLENBEC
K, B.
GERHART, AND P.M
. WRIGHT
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Need to Know
1. Activities involved in performance management.
2. Purposes and criteria and methods for measuring effectiveness of performance management systems.
3. Sources of performance information in terms of their advantages and disadvantages.
4. Types of rating errors and how to minimize them.
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Need to Know
5. How to provide performance feedback effectively.6. Ways to produce improvement in unsatisfactory performance.7. Legal and ethical issues that affect performance management.
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Introduction
Performance management: process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals.
This process requires: Knowing what activities and outputs are desired Observing whether they occur Providing feedback to help employees meet expectations
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Test Your Knowledge
If the performance management system created competition among team members, I would
A. Make collaboration a criterion to be evaluated.
B. Nothing, competition is good.C. Increase the specificity of the feedback.D. Focus on personal traits rather than
behaviors.
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Figure 8.1: Steps in the Performance Management Process
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Purposes of Performance Management Strategic Purpose - effective performance
management helps the organization achieve its business objectives.
Administrative Purpose - ways in which organizations use the system to provide information for day-to-day decisions about salary, benefits, and recognition programs.
Developmental Purpose - serves as a basis for developing employees’ knowledge and skills.
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Criteria for Effective Performance Management
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Figure 8.2: Contamination and Deficiency of a Job Performance Measure
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Test Your Knowledge
Sarah is a computer programmer whose job mainly consists of independently coding software. Interpersonal and teamwork skills are included on performance appraisal. Measuring these skills most closely represents:A. Criterion contaminationB. Criterion deficiencyC. Unreliability
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Methods for Measuring Performance
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Table 8.1:Basic Approaches to Performance Measurement
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Measuring Performance:Making Comparisons
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Measuring Performance:Rating Individuals - Attributes
Lists traits and provides a rating scale for each trait.
Employer uses the scale to indicate extent to which an employee displays each trait.
Uses several statements describing each trait to produce a final score for that trait.
Graphic Rating Scale Mixed-Standard Scale
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Figure 8.3:Example of a Graphic Rating Scale
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Figure 8.4: Example of a Mixed-Standard Scale
An employee’s performance measurement differs from job to job. For example, a car dealer’s performance is measured by the dollar amount of sales, the number of new customers, and customer satisfaction surveys.
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Measuring Performance:Rating Individuals - Behaviors
Based on managers’ records of specific examples of employees acting in ways that are either effective or ineffective.Employees receive feedback about what they do well and what they do poorly and how they are helping the organization achieve its goals.
Rates behavior in terms of a scale showing specific statements of behavior that describe different levels of performance.
Critical-Incident Method Behaviorally Anchored Rating Scale (BARS)
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Figure 8.5: Task- BARS Rating Dimension for a Patrol Officer
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Measuring Performance:Rating Individuals – Behaviors
A variation of a BARS which uses all behaviors necessary for effective performance to rate performance at a task.A BOS also asks the manager to rate frequency with which the employee has exhibited the behavior during rating period.
A plan for managing behavior of employees through a formal system of feedback and reinforcement.
Behavioral Observation Scale (BOS) Organizational Behavior Modification (OBM)
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Figure 8.6: Example of a Behavioral Observation Scale (BOS)
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Measuring Performance:Measuring Results Management by Objectives (MBO): people at
each level of the organization set goals in a process that flows from top to bottom, so that all levels are contributing to the organization’s overall goals.
These goals become the standards for evaluating each employee’s performance.
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Table 8.2: Management by Objectives: Two Objectives for a Bank
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Test Your Knowledge
The performance management system at XYZ company currently is perceived as unfair and is time-consuming for managers. Which of the following systems is the most likely and least likely used, respectively.A. Paired comparisons; ResultsB. Results; Forced distributionC. Behavioral; AttributesD. Attributes; Comparative
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Measuring Performance:Measuring Quality
The principles of total quality management (TQM), provide methods for performance measurement and management.With TQM, performance measurement combines measurements of attributes and results.
Subjective feedback Statistical quality control
• Coaches provide feedback to their team just as managers provide feedback to their employees.
• Feedback is important so that individuals know what they are doing well and what areas they may need to work on. 8-26
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Sources of Performance Information
360-Degree Performance Appraisal: performance measurement that combines information from the employees’:
Managers Peers Subordinates Self Customers
Performance management is critical for executing a talent management system and involves one-on-one contact with managers to ensure that proper training and development are taking place.
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Types of Performance MeasurementRating ErrorsContrast errors: rater compares an individual, not against an objective standard, but against other employees.Distributional errors: rater tends to use only one part of a rating scale.
Leniency: the reviewer rates everyone near the top
Strictness: the rater favors lower rankings Central tendency: the rater puts everyone
near the middle of the scale
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Types of Performance MeasurementRating Errors Rater bias: raters often let their opinion of one
quality color their opinion of others. Halo error: when bias is in a favorable direction. This can
mistakenly tell employees they don’t need to improve in any area. Horns error: when bias involves negative ratings. This can cause
employees to feel frustrated and defensive.
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Test Your Knowledge
Bill rates all of his employees very low except for Jan. Jan gets above average ratings because she consistently comes to work on time. The rating errors Bill makes are _______ and _______, respectively.
A. Leniency; HornB. Strictness; HaloC. Similar-to-me; Central TendencyD. Horn; Strictness
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Political Behavior in Performance Appraisals Distorting a performance evaluation to
advance one’s personal goals A technique to minimize appraisal politics
is a calibration meeting: Meeting at which managers discuss employee
performance ratings and provide evidence supporting their ratings with the goal of eliminating influence of rating errors
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Giving Performance Feedback
Scheduling Performance Feedback Performance feedback should be a regular,
expected management activity. Annual feedback is not enough. Employees should receive feedback so often
that they know what the manager will say during their annual performance review.
Preparing for a Feedback Session Managers should be prepared for each formal feedback session.
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When giving performance feedback, do it in an appropriate meeting place.
Meet in a setting that is neutral and free of distractions.
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Giving Performance Feedback
Conducting the Feedback Session During feedback sessions, managers can take
any of three approaches:1.“Tell-and-Sell” – managers tell employees their
ratings and then justify those ratings.2.“Tell-and-Listen” – managers tell employees
their ratings and then let employees explain view.
3.“Problem-Solving” – managers and employees work together to solve performance problems.
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6 Ways to Structure communication
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Figure 8.7: Improving Performance
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Legal and Ethical Issues inPerformance Management Legal
Performance management processes are often scrutinized in cases of discrimination or dismissal.
Ethical Employee monitoring via electronic devices and
computers may raise concerns over employee privacy.
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Legal Requirements forPerformance Management
Lawsuits related to performance management usually involve charges of:
Discrimination Unjust dismissal
To protect against both kinds of lawsuits, it is important to have a legally defensible performance management system.
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Legal Requirements forPerformance ManagementA legally defensible performance
management system: Based on valid job analyses, with requirements
for job success clearly communicated to employees.
Evaluates behaviors or results, rather than traits. Multiple raters (including self-appraisals) used. All performance ratings reviewed by upper-level
managers. Appeals mechanism for employees.
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Summary
Performance management is the process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals.
Organizations establish performance management systems to meet three broad purposes:
1. Strategic purpose2. Administrative purpose3. Developmental purpose
Performance measures should fit with the organization’s strategy by supporting its goals and culture.
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Summary
• Performance information may come from an employee’s self-appraisal and from appraisals by the employee’s supervisor, employees, peers, and customers.
• Using only one source makes the appraisal more subjective.
• Organizations may combine many sources into a 360- degree performance appraisal.
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Summary
• Organizations can minimize appraisal politics by establishing a fair appraisal system, involving managers and employees in developing the system, allowing employees to challenge evaluations, communicating expectations, and having open discussion.
• Performance feedback should be a regular, scheduled management activity, so that employees can correct problems as soon as they occur.
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Summary
• Performance feedback discussions should focus on behavior and results rather than on personalities.
• Managers must make sure that performance management systems and decisions treat employees equally, without regard to race, sex, or other protected status.
• A system is more likely to be legally defensible if it is based on behaviors and results, rather than on traits, and if multiple raters evaluate each person’s performance.
