INTRIODUCTION

Performance management is a broad term coined by Dr. Aubrey Daniels in the late 1970s to
describe a technology (i.e. science imbedded in applications methods) for managing behavior and
results, two critical elements of what is known as performance.

Twenty-first century organizations and their leaders must understand and realize that their most
important asset in achieving long-term success is not necessarily their technologies, but this
competitive edge and the key to success lies in their people. This is why continuous performance
assessment, coaching and developing of each employee in the organization are so critical in today’s
competitive workplace. Performance assessment and developing people are important elements of
a holistic paradigm for the growth and development of organizations through effective performance
management systems. Professor Herman Aguinis defined performance management as the
“continuous process of identifying, measuring, and developing the performance of individuals and
teams and aligning performance with the strategic goals of the organization” (2007). This definition
emphasizes that an effective performance management program requires continuous feedback and
improvement processes for the development of people. Aguinis states that “A system that involves
employee evaluations once a year without an ongoing effort to provide feedback and coaching so
that performance can be improved is not a true performance management system” (2007).

What Is Performance Measurement? Why did I choose this topic?

Managers of any sports team need to know the running score so they can assess whether changes
are needed for the team to win. Managers of public agencies and private, nonprofit organizations
need similar information. For businesses, the running score is data on profits and market share.
Costs alone mean little. Measuring that running score and using it for better performance are the
subject of my assignment —a subject popularly called performance measurement.

Performance measurement has many meanings, but it is defined here as regular measurement of
the results (outcomes) and efficiency of services or programs.

There are three major determinants of performance like. Declarative knowledge.

Procedural knowledge and motivation. These are the factors which affect an individual’s
performance.

As we have three determinants we have three approaches also available also and the approaches
are trait approach , behaviors approach and results approach now the question is which approach is
to be adopted to get better results, this assignment we will discuss at the given situation which
approach should be adopted.
DEFINING PERFORMANCE

Performance management system usually includes measures of both behaviors (what an employee
does) and results (the out comes of an employee’s behavior). The definition of performance does
not include the results of an employee’s behaviors, but only the behaviors themselves. Performance
is about behavior or what employees do, not about what employees produce or the outcomes of
their work.

Performance is

Behavior

What employees do

Performance is not

Results, outcomes what employees produce?

Behaviors labeled as performance are

1 Evaluative

Negative

Natural

Positive

2 Multi dimensional

Many different kind of behaviors

Advance or hider organizational goals

Behaviors are not always

Observable

Measurable
DETERMINANTS OF PERFORMANCE

What factor causes an employee to perform at a certain level????????

Why do certain people better perform then others?????

A combination of certain three factors allows an individual to perform at high levels.

1. Declarative knowledge.

2. Procedural knowledge

3. Motivation

Declarative knowledge is information about facts and figures it also including information regarding
given task’s requirements, labels, principles and goals.

Procedural knowledge is a combination of knowing what to do and how to do and also includes
cognitive, physical, motor, and inter personal, skills.

Motivation

It involve three types of choices of behaviors

1 Choice to put/ expend effort

2 choice of level of effort

3 choices to persist in the expenditure of the level of effort

Performance= declarative knowledge X procedural knowledge X motivation

If we assume that a determinant has a value of 0 then performance would also be 0.

For example

Consider an individual Mr. X who works in a store has impressive and excellent declarative
knowledge, regarding store merchandise, we consider Mr. X as a intelligent person as he has
complete information about store so we consider Mr. X procedural knowledge is also very high but
some how some way he is not willing to perform or we can say he is demotivated. When customer
comes he does not approach them to buy some thing instead he keeps on talking on phone so over
his performance is said to be POOR
Factors determining performance

Declarative knowledge procedural knowledge motivation

Facts cognitive skills choice to perform

Principles physomotor skills level of effort

Goals physical skills persistence effort

Interpersonal skills

Top performers keep their selves engage in deliberate practice.

Deliberate practice involves five steps

1 Approach performance with the goal of getting better and better

2 As you are performing focus on what is happening, and any you are doing things the way you do.

3 Once your task is finished see performance feed back from experts and more sources.

4 Build mental model of your job, your situation, your organization.

5 Repeat step 1---4 continually and on ongoing basis.

MOTIVES, EVPECTANCIES OF SOURCES AND VALUES AS DETERMINANTS OF PERFORMANCE

Lewin’s model of motivated behavior identified three variables very similar to those used by
behaviors like Hull and Spence, although Lewin defined them in phenomenological or cognitive
terms.

He spoke the need or tension which is equal to drive strength properties of goal object which is
equal to incentive value and psychological distance, which is a kind of phenomenological equivalent
of the skill or habit variable in terms of how easy or hard to achieve the objective.

The initial formula read as follow

T=MXPXI

Where

T is the tendency to achieve success

M is multiplicative function of the motive to achieve success

P is expectancy or probability of success

I is incentive value of success

It was assumed that the incentive value of success could be defined as 1 _ P which means more
difficult task the less probability of successuding it.

Two types of such beliefs have been studied. One type has to do efficacy of effort in bringing about a
consequence through a particular response in a given situation.

The other type has to do generalize confidence people have that they can bring about outcomes
through activities of any kind.

So we can say that a belief in importance of effort facilitates performance.

IMPLICATIONS FOR ADDRESSING PERFORMANCE

As we have discussed earlier performance is affected by the three (3) factors and these three factors
has implications for addressing performance problems.

In order to address performance problem manager must find information that will allow them to
understand weather the source of problem is of declarative knowledge, procedural knowledge,
motivation or some combinations of these factors. If an employee lacks motivation but manager
believes the source of problem is declarative knowledge, the manager may sent employee to any
training program so he can acquire the lacking knowledge.

This would be nothing but wastage of time because it’s the problem is lack of motivation not lack of
declarative knowledge, procedural knowledge. This is why performance management systems need
not only to measure performance but also to provide information about source of any performance
deficiencies.

FACTORS INFLUACCING DETERMINANTS OF PERFORMANCE

The factors that determine performances are affected by the employee (abilities, and previous
experience), HR practice and work environment.

In terms of procedural knowledge, employees may actually have the knowledge to perform certain
tasks but may not have the skill to do them because of lack of opportunity for practice.

In many companies declarative knowledge is not likely to be a big problem because when lack of
knowledge is identified, employees have multiple opportunities to fill in the gap. However
performance problems may be related more to procedural knowledge and motivation.

In other words employee may have knowledge to perform certain tasks but may not have skills to do
them because of lack of opportunity.

In terms of motivation, downsizing interventions may have caused SURVIVOR SYNDROME, which
includes retained employees feelings of frustration, resentment, and even anger. These feelings are
likely to have strong negative effects on motivation, and employees may expend minimal energy on
their jobs.

Thus, there are three individual characteristics that determine performance:

Procedural knowledge, declarative knowledge and motivation. In addition HR practices and the
work environment can affect performance.

These are three individual characteristics that determine performance in addition HR practice and
the work environment can affect performance.

Manager first need to identify which of these factors is hampering performance and then help the
employee improve his or her performance.

PERFORMANCE DIMENSIONS

As it was described earlier performance is a multidimensional process, which means we need to

consider many different types of behaviors’ to understand performance. We can identify two
different specific behaviors’ to understand performance. Facets stand out

Task performance

Contextual performance

Contextual and task performance must be consider separately because they don’t necessarily occur
in tandem. An employee can be highly proficient at his task but be underperformer regarding
contextual performance.

Task performance is defined as

Activities that transform raw material raw material into goods and services that are produced by
organization.

Activities that help transformation process by replenishing the supply of raw materials, distributing
its finished goods, or providing important planning, coordination, supervising, or staff functions that
enables the organization to function effectively and efficiently.

CONTEXTUAL PERFORMANCE

Contextual performance is defined as those behaviors’ that contributes to the organization’s

effectiveness by providing good environment in which task performance can occur. Contextual
performance includes behaviors’ such as the following

Persisting with enthusiasm and exerting extra effort as necessary to complete one’s own task activity
successfully (e.g. being punctual and rarely absent, expending extra effort on job)

Volunteering to carry out task activities that are not formally part of job (e.g. suggesting
organizational improvement, making constructive suggestions)

Helping and cooperating with others (e.g. assisting, helping coworkers)

Following organizational rules and procedures

Endorsing, supporting, and defending organizational objectives.

Both task and contextual performance are important dimensions to take into account in
performance management system. Many organizations now realize that there is need to focus on
both task and contextual performance because organization can not function properly without a
minimum dose of positive contextual behavior on the part of all employees.

Task performance Contextual performance

Varies across jobs fairly similar across jobs

Likely to be role prescribed not likely to be role prescribed

Antecedents: abilities and skills antecedent: personality

Above are main differences between task and contextual performance. First task performance varies
across jobs which mean task performed by HR manager must be different by the task preformed by
LINE MANAGER. On the other hand contextual performance is fairly similar across functional and
hierarchical level.

Second task performance is likely to be role prescribed, meaning that task performance is usually
included one’s job description. On the other hand contextual performance behaviors’ are usually not
role prescribed and instead are typically expected without making them explicit.

Finally task performance is mainly influenced by abilities and skills (cognitive and physical), whereas
contextual performance is mainly influenced by personality (conscientiousness).

There are main reasons that why task performance is included in performance management system

1 global competition is raising the level of effort required of employees.

2 issues of global competition is need to offer out siding from customer service. Contextual
performance behaviors’ can make a profound impact on customer service. Contextual performance
can make an impact on customer satisfaction.

3 many organizations are forming employees into teams. Although some teams are not permanent
because they are created to complete specific short-term tasks. Interpersonal is a key determinate
of team effectiveness. Thus contextual performance becomes relevant to team work.

4 including both task and contextual performance in the performance management system provide
additional benefits: employees being rated are more satisfied with the system and also believe the
system is fairer if contextual performance is measured in addition to task performance.

5 when supervisors evaluate performance its difficult for them to ignore the contextual dimension,
even through the evaluation from they are using may not include any specific question about
contextual performance. Since contextual performance has an impact on rating on overall
performance even when only task performance is measured, it makes sense to include contextual
performance more explicitly.

In short performance includes both task and contextual dimension. Both should be considered
because both dimensions contribute to organizational success. In case of both task and contextual
performance, each behavior should be defined clearly so that employee understands what is
expected of them. Organization that includes both task and contextual performance are likely to be
more successful.

JOB PERFORMANCE IN CONTEXT

Employees That
A performer
In a given in certain produce
Individual or behaviors various
team Situation
results

TARIT BEHAVIOUR RESULTS

APPROCHES TO MEASURING PERFORMANCE

TRAIT APPROCH

Emphasizes on individual trait of employees.

BEHAVIOUR APPROCH

Emphasizes hoe employee do the job.

RESULTS APPROCH

Emphasizes what employee produce.

TRAIT APPROACH

Traits are an implicit part of most measurement procedures in applied psychology. There are many
interperatations of trait sources. Differences in interpretations have profound societal, scientific, and
clinical implications. It is also assumed that traits defined by an assessment process are more less
valid reflection of the behaviors of the person being described.

The trait approach emphasizes the individual performer and ignores the specific situation, behaviors,
and results. If one adopts the trait approach, raters evaluate relatively stable traits. These can include
abilities, such as cognitive abilities (which are not easily trainable) or personality (which is not likely
to change over time). For example, performance measurement may consist of assessing an employee’s
intelligence and conscientiousness at the end of each review period. This approach is justified based
on the positive relationship found between abilities (such as intelligence) and personality traits (such
as conscientiousness) and desirable work-related behaviors.

A traits approach also emphasizes individual traits that remain fairly stable throughout an
individual’s lifespan (e.g., cognitive abilities or personality). This approach may be most appropriate
when an organization anticipates drastic structural changes. A major disadvantage of this approach
is that traits are not under the control of individuals, and, even when individuals possess a specific
positive trait (e.g., high intelligence), this does not necessarily mean that the employee will engage
in productive behaviors leading to desired results.

What are some of the challenges of implementing a system that emphasizes the measurement of
traits only? First, traits are not under the control of individuals. In most cases, they are fairly stable
over one’s Life span. They are not likely to change even if an individual is willing to exert substantial
effort to do so. Consequently, employees may feel that a system based on traits is not fair because
the development of these traits is usually beyond their control.19 second; the fact that an individual
possesses a certain trait (e.g., intelligence) does not mean that this trait will necessarily lead to
desired results and behaviors. As noted in Figure 4.1. Individuals are embedded in specific situations.
If the equipment is faulty and coworkers are uncooperative, even a very intelligent and
conscientious employee is not likely to engage in behaviors conducive to supporting the
organization’s goats.
In spite of these challenges, there are situations in which a trait-oriented approach can be fruitful.
For example, as part of its business strategy. An organization may anticipate drastic structural
changes that will result in the reorganization of most functions and the resulting reallocation of
employees. In such a circumstance, it may be useful to assess the traits possessed by the various
individuals so that fair and appropriate decisions are made regarding the allocation of HR resources
across the newly crated organizational units. This is, of course, a fairly unique circumstance. In most
organizations. Performance is not measured using the trait approach. Two more popular approaches
to measuring performance are based on behaviors and results, discussed next.
TRAIT APPROCH

Emphasis individual trait of employee:

Evaluate stable traits

Congnative abilities

Personality

Based on relationship between trairs and performance

Approptiate if

Structural changes planned for organization

Disadvantages

Improvement not under individual’s control

Trait may not led to

Desired behaviours

Desired results

BEHAVIOR APPROACH

A behavior approach emphasizes what employees do (i.e., how work is done). This approach is most
appropriate when (a) it will take a long time to achieve the desired outcomes, (b) the link between
behaviors and results is not obvious, (c) outcomes are distant in the future, or (d) poor results are
due to causes beyond the employee’s control. A behavior approach may not be the best choice if
most of these conditions are not present. In most situations, however, the inclusion of at least some
behavior-based measures is beneficial.

The behavior approach emphasizes what employees do on the job and does not consider
employees’ traits or the outcomes resulting from their behaviors. This is basically a process-oriented
approach that emphasizes how an employee does the job.

The behavior approach is most appropriate under the following circumstances:

• The link between behaviors and results is not obvious

Sometimes the relationship between behaviors and the desired outcomes is not clear. In some
cases, the desired result may not be achieved in spite of the fact that the right behaviors are in
place. For example, a salesperson may not be able to close a deal because of a downturn in the
economy. In other cases, results may be achieved in spite of the absence of the correct behaviors.
For example, a pilot may not be check all the items in the preflight checklist but the flight may
nevertheless be successful (i.e., take off and land safely and on time). When the link between
behaviors and results is not always obvious, it is beneficial to- focus on behaviors as opposed to
outcomes.

• Outcomes occur in the distant future

When the desired results will not be seen for months, or even years, the measurement of behaviors
is beneficial. Take the case of NASA’s Mars Exploration Rover Mission program. NASA launched the
exploration rover Spirit on June 10, 2003, which landed on Mars on January 3,2004, after traveling
487 million kilometers (302.6 million miles). Its twin, the exploration rover Opportunity, was
launched on July 7, 2003, and landed on the opposite side

of Mars on January 24, 2004. From launching to landing, this mission took about six months to
complete. In this circumstance it is certainly appropriate to assess the performance of the engineers
involved in the mission by measuring their behaviors in short intervals during this six-month period
rather than waiting until the final result (i.e., successful or unsuccessful landing) is observed.

Poor results are due to causes beyond the performers control

When the results of an employee’s performance are beyond the employee’s control, then it makes
sense to emphasize the measurement of behaviors. For example, consider a situation involving two
assembly-line workers, one of them working the day shift and the other the night shift. When the
assembly line gets stuck because of technical problems, the employee working during the day
receives immediate technical assistance, so the assembly line is back in motion in less than five
minutes. In contrast, the employee working the night shift has very little technical support and,
therefore, when the assembly line breaks down, it takes about 45 minutes for it to be up and
running again, If we measured results, we would conclude that the performance of the day-shift
employee is far superior to that of the night-shift employee, but this would be an incorrect
conclusion. Both employees may be equally competent and do the job equally well. The results
produced by these employees are uneven because they depend on the amount and quality of
technical assistance they receive when the assembly line is stuck.

Behavior approach

Appropriate if

Employees take a long time to achive desired outcomes

Link between behaviors and results is not obvious

Outcomes occur in the distant future

Poor results are due to causes beyond the performer’s control

Not appropriate if
Above conditions are not present

RESULTS APPROACH

A results approach emphasizes the outcomes and results produced by employees. This is basically a
bottom-line approach that is not concerned about how the work is done as long as certain specific
results are obtained. This approach is most appropriate when (a) workers are skilled in the needed
behaviors, (b) behaviors and results are obviously related, (c) results show consistent improvement
over time, or (d) there are many ways to do the job right. An emphasis on results can be beneficial
because it could encourage employees to achieve the desired outcomes in creative and innovative
ways. On the other hand, measuring only results is typically not welcomed by employees, even in
types of jobs for which the expected result is very clear (e.g., as in the case of sales jobs such as at
The Limited).

The results approach emphasizes the outcomes and results produced by the employees. it does not
consider the traits that employees may possess or how employees do the job. This is basically a
bottom-line approach that is not concerned about employee behaviors and processes but, instead,
focuses on what is produced (e.g. sales, number of accounts acquired, time spent with clients on the
telephone, number of errors). Defining and measuring results usually takes less time than defining
and measuring behaviors needed to achieve these results. Also, the results approach is usually seen
as more cost-effective because results can be less expensive to track than behaviors. Overall, data
resulting from a results approach seem to be objective and arc intuitively very appealing.
The results approach is most appropriate under the following circumstances:

• Workers are skilled in the needed behaviors

An emphasis on results is appropriate when workers have the necessary knowledge and skills to do
the work. In such situations, workers know what specific behaviors are needed to achieve the
desired results and they are also sufficiently skilled to know what to do to correct any process-
related problems when the desired results arc not obtained. Consider the example of a professional
basketball player. A free throw is an unhindered shot made from the foul line which is given to one
team to penalize the other team for committing a foul. Free throw shooting can make the difference
between winning and losing in a close basketball game. Professional players know that there is really
no secret to becoming a great free throw shooter: just hours and hours of dedicated practice besides
actual basketball play. In assessing the performance of professional basketball players, the free
throw shooting percentage is a key results- oriented performance indicator because most players
have the skills to do it well. It’s just a matter of assessing whether they do it or not.

• Behaviors and results are obviously related.

 In some situations, certain results can be obtained only if a worker engages in certain specific
behaviors. This is the case of jobs involving repetitive tasks such as assembly-line work or newspaper
delivery. Take the case of a person dcli4iering newspapers Performance can be measured adopting a
results approach: whether the newspaper is delivered to every customer within a particular time
frame. For the employee to obtain this result, she needs to pick up the papers at a specific time and
use the most effective delivery route. If these behaviors arc not present, the paper will not be
delivered on time.
• Results show consistent improvement over time

When results improve consistently over time, It is an indication that workers are aware of the
behaviors needed to complete the job successfully. In these situations, it is appropriate to adopt a
result approach to assessing performance.

• There are many ways to do the job right.

When there are different ways in which one can do the tasks required for a job, a results approach is
appropriate. An emphasis on results can be beneficial because it could encourage employees to
achieve the desired outcomes in creative and innovative ways.

Adopting a behavior approach to measuring performance Li most appropriate when

• The link between behaviors and results is not obvious
• Outcomes occur in the distant future
• Poor results are due to causes beyond the performer’s control

Adopting a results approach so measuring performance is most appropriate when

• Workers are skilled in the needed behaviors
• Behaviors and results are obviously related
• Results show consistent improvement over time
• There are many ways to do the job right

Columbus, Ohio. The Limited, Inc., now operates 3,500 retail stores and seven retail brands,
including Victoria’s Secret, Express, The Limited, Bath & Body Works, C. 0. Bigelow, The White Barn
Candle Co., and Henri BendeL The Limited aims to foster an entrepreneurial culture for its managers:
therefore, managers who thrive in the company have a history of delivering impressive business
results. The Limited decided to design a new performance management system that is now used
uniformly by all The Limited companies. With the involvement of outside consultants and
employees, The limited developed a performance management system wherein managers arc
measured on business results including total sales, market share, and expense sale growth ratio, as
well as leadership competencies that are tailored to The Limited. A few of these competencies
include developing fashion sense, financial acumen, and entrepreneurial drive. Overall, The Limited
has been pleased with the new system because It helps align individual goals
Behavior approach verses results approach

The link between behaviors and results is not obvious

Outcomes occur in the distant future

Poor results are due to causes beyond the performer’s control

Adopting results approach to measuring performance is most appropriate when

Workers are skilled in the needed behaviors

Behaviors and results are obviously related

Results show consistent improvement over time

There are many ways to do the job right.

RESULTS APPROCH

Advantages

Less time

Lower cost

Data appear objective

The Scope of Performance Measurement

In New York City, a priest and a taxicab driver died and went
to heaven. Saint Peter showed the priest his eternal dwelling
place—a shack. Saint Peter then showed the driver his
eternal dwelling place—a mansion. The priest was angry and
asked Saint Peter, "Why the difference?" Saint Peter said,
"When you preach, people sleep. When riders get into his
cab, they pray!"

For this book, RESULTS are what count!

What Is Performance Measurement? Why Do It?

Managers of any sports team need to know the running score so they can
assess whether changes are needed for the team to win. Managers of public
agencies and private, nonprofit organizations need similar information. For
businesses, the running score is data on profits and market share. Costs alone
mean little. Measuring that running score and using it for better performance
are the subject of this book—a subject popularly called performance
measurement.
Performance measurement has many meanings, but it is defined here as regular measurement of
the results (outcomes) and efficiency of services or programs. The new element in this
definition is the regular measurement of results or outcomes. Regular
measurement of progress toward specified outcomes is a vital component of
any effort at managing-for-results,1 a customer-oriented process that focuses
on maximizing benefits and minimizing negative consequences for customers
of services and programs. The customers may be citizens receiving services
directly or citizens or businesses affected indirectly.

If the right things are not measured, or are measured inaccurately, those using
the data will be misled and bad decisions will likely follow. As the old saying
puts it: garbage in, garbage out.

A major use of performance information is to establish accountability, so

citizens and elected officials can assess what programs have achieved with the
funds provided. Another major use is to help programs develop and then
justify budget proposals. But performance information is at least as important
to help managers throughout the year. Public and private managers often say
that performance information will not help them because their problem is too
few resources to do what needs to be done. Yet managers need performance
information to help them decide how to increase their ability to get the job
done with whatever resources they have—and to provide evidence to the
budget decision makers that they are indeed getting the biggest bang for the
buck.

Programs have been tracking expenditures and physical outputs for decades.
Tracking these elements is useful to program personnel but says little about
what resulted—how customers and the public benefited. Regular tracking of
outcomes is intended to fill this gap.

Outcome tracking is the new kid on the block for most public and private
services and programs, although ample precedents exist. Police and other law
enforcement agencies for many years have regularly tracked and reported
such data as crime and clearance rates. Transportation agencies have tracked
accidents, injuries, and deaths. Health officials have tracked the incidence of
serious diseases and mortality. Fire agencies have tracked the number of fires
and the resulting injuries and deaths. Environmental protection agencies have
tracked the pollutant content of air and water. School districts have tracked
dropouts and test scores. However, such tracking focused on jurisdiction-wide
data, not specific program outcomes that are essential information.

Regular tracking is a key characteristic of performance measurement. For

budget purposes, annual data are usually sufficient, but agencies and their
managers need more frequent outcome information to assess the success of
their program activities, identify where significant problems exist, and
motivate personnel to strive for continuous service improvement.2

A particularly crucial outcome characteristic for public programs—often

neglected in discussions of performance measurement—is equity. A well-
designed measurement system enables agency managers to assess the fairness
of a program and adjust it appropriately. A good performance measurement
system will help officials demonstrate to the public and to policymakers that
services are delivered fairly—thus building trust in the program. As chapter 8
discusses, disaggregating outcome data by the characteristics of the citizens
affected is a major way to help assess equity.

Limitations of Performance Measurement

All those using performance measurement information, whether inside or

outside government or in a private agency, should understand what it can and
cannot do and keep their expectations realistic. Performance measurement
has three primary limitations.

1. Performance Data Do Not, by Themselves, Tell Why the Outcomes Occurred

In other words, performance data do not reveal the extent to which the
program caused the measured results. This point is an important one. The
analogy to managers of sports teams helps here. The manager needs to know
the running score. If the team is losing, whether an individual game or over the
whole season, the manager and other team officials may need to change the
game plan. But the score does not tell the officials why the score is the way it
is. Nor does the running score tell what specifically needs to be changed to
improve the score. For that information, the managers, coaches, and other
team officials need to seek explanations before they act.

It is the same for service delivery. Managers and other officials need to track
results and use that information to help guide them about what, if any, future
actions to take. Performance measurement is designed primarily to provide
data on outcomes (the score). But to be most helpful (as discussed in chapters
9 and 10), performance measurement systems also need to have built into
them opportunities to analyze the details of program performance and steps
to seek explanations for the outcome data such systems produce.

This limitation raises a major issue in performance measurement that

generates controversy: accountability. What should managers be held
accountable for? In the past, the government of New Zealand had taken the
view that responsibility for program outcomes rested solely with officials at the
policymaking level, thus removing all accountability for outcomes from the
operating departments. Important outcomes are seldom, if ever, fully under the
control of a particular agency (public or private). Nevertheless, the agency and
its personnel do share responsibility for producing those outcomes. As long as a
program has any role in delivering a service intended to help produce
particular outcomes, the managers of that program—and its personnel—have
a responsibility to track the relevant outcomes and use that information to
help improve results.

Agency personnel and other officials are often too ready to believe they lack
responsibility over outcomes—in part out of fear that they will be blamed
unfairly for poorer-than-desired outcomes. This fear is reasonable. However,
recognizing shared responsibility helps agencies create innovative solutions
that can improveservice outcomes, even in the face of highly limited resources.
And this understanding can lead to more use of performance partnerships
among programs, agencies, levels of government, and between the private and
public sectors.

2. Some Outcomes Cannot Be Measured Directly

The classic example is success in preventing undesirable events, such as

prevention of crime or reduction of illicit drug use. In such cases, surrogates
can usually be used, such as indicators that reflect trends over time in the
number of incidents that were not prevented. This is not ideal, but this is the
real world.

3. Performance Measurement Provides Just Part of the Information Managers

and Elected Officials Need to Make Decisions

Performance measurement does not replace the need for expenditure data or
political judgments, nor does it replace the need for common sense, good
management, leadership, and creativity. A major purpose of performance
measurement is to raise questions. It seldom, if ever, provides answers by itself
about what should be done.

Exhibit 1-1 presents common objections from agencies and programs required
to implement an outcome-based performance measurement process. Each
objection is an element for concern. Subsequent chapters will address most of
these concerns and hopefully will at least allay them.

Outcome-Focused Efficiency Measurement

In performance measurement, efficiency is usually defined as the ratio of the

amount of input (usually monetary expenditures or amount of employee time)
to the amount of product created by that input. Unit-cost ratios that relate
expenditures to physical outputs have been common in public agencies for
years. The trouble with input-to-output ratios is they can be improved by
reducing the quality of the output. If outcomes are tracked, a considerably
more accurate indicator of true efficiency becomes possible. For example,
“cost per client served” is an output-based efficiency indicator. Efficiency
appears to increase when a program spends less per client, even if the
condition of the typical client deteriorates. “Cost per client whose condition
improved after services” is an outcome-focused efficiency indicator. It gives a
much more meaningful picture of a program’s real accomplishments.

Take the example of a program that holds regular sessions to help customers
stop smoking. “Cost per session held” is considerably under the control of the
program. “Cost per customer who quits smoking” is not, because whether
someone quits probably also depends on a host of other factors besides the
stop-smoking sessions. But is “cost per session held” a true measure of
efficiency? Officials and citizens are considerably more likely concerned with
efficiency in producing the desired outcome. Even if a causal link cannot be
firmly drawn, the program still has some responsibility for affecting the desired
outcome. An outcome-based indicator provides more insight into how much the
program is helping accomplish that objective.

Which Organizations Are Suitable for Performance Measurement?

Managing-for-results applies to all agencies that provide services to the public,

whether the agency has ample or highly limited resources, is small or large, is
public or private, or is in a developing or developed country.3 As long as the
agency is delivering services to the public, its management and elected officials
should be intensely concerned with the quality, outcomes, and efficiency of
those services and should measure performance.

Even small agencies with very limited resources should be able to track some
aspects of service quality and outcomes (probably more than seems possible at
first glance) and improve operations with their existing resources. Poorer
agencies with fewer resources will have to rely on less sophisticated
procedures and, perhaps, more volunteers.
The same principles apply to all agencies. Officials and managers need to
recognize and support the need for outcome information and be willing to use
it to improve services, however tight their budgets.

Which Services Are Suitable for Performance Measurement?

The procedures and issues of performance measurement are applicable to

most public and private services—ranging from public safety programs, to
public works programs, to human service programs, to environmental
protection programs, to regulatory programs, and to defense programs.
Performance measurement is even applicable to internal support services,
such as building maintenance, fleet maintenance, information systems,
personnel activities, and purchasing. However, outcomes of these support
services occur primarily within an organization, and it is usually difficult, if not
impossible, to estimate the effect these internal services have on the
outcomes of external services. This book focuses on external services, but the
same principles apply to support services.

The regular tracking of performance measurement may not be readily

applicable to activities whose important outcomes do not occur for years, if not
decades. Long-range planning and basic research are primary examples. The
federal government’s Government Performance and Results Act of 1993 has
been applied broadly to every type of federal program. Nevertheless, basic
research programs have had only slight success at fitting tracking systems into
the annual outcome-oriented performance measurement process. Regular
tracking can be used to assess whether timelines have been met, expenditures
have been kept within budget, and the quality of any interim product is
acceptable (such as by using expert panels to rate the quality and progress of
ongoing research). For assessing the major outcomes of research, analytical
resources are better spent on later, in-depth evaluations.

Performance Measurement in Relation to Other Evaluation Activities

Program Evaluations and Other In-Depth Studies

Performance measurement can be considered a field of program evaluation.
However, program evaluation usually refers to in-depth, special studies that
not only examine a program’s outcomes but also identify the “whys,” including
the extent to which the program actually caused the outcomes. Such in-depth
program evaluations are not the subject of this book.4

In practice, many of the so-called program evaluations undertaken by

government (federal, state, or local) provide information on outcomes but
little evidence on the causal link between activities and results. Even so, in-
depth studies can provide many insights about what happened and why.
Performance measurement cannot generally provide this information.

Because of the time and cost involved, in-depth evaluations are usually done
much less frequently and only for selected programs. Performance
measurement and in-depth program evaluations are complementary activities
that can nourish and enhance each other. Findings from a program evaluation
completed during a given year can add to or supersede that year’s
performance measurement data. Data from an agency’s performance
measurement system can offer program evaluators data, useful indications of
trends, and questions that encourage more in-depth evaluation. Sometimes
evaluators can use the existing performance measurement procedures to
collect data.

Performance Auditing
Performance audits, which are becoming more frequent, are typically
conducted by auditors or inspectors general. They are ad hoc studies, often
closely resembling in-depth program evaluations, that are applied to a
selection of public programs each year. Performance auditors should have
considerable interest in performance measurement systems as ways to
provide data on outcomes for use in audits. In addition, these offices are likely
to be given the responsibility for periodically assessing agencies’ performance
measurement systems, the indicators used, and the data being provided. (This
quality control responsibility is discussed in chapter 14.)

Budgeting, Strategic Planning, and Policy Analysis

Performance measurement provides information primarily about the past.
Budgeting, strategic planning, and policy analysis are primarily about the
future. As discussed in later chapters, performance data provide a baseline for
decisions and give clues about what might happen in the future. The future-
oriented processes require estimation and judgment skills that performance
measurement systems cannot provide by themselves. Subsequent chapters
(especially 12 and 13) introduce these issues but do not attempt
comprehensive coverage of budgeting, strategic planning, or policy analysis.
Rather, these topics are discussed only in the context of the (important) role
that outcome-focused performance measurement systems play in these
activities.

Role of Agency Employees

The employees of agencies undertaking performance measurement clearly

have a stake in the process. Later chapters address the roles of this important
stakeholder group in helping identify appropriate performance indicators and
in using performance information to help improve services. The performance
measurement work described here does not address the measurement of
employee job satisfaction, however, because employees are considered
suppliers of services, not customers.

Moving Performance Measurement into Performance Management

Performance measurement focuses on measuring outcomes and efficiency. If

at least some of the measurement information generated is not used, the
effort and cost of the performance measurement process will be wasted. Use
of the performance information —whether by program managers, agency
officials, officials in the central government, elected officials, members of
boards of private nonprofit organizations, or citizens—transforms performance
measurement into performance management. The purely measurement
chapters of this book are chapters 1 through 7, 14, and 15. Chapters 8 through
11 discuss key components that can greatly enhance usefulness and that
reflect the transition from measurement into usefulness. Chapters 12 and 13
discuss the various uses of performance information.

Thus, this book is about both performance measurement and performance

management.

A Guide to This Volume

Chapter 2 completes Part I by providing definitions that are the basic

background for the material in the rest of the book.
Part II addresses the performance measurement process. Chapter 3 discusses
organizational start-up. Chapters 4 through 6 address determining what the
program’s objectives are and who its customers are (chapter 4), what
outcomes should be tracked (chapter 5), and what the specific outcome
indicators should be (chapter 6). Chapter 7 addresses how the data can be
obtained.

Part III covers the critical issues of how to analyze, report, and use the
performance measurement data. Chapters 8 and 9 focus on ways to make
performance data useful to program personnel and others. Chapter 8 discusses
the importance of procedures for providing more detailed breakouts of
outcome data. Chapter 9 discusses benchmarking—that is, what comparisons
should be made to help interpret outcome levels. Chapter 10 discusses
analyses that can make the outcome information fully useful. Chapter 11
provides suggestions on an all too frequently neglected key element: reporting
the findings. Chapters 12 and 13 identify major uses of performance
information, with special attention to results-based budgeting.

Part IV (chapters 14 and 15) addresses various other important performance

measurement concerns, including the long-term problem of controlling the
quality of the information performance measurement produces (chapter 14),
political considerations, and the need for personnel training (chapter 15).

Part V (chapter 16) summarizes the principal points about performance

measurement that are important in producing a practical process with real
world utility.

References and Notes

1. “Governing-for-results” and “results-oriented government” refer to the

same process. We have used “managing-for-results” here to indicate that the
process is not restricted to government (executive or legislative) but is equally
applicable to private service agencies. Other phrases have been used, such as
“results-based management,” “managing by results,” and the like. Recent work
on legislatures has used the phrase “legislating for results.”
2. A distinction is often made between the way in which a service is delivered
(such as its timeliness, accessibility, and courteousness to customers) and the
results the service is intended to achieve (such as actual improvements in the
condition of customers). As will be discussed in chapter 4, these aspects of
service delivery quality are important to customers (and, thus, we have
categorized them “intermediate outcomes”), but they usually do not indicate
how much progress has been made toward service objectives.

3. Numerous publications have been written on this subject. A few recent ones
are John Kamensky and Albert Morales, eds., Managing for Results 2005
(Lanham, MD: Rowman & Littlefield Publishers, 2005); Barry White and
Kathryn Newcomer, eds., “Getting Results: A Guide for Federal Leaders and
Managers” (Vienna, VA: Management Concepts, 2005); and Dall W. Forsythe,
ed., Quicker, Better, Cheaper? Managing Performance in American
Government (Albany, NY: Rockefeller Institute Press, 2001). For those
interested in performance measurement in the international scene, some
publications are Jody Zall Kusek and Ray Rist, Ten Steps to a Results-Based
Monitoring and Evaluation System (Washington, DC: The World Bank, 2004);
Anwar Shah, ed., Public Services Delivery (Washington, DC: The World Bank,
2005); Korean Development Institute, “Reforming the Public Expenditure
System: Medium-Term Expenditure Framework, Performance Management,
and Fiscal Transparency,” (Seoul and Washington, DC: Korean Development
Institute and The World Bank, Conference Proceedings, March 2004); Hans de
Bruijn, Managing Performance in the Public Sector (London: Routledge, 2002);
and Burt Perrin, “Moving from Outputs to Outcomes: Practical Advice from
Governments around the World” (Washington, DC: The World Bank and IBM
Center for the Business of Government, 2006).

4. Considerable literature exists describing in-depth program evaluations and

how they might be done.

Performance Measurement, Second Edition, by Harry P. Hatry, is available from

the Urban Institute Press (paper, 8½" x 11", 342 pages, ISBN 978-0-87766-734-
6, $34.50).
Because of the social and economic value of new business enterprises (Birch,
1987; Reagan, 1985; Schumpeter, 1934), models leading to an improved
understanding of the determinants of new venture performance represent
significant contributions to the literature. Perhaps the most compelling model
of new venture performance developed in the last decade was proposed by
Sandberg and Hofer (1987). Their model specified that the performance of a
new venture was the consequence of a confluence of factors that encompass
attributes of the entrepreneur (E), strategy (S), and industry structure (IS), as
shown below.

New Venture Performance = f (E, IS, S) (1)

Using information on new ventures that sought funding from venture

capitalists, Sandberg and Hofer found evidence that industry structure and
strategy, separately and in combination, influenced new venture performance.
Although their data did not support the importance of the entrepreneur,
Sandberg and Hofer stated that additional research would be required before
the entrepreneur could or should be removed from the model of new venture
performance. Subsequent work by Feeser and Willard (1990), Keeley and
Roure (1990), and McDougall (1987), among others, has corroborated
Sandberg and Hofer's findings with respect to strategy and industry structure.
Furthermore, Herron's (1990) study on the skills of the entrepreneur provided
empirical evidence of the paramount importance of the entrepreneur in the
new venture performance model.

Despite the importance and appeal of the model proposed by Sandberg and
Hofer (1987), it is incomplete. There are other variables that can affect the
performance of a new venture that go beyond the skills and behaviors of its
founders, the form of its strategies, and the structure of its industry. More
specifically, their model does not include the resources upon which a venture's
strategy must be based, or the organizational structure, processes, and
systems by which the venture's strategy must be implemented. To fill this gap,
this article discusses the determinants of new venture performance from the
perspective of strategic management theory and describes why the concepts
of resources and organizational structure, processes, and systems are essential
elements of any fully specified model of new venture performance.
KEY ASSUMPTIONS AND DEFINITIONS

Before proceeding further, it is necessary to define key terms, and the scope of
this article, discuss the contextual basis of the extended theoretical model of
new venture performance proposed, and examine the critical assumptions that
led Sandberg and Hofer to exclude resources and organizational structure,
processes, and systems from their model.

Definitions and Scope

A new venture is the end result of the process of creating and organizing a new
business that develops, produces, and markets products or services to satisfy
unmet market needs for the purposes of profit and growth (Gartner, 1985;
Normann, 1977; Sandberg, 1986). In this article, we define entrepreneurship as
the creation of new ventures, and entrepreneurs as the creators of new
ventures (Gartner, 1988). There is evidence that many ventures are founded by
teams of entrepreneurs and that the completeness of these teams has a
positive impact on new venture performance (Cooper & Bruno, 1977; Roure &
Keeley, 1990; Route & Madique, 1986). While acknowledging the importance
of such teams, it is, nevertheless, beyond the scope of this article to deal with
nuances concerning the number of founding entrepreneurs associated with a
new venture.

A venture is considered new if it has not yet reached a phase in its

development where it could be considered a mature business. The precise
moment in time in which a new venture becomes a mature business has not
yet been determined. However, the idea of business maturation could be
equated with a firm that has fully completed the transition to a Stage II
organization in the sense of the model of organizational growth proposed by
Scott (1971), or has reached the point of stability proposed in Kazanjian's
(1988) four-stage model, or, more generally, has overcome the "liability of
newness" discussed by Stinchcombe (1965). The length of time it takes for a
new venture to mature will vary depending on its industry, resources, strategy,
etc. It seems reasonable to assume that the earliest this might occur would be
three to five years after its creation, and, more usually, not until the venture is
eight to twelve years old (Biggadike, 1979; Kazanjian & Drazin, 1990). It is not
the purpose of this article to describe the stages of growth through which a
new venture may pass. However, because a venture's problems appear to be
contingent upon its stage of growth (Greiner, 1972; Kazanjian, 1988; Kazanjian
& Drazin, 1990), we shall explore the manner in which the relative importance
of the determinants of new venture performance change as a venture evolves.

A new venture can take several forms: as a joint venture between two or more
established firms; as a corporate venture initiated as a self-contained
organizational unit within the boundaries of an established company; or as an
independent venture initiated and controlled by one or more individuals acting
in their own self-interest (Vesper, 1980). Each type of venture possesses some
unique characteristics with respect to ownership, genesis, and purpose (cf.
Borys & Jemison, 1989; Burgelman & Sayles, 1986; Gartner, 1985; Katz &
Gartner, 1988). In keeping with the intent to extend the model proposed by
Sandberg and Hofer (1987), this article focuses its discussion on the
independent venture. Nevertheless, we assume that the extended model
applies to ventures of any form because, first, venturing is a special case of
strategic management theory and, second, the model is derived from the
dominant paradigm of that field. At the same time, given that venturing is a
special case and there are different types of ventures, we do not make the
same claim of generality with respect to the propositions to be derived in the
article.

There are many methods by which the performance of a venture might be

measured (Dollinger, 1984), and it is beyond the scope of this article to debate
the relative merits of these approaches. Rather, we shall discuss venture
performance along two dimensions: survival and success. The first, survival, is
the opposite of failure. A venture fails when it ceases to exist as an economic
entity. Failure may occur because a venture is unable to satisfy its financial
obligations to creditors or because it is unable to meet the objectives of its
owners. Put differently, survival is an absolute measure of venture
performance that depends on the ability of the venture to continue to operate
as a self-sustaining economic entity (Barney, 1986a). Success, by contrast, is a
relative measure of venture performance that occurs when the venture
creates value for its customers in a sustainable and economically efficient
manner (Barney, 1991; Coyne, 1986; Schumpeter, 1934). Although it may take
several years for a new venture to earn a profit (Biggadike, 1979; Weiss, 1981),
its ability to create lasting, hard-to-imitate value, suggests that if it survives
those initial years, superior levels of profitability and growth vis-a-vis its
competitors should occur. We take this two-dimensional view of new venture
performance because a central assumption of the theoretical model presented
in this article is that the determinants of a venture's survival are somewhat
different from the determinants of its success. For example, while strategy is
considered a primary cause of business success (Hofer & Schendel, 1978), it is
rarely featured prominently as a cause of business failure (Cochran, 1981;
Dickinson, 1981).

Venturing and Strategic Management Theory

The initiation of a new business venture is predicated upon the decisions of its
founders concerning customers, products or services, resources, technologies,
and methods of organization (Cooper, 1979; Gartner, 1985; Katz & Gartner,
1988). In the field of strategic management such decisions are called
"strategic" because each has a significant impact on the performance of the
business making them. For example, strategic management theory suggests
that a business unit's performance is both directly and indirectly related to the
environment of the industry in which it competes, the resources it controls,
the strategy it uses to align available resources with environmental
opportunity, and the organizational structure, processes, and systems it
employs to implement its chosen strategy (Hofer & Schendel, 1978; Porter,
1980, 1985; White & Hamermesh, 1981). Theorists also agree that top
management is responsible for making strategic decisions, and, therefore, is
responsible for the performance of a business (Andrews, 1971; Schendel &
Hofer, 1979).

Such decisions are also important to a new venture, although the nature of the
decisions and the problems it confronts are different from those facing an
established business owing to differences in history, age, size, attitudes toward
change, and so on (Cooper, 1979; Stinchcombe, 1965). In fact, as the research
models used in the studies of new venture performance shown in Table 1
suggest, the determinants of performance of a new venture and an established
business are nearly identical.
Based on this evidence, we conclude that the performance of new ventures
and established businesses depends upon a set of factors that vary more in
importance and form than type. As a consequence, any theory of new venture
performance should be treated as a special case of strategic management
theory (Sandberg, 1986; Schendel & Hofer, 1979) and include consideration of
the entrepreneur (E), industry structure (IS), [TABULAR DATA FOR TABLE 1
OMITTED] business strategy (BS), resources (R), and organizational structure,
processes, and systems (OS), as shown in the functional relationship depicted
below.

New Venture Performance = f(E, IS, BS, R, OS) (2)

Implicit Assumptions of the Sandberg & Hofer Model

Sandberg and Hofer (1987) also considered venturing as a special case of

strategic management theory, yet did not include resources or organizational
structure, processes, and systems variables in their model. By excluding
variables representing these determinants of performance, they made two
implicit assumptions that require examination.

1. Resources and organizational structure, processes, and systems have, at

best, a marginal direct affect on new venture performance.

2. The venture possesses, or can develop, the resources and organizational

structure, processes, and systems necessary to implement its intended
strategy.

While not included in their model, Sandberg and Hofer (1987) recognize the
importance of resources, pointing out that any strategy intended to be non-
imitative is indicative of some desired distinctive competence. Nevertheless,
an intended strategy is not always realized (Mintzberg, …
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What factor causes an employee to perform at a certain level????????

Why do certain people better perform then others?????

A combination of certain three factors allows an individual to perform at high levels.

1 declarative knowledge.

2 procedural knowledge

3motivation

DK is information about facts and figures it also including information regarding given task’s
requirements, labels, principles and goals.

P K is a combination of knowing what to do and how to do and also includes cognitive, physical,
motor, and inter personal, skills.

Motivation

It involve three types of choices of behaviors

1 Choice to put/ expend effort

2 choice of level of effort

3 choices to persist in the expenditure of the level of effort

Performance= declarative knowledge X procedural knowledge X motivation

If we assume that a determinant has a value of 0 then performance would also be 0.

For example

Consider an individual Mr. X who works in a store has impressive and excellent declarative
knowledge, regarding store merchandise, we consider Mr. X as a intelligent person as he has
complete information about store so we consider Mr. X procedural knowledge is also very high but
some how some way he is not willing to perform or we can say he is demotivated. When customer
comes he does not approach them to buy some thing instead he keeps on talking on phone so over
his performance is said to be POOR

Factors determining performance

Declarative knowledge procedural knowledge motivation

Facts cognitive skills choice to perform

Principles physomotor skills level of effort

Goals physical skills persistence effort

Interpersonal skills
Top performers keep their selves engage in deliberate practice.

Deliberate practice involves five steps

Approach performance with the goal of getting better and better

2 as you are performing focus on what is happening, and any you are doing things the way you do.

3 once your task is finished see performance feed back from experts and more sources.

4 build mental model of your job, your situation, your organization.

5 repeat step 1---4 continually and on ongoing basis.

IMPLICATIONS FOR ADDRESSING PERFORMANCE

As we have discussed earlier performance is affected by the three (3) factors and these three factors
has implications for addressing performance problems.

In order to address performance problem manager must find information that will allow them to
understand weather the source of problem is of declarative knowledge, procedural knowledge,
motivation or some combinations of these factors. if an employee lacks motivation but manager
believes the source of problem is declarative knowledge , the manager may sent employee to any
training program so he can acquire the lacking knowledge.

This would be nothing but wastage of time because it’s the problem is lack of motivation not lack of
declarative knowledge, procedural knowledge. This is why performance manage4ment systems need
not only to measure performance but also to provide information about source of any performance
deficiencies.

FACTORS INFLUACCING DETERMINANTS OF PERFORMANCE

The factors that determine performances are affected by the employee (abilities, and previous
experience), HR practice and work environment.

In many companies declarative knowledge is not likely to be a big problem because when lack of
knowledge is identified, employees have multiple opportunities to fill in the gap. However
performance problems may be related more to procedural knowledge and motivation.

In other words employee may have knowledge to perform certain tasks but but may not have skills
to do them because of lack of opportunity.

In terms of motivation, downsizing interventions may have caused SURVIVOR SYNDROME, which
includes retained employees feelings of frustration, resentment, and even anger. These feelings are
likely to have strong negative effects on motivation, and employees may expend minimal energy on
their jobs.

These are three individual characteristics that determine performance in addition HR practice and
the work environment can affect performance.
Manager first need to identify which of these factors is hampering performance and then help the
employee improve his or her performance.

PERFORMANCE DIMENSIONS

As it was described earlier performance is a multidimensional process, which means we need to

consider many different types of behaviors’ to understand performance. We can identify two
different specific behaviors’ to understand performance. Facets stand out

Task performance

Contextual performance.

Contextual and task performance must be consider separately because they don’t necessarily occur
in tandem. An employee can be highly proficient at his task but be underperformer regarding
contextual performance.

Task performance is defined as

Activities that transform raw material raw material into goods and services that are produced by
organization.

Activities that help transformation process by replenishing the supply of raw materials, distributing
its finished goods, or providing important planning, coordination, supervising, or staff functions that
enables the organization to function effectively and efficiently.

CONTEXTUAL PERFORMANCE

Contextual performance is defined as those behaviors’ that contributes to the organization’s

effectiveness by providing good environment in which task performance can occur. Contextual
performance includes behaviors’ such as the following

Persisting with enthusiasm and exerting extra effort as necessary to complete one’s own task activity
successfully ( e.g. being punctual and rarely absent, expending extra effort on job)

Volunteering to carry out task activities that are not formally part of job ( e.g. suggesting
organizational improvement, making constructive suggestions)

Helping and cooperating with others (e.g. assisting, helping coworkers)

Following organizational rules and procedures

Endorsing, supporting, and defending organizational objectives.

Both task and contextual performance are important dimensions to take into account in
performance management system. Many organizations now realize that there is need to focus on
both task and contextual performance because organization can not function properly without a
minimum dose of positive contextual behavior on the part of all employees.
Task performance Contextual performance

Varies across jobs fairly similar across jobs

Likely to be role prescribed not likely to be role prescribed

Antecedents: abilities and skills antecedent: personality

Above are main differences between task and contextual performance. First task performance varies
across jobs which mean task performed by HR manager must be different by the task preformed by
LINE MANAGER. On the other hand contextual performance is fairly similar across functional and
hierarchical level.

Second task performance is likely to be role prescribed, meaning that task performance is usually
included one’s job description. On the other hand contextual performance behaviors’ are usually not
role prescribed and instead are typically expected without making them explicit.

Finally task performance is mainly influenced by abilities and skills (cognitive and physical), whereas
contextual performance is mainly influenced by personality (conscientiousness).

There are main reasons that why task performance is included in performance management system

1 global competition is raising the level of effort required of employees.

2 issues of global competition is need to offer out siding from customer service. Contextual
performance behaviors’ can make a profound impact on customer service. Contextual performance
can make an impact on customer satisfaction.

3 many organizations are forming employees into teams. Although some teams are not permanent
because they are created to complete specific short-term tasks. Interpersonal is a key determinate
of team effectiveness. Thus contextual performance becomes relevant to team work.

4 including both task and contextual performance in the performance management system provide
additional benefits: employees being rated are more satisfied with the system and also believe the
system is fairer if contextual performance is measured in addition to task performance.

5 when supervisors evaluate performance its difficult for them to ignore the contextual dimension,
even through the evaluation from they are using may not include any specific question about
contextual performance. Since contextual performance has an impact on rating on overall
performance even when only task performance is measured, it makes sense to include contextual
performance more explicitly.

In short performance includes both task and contextual dimension. Both should be considered
because both dimensions contribute to organizational success. In case of both task and contextual
performance, each behavior should be defined clearly so that employee understands what is
expected of them. Organization that includes both task and contextual performance are likely to be
more successful.

JOB PERFORMANCE IN CONTEXT

A performer Employees That

In a given in certain produce
Individual
behaviors various
or team Situation
results

TARIT BEHAVIOUR RESULTS

APPROCHES TO MEASURING PERFORMANCE

TRAIT APPROCH

Emphasizes on individual trait of employees.

BEHAVIOUR APPROCH

Emphasizes hoe employee do the job.

RESULTS APPROCH

Emphasizes what employee produce.

Defining Performance and Choosing a Measurement Approach

Summary

Performance is about behaviours or what employees do, and not about what employees produce or
the outcomes of their work. However, performance management systems typically include the
measurement both of behaviours (how the work is done) and of results (the outcomes of one’s
work). Performance is evaluative (i.e., we judge it based on whether it helps advance or hinder
organisational goals) and multidimensional (i.e., many behaviours are needed to describe an
employee’s performance).

Performance is determined by a combination of declarative knowledge (i.e., information),

procedural knowledge (i.e., know-how), and motivation (willingness to perform). Thus

Performance = Declarative knowledge × Procedural knowledge × Motivation

If any of the three determinants of performance has a very small value (e.g., very little procedural
knowledge), then performance will have a low level also. All three determinants of performance
must be present for performance to reach satisfactory (and better) levels.

There are two important facets of performance: task and contextual. Task performance refers to the
specific activities required by one’s job. Contextual performance refers to the activities required to
be a good ‘organisational citizen’(i.e., helping co-workers, supporting company initiatives, etc.). Both
task and contextual performance are needed for organisational success, and both should be included
in a performance management system.

Employees’ performance does not take place in a vacuum. Employees are in a specific situation,
engaging in specific behaviours that produce certain results. An emphasis on the employee leads to
a trait-based approach to assessing performance. An emphasis on behaviours leads to a behaviour-
based approach to assessing performance. An emphasis on results leads to a results-based approach
to assessing performance.

A traits approach emphasises individual traits that remain fairly stable throughout an individual’s
lifespan (e.g., cognitive abilities or personality). This approach may be most appropriate when an
organisation anticipates drastic structural changes. A major disadvantage of this approach is that
traits are not under the control of individuals, and, even when individuals possess a specific positive

trait (e.g., high intelligence), this does not necessarily mean that the employee will engage in
productive behaviours leading to desired results.

A behaviour approach emphasises what employees do (i.e., how work is done). This approach is
most appropriate when (a) it will take a long time to achieve the desired outcomes, (b) the link
between behaviours and results is not obvious, (c) outcomes are distant in the future, or (d) poor
results are due to causes beyond the employee’s control. A behaviour approach may not be the best
choice if most of these conditions are not present. In most situations, however, the inclusion of at
least some behaviour-based measures is beneficial.

A results approach emphasises the outcomes and results produced by employees. This is basically a
bottom-line approach that is not concerned about how the work is done as long as certain specific
results are obtained. This approach is most appropriate when (a) workers are skilled in the needed
behaviours, (b) behaviours and results are obviously related, (c) results show consistent
improvement over time, or (d) there are many ways to do the job right. An emphasis on results can
be beneficial because it could encourage employees to achieve the desired outcomes in creative and
innovative ways. On the other hand, measuring only results is typically not welcomed by employees,
even in types of jobs for which the expected result is very clear (e.g., as in the case of sales jobs such
as at The Limited).

5 Measuring Results and Behaviours

Summary
In measuring performance adopting a results approach, the first step is to identify accountabilities.
These are the various areas in which an individual is expected to focus.

Once all key accountabilities are identified, the second step is to set objectives for each. Objectives
should be (a) specific and clear, (b) challenging, (c) agreed upon, (d) significant, (e) prioritised, (f)

bound by time, (g) achievable, (h) fully communicated, (i) flexible, and (j) limited in number.

Finally, the third step involves determining performance standards. These are yardsticks designed to
help understand to what extent the objective has been achieved. In creating standards, we must
consider the quality, quantity and time dimensions. Good standards are: (a) related to the position;
(b) concrete, specific, and measurable; (c) practical to measure; (d) meaningful; (e) realistic and
achievable; and (f) reviewed regularly.

In measuring performance adopting a behaviour approach, the first step involves identifying
competencies. Competencies are measurable clusters of KSAs critical in determining how results will
be achieved. Examples of competencies are customer service, written or oral communication,
creative thinking and dependability.

The second step involves identifying indicators allowing us to understand the extent to which each
individual possesses the competency in question. These indicators are behavioural manifestations of
the underlying (unobservable) competency.

In describing competencies, one must first clearly define them, and then describe behavioural
indicators showing the presence of the competencies, describe behavioural indicators showing the
absence of the competencies, and list suggestions for developing the competencies.

Once the indicators are identified, the third step includes choosing an appropriate measurement
system, and there are two choices: comparative and absolute.

Comparative systems base the measurement on comparing employees with each other, and include
simple rank order, alternation rank order, paired comparisons and forced distribution. Comparative
systems are easy to explain, and the resulting data are easy to interpret, thus facilitating
administrative decisions. On the other hand, employees are usually compared with each other in
terms of one overall single category rather than specific behaviours or competencies. This produces
less useful feedback for employees to use for future improvement.

Absolute systems include evaluations of employees’ performance without making direct reference
to other employees. Such systems include essays, behaviour checklists, critical incidents and graphic
rating scales. Essays are difficult to quantify but produce useful and often detailed feedback.
Behaviour checklists are easy to use and understand, but the scale points used are often arbitrary,
and

we cannot assume that a one-point difference has the same meaning along the entire scale (i.e., the
difference between employees scoring 5 and 4 may not have the same meaning as the difference
between employees scoring 3 and 2). Critical incidents allow supervisors to focus on actual job
behaviour rather than on vaguely defined traits, but gathering critical incident data may be quite
time consuming. Graphic rating scales are arguably the most frequently used measurement method
to assess performance. For this type of measurement to be most useful, the meaning of each
response category should be clear, the individual interpreting the ratings (e.g., HR manager) should
be able to tell clearly what response was intended, and the performance dimension being rated
should be clearly defined for the rater.

APPROCHES TO MEASURE PERFORMANCE

Employee does not perform at vacuum, but employee work in an organization context, engaging in
certain behaviors that produce certain results. The same employee may behave differently

MOTIVES, EVPECTANCIES OF SOURCES AND VALUES AS DETERMINANTS OF PERFORMANCE

From the book human motivation page# 516

Atkinson (1964) and wiener (1980)

Lewin’s model of motivated behavior identified three variables very similar to those used by
behaviors like Hull and Spence, although Lewin defined them in phenomenological or cognitive
terms.

He spoke the need or tension which is equal to drive strength properties of goal object which is
equal to incentive value and psychological distance, which is a kind of phenomenological equivalent
of the skill or habit variable in terms of how easy or hard to achieve the objective.
The initial formula read as follow

T=MXPXI

Where

T is the tendency to achieve success

M is multiplicative function of the motive to achieve success

P is expectancy or probability of success

I is incentive value of success

It was assumed that the incentive value of success could be defined as 1 _ P which means more
difficult task the less probability of successuding it.

Two types of such beliefs have been studied. One type has to do efficacy of effort in bringing about a
consequence through a particular response in a given situation.

The other type has to do generalize confidence people have that they can bring about outcomes
through activities of any kind.

So we can say that a belief in importance of effort facilitates performance.

TRAIT APPROCH

From the book Assessment of personality and Behaviour problems by Roy P Martin

Traits are an implicit part of most measurement procedures in applied psychology. There are many
interperatations of trait sources. Differences in interpreatations have profound societal, scientific,
and clinical implications. It is also assumed that traits defined by an assessment process are more
less valid reflection of the behaviours of the person being described.

Handbook of work and organizational psychology: Personnel psychology page #15