CHAPTER 10:
PERFORMANCE
MANAGEMENT
AND FEEDBACK
Copyright © 2005 South-Western. All rights reserved
Performance Management & Feedback
• Organizations need broader performance
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 & specific
feedback to assist with career development
Copyright © 2005 South-Western. All rights reserved.
1–2
Exhibit 10-2
Strategic Choices in Performance Management
Copyright © 2005 South-Western. All rights reserved.
1–3
Exhibit 10-3
Reciprocal Relationship Between T&D &
Performance Management
Copyright © 2005 South-Western. All rights reserved.
1–4
Who Evaluates?
• Problems with immediate supervisors conducting
performance evaluations
– Lacking appropriate information to provide informed
feedback on employee performance
– Insufficient observation of employee’s day-to-day work to
validly assess performance
– Lack of knowledge about technical dimensions of
subordinate’s work
– Lack of training or appreciation for evaluation process
– Perceptual errors by supervisors that create bias or lack of
subjectivity in evaluations
Copyright © 2005 South-Western. All rights reserved.
1–5
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 employee’s
personal characteristics rather than employee’s actual
performance
• Recency error
– Recent events & behaviors of employee bias rater’s
evaluation of employee’s overall performance
Copyright © 2005 South-Western. All rights reserved.
1–6
Perceptual Errors of Raters
• Central tendency error
– Evaluator avoids higher & lower ends of rating in favor of
placing all employees at or near middle of scales
• Leniency or strictness errors
– Evaluator’s tendency to rate all employees above (leniency)
or below (strictness) actual performance level
• Personal biases & organizational politics
– Have significant impact on ratings employees receive from
supervisors
Copyright © 2005 South-Western. All rights reserved.
1–7
Purposes of Performance Management
Systems
• Facilitate employee development
– Determine specific training & development needs
– Assess individual & team strengths & weaknesses
• Determine appropriate rewards & compensation
– Salary, promotion, retention, & bonus decisions
– Employees must understand & accept performance
feedback system
• Enhance employee motivation
– Employee acknowledgment & praise reinforces desirable
behaviors & outcomes
Copyright © 2005 South-Western. All rights reserved.
1–8
Purposes of Performance Management
Systems
• Facilitate legal compliance
– Documentation is strong defense against
charges of unlawful bias
• Facilitate HR planning process
– Alert organization to deficiencies in overall
level & focus of employee skills
Copyright © 2005 South-Western. All rights reserved.
1–9
Other Performance Feedback Systems
• Peers
– Only effective when political considerations & consequences
are minimized, & employees have sense of trust
• Subordinates
– Insights into interpersonal & managerial styles
– Excellent measures of individual leadership capabilities
– Same political problems as peer evaluations
• Customers
– Feedback most free from bias
Copyright © 2005 South-Western. All rights reserved.
1–10
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 facilitation
of assessment & development of employee
– Costly to collect & process
– Consistent view of effective performance relative to strategy
Copyright © 2005 South-Western. All rights reserved.
1–11
What to Evaluate?
• Traits measures
– Assessment of how employee fits with
organization’s culture, not what s/he actually
does
• Behavior-based measures
– Focus on what employee does correctly &
what employee should do differently
Copyright © 2005 South-Western. All rights reserved.
1–12
What to Evaluate?
• 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 employee’s control
Ignores means or processes
Fails to tap some critical performance areas
Copyright © 2005 South-Western. All rights reserved.
1–13
Job Performance Competencies
• Closely tied to organization’s strategic
objectives
• Can take tremendous amount of time to
establish
• Must be communicated clearly to
employees
• Must be tied in with organization’s reward
structure
Copyright © 2005 South-Western. All rights reserved.
1–14
Exhibit 10-4
Multilevel Corporate Competency Model
Copyright © 2005 South-Western. All rights reserved.
1–15
Capital One Success Factors &
Competencies
• Builds relationships
– Communicates clearly & openly
– Treats others with respect
– Collaborates with others
• Applies integrative thinking
–
–
–
–
–
Analyzes information
Generates & pursues ideas
Develops & shapes strategies
Identifies & solves problems
Applies integrated decision making
• Drives toward results
–
–
–
–
Focuses on strategic priorities
Organizes & manages multiple tasks
Directs & coordinates work
Gets job done
Copyright © 2005 South-Western. All rights reserved.
• Leads in learning
environment
–
–
–
–
–
Recruits talent
Motivates & develops
Builds & leads teams
Influences others
Promotes culture
• Takes personal ownership
–
–
–
–
Takes responsibility
Learns continuously
Embraces change
Initiates opportunities for
improvement
– Shows integrity
– Maintains perspective
1–16
How to Evaluate?
• Absolute measurement
– Measured strictly by absolute performance
requirements or standards of jobs
• Relative assessment
– Measured against other employees & 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
Copyright © 2005 South-Western. All rights reserved.
1–17
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 & justify tough decisions
• Arguments critical of forced ranking
– Can be arbitrary, unfair, & expose organization to lawsuits
– Inherent subjectivity
• Forced rankings tend to be more effective in
organizations with high-pressure, results-driven
culture
Copyright © 2005 South-Western. All rights reserved.
1–18
Measures of Evaluation
• Graphic rating scales
• Weighted checklists
• Behaviorally anchored rating scales
(BARS)
• Behavioral observation scales (BOS)
• Critical incident method
• Management by objectives (MBO)
Copyright © 2005 South-Western. All rights reserved.
1–19
Exhibit 10-6
Graphic Rating Scales
Copyright © 2005 South-Western. All rights reserved.
1–20
Exhibit 10-7
Weighted Checklist
Copyright © 2005 South-Western. All rights reserved.
1–21
Exhibit 10-8
Behaviorally
Anchored Rating
Scale (BARS)
Copyright © 2005 South-Western. All rights reserved.
1–22
Exhibit 10-9
Behavioral Observation Scale (BOS)
Copyright © 2005 South-Western. All rights reserved.
1–23
Objectives-Based Performance
Measurement
• Enhanced employee motivation
• Employees can far more committed to
reaching performance objectives they
have agreed to
• When employee participates, his/her
trust & dependability placed on line
Copyright © 2005 South-Western. All rights reserved.
1–24
Objectives-Based Performance
Measurement
• Three common oversights
– Setting vague objectives
– Setting unrealistically difficult objectives
– Not clarifying how performance will be measured
• Objectives selected must be valid
Copyright © 2005 South-Western. All rights reserved.
1–25
Other Considerations
• Ensure link between performance management,
training & development, & compensation
• Assignments & responsibilities
• Traditional performance evaluation may need
redesign due to changes in contemporary
organizations
• Degree of standardization or flexibility of
performance management system
– Standardization important to prevent job bias
– Flexibility important differing levels of responsibility
& accountability
Copyright © 2005 South-Western. All rights reserved.
1–26
Reasons Managers Resist or Ignore
Performance Management
•
•
•
•
•
•
Process is too complicated
No impact on job performance
Possible legal challenges
Lack of control over process
No connection with rewards
Complexity & length of forms
Copyright © 2005 South-Western. All rights reserved.
1–27
Strategies for Improving Performance
Management System
• Involve managers in design of system
• Hold managers accountable for
performance & development of
subordinates
• Set clear expectations for performance
• Set specific objectives for system
• Tie performance measures to rewards
• Gain commitment from senior managers
Copyright © 2005 South-Western. All rights reserved.
1–28
Reading 10.1
Has 360 Degree Feedback Gone Amok?
• Purposes of 360 Degree feedback systems
– Furthering management & leadership development
– Facilitating organizational change & improvement
initiatives that allow organization to become more
open & participative
– Expand formal appraisal system by making
feedback evaluative & linking more with formal
performance appraisal
Copyright © 2005 South-Western. All rights reserved.
1–29
Reading 10.1
Has 360 Degree Feedback Gone Amok?
• Recommendations for increasing likelihood that
360 feedback will benefit organization
– Assign internal consultant or champion to oversee process &
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 & will be used in measurement process
– Train all raters to avoid systematic rater errors
Copyright © 2005 South-Western. All rights reserved.
1–30
Reading 10.2
“Super-Measure” (SM)
• Single measure with great relevance up,
down, & across organization & customer
base
• Used to align behaviors & actions of
various parts of firm with value proposition
• Transcends other measures by unifying
actions of disparate organizational functions
& levels
Copyright © 2005 South-Western. All rights reserved.
1–31
Reading 10.2
“Super-Measure” (SM)
• Clearest examples from firms within
service 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
Copyright © 2005 South-Western. All rights reserved.
1–32
Reading 10-2
Reasons for Adopting SM Management
• Crises may provide pressure to resolve conflict &
to arrive at consensus
• Continuous improvement
• Achieve better alignment with strategy
• Market-share-grabbing strategy
• Achieve rapid growth
• Maintain culture
• Decentralize management
Copyright © 2005 South-Western. All rights reserved.
1–33
Reading 10-2
Selecting & Implementing SM
• SMs tie directly to firm’s market & follow
strategy
• SMs are simple & common
– Need not be comprehensive or balanced
• Nave horizontal & vertical relevance
– Relevant from executives to employees, across functional
departments & are linked to market
• Both monetary & behavioral rewards tied to SM
• All employees must understand how they affect
SM
• Dynamic reward system
Copyright © 2005 South-Western. All rights reserved.
1–34
Reading 10.3
Strategic Performance Appraisal in Team
Organizations
• Effective performance-appraisal systems
require careful consideration of team
contingencies
– Team membership configuration
– Team task complexity
– Nature of interdependencies among team & external
groups
Copyright © 2005 South-Western. All rights reserved.
1–35
Reading 10-3
Work or Service Teams
• Well-developed social system
• Quality of interpersonal relationships important
• Individual& team performance appraisals
recommended
• Outcome-based performance appraisal
recommended for team, but not for individual
members
• Members typically responsible for monitoring &
documenting own performance on individual tasks
Copyright © 2005 South-Western. All rights reserved.
1–36
Reading 10-3
Project Teams
• Assembled for specific purpose & 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 go too far off
course
Copyright © 2005 South-Western. All rights reserved.
1–37
Reading 10-3
Project Teams
• Multisource performance appraisal
particularly useful
• Project leader & peer ratings good sources
of behavioral ratings
• Members rated on both individual
performance & team contribution
Copyright © 2005 South-Western. All rights reserved.
1–38
Reading 10-3
Network Teams
• Virtual
– Potential membership not constrained by time or space
• Work extremely nonroutine
• Rapid-response units charged with strategically
responding to market challenges
• Performance of whole team often not assessed
formally
• Appraisal focused on
– Developing individual capacity to initiate, participate, & lead
improvisational action, rather than on past outcomes
Copyright © 2005 South-Western. All rights reserved.
1–39
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 collaborative
communication & teamwork
Copyright © 2005 South-Western. All rights reserved.
1–40