Chapter 8: Performance Management
Performance Management: The use of performance data to effect organizational culture, systems, and
processes, set goals, allocate resource, affect policies and programs, and share results.
To make performance management work requires several characteristics:
Performance objectives: This is a critical aspect of a company’s strategy that it has to meet;
otherwise the company will result in a lower customer satisfaction and other less desirable
Performance goals: Achievable and realistic targets to which actual outcomes can be compared.
Performance measurement: Measuring the process of achieving preset goals, including the
efficiency of transforming resources to goods and services, their quality, client satisfaction,
quality of decision making, and efficiency and effectiveness of management contribution
Output measures: quantity and quality assessments.
Outcome measures: results of programs compared to preset targets.
Performance appraisal: The process by which organizations evaluate employee job performance.
Halo effect: occurs when an evaluation allows some information to disproportionately affect
the final evaluation
Error of central tendency: An error in rating employees that consists of evaluating employees as
neither good or poor performers even when some employees perform exceptionally well or
Leniency bias: A tendency to rate employees higher than their performance j