1

MANAGING AND
EVALUATING
PERFORMANCE
Week 3 (cont.)
________________________
Dr. Teal McAteer-Early




















2
Performance Management
HR system that includes processes used
to identify, encourage, measure, evaluate,
improve, and reward employee
performance

Related to terms such as performance
appraisal, performance evaluation, etc.
Although Performance Management is often
considered to be a broader term
3
Common Purposes of
Performance Appraisal
1. Administrative to make employment
decisions
Promotion, termination
Trainingwho to train; training needs in general
Compensationmerit increases
Legal justification for these decisions

2. Feedback and Development
Point out strengths and weaknesses
Identify corrective action to address weaknesses
Motivation
4
The Criterion Problem
Difficulties involved in determining what
performance is and how to measure it

Ultimate Criterion
Includes everything that ultimately defines
success on the job
Is a construct conceptual in nature

Operational Criterion
The aspects of performance that are actually
measured
5
The Criterion Problem
Criterion Deficiency
When performance standards fail to capture
the full range of employees responsibilities
E.g., focus on sale revenue but ignore customer
service

Criterion Contamination
When factors outside of employees control
influence his/her performance
E.g., machine breakdowns; differences in sales
regions
6
Potential Performance Criteria
Output
Units produced, items sold, $ sales, commission
earnings, etc.

Quality measures
# of errors, # of errors detected, #
complaints/grievances, # commendations, rates of
scrap/breakage

Lost time
Absences (unexcused), Lateness/tardiness,
Turnover (withdrawal) from training or job,
transfers due to inadequate performance
7
Potential Performance Criteria
Ratings
Performance appraisals by trainers,
supervisors, peers, self
Performance in work samples, simulations,
etc.

Others
Counterproductive behaviours
Safety records, accidents
Citizenship (voluntary) behaviours

8
The Appraisal Process
9
Legal Considerations in PA
Performance standards should be job-
related
Based on job analysis (content validity)
Employees must be aware of performance
standards
Managers must be able to observe the
behaviour they are rating
Raters should be trained
Ratings should be valid / bias-free
Reasonable time frame for performance
improvement
10
Factors Affecting Legal
Decisions
McShane (1989)
In cases involving dismissal due to poor
performance, Canadian courts may consider
the following:
1. Cause of poor performance
Within or outside of employee control

2. Effect of poor performance on employer
Organizations may be required to show adverse
effect of poor performance
If found, opportunity must be provided to improve
performance
11
Factors Affecting Legal
Decisions
McShane (1989)
3. Link between job duties and performance
standards must exist
Manager was fired for poor interpersonal
skills court ruled in her favour because job
description did not include interpersonal
skills as requirement

4. Feedback / warnings must be provided
before employee can be dismissed for
poor performance
12
Factors Affecting Legal
Decisions
McShane (1989)
5. Credibility of appraisal source
Source of appraisal must be considered
balanced and detached i.e., fair and
unbiased

6. Contrived appraisals
Courts tend to rule against appraisals that
are done just to document poor performance
E.g., court ruled in favour of fired TD Bank
employee because a management memo
requested that the next appraisal contain
negative comments
13
Importance Elements of PA
In general, Performance Appraisal
systems like selection systems should
be:

Valid
Reliable
Free from bias
Practical

Fairness is also critical
14
3 Dimensions of Fairness /
Justice
1. Distributive justice
Perceived fairness of the distribution of the
rewards

2. Procedural justice
Perceived fairness of the procedure/system
used
Voice

3. Interactional justice
Perceived fairness of the relationship with
the rater(s); sincerity, etc.
15
Now some considerations about
choosing the right instrument to
increase the likelihood of the PA
being valid, reliable, and free from
bias
16
Considerations re: PA Methods
Absolute judgments vs Relative judgments

Absolute
Compare employee to pre-established criteria /
dimensions

Relative
Compare employee to other employees - ranking
17
Considerations re: PA Methods
What do we want to measure: traits,
outcomes, or behaviours??

Traits (personality)
E.g., loyalty, dependability, initiative
Problems
too ambiguous
susceptible to bias
not legally defensible
focuses on person rather than performance

18
Considerations re: PA Methods
Outcomes objective criteria
E.g., sales revenue, # of calls taken, # of
complaints
Problems influenced by factors beyond
employee control

Behaviours
E.g., works well with others
Focuses on what employees do what
they should start, stop, and continue doing
2 common instrument types: BARS, BOS

19
BARS:
Behaviourally Anchored Rating
Scales
Format was developed to due lack of
standardization (and reliability) across
raters
Goal was to help the rater rate
Performance standards are concrete
Each standard consists of a number of
specific, behavioural anchors on the rating
form itself
The behavioural anchors cover the range of
performance from excellent to poor
behaviour
Anchors are worded in the form of
expecations see e.g.
20
21
BOS: Behavioural Observation
Scales
Focus on behaviour
Based on job analysis often critical
incident technique
Performance ratings are based on the
frequency of use criterion
How often employee engages in behaviour
Using a 5-point frequency scale


22
Example of a BOS Criterion

I. Overcoming Resistance to Change
1. Provides employees with information about
organizational change
Almost never 1 2 3 4 5 Almost
always
2. Addresses/responds to employee concerns and
input regarding change
Almost never 1 2 3 4 5 Almost
always
23
Developing
Behavioural Observation Scales (BOS)
1. Collect critical incidents

2. Group similar incidents into a behavioural
item
E.g., 2 critical incidents
(1) Describes details of organizational change to subordinates
(2) Explains why the change is necessary
Could be grouped into a behavioural item Provides
employees with information about organizational
change

2 more critical incidents
(1) Listens to employee concerns
(2) Asks employee for help in making the change work
Could be grouped into a behavioural item Addresses
employee concerns and input regarding change
24
Developing
Behavioural Observation Scales (BOS)
3. Similar behavioural items are grouped
into a meaningful behavioural criterion
2 behavioural items
1. Provides employees with information about
organizational change
2. Addresses/responds to employee concerns
and input regarding change

Combine to form the behavioural (BOS)
criterion OVERCOMING RESISTANCE TO
CHANGE

The PA instrument is created by attaching a 5-
point rating scale to each behavioural item
25
Example of a BOS Criterion

I. Overcoming Resistance to Change
1. Provides employees with information about
organizational change
Almost never 1 2 3 4 5 Almost always

2. Addresses/responds to employee concerns and
input regarding change
Almost never 1 2 3 4 5 Almost always
26
360-degree PA
Subordinate
ratings
Self
assessment
Customer
ratings
Peer
ratings
Supervisor
ratings
Target
Employee
27
360-degree PA
Benefits
More complete picture of job
performance
Different stakeholders may observe
different behaviours
Target may behave differently with different
stakeholders
Reduced bias because feedback comes
from more than 1 person
Feedback from peers and subordinates
useful for development purposes
28
360-degree PA
Limitations
Complex and time consuming
Potential for conflicting opinions
Same behaviours may be seen as positive by one
group and negative by another group
E.g., manager who encourages participative
decision-making
Peer, subordinate, and self evaluations not
useful for administrative decisions (e.g.,
raises)
Peer and subordinate evaluations may
jeopardize coworker relations
29
Questions / Comments ??

30
Factors Distorting PA Ratings
Halo effect / error
Leniency / Strictness error
Central tendency
Similarity error
Recency effect
Contrast effect
Matthew effect
31
Factors Distorting PA Ratings
Halo effect
Tendency to provide similar ratings across different
PA dimensions

Leniency / Strictness error
Leniency when ratings are restricted to high part of
scale
Strictness when ratings are restricted to low part of
scale

Central tendency
When raters avoid extreme ratings and restrict ratings
to middle of scale
32
Factors Distorting PA Ratings
Similarity (similar-to-me) error
Tendency of rater to inflate ratings when they have
something in common with the target

Recency effect
Ratings are based largely on employees most recent
behaviour

Contrast effect
When an employees evaluation is biased upward or
downward because of a comparison with another
employee who was recently evaluated
33
Factors Distorting PA Ratings
Matthew effect
Tendency of raters to use previous
evaluations as an anchor for subsequent
evaluations
i.e., Employees receive the same appraisal
results, year in and year out
Like a self-fulfilling prophecy -- if they have
done well, they will continue to do well; if they
have done poorly, they will continue to do
poorly

"For everyone who has will be given more,
and he will have an abundance. Whoever
does not have, even what he has will be
taken from him.
(Matt. 25: 29)
34
Reasons PA can fail
1. Rater lacks information re: an employees
actual performance
2. Performance standards are unclear
3. Employee does not receive on-going feedback
4. Rater does not take PA seriously; not prepared
for PA review; lacks PA skills
5. Review meeting is ineffective feedback poorly
delivered and/or received
6. Insufficient resources to reward performance
7. Lack of attention to employee development
35
Summary of Recommendations
1. Based on job analysis
2. Focus on behaviour (use BOS)
3. Top management must prioritize PA
4. Use multiple raters
5. Provide raters with extensive training
6. Ensure system is fair
7. Make sure performance management is
on-going
36
Comments / Questions