Chapter 19 Performance management
KEY WORDS AND CONCEPTS
Absolute and relative evaluation methods
Absolute methods: supervisors make judgments about performance based solely on performance standards
Relative methods: supervisors compare performance to the performance of other employees
Actor/observer bias
The tendency to attribute poor performance to the worker, while the worker blames external factors
Added value
More than the minimum value requirement
Behaviourally anchored rating scales (BARS)
Evaluation based on whether or not certain specifically described job behaviours are present
Bias
Allowing prejudice against elements such as age, race, and gender to influence an evaluation
Central tendency
Tendency to rate all employees as average
Critical incidents
Continuous recording of actual job behaviours
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Customer appraisal
Evaluation by internal or external customers
Essay method
Evaluation in the form of a written report
Forced choice
Choosing from paired job-related descriptions
Forced distribution
Assignment of workers to certain categories of performance
Graphic rating scales
Indicating on a scale where the employee rates in certain selected factors
Halo effect
Allowing a single prominent characteristic to influence judgement on separate items of performance evaluation
Knowledge worker
An employee who can organise and deal in information and technology, analyse and problem-solve complex issues and tasks
Leniency and strictness
Tendency to rate all employees’ performance as either good or poor, even when not deserved
Management by objectives (MBO)
Establishing statements of objectives for work to be done, an action plan of how objectives should be achieved, allowing employees to implement the plan, measuring objective achievement, taking corrective action and establishing new objectives
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Paired comparisons
Comparison of each worker with every other worker
Peer review
Evaluation by co-workers
Ranking
Rank ordering according to merit or performance factors
Rational and political perspectives
Rational perspective assumes that the value of performance can be estimated; political perspective assumes that the value of performance depends on the goals of the supervisor
Recency
Allowing recent events to influence the evaluation
Reverse appraisals
Evaluation of supervisor’s performance by subordinates
Self-appraisal
Evaluation of one’s own performance
Team appraisals
Evaluation of a whole team
360  appraisals
Evaluation by multi-’raters’
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CHAPTER SYNOPSIS
The topic of performance management is discussed from two important perspectives: the holistic perspective and the added-value perspective. The instructor should stress that the process of performance management is not only aimed at evaluating, or appraising an employee’s performance. Performance management addresses all the important issues that begin with the planning for the process by defining what is expected of an employee, jointly developing an action plan, coaching, and mentoring the employee, measuring and rating performance, and providing performance feedback and documenting performance results.
Performance management also includes and incorporates the elements of reward systems and employee development, and should also consider the effects of the process on the competitiveness of the organisation. The link between the performance management process and organisational strategic goal should be emphasised.
Be aware of the current trend towards adding value to the organisation. Thus, performance management does not only highlight the achievement of goals and objectives, but also includes the aspect of how the employee can add value to the organisation, and in so doing, add value to his or her personal development.
The discussion commences with some thoughts on how performance management can contribute to organisational effectiveness. The performance management process is introduced in detail; the debate covers the inception of the process, coaching the employee to better performance, and the evaluation of performance. Possible rater errors are described and the feedback interview is examined. Some guidelines are offered for the avoidance of legal problems and the chapter closes with an overview of the link between performance management and quality assurance (QA).
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19.1
Introduction
 Strategic success lies in focusing attention at all levels on key business imperatives, which can be achieved through effective performance management.
19.2
From performance management to knowledge management
 Performance leadership, not just performance management, enables a company to integrate knowledge management into its corporate strategy.
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The systematic capture, re-use, and retention of knowledge through voluntary sharing remain the primary organisational challenge.
Managers and human resource (HR) practitioners have to fathom out how to incorporate knowledge and knowledge management into the jobs of knowledge workers.
 E-learning has been introduced to assist in the management of knowledge in organisations.
19.3
The purposes of the performance management process
 Performance management is a process for strategy implementation, a vehicle for culture change, and it provides input to other HR systems such as development and
 remuneration.
19.4
Launching the performance management process
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The traditional way of managing performance by measuring whether the employee has achieved prescribed objectives is no longer adequate.
The trend is to collaboratively determine the amount of value the subordinate’s
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 performance adds to the overall organisational performance.
The process is focused on the strategic goals of the organisation.
The role of HR practitioners will be that of creator of overall values and direction. 
19.5.1
Performance management planning process
The process commences with planning for the ‘road ahead’, which comprises the setting of direction and the determination of employee goals and objectives, deciding on the evaluator(s) and method to be used and, finally, the development of a joint action plan.
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19.5.2
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Coaching and mentoring
Performance problems must be noticed and analysed at an early stage.
McKenna and Maister (2002) list the reasons why employees can have performance problems.
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19.5.3
Supervisors who manage performance effectively share four characteristics:
They explore the causes of performance problems
They direct attention to the causes of problems
They develop an action plan and empower workers to reach a solution
They direct communication at performance.
Performance measurement and evaluation
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Relative judgements require supervisors to compare an employee’s performance with the performance of other employees doing the same job.
Relative judgements do not make it clear how great or small the differences between employees are, and they do not provide any absolute information so managers cannot determine how good or bad the performance of workers is.
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Absolute judgements ask supervisors to make judgements about an employee’s performance based solely on performance standards.
Feedback to the employee is specific and helpful because ratings are made on separate dimensions of performance.
 Absolute rating systems also have their disadvantages; all workers in a group can receive the same evaluation if the supervisor is reluctant to differentiate among workers, and different supervisors can have different evaluation standards.
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The objectives of performance measurement and evaluation
The rational perspective to performance evaluation assumes that the value of each
 worker’s performance can be estimated.
The political perspective assumes that the value of a worker’s performance depends on the agenda, or goals, of the supervisor.
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Methods of performance evaluation: who should evaluate performance?
The fundamental requirement is that there is an adequate opportunity for performance to be observed over a reasonable period of time.
The immediate supervisor
This is the most popular and easiest choice for a rater because the supervisor is most familiar with the subordinate’s performance and has the best opportunity to observe job performance.
The immediate supervisor may be too lenient in rating an employee in an attempt to win favour.
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 Peers
The judgement of peers often provides a perspective on performance that is different from that of immediate supervisors.
Friendship can skew the feedback value of the information provided.
It is best to consider peers as part of a system that includes input from other
‘raters’ as well.
Subordinates
Reverse appraisals can be a useful input to the immediate supervisor’s development.
Subordinates know how well a supervisor delegates, communicates, plans, and organises. Considerable trust and openness is a prerequisite.
Self-appraisal
If self-appraisal is combined with goal-setting and the chance to add value to the organisation, the rater’s motivation is improved and defensiveness reduced during the evaluation interview.
Self-appraisals are more lenient, less variable, and more biased, and are probably more appropriate for counselling and development.
Customer appraisals
An individual’s internal customers or the organisation’s external customers can provide a unique perspective on job performance.
The customer’s objectives may not correspond entirely with those of the individual or the organisation, but information can be useful for promotion, transfer, and training decisions.
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 360  appraisals
The multi-rater system of carrying out employee evaluation is a questionnaire that asks many people (superiors, subordinates, peers, internal and external customers) to respond to questions on how well a specific individual performs in a number of behavioural areas.
The combination of these multiple perspectives offers a more balanced point of view on the employee’s overall performance.
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Multi-rater feedback requires ‘bystanders’ to assess a multitude of work situations
which are controlled or managed by the person who is the focus of the feedback.
The focal person also rates himself or herself in terms of the questionnaire.
Bystander ratings are averaged and compared with the self-ratings of the focal person.
Negative differences indicate potential areas for personal development and performance improvement.
Team appraisals
Team evaluations require a measure of how much each member contributes to the team, and a measure of how well the team accomplishes its goals.
Individual member contributions are usually measured through peer evaluation and the focus is usually developmental.
Team performance is most often measured against specific team objectives.
Performance rating techniques
Rating techniques can be categorised as relative or absolute.
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 Relative rating techniques
This is the rank ordering of individuals according to overall merit or selected performance factors, in order from the best to the worst performer.
Forced distribution aligns employees in accordance with pre-assigned performance-distribution fields.
Each worker is compared with every other worker in a selected group.
The final ranking of each individual is then determined by the number of times he or she was judged to be better than the others.
The disadvantages are similar to those of the ranking technique.
Absolute rating techniques
Essay method: the rater reports the strengths and weaknesses of the employee in the form of an essay.
It is a time-consuming method, dependent on writing skill, and reliant on comprehensive reporting.
Critical incidents
This technique focuses on the continuous recording of successes and failures in actual job behaviours.
It is time-consuming and can be influenced by incidents that are recorded towards the end of the review period, or by incidents that may have been omitted.
Forced choice
The rater receives a list of paired job-related descriptions from which he or she is forced to choose the description that best fits the employee in each case.
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Graphic rating scales
These are popular absolute evaluation techniques.
Various characteristics are selected that relate to the specific job.
The rater makes a choice across a continuum between two poles.
Graphic rating scales are easy to understand and apply, standardised, acceptable to users, less time-consuming, and provide a high degree of consistency.
Behaviourally anchored rating scales (BARS)
The BARS technique combines graphic rating scales with examples of critical incidents. These rating scales are job specific and require a high level of participation from supervisors.
Although partly objective, the rater may be forced into making a choice between two descriptions, neither of which may fully describe the employee’s performance.
Management by objectives (MBO)
The MBO technique provides for an initial goal-setting phase, utilising joint goalsetting by the employee and manager.
Periodically, the manager will measure progress towards the goals, and will coach the subordinate if progress is lacking or slow.
The final evaluation is carried out at the end of the review period.
The MBO method only addresses results, and not how the performance should be managed.
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Rater errors
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Several issues must be borne in mind by the rater.
Unclear standards
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* An ever-present problem is inconsistency of standards between ‘raters’
* Different people define standards differently
* The solution is to develop and include descriptive phrases that define the language the rater is required to use.
Halo effect
This occurs when a manager’s rating of a subordinate on one characteristic biases the way that other characteristics are rated
Failure in one area may also negatively influence an overall rating
This is known as a negative halo, or the ‘devil’s horns’ effect.
Central tendency
Some ‘raters’ tend to rate everyone as average, resulting in a central tendency
This problem also can occur if supervisors are unfamiliar with the work of the subordinate, if they lack supervisory ability, or if they fear a reprimand for rating too leniently or too strictly.
Leniency or strictness
Some inexperienced supervisors may feel this is the easiest route to follow or that they could gain in popularity if they use a lenient approach even if the employee does not deserve it
This could result in feelings that the evaluation has been unfair
Strictness could occur if the supervisor believes that no one has achieved the standards required.
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 Recency
 Recent incidents in the employee’s performance tend to influence the supervisor’s overall perception of the individual’s performance.
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Bias
The rater may be influenced by characteristics such as the age, gender, race, or seniority of the employee
Proper rater training and specific development of the appraisal system by means of job analysis can improve performance evaluations.
19.5.4
The performance feedback and documentation
The appraisal interview should be both evaluative and developmental.
 Before the interview, the rater must:
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Communicate frequently with employees about their performance
Get training in performance appraisal interviewing
Plan to use a problem-solving approach rather than ‘tell-and-sell’
Encourage subordinates to prepare for the interview.
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During the interview, the rater must:
Encourage ratee participation
Judge performance, not personality
Be specific
Be an active listener
Set mutually agreeable goals for future improvements
Avoid destructive criticism.
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 After the interview, the rater must:
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Communicate frequently with ratees about their performance
Periodically assess progress toward goals
Make organisational goals contingent on performance
* HR practitioners believe that discussion of salary in an evaluation session has a positive impact on the success of the interview.
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Scheduling the feedback interview
The structure of the performance management system determines when an
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The end interview should be scheduled.
If the system is cyclical, formal feedback should occur at least twice a year.
Often new recruits have feedback interviews scheduled more regularly.
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