Human Resource Management

Gaining a Competitive Advantage

Chapter 8
Performance Management

McGraw-Hill/Irwin Copyright 2008 by The McGraw-Hill Companies, All Rights Reserved. 1-1
Learning Objectives

After reading this chapter, you should be able to:

Identify the major determinants of individual performance.
Discuss the three general purposes of performance
management.
Identify the five criteria for effective performance
management systems.
Discuss the four approaches to performance
management, the specific techniques used in each
approach, and the way these approaches compare with
the criteria for effective performance management
systems.

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Learning Objectives

After reading this chapter, you should be able to:

Choose the most effective approach to performance
measurement for a given situation.
Discuss the advantages and disadvantages of the
different sources of performance information.
Choose the most effective source(s) for performance
information for any situation.
Distinguish types of rating errors and explain how to
minimize each in a performance evaluation.
Conduct an effective performance feedback session.
Identify the cause of a performance problem.

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Introduction

Performance management is the process

through which managers ensure that
employees activities and outputs are congruent
with the organization's goals.
Performance Appraisal is the process through
which an organization gets information on how
well an employee is doing his or her job.
Performance Feedback is the process of
providing employees information regarding their
performance effectiveness.

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An Organizational Model of
Performance Management
Organizational
Strategy
Long and short
term goals
and values

Individual
Attributes Individual Objective
(skills, abilities) Behaviors Results

Situational
Constraints
Culture and
economic
conditions
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 Purposes of Performance
Management

Strategic
Administrative Developmental

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Performance Measures Criteria
Five performance criteria stand out:

Strategic congruence

Specificity Validity

Acceptability Reliability
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The Comparative Approach

Ranking
Simple ranking ranks employees from
highest to lowest performer.
Alternation ranking - crossing off the best
and worst employees.
Forced distribution
Employees are ranked in groups.
Paired comparison
Managers compare every employee with
every other employee in the work group.

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The Attribute Approach

Graphic rating scales

A list of traits is evaluated by a
five-point rating scale.
Legally questionable.
Mixed-standard scales
Define relevant performance
dimensions and then develop
statements representing
good, average, and poor
performance along each
dimension.

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Behavioral Approach

Critical incidents approach - requires managers

to keep record of specific examples of effective
and ineffective performance.
Behaviorally anchored rating scales (BARS)
Behavioral observation scales (BOS)
Organizational behavior modification - a formal
system of behavioral feedback and
reinforcement.
Assessment centers - multiple raters evaluate
employees performance on a number of
exercises.

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Results Approach

Management by objectives
Goals
top management passes
down companys strategic
goals to next layer of
management, and these
managers define the goals
they must achieve.
Productivity Measurement and
Evaluation System (ProMES)
Hierarchy
goal is to motivate employees
to higher levels of productivity.

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Quality Approach

A performance management system designed

with a strong quality orientation can be
expected to:
Emphasize an assessment of both person and
system factors in the measurement system.
Emphasize that managers and employees work
together to solve performance problems.
Involve both internal and external customers in
setting standards and measuring performance.
Use multiple sources to evaluate person and
system factors.

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Quality Approach (cont.)

Statistical process quality

control techniques used:
Process-flow analysis
Cause-and-effect diagrams
Pareto chart
Control chart
Histogram
Scattergram

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Sources for Performance
Information

Managers

Customers Peers

Self Subordinates

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Rater Errors in Performance
Measurement

Similar to me
Contrast
Distributional
errors
Halo and horns

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Reducing Rater Errors and
Appraisal Politics
Two Approaches to reducing rater error:
Rater error training
Rater accuracy training
Appraisal politics - a situation in which
evaluators purposefully distort ratings to
achieve personal or company goals.

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Improving Performance
Feedback
Feedback should be given frequently,
not once a year.
Create the right context for the
discussion.
Ask employee to rate his or her
performance before the session.
Encourage the subordinate to participate
in the session.

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Improving Performance
Feedback
Recognize effective performance
through praise.
Focus on solving problems.
Focus feedback on behavior or results,
not on the person.
Minimize criticism.
Agree to specific goals and set a date
to review progress.

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Factors to Consider in Analyzing
Poor Performance

Input
Employee characteristics
Feedback
Performance standards/Goals
Consequences

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Managing Performance of
Marginal Performers
Solid performers
High ability and motivation; managers should
provide development opportunities
Misdirected effort
Lack of ability but high motivation; managers
should focus on training
Underutilizers
High ability but lack motivation; managers should
focus on interpersonal abilities
Deadwood
Low ability and motivation; managerial action,
outplacement, demotion, firing.

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Following Legal Guidelines

Conduct a valid job analysis related to

performance.
Base system on specific behaviors or
results.
Train raters to use system correctly.
Review performance ratings and allow for
employee appeal.
Provide guidance/support for poor
performers.
Use multiple raters.

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Use of Technology for
Performance Management
Electronic tracking systems includes:
Hand and fingerprint recognition systems
Global positioning systems (GPS)
Systems that can track employees using
handheld computers and cell phones
Increased productivity can be a benefit
from these systems.
These systems present privacy
concerns.

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