Chapter 10: Performance Management Copyright © 2014 Pearson Canada Inc. All rights reserved. Dessler, Chhinzer, Cole Human Resources Management in Canada Canadian Twelfth Edition Perfor mance Manag ement | 101 • EXPLAIN the five steps in the performance management process. • DESCRIBE five performance appraisal methods and the pros and cons of each. • DISCUSS the major problems inhibiting effective performance appraisals. Copyright © 2014 Pearson Canada Inc. All rights reserved. Learning Outcomes Perfor mance Manag ement | 102 Learning Outcomes • DESCRIBE the three types of appraisal interviews. • DISCUSS the future of performance management. Copyright © 2014 Pearson Canada Inc. All rights reserved. • DISCUSS 360-degree appraisal from multiple sources. Perfor mance Manag ement | 103 Performance Management • includes goal setting, pay for performance, training and development, career management, and disciplinary action Copyright © 2014 Pearson Canada Inc. All rights reserved. The process encompassing all activities related to improving employee performance, productivity, and effectiveness. Perfor mance Manag ement | 104 Performance Management Process Step 5: Conduct development and career opportunity discussions Step 3: Conduct performance appraisal and evaluation discussions Step 2: Provide ongoing feedback and coaching Step 1: Define performance expectations Copyright © 2014 Pearson Canada Inc. All rights reserved. Step 4: Determine performance rewards/consequences Perfor mance Manag ement | 105 Step 1: Defining Performance Expectations Task performance • direct contribution to job-related processes • indirect contribution to the organization’s social responsibility values Legal considerations • correlate performance expectations to job activities Copyright © 2014 Pearson Canada Inc. All rights reserved. Contextual performance Perfor mance Manag ement | 106 Step 2: Providing Ongoing Coaching and Feedback • employee responsible for monitoring own performance, and asking for help • manager responsible for communicating changing strategies and objectives if applicable Copyright © 2014 Pearson Canada Inc. All rights reserved. • important to have open two-way communication Perfor mance Manag ement | 107 Copyright © 2014 Pearson Canada Inc. All rights reserved. Performance Improvement Plan (PIP) continued Perfor mance Manag ement | 108 Copyright © 2014 Pearson Canada Inc. All rights reserved. Performance Improvement Plan (PIP) Perfor mance Manag ement | 109 Step 3: Performance Appraisal andmethods: Evaluation Discussion Formal appraisal • graphic rating scale • alternation ranking • forced distribution • critical incident • narrative forms • behaviourally anchored rating scales (BARS) • management by objectives (MBO) Copyright © 2014 Pearson Canada Inc. All rights reserved. • paired comparison Perfor mance Manag ement | 1010 Graphic Rating Scale • the employee is given a rating that best describes the level of performance for each trait Copyright © 2014 Pearson Canada Inc. All rights reserved. • a scale that lists a number of traits and a range of performance for each Perfor mance Manag ement | 1011 Copyright © 2014 Pearson Canada Inc. All rights reserved. Graphic Rating Scale - Sample continued Perfor mance Manag ement | 1012 continued Copyright © 2014 Pearson Canada Inc. All rights reserved. Graphic Rating Scale - Sample Perfor mance Manag ement | 1013 continued Copyright © 2014 Pearson Canada Inc. All rights reserved. Graphic Rating Scale - Sample Perfor mance Manag ement | 1014 Copyright © 2014 Pearson Canada Inc. All rights reserved. Graphic Rating Scale - Sample Perfor mance Manag ement | 1015 Copyright © 2014 Pearson Canada Inc. All rights reserved. Alternation Ranking Method Perfor mance Manag ement | 1016 Paired Comparison The paired comparison method bases evaluations on an employee’s performance relative to his or her peers in selected job skill categories. For example, if you have five employees, you would compare their performance in each category individually, assigning a plus or a minus to indicate relative strength or weakness, Copyright © 2014 Pearson Canada Inc. All rights reserved. Paired Comparison Method Perfor mance Manag ement | 1017 Paired Comparison Sample Performance Management | 10-18 Copyright © 2014 Pearson Canada Inc. All rights reserved. Forced Distribution Method • predetermined percentages of ratees are placed in various performance categories • • • • • 15 20 30 20 15 percent percent percent percent percent high performers high-average performers average performers low-average performers low performers Copyright © 2014 Pearson Canada Inc. All rights reserved. • example: Perfor mance Manag ement | 1019 Keeping a record of uncommonly good or undesirable examples of an employee’s work-related behaviour and reviewing the list with the employee at predetermined times. Copyright © 2014 Pearson Canada Inc. All rights reserved. Critical Incident Method Perfor mance Manag ement | 1020 Critical Incident Sample Performance Management | 10-21 Copyright © 2014 Pearson Canada Inc. All rights reserved. Narrative Forms • free form report of performance Copyright © 2014 Pearson Canada Inc. All rights reserved. • may take form of performance improvement plan Perfor mance Manag ement | 1022 Copyright © 2014 Pearson Canada Inc. All rights reserved. BARS The Behaviorally Anchored Rating Scale or BARS appraisal method combines aspects of the critical incident and graphic rating methods. Like the critical incident method, BARS focused on behaviors that constitute significant performance dimensions of a job. It differs from the typical graphic rating scale in that it focuses on job specifics rather than vague work statements. For example, instead of a rating that might be open to interpretation—for example, “Answers phone promptly and courteously”—a BARS approach would break it down into two component actions: “Answers phone within 3 rings.” and “Greets caller with “Hello. This is [name]. How may I help you?” . Perfor mance Manag ement | 1023 Copyright © 2014 Pearson Canada Inc. All rights reserved. Behaviourally Anchored Rating Scales Sample Perfor mance Manag ement | 1024 Advantages Behaviourally Anchored Rating Scales (BARS) • a more accurate measure • Assists in providing feedback • independent dimensions • Consistency Disadvantage • time-consuming Copyright © 2014 Pearson Canada Inc. All rights reserved. • clearer standards Perfor mance Manag ement | 1025 Management by Objectives (MBO) Step 6: Provide feedback Step 4: Define expected results (individual goals) Step 3: Discuss departmental goals Step 2: Set departmental goals Step 1: Set the organization’s goals Copyright © 2014 Pearson Canada Inc. All rights reserved. Step 5: Performance reviews: measure results Perfor mance Manag ement | 1026 Use of Technology in Performance Appraisals • provides overall performance management process • provides employees with clear development path • advanced reporting capabilities • electronic performance monitoring (EPM) Copyright © 2014 Pearson Canada Inc. All rights reserved. • enables managers to automate record keeping and report writing Perfor mance Manag ement | 1027 Performance Appraisal Problems • validity and reliability • unclear performance standards • halo effect • central tendency • • • • leniency or strictness appraisal bias recency effect similar-to-me bias Copyright © 2014 Pearson Canada Inc. All rights reserved. • rating scale problems Perfor mance Manag ement | 1028 Copyright © 2014 Pearson Canada Inc. All rights reserved. Example of Unclear Standards Perfor mance Manag ement | 1029 Copyright © 2014 Pearson Canada Inc. All rights reserved. Advantages and Disadvantages of Appraisal Methods Perfor mance Manag ement | 1030 Who Should Do the Appraising? • supervisors • self • committees • subordinates • 360-degree appraisal (all of the above) Copyright © 2014 Pearson Canada Inc. All rights reserved. • peers Perfor mance Manag ement | 1031 360-Degree Appraisal Performance Management | 10-32 Copyright © 2014 Pearson Canada Inc. All rights reserved. 360-Degree Appraisal Advice • have performance criteria developed by people familiar with the job • provide training for all participants • ensure confidentiality • evaluate 360-degree system for fine-tuning Copyright © 2014 Pearson Canada Inc. All rights reserved. • be clear about who will have access to reports Perfor mance Manag ement | 1033 Formal Appraisal Discussions • supervisor and employee: • review appraisal, and plan to remedy deficiencies and reinforce strengths • satisfactory—promotable: development plans • satisfactory—not promotable: maintain performance • unsatisfactory—correctable: action plan to correct performance Copyright © 2014 Pearson Canada Inc. All rights reserved. • types of interviews: Perfor mance Manag ement | 1034 How to Conduct the Interview 1. Be direct and specific • use objective work data • compare against standard 3. Encourage the person to talk • use open-ended questions, listen 4. Develop an action plan • agree on future steps Copyright © 2014 Pearson Canada Inc. All rights reserved. 2. Do not get personal Perfor mance Manag ement | 1035 How to Handle Criticism and Defensive Employees 1. Recognize that defensive behaviour is normal 3. Postpone action 4. Recognize human limitations Copyright © 2014 Pearson Canada Inc. All rights reserved. 2. Never attack a person’s defenses Perfor mance Manag ement | 1036 Ensuring the Discussion Leads to Improved Performance 1. Notify of unacceptable performance, explain minimum expectations 3. Explain role of warnings in the process of establishing just cause 4. Take prompt corrective measures 5. Avoid sending mixed messages 6. Provide a reasonable amount of time for improvement Copyright © 2014 Pearson Canada Inc. All rights reserved. 2. Ensure that expectations are reasonable 7. Provide support to facilitate improvement Perfor mance Manag ement | 1037 Step 4: Determine Performance Rewards/Consequences • provide performance awards: merit pay, extra pay • • achievement of goals how the employee meets the defined standards Copyright © 2014 Pearson Canada Inc. All rights reserved. • important aspects used to determine the appropriate reward/consequence: Perfor mance Manag ement | 1038 Step 5: Career Development Discussion • based on current job requirements or future development • business needs must be balanced with the employee’s preferences Copyright © 2014 Pearson Canada Inc. All rights reserved. • manager and employee discuss opportunities for development Perfor mance Manag ement | 1039 Legal and Ethical Issues • determine required characteristics through job analysis • ensure ratees and raters know performance standards • use clearly defined dimensions of performance • avoid abstract trait names • use subjective ratings as only one component Copyright © 2014 Pearson Canada Inc. All rights reserved. • use characteristics in rating system Perfor mance Manag ement | 1040 Legal and Ethical Issues • train supervisors • allow raters regular contact with ratee • use formal appeal mechanism • document evaluations and reasons for termination • provide corrective guidance to lower performers Copyright © 2014 Pearson Canada Inc. All rights reserved. • have more than one rater, if possible Perfor mance Manag ement | 1041 The Future of Performance Management • linking individual goals and business strategy • showing leadership and accountability • ensuring close ties among appraisal results, rewards, and recognition outcomes • investing in employee development planning • having an administratively efficient system with sufficient communication support Copyright © 2014 Pearson Canada Inc. All rights reserved. • Effective performance management involves: Perfor mance Manag ement | 1042
