Performance

Management

The Strategic Importance of

Performance Management
Performance

Management System

A formal, structured process used to measure, evaluate, and

influence employees job-related attitudes, behaviors, and
performance results.

Purposes

of Performance Management

To enhance employee motivation and productivity

To support the achievement of the organizations strategic
goals
To facilitate strategic planning and change

Effective Performance Management

Helps

to direct and motivate employees to maximize their

efforts on behalf of the organization by:

Defining clear performance goals and measures

Conducting performance appraisals

Providing ongoing performance feedback

Linking performance results to rewards and consequences

Providing career planning and development opportunities

Enhancing Motivation and

Productivity
Expectancy

Theory

People chose their

behaviors and effort levels.
Choices are based on
workers beliefs that
behaviors and efforts will
lead to desired
consequences.

Expectancy

If I make an effort, will I be

able to perform?

Instrumentality

What consequences will

follow from my
performance?

Value

How much do I value

the consequences?

Satisfaction

Will I think the rewards

received are fair?

What to Measure
Performance

Criteria

The

dimensions against which the performance of an

incumbent, a team, or a work unit is evaluated.

Personal

Traits

Criteria that focus on personal characteristics such as loyalty

and dependability
Not reliable and difficult to defend as measurable performance
criteria

What to Measure (contd)

Behaviors

Focus

on how work is performed

Easier to observe and defend than traits

Has not been late to work during past 6 months.

Types

Task-related Behaviors
General Counter-Productive Behaviors
Organizational Citizenship

May

want to include in evaluation as part of

overall performance:
Volunteering

for tasks not formally part of the job

Helping others
Endorsing, supporting, and defending organizational objectives

What to Measure (contd)

Objective

Results

Focus on what was accomplished or produced

May miss critical aspects of job that are difficult to quantify
For example: number of traffic tickets written.

Multiple

Criteria

Performance appraisal should capture all aspects of the job

Weighting the Criteria

Adding

values to specific criteria based on

their importance relative to other criteria

Timing
Focal-Point

Approach

All employees evaluated at the same time

Easier

to standardize across employees

May create burdensome workload on managers
May create artificial performance cycles
Anniversary

Approach

On employees anniversary with the organization

Does

not tie individual performance to overall

organizational performance
Ratings earlier in year may be more lenient
Difficult make comparisons to other employees

Timing of Evaluations (contd)

Natural

Time Span of the Job

Ensures feedback is given when it is most useful.

Not suited for short-cycle simple jobs.
Possible time spans:

For

teams: feedback on progress

at the mid-point of a project and
again at project completion
to assess goal achievements.

EXHIBIT 8.8 Frequency of Performance Reviews

Participants in Performance
Measurement and Feedback
Supervisors

360-Degree
Appraisals
Customers

Sources
Sourcesfor
for
Employee
Employee
Appraisals
Appraisals

Subordinates

SelfAppraisal
Peers

Participants
Issues

Consider the amount and type of information each source has

available.

Supervisors

may make the most reliable judgments

Self-Appraisals

Accuracy
Increase satisfaction with appraisal but are subject to
inflation and leniency bias by the employee.
Cultural Differences
Employees from collectivist cultures approach selfappraisals differently.

Participants (contd)
Peers

Often have best opportunity to observe behavior.

Are useful predictors of future performance.

Subordinates

Useful if anonymity guaranteed and contains specific

improvement suggestions.
Managers should discuss results with direct reports.

Customers

Most useful when a large number of customers respond and

results are not biased by few customers with bad experiences.

Participants (contd)
360-Degree

Appraisals

Evaluations collected from colleagues, supervisors,

subordinates, peers, and employees
Less susceptible to gender/ethnicity biases
Research support for anonymity of raters and the use of a full
circle of raters

Performance Appraisal Formats

Forced Distribution

Common Rating Errors

Halo/Horn

Leniency

Rating all employees higher than they should be.

Strictness

Overly focusing on specific performance ratings or

stereotyping employee by a single personal characteristic.

Rating all employees lower that they should be.

Central Tendency

Rating all employees as average when individual employee

performance actually varies.

Common Rating Errors

Primacy

Recency

Using initial information that supports the rating decision while

ignoring later information does not.
Basing the rating decision primarily on the most recent
performance information while placing much less emphasis
on past performance.

Contrast Effects

Comparing one employee to another rather than applying a

common standard to all employees

EXHIBIT 8.13 Sample Checklist for Diagnosing the Causes

of Performance Deficiencies

Follow-Up to the Feedback Session

Positive

Reinforcement

Use of positive rewards to increase occurrence of desired

performance
Principles:
People perform in ways that they find most rewarding
By providing proper rewards, it is possible to improve
performance

Punishment

Decreases frequency of undesired behavior

Gets immediate results and has vicarious power
Can have undesirable side effectsemployee anger and
contingent bad behavior

When Nothing Else Works

Transfer

When employee and job are not well matched

Neutralize

Assign noncritical tasks to minimize the impact of

deficiencies

Terminate

For dishonesty, habitual absenteeism, substance abuse,

insubordination, and low productivity that cannot be
corrected

THANK YOU
ANY QUESTION?

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