Study Notes: Chapter 10.docx

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17 Apr 2012
Chapter 10: Performance Management
MHR Notes
Performance Management the process encompassing all activities related to improving employee
performance, productivity and effectiveness
- includes goal setting, pay for performance, training and development, career
management and disciplinary action
5 Performance Management Steps
1. Defining performance expectations and goals
2. Providing ongoing feedback and coaching
3. Conducting performance appraisal and evaluation
4. Determining performance rewards/consequences
5. Conducting development and career opportunities discussion
Step One: Defining performance expectations and goals
Job descriptions are often insufficient to clarify what employees are expected to do and how their duties relate
to strategic objectives. To clarify expectations, measurable standards related to strategic objectives should be
There are several ways to measure performance. The first method is a graphic rating scale where numbers are
listed regarding attributes required by qualities (eg. John Doe gets a 3 in performance). The second method is a
forced distribution method where predetermined percentages of employees are placed in various
performance categories. Think of it as a bell curve, where the top employees are on the right of the curve, the
average ones in the middle (or the top) of the curve and the below average ones on the left. Another way to
measure performance is using a behaviourally anchored rating scale (BARS). BARS can (1) generate critical
incidents and develop dimensions, meaning specify effective and ineffective performance then cluster the
incidents into a smaller set of dimensions, (2) Reallocate incidents, meaning group incidents into the same
clusters and retain incidents similarly assigned twice and (3) scale the incidents. Basically, BARS is an
appraisal method that aims to combine the benefits of narratives, critical incidents, and quantified ratings by
anchoring a quantified scale with specific narrative examples of good and poor performance. The advantages
of BARS include accuracy, clear standards, feedback assistance to managers and consistency. The major
disadvantage of this appraisal method is that it is time consuming. A fourth method to measure performance
is through management by objectives (MBO’s). MBO’s involve setting specific measurable goals with each
employee and then periodically reviewing the progress made. The six main steps include (1) set the
organization’s goals, (2) set departmental goals, (3) discuss departmental goals, (4) define expected results, (5)
performance reviews: measure the results, (6) provide feedback.
There are several problems with performance measures. They include the inadequate reliability and validity
and rating scale problems include unclear performance standards, halo effect, central tendency,
strictness/leniency, appraisal bias eg. sex, race, age, recency effect, similar to me bias and more.
Unclear performance standards an appraisal scale that is too open to interpretation of traits and standards
Halo effect in performance appraisal, the problem that occurs when a supervisor’s rating of an employee on
one trait biases the rating of that person on other traits
Central Tendency a tendency to rate all employees in the middle of the scale
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