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Chapter 09 Performance Management

McGraw-Hill/Irwin

Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Questions This Chapter Will Help Managers Answer


What steps can I, as a manager, take to make the performance management process more relevant and acceptable to those who will be affected by it? How can we best fit our approach to performance management with the strategic direction of our dept. and business?

Should managers and nonmanagers be appraised from multiple perspectives for example, by those above, by those below, by coequals, and by customers?
What strategy should we use to train raters at all levels in the mechanics of performance management and in the art of giving feedback? What would an effective performance management process look like?
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Managing For Maximum Performance


Performance management is a kind of compassone that indicates actual direction as well as desired direction

Many managers incorrectly equate it with performance appraisalan exercise they typically do once a year to identify and discuss job-relevant strengths and weaknesses of individuals or work teams
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The Process of Performance Management


1. Define performance 2. Facilitate performance 3. Encourage performance

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Defining Performance Key Elements

Goals Measures Assessment

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Encouraging Performance

1. Provide a sufficient amount of rewards that employees really value 2. In a timely 3. Fair manner

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What is Fairness? Important Practices


Voice Collect employee input through surveys or interviews Consistency Ensure that all employees are treated consistently when seeking input and communicating about the process for administering rewards Relevance Include rewards that employees really care about Communication Explain clearly the rules and logic of the rewards process
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Figure 9-1 Elements of a Performance Management System

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Figure 9-2 Purposes of Performance Appraisal Systems

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Requirements of Effective Appraisal Systems


Legally and scientifically, the key requirements of any appraisal system are
Relevance Sensitivity Reliability

In the context of ongoing operations, the key requirements are


Acceptability Practicality

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Relevance

Implies that there are

1. Clear links between the performance standards for a particular job and organizational objectives, and 2. Clear links between the critical job elements identified through a job analysis and the dimensions to be rated on an appraisal form

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Performance Standards
translate job requirements into levels of acceptable or unacceptable employee behavior. They play a critical role in the job analysis-performance appraisal linkage.

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Figure 9-3 Relationship of Performance Standards to Job Analysis and Performance Appraisal

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Rating Methods or Formats


Relative Rating Systems
Comparing the performance of employees to that of other employees

Absolute Rating Systems


Evaluating each employee in terms of performance standards without reference to others

Results-Oriented Systems
Emphasis is on what employee produces
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Ranking

Simple ranking requires only that a rater order all employees from highest to lowest, from best employee to worst employee. Alternation ranking requires that a rater initially list all employees on a sheet of paper. From this list he/she chooses the best employee (No. 1), then the worst employee (No. n), then the second best (no. 2), then the second worst (No. n -1), and so forth, alternating from the top to the bottom of the list until all employees have been ranked.

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Behaviorally Anchored Rating Scales


The major advantage of BARS is that they define the dimensions to be rated in behavioral terms and use critical incidents to describe various levels of performance

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Management By Objectives (MBO)

A process of managing that relies on goal-setting to establish objectives for the organization as a whole, for each department, for each manager within each department, and for each employee

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Establishing Objectives in MBO What the Key People Involved Should Do


Meet to agree on the major objectives for a given period of time Develop plans for how and when the objectives will be accomplished Agree on the measurement tools for determining whether the objectives have been met

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Table 91: Advantages and Disadvantages of Alternative Appraisal Methods

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Work Planning and Review


Work planning and review is similar to MBO; however, it places greater emphasis on the periodic review of work plans by both supervisor and subordinate in order to identify goals attained, problems encountered, and the need for training

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Who Should Evaluate Performance? Possible Raters


The immediate supervisor Peers Subordinates Self-appraisal Customers served Computers

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Multi-Rater or 360-Degree Feedback


Using input from managers, subordinates, peers, and customers to provide a perspective on performance from all angles

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Types of Teams
Work or Service Teams
Intact teams engaged on routine tasks

Project Teams
Teams assembled for a specific purpose and expected to disband once their task is completed

Network Teams
Teams that include membership not constrained by time/space and membership is not limited by organizational boundaries
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Types of Appraisal Errors


Halo error raters assign their ratings on the basis
of global (good or bad) impressions of ratees

Contrast error rater compares several


employees to one another rather than to an objective standard of performance

Recency error rater assigns his/her ratings on


the basis of the employees most recent performance

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Frame-of-reference training
Of the many types of rater training programs available today, frame-of-reference training (FOR) is the most effective at improving the accuracy of performance appraisals

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Table 9-3 Supervisory Activities Before, During, and After Performance Feedback Interviews

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Key Terms Discussed in the Chapter


Performance management Performance appraisal Performance facilitation Performance encouragement Relevance Performance standards Sensitivity Reliability Acceptability Practicality Applicant group Behavior-oriented rating methods Relative rating systems Absolute rating systems Results-oriented rating systems Simple ranking Alternation ranking Paired comparisons Forced distribution

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Key Terms (contd.)


Severity Central tendency Likert method of summed ratings Critical incidents Graphic rating scales Behaviorally anchored rating scales (BARS) Management by objectives (MBO) Leniency Work planning and review 360-degree feedback Halo error Contrast error Recency error Active listening Destructive criticism Frame-of-reference training Narrative essay

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