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CHAPTER 10:
PERFORMANCE
MANAGEMENTAND FEEDBACK
Copyright 2005 South-Western. All rights reserved
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Performance Management & Feedback
Organizations needbroaderperformance measures
to insure
Performance deficiencies addressed in timely manner
through employee development programs
Employee behaviors channeled in appropriate direction
toward performance of specific objectives
Employees provided with appropriate and specific feedback
to assist with career development
Focus on both core and citizenship employee behaviors
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Exhibit 10-2
Strategic Choices in Performance Management
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Exhibit 10-3
Reciprocal Relationship Between T&D andPerformance Management
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Who Evaluates?
Problems with immediate supervisors conducting
performance evaluations
Lacking appropriate information to provide informed feedback
on employee performance Insufficient observation of employees day-to-day work to
validly assess performance
Lack of knowledge about technical dimensions of
subordinates work Lack of training or appreciation for evaluation process
Perceptual errors by supervisors that create bias or lack of
subjectivity in evaluations
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Perceptual Errors of Raters
Halo effect
Rater allows single trait, outcome or consideration to
influence other measures of performance
Stereotyping Rater makes performance judgments based on employees
personal characteristics, rather than employees actual
performance
Recency error Recent events and behaviors of employee bias raters
evaluation of employees overall performance
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Perceptual Errors of Raters (cont.)
Central tendency error
Evaluator avoids higher and lower ends of rating scale in
favor of placing all employees at or near middle of scales
Leniency or strictness errors Evaluators tendency to rate all employees above (leniency)
or below (strictness) actual performance level
Personal biases and organizational politics
Have significant impact on ratings employees receive from
supervisors
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Purposes of Performance ManagementSystems
Facilitate employee development
Determine specific training and development needs
Assess individual and team strengths and weaknesses
Determine appropriate rewards and compensation Salary, promotion, retention, and bonus decisions
Employees must understand and accept performance
feedback system
Enhance employee motivation
Employee acknowledgment and praise reinforces desirable
behaviors and outcomes
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Purposes of Performance ManagementSystems (cont.)
Facilitate legal compliance
Documentation is strong defense against
charges of unlawful bias
cf., Werner & Bolino (1997)
Facilitate HR planning process
Alert organization to deficiencies in overalllevel and focus of employee skills
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Other Performance Feedback Systems
Peers
Only effective when political considerations and
consequences are minimized, and employees have sense of
trust Subordinates
Insights into interpersonal and managerial styles
Excellent measures of individual leadership capabilities
Same political problems as peer evaluations
Customers
Feedback most free from bias
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Other Performance Feedback Systems
Self-evaluations
Allow employees to participate in critical employment
decisions
More holistic assessment of performance
Multi-rater systems or 360-degree feedback
systems
Can be very time-consuming
More performance data collected, greater overall facilitationof assessment and development of employee
Costly to collect and process
Consistent view of effective performance relative to strategy
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What to Evaluate?
Trait measures
Assessment of how employee fits with organizations
culture, not what s/he actually does
Behavior-based measures
Focus on what employee does correctly, and what
employee should do differently
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What to Evaluate? (cont.)
Results-based measures Focus on accomplishments or outcomes that can be
measured objectively
Problems occur when results measures are difficult to
obtain, outside employee control, or ignore means by which
results were obtained
Limitations
Difficult to obtain results for certain job responsibilities Results sometimes beyond employees control
Ignores means or processes
Fails to tap some critical performance areas
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Job Performance Competencies
Closely tied to organizations strategicobjectives
Can take tremendous amount of time to
establish
Must be communicated clearly to
employees
Must be tied in with organizations reward
structure
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Exhibit 10-4
Multilevel Corporate Competency Model
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How to Evaluate?
Absolute measurement
Measured strictly by absolute performance requirements or
standards of jobs
Relative assessment
Measured against other employees, and ranked on distance
from next higher to next lower performing employee
Ranking allows for comparison of employees, but does not
shed light on distribution of performance
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Forced Ranking/Distribution
Arguments in favor of forced ranking
Best way to identify highest-performing employees
Data-driven bases for compensation decisions
Forces managers to make and justify tough decisions
Arguments critical of forced ranking
Can be arbitrary, unfair, and expose organization to lawsuits
Inherent subjectivity
Forced rankings tend to be more effective inorganizations with high-pressure, results-driven
culture
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Measures of Evaluation
Graphic rating scales
Weighted checklists
Behaviorally anchored rating scales (BARS)
Behavioral observation scales (BOS)
Critical incident method
Management by objectives (MBO)
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Exhibit 10-6
Graphic Rating Scales
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Exhibit 10-7
Weighted Checklist
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Exhibit 10-8
Behaviorally Anchored Rating Scale (BARS)
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Exhibit 10-9
Behavioral Observation Scale (BOS)
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Objectives-Based PerformanceMeasurement
Enhanced employee motivation
Employees can be far more committed
to reaching performance objectives(goals) that they have agreed to
When employee participates, his/hertrust and dependability placed on line
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Objectives-Based PerformanceMeasurement
Three common oversights
Setting vague objectives
Setting unrealistically difficult objectives
Not clarifying how performance will be measured
Objectives selected must be valid
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Other Considerations
Ensure link between performance management,training & development, and compensation
Assignments and responsibilities
Traditional performance evaluation may needredesign due to changes in contemporaryorganizations
Degree of standardization or flexibility ofperformance management system
Standardization important to prevent job bias
Flexibility important for differing levels ofresponsibility and accountability
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Reasons Managers Resist or IgnorePerformance Management
Process is too complicated
No impact on job performance
Possible legal challenges
Lack of control over process
No connection with rewards
Complexity and length of forms
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Strategies for Improving PerformanceManagement System
Involve managers in design of system
Hold managers accountable for
performance and development of
subordinates
Set clear expectations for performance
Set specific objectives for system
Tie performance measures to rewards
Gain commitment from senior managers
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Reading 10.1 (Waldman et al.)
Has 360 Degree Feedback Gone Amok?
Purposes of 360 Degree feedback systems
Furthering management and leadership
development
Facilitating organizational change and improvement
initiatives that allow organization to become more
open and participative
Expand formal appraisal system by makingfeedback evaluative and linking more with formal
performance appraisal
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Reading 10.1
Has 360 Degree Feedback Gone Amok?
Recommendations for increasing likelihood that360 feedback will benefit organization
Assign internal consultant or champion to oversee process,
and hold him/her accountable for results
Initial implementation should be on limited basis to allow for
evaluation of process using pre-post test control group test
design
Create focus group to identify effectiveness criteria that
organization values and that will be used in themeasurement process
Train all raters to avoid systematic rater errors
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Reading 10.2 (Morgan & Rao)
Super-Measure (SM)
Single measure with great relevance up,
down, and across organization and
customer base
Used to align behaviors and actions of
various parts of firm with value proposition
Transcends other measures by unifying
actions of disparate organizational functions
and levels
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Reading 10.2
Super-Measure (SM)
Clearest examples from firms withinservice sector
Service encounters often require various
elements of supply system to have direct
customer interface
Most powerful service guarantees are those
that guarantee satisfaction with no exclusions
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Reading 10-2
Reasons for Adopting SM Management
Crises may provide pressure to resolve conflictand to arrive at consensus
Continuous improvement
Achieve better alignment with strategy Market-share-grabbing strategy
Achieve rapid growth
Maintain culture Decentralize management
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Reading 10-2
Selecting and Implementing SM
SMs tie directly to firms market and followstrategy
SMs are simple and common
Need not be comprehensive or balanced
Have horizontal and vertical relevance
Relevant from executives to employees, across functionaldepartments, and are linked to market
Both monetary and behavioral rewards tied to SM
All employees must understand how they affectSM
Dynamic reward system
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Reading 10.3 (Scott & Einstein)
Strategic Performance Appraisal in TeamOrganizations
Effective performance-appraisal systems
require careful consideration of team
contingencies Team membership configuration
Team task complexity
Nature of interdependencies among team andexternal groups
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Reading 10-3
Work or Service Teams
Well-developed social system
Quality of interpersonal relationships important
Individual and team performance appraisals
recommended Outcome-based performance appraisal
recommended for team, but not for individual
members
Members typically responsible for monitoring and
documenting own performance on individual tasks
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Reading 10-3
Project Teams
Assembled for specific purpose, and expect
to disband once task is complete
Focused more on tasks than on team
members
Metrics developed that relate to various
stages of project
Teams can self-correct before things get too far off
course
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Reading 10-3
Project Teams
Multisource performance appraisal
particularly useful
Project leader and peer ratings are good
sources of behavioral ratings
Members rated on both individual
performance and team contribution
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Reading 10-3
Network Teams
Virtual Potential membership not constrained by time or space
Work is extremely nonroutine
Rapid-response units charged with strategicallyresponding to market challenges
Performance of whole team often not assessed
formally
Appraisal focused on
Developing individual capacity to initiate, participate, and
lead improvisational action, rather than on past outcomes
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Reading 10-3
Network Teams
Competency-based appraisal systems optimal
Employees assessed on extent to which they:
Apply learning to current activities
Set developmental goals Seek out feedback
Behavior-based appraisal used to assess extent to
which members engage in collaborativecommunication and teamwork