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what is performance management

What is performance appraisal

managers ensure that employees’ behavior contributes to org goals

dynamic, continuous process

not the technique of performance appraisal, but rather a strategic process done on a daily basis

A performance appraisal is job performance of an employee is documented and evaluated.


steps in a performance management process

1. define performance outcomes for company vision and department

2. develop employee goals, behavior, and actions to achieve outcomes
define required behavior and job analysis

3. provide support and ongoing performance discussions
implies that it is an ongoing process
deal with issues and support accomplishments

4. evaluate performance
performance appraisal
compare targeted goals and supporting behavior with actual results

5. identity improvements needed

6. provide consequences for performance results


Purpose of performance management

1. strategic purpose
link ee behavior with org goals
help achieve bus objectives

2. administrative purpose
can provide justification for firing people
provides info for day-to-day decisions about salary, benefits, promos, etc.

3. developmental purpose
serves as a basis for developing employees’ knowledge and skills
strengths and weaknesses


What is HR’s role in the performance appraisal process?

1. ensures correct job analysis info

2. designs and implements the perf review system

3. ensures managers have required skills to offer timely, unbiased ratings

4. monitors the process and makes sure documentation is complete and accurate

5. establishes a due process for ees who disagree with ratings
ee can settle dispute within the company
highly recommended so that disputes do not escalate to EEOC

6. maintains records and ensures privacy


In Performance Management, HR must make sure everything is done:

Can hold up in court


effective performance management

contributes to company’s overall competitive advantage
must be given visible support by the CEO and other senior managers


performance managements improves:

ee knowledge about strengths and weaknesses
strategic process
helps orgs strategic initiatives be aligned with ee performance
communication between ee and managers regarding ee’s ability to help or hurt the company be strategic



when performance appraisal measures aspects unrelated to the job



actually assessing good performance



aspects of job performance not being captured by a job appraisal


Methods for measuring performance

Forced Distribution
Paired Comparative
Attribute (Graphic rating scale)
Critical Incident
Behaviorally anchored reading scale (Bars)
Behavioral Observation Scale (Bos)



Simple Ranking
required managers to rank ees in their group from highest performer to poorest performer


Forced Distribution

assignes a certain percentage of employees to each category in a set of categories

creates a cut-throat environment -- certain % gets cut


Paired Comparison

compares each employee with each other employee to establish rankings


Benefits of Measure Performance

easy to make admin decisions
forces people to rank their best and worst employees


Problems for comparative, forced distribution, and pare comparison

can create legal issues (disparate impact)

creates a ‘Fight For It’ / cut-throat culture

generalized people as a good fit or a bad fit with nobody in-between

no individual feedback to why or how the rankings were chosen



ex. graphic rating scale
lists traits and provides a rating scale for each trait, used to indicate extent to which employee displays each trait
allows employers to assess multiple people across multiple dimensions
more behavioral-specific on how to improve performance
add up the points from each rank and compare
most commonly used
used for administrative and developmental purposes
distributel biases/errors - no common ground
not enough behavioral specificity - does not give employee meaning of rank



provides narrative or anecdote of effective or ineffective behavior


critical-incident method

based on managers’ record of specific examples of employees acting in ways that are either effective or ineffective
ees receive feedback about what they do well and what they do poorly as well as how the are helping the org achieve its goals
ex. salesperson at staples selling computers
issue: cannot compare people


Behaviorally Anchored Rating Scale (BARS)

rated behavior in terms of a scale showing specific statements of behavior that describe different levels of performance
adds critical incidents (example behaviors) to attribute rating approach in order to show the rater what a good and poor performance is
best to group with a graphic rating scale


Behavioral Observation Scale (BOS)

variation of BARS which uses all behaviors necessary for effective performance to rate performance at a task
asks the manager to rate frequency in which the ee has exhibited the behavior during a rating period


BARS and BOS Advantages and disadvantages

provides a lot of feedback
ees know exactly what they need to improve on
can still rank ees and make administrative decision
legally defensible

BOS includes frequency in which someone engages in a specific critical incident


Management By Objectives (MBO)

people at each level of the org set goals in a process that flows from top to bottom
all levels are contributing to the orgs overall goals
goals become the standard for evaluating each ees performance
set org goals

ex. Applebees
“We need to make this much $ in sales”
set departmental goals
managers decide how to complete headquarters’ goals
defining expected results (setting individual goals)
managers give waitstaff foal to complete for the night i.e. this $ in sales, push desserts, etc.
conducting periodic performance reviews
providing performance feedback


Who collects job performance information?

1. 360 degree feedback - multi-dimensional
Ask different people to reach different aspects of somebody’s performance
allows ee to be self-aware and accept negative feedback

2. supervisor
most familiar with job performance
direct job authority and decision making

3. self-ratings
identify discrepancies
input, make recommendations and limitations
voice opinions
motivates and engages ees
managers get insight to how someone thinks he/she is doing
ex. office clip showed in class -- “Don’t know”
problem: does not know objective of organization, how/what employee was told to do
policies/product reviews could be unrelated to ee

4. subordinate appraisal
only time to use: when anonymous and does not affect administrative decisions
do not allow disgruntled employees to ‘get back’ at someone
only for developmental purposes

5. peer
helpful for team settings
can create cut-throat environments
ex. Amazon & GE


What are the different types of rating errors?

1. Contrast Errors
rater compares an individual, not against an objective standard. but against other employees
ex. comparing everyone to the star performer when grading papers
can be fixed with a rubric or objective standard of measurement

2. Distributional errors
rater tends to use only one part of a rating scale
central tendency

3. Halo Error
when bias is in favorable direction
Can mistakenly tell employees they do not need to improve in any area
end up generalising performance based on one great trait
nobody is great at everything and you have to distinguish different performance measures

4. Horns Error
when bias involves negative ratings
can cause ees to feel frustrated and defensive
end up giving people all poor ratings because you do not like one particular trait about them


How should managers prepare for a performance feedback session?

1. purpose
find what motivates someone
how to trigger their motivation
make them a better performer/more valuable employee

2. scheduling performance feedback
people should never be surprised -- address critical incidents then and there -- don’t wait

3. regular, expected management activity
annual feedback is not enough
ees should receive feedback so often they know what the manager will say during the performance review

4. preparing for a feedback session
make sure you’re prepared for each formal feedback session
document specific incidents and examples to back up ratings

5. meet in a neutral setting and free of distractions
avoid the power dynamic/ reduce anxiety


What are the principles of effective communication? (6)

1. Focus on Goals

2. Listen as well as talk
give them a voice

3. be honest and positive
back up negative feedback with ways they can improve

4. prevent surprises and prepare for success

5. use specific, concrete examples
identify very explicit examples of critical incidents to back up low ratings
show what they are currently doing and what they should be doing
clarify their role

6. treat employees with respect

Best way:
address issue
give them the opportunity to voice disagreements
identify constraints
offer them training


High ability, low ability, high motivation, low motivation

Chart (sheet)