Establishing the Performance Management System

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Fundamentals of Human Resource Management Eighth
Edition DeCenzo and Robbins
Chapter 10 Establishing the Performance
Management System
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Introduction

• Employees generally see performance evaluations
  as having a direct effect on their work lives.
• The performance management systems need to
  include
• decisions about who should evaluate performance
• what format should be used
• how the results should be utilized

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Performance Management Systems

• Purposes of a Performance Management System
• Feedback - let employees know how well they have
  done and allow for employee input.
• Development identify areas in which employees
  have deficiencies or weaknesses.
• Documentation - to meet legal requirements.

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Performance Management Systems

• Difficulties in Performance Management Systems
• Focus on the individual Discussions of
  performance may elicit strong emotions and may
  generate conflicts when subordinates and
  supervisors do not agree.

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Performance Management Systems

• Difficulties in Performance Management Systems
• Focus on the process Company policies and
  procedures may present barriers to a properly
  functioning appraisal process.
• Additionally, appraisers may be poorly trained.

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Performance Management and EEO

• HRM practices must be bias free, objective and
  job-related.
• Valid performance appraisals are conducted at
  established intervals and are done by trained
  appraisers.

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The Appraisal Process
8
The Appraisal Process

• Establishment of performance standards
• Derived from companys strategic goals.
• Based on job analysis and job description.
• Communication of performance standards to
  employee.

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The Appraisal Process

• Measurement of performance using information
  from
• personal observation
• statistical reports
• oral reports
• written reports
• Comparison of actual performance with standards.

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The Appraisal Process

• Discussion of appraisal with employee.
• Identification of corrective action where
  necessary.
• Immediate action deals with symptoms.
• Basic corrective action deals with causes.

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Appraisal Methods

• Three approaches
• Absolute standards
• Relative standards
• Objectives

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Appraisal Methods

• Evaluating absolute standards
• An employees performance is measured against
  established standards.
• Evaluation is independent of any other employee.

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Appraisal Methods

• Evaluating absolute standards
• Essay Appraisal Appraiser writes narrative
  describing employee performance suggestions.
• Critical Incident Appraisal Based on key
  behavior anecdotes illustrating effective or
  ineffective job performance.

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Appraisal Methods

• Evaluating absolute standards
• Checklist Appraisal Appraiser checks off
  behaviors that apply to the employee.
• Adjective Rating Scale Appraisal Appraiser
  rates employee on a number of job-related
  factors.

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Appraisal Methods

• Evaluating absolute standards
• Forced-Choice Appraisal Appraisers choose from
  sets of statements which appear to be equally
  favorable, the statement which best describes the
  employee.

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Appraisal Methods

• Evaluating absolute standards
• Behaviorally Anchored Rating Scales (BARS)
  Appraiser rates employee on factors which are
  defined by behavioral descriptions illustrating
  various dimensions along each rating scale.

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Appraisal Methods

• Relative standards
• Employees are evaluated by comparing their
  performance to the performance of other
  employees.

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Appraisal Methods

• Relative standards
• Group Order Ranking Employees are placed in a
  classification reflecting their relative
  performance, such as top one-fifth.

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Appraisal Methods

• Relative standards
• Individual Ranking Employees are ranked from
  highest to lowest.
• Paired Comparison
• Each individual is compared to every other.
• Final ranking is based on number of times the
  individual is preferred member in a pair.

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Appraisal Methods

• Using Achieved Outcomes to Evaluate Employees
• Management by Objectives (MBO)
• includes mutual objective setting and evaluation
  based on the attainment of the specific objectives

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Appraisal Methods

• Using Achieved Outcomes to Evaluate Employees
• Common elements in an MBO program are
• goal specificity
• participative decision making
• an explicit time period
• performance feedback
• Effectively increases employee performance and
  organizational productivity.

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Factors that can Distort Appraisals
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Factors that can Distort Appraisals

• Leniency error
• Each evaluator has his/her own value system.
• Some evaluate high (positive leniency) and
  others, low (negative leniency).
• Halo error Evaluator lets an assessment of an
  individual on one trait influence evaluation on
  all traits.

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Factors that can Distort Appraisals

• Similarity error Evaluator rates others in the
  same way that the evaluator perceives him or
  herself.
• Low appraiser motivation Evaluators may be
  reluctant to be accurate if important rewards for
  the employee depend on the results.

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Factors that can Distort Appraisals

• Central tendency The reluctance to use the
  extremes of a rating scale and to adequately
  distinguish among employees being rated.
• Inflationary pressures Pressures for equality
  and fear of retribution for low ratings leads to
  less differentiation among rated employees.
• Inappropriate substitutes for performance
  Effort, enthusiasm, appearance, etc. are less
  relevant for some jobs than others.

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Factors that can Distort Appraisals

• Attribution Theory
• Evaluations are affected based on whether
  someones performance is due to
• internal factors they can control
• external factors which they cannot
• If poor performance is attributed to internal
  control, the judgment is harsher than when it is
  attributed to external control.

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Factors that can Distort Appraisals

• Impression management
• If employee positively influences the
  relationship with the supervisor, he/she is
  likely to receive a higher rating.

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Creating More Effective Performance Management
Systems

• Use Behavior-Based Measures
• Measures based on specific descriptions of
  behavior are more job-related and elicit more
  inter-rater agreement than traits, such as
  loyalty or friendliness.

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Creating More Effective Performance Management
Systems

• Combine Absolute and Relative Standards
• Absolute standards tend to be positively lenient
  relative standards suffer when there is little
  variability.
• Combining the standards tends to offset the
  weaknesses of each.

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Creating More Effective Performance Management
Systems

• Provide Ongoing Feedback
• Expectations and disappointments should be shared
  with employees on a frequent basis.

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Creating More Effective Performance Management
Systems

• Use Multiple Raters
• Increasing the number of raters leads to more
  reliable and valid ratings.
• Use peer evaluations Coworkers offer
  constructive insights and more specific
  evaluations.
• Upward appraisals allow employees to give their
  managers feedback.
• 360-Degree appraisals Supervisors, peers,
  employees, team members, customers and others
  with relevant information evaluate the employee.

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Creating More Effective Performance Management
Systems

• Rate Selectively
• Appraisers only evaluate in those areas about
  which they have sufficient knowledge.
• Appraisers should be organizationally as close as
  possible to the individual being evaluated.
• More effective raters are asked to do the
  appraisals.

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Creating More Effective Performance Management
Systems

• Train Appraisers
• Untrained appraisers who do poor appraisals can
  demoralize employees and increase legal
  liabilities.

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Creating More Effective Performance Management
Systems
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International Performance Appraisal

• Who performs the evaluation?
• Different cultural perspectives and expectations
  between the parent and local country may make
  evaluation difficult.
• Evaluation forms may not be translated
  accurately.
• Quantitative measures may be misleading.

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International Performance Appraisal

• Evaluation Formats
• May make sense to use different forms for
  parent-country nationals and host-country
  nationals.
• Performance criteria for a particular position
  should be modified to fit the overseas position
  and site.
• Include a current expatriates insights as part
  of the evaluation.