Management 623: Compensation

1
Management 623Compensation Performance
Management

• Session 13
• March 2nd 2006
• Dr. J. Bruce Prince

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Agenda

• Performance Management Appraisal Introduction
• Discuss handout reading
• Performance Management and Appraisal
• Discuss short case handout
• Problems in Appraisal at Peak Power

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Coming Up

• Tuesday, March 7th
• Morgan Stanley One-Firm Firm case discussion
• Download this from the HBSP website sent by
  email
• Case Critique Opportunity Questions are on
  website
• There will be 3 more case critique opportunities
  you are required to do two out of these four
  opportunities.
• Thursday, March 9th
• Designing External Equity Reading (handed out to
  groups at CopyCo)
• Handout case for discussion (possibility)
• Thursday, March 14th
• Mid-Term Exam

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Morgan Stanley One-Firm Firm Case

• Done in 2-3 person teams 2-3 pages
• Assume that you are a consultant to the 15-person
  task force
• Case Critique Questions
• The new appraisal and performance management
  system must be aligned with the new strategy
  What behaviors should the new system motivation?
• Present a performance management appraisal
  system that will support this behavior.

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Good Case Critiques

• Responsive to the questions provided
• Sensitive to key facts from the case
• Draws on course-related concepts in an
  appropriate way
• Written in a clear, professional style
• 2-3 pages in length
• Can add an figure or table as an exhibit

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Performance Management Key Elements

• Clear performance requirements up-front
• Performance contract requirements assessment
  measures clear from the start (goal setting
  relevant)
• Feedback, coaching mutual goal-setting
• Continuous performance feedback planning
• Provide resources remove performance obstacles
• Future performance improvement focus
• Versus sole focus on evaluating past performance
• Consistent (with expectations) evaluation
  rewards
• Skill development opportunities
• On-the-job growth opportunity off-the-job
  training

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Effective Appraisal System Requirements

• Relevance
• Links between job demands ? performance measures
  ? larger organizational goals
• Sensitivity
• Distinguish different performance levels
• Purpose Administrative decisions vs. development
• Reliability Forms ? Consistent evaluation
• Acceptability Users must see it as useful
• Practicality Fit with larger work demands

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Peak Power Case

• What is wrong with Peak Powers performance
  management/appraisal system?
• Outline your suggestions for improving the
  Performance Management/Appraisal system.
• How will you get buy-in (acceptability) from
  line managers?

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Appraisal System Design Choices

• Content to be measured
• Job strategy relatedness is key
• Behaviors (vs. traits) results/outcome goals
• Both-or multiple methods-is often the best choice
• Rating formats Behavioral vs. Results
• Rating scale (of a attribute or behavior), essay,
  ranking (forced choice), critical incidents,
  BARS, MBO, work planning review
• Who measures (beyond the supervisor) 360-degree?
• Peers, customers, managers, subordinates, self

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Design Choices (continued)

• Training able willing to use
• Rater error, content scale clarity, feedback
  skill
• Future performance improvement focus
• Initial goal setting/work planning process
• Feedback throughout the process
• Evaluation against clear standards
• Future improvement-focused discussion
• Start goal setting/work planning process

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360-Degree Appraisal Systems 1

• Growing in popularity one-third use it
• Changing work context gives boss less info
• Different sources have unique perf. Info
• Customers, peers, subordinates, managers, self
• 360 systems integrate all part into a larger
  view
• Administratively intense expensive
• Needs integrator to bring it into a whole
• Protections for confidentiality of replies

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360-Degree Appraisal Systems 2

• What are the challenges?
• Administrative burden
• Getting valid peer and subordinate data
• Often counter-culturedeal with resistance
• Managers role becomes more important
• Integrate diverse inputs in fair way
• Coach Help interpret extrapolate to future
  perf.
• Sell why peer input is useful (team rewards help)

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Is Forced Choice Good?

• GEs vitality curve
• top 20, vital 70, low 10
• Growing in use see /- on pages 32-3
• Invalidity problem is worse
• Research is fairly negative but limited
• How else do you get raters to differentiate?
• Commitment building validity involvement
• Evaluate reward them for doing it right
• Stop rewarding the opposite behavior