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CHAPTER 10:

PERFORMANCE

MANAGEMENTAND FEEDBACK

Copyright 2005 South-Western. All rights reserved


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Copyright 2005 South-Western. All rights reserved. 12

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



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



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



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

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