Performance Management I
HR Management
MBAO 6030
MBAO 6030 Human Resource
Management
Performance Management I
Key Components of Performance Management
Systems:
 Goal Setting
 Coaching and informal Feedback
 Performance Evaluation
 Performance-based Rewards
 Appeal Mechanism
MBAO 6030 Human Resource
Management
Performance Management I
Uses of Performance Evaluation
1. Feedback and Development Applications
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Formal Performance Feedback
Control Performance of Subordinates
Assess Training Needs, Skill Gaps
Input to Goal Setting
MBAO 6030 Human Resource
Management
Performance Management I
Uses of Performance Evaluation
2. Basis for Administration Decisions
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Basis for pay increases based on performance
Basis for promotions (or demotions)
Basis for layoffs (or retention)
Basis for work assignments
Used for legal defense of HR practices
Validate useful (and useless) HR practices
MBAO 6030 Human Resource
Management
Performance Management I
Contexts of Performance Evaluation:
 Rational: According to our measures who are
the best (and worst) performers?
 Political: Do we have the evidence from
performance evaluation to recognize our best
and lowest performers?
 Legal: Is this evidence from performance
evaluation reliable & valid so we can discharge
our worst performer without legal
consequences?
MBAO 6030 Human Resource
Management
Performance Management I
Critical Thinking Questions:
1. Most managers dislike giving performance
evaluations to their employees. Why is this so?
2. What are the advantages of just using
performance evaluation for feedback purposes
and avoiding using it for administrative
decisions? Any disadvantages?
MBAO 6030 Human Resource
Management
Performance Management I
Sources of Feedback for Performance
Evaluation:
 Supervisor
 Self
 Peers
 Subordinates
 Customers
MBAO 6030 Human Resource
Management
Performance Management I
Models of Performance Evaluation (Sources)
1. Direct supervisor only
2. Group of supervisors
3. Self
4. Supervisor and self
5. Supervisor and peers
6. Supervisor, peers and subordinates
7. Customers
8. Supervisors, peers, subordinates and customers
MBAO 6030 Human Resource
Management
Performance Management I
Critical Thinking Questions
1. Which model(s) of Performance Evaluation do
you prefer? Give your reason.
2. How useful is peer feedback as the source of
information for performance evaluation? What
are its drawbacks? Any caveats for the use of
peer information?
MBAO 6030 Human Resource
Management
Performance Management I:
Measurement Issues
Criteria for Performance
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Outcomes
Behaviors
Mix of outcomes and behaviors
Performance Scales
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Absolute scale – compared to goals or standards
Relative scale – measure relative to peer
comparisons (individuals, teams or units)
Mix of absolute and relative scales
MBAO 6030 Human Resource
Management
Performance Management I:
Measurement Issues
Distributions of Performance
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Forced Distribution – individuals forced into
categories based on relative ranking
Unspecified Distribution – gives evaluator more
freedom to judge performance of employees
Precision of Performance Measures
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Subjective/Qualitative Judgments
Objective/Quantitative Measures
MBAO 6030 Human Resource
Management
Performance Management I:
Measurement Issues
Critical Thinking Questions
1. Which approaches to measurement will be
perceived as most procedurally fair by the
employees? Justify your choice.
2. Should procedural fairness be the controlling
factor in the selection of performance
measures? Give an example to illustrate your
point.
MBAO 6030 Human Resource
Management
Performance Management I: Rater Errors
Rater Errors of Range Restriction
Central
Tendency
Harshness
0
1
Low Score
2
3
Leniency
4
5
High Score
MBAO 6030 Human Resource
Management
Performance Management I: Rater Errors
Halo Effect Bias
Competence B
Competence B Halo Effect
True Score
0
1
Low Score
2
3
Competence A
4
5
High Score
MBAO 6030 Human Resource
Management
Performance Management I: Rater Errors
Recency Error
Biased score due to
recent event
True Evaluation
Score
0
1
Low Score
2
3
4
5
High Score
MBAO 6030 Human Resource
Management
Performance Management I: Rater Errors
Critical Thinking Questions
1. Do you think supervisor training can reduce or
eliminate rater errors? What other causes might
give rise to rater errors in performance
evaluation?
2. If a supervisor uses performance evaluation as
the basis for discharging an employee by reason
of poor performance, what precautions should
be made to avoid legal or other negative
consequences?
MBAO 6030 Human Resource
Management