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Chapter 10

Chapter 10 BU354.docx

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John Coffey

BU354 Chapter 10 – Performance Management Week 8 The Strategic Importance of Performance Management -Achieving strategic objectives requires employee productivity -Better performance management represents a largely untapped opportunity to improve company profitability -Performance management- the process encompassing all activities related to improving employee performance, productivity, and effectiveness -Performance management includes goal setting, pay for performance, training and development, career management, and disciplinary action -Must provide an integrated network of procedures across the organization that will influence all work behaviour -Three main purposes: it aligns employee actions with strategic goals, it is a vehicle for culture change, and it provides inputs into other HR systems such as development and remuneration The Performance Management Process 1. Defining performance expectations and goals 2. Providing ongoing feedback and coaching 3. Conducting performance appraisal and evaluation discussions 4. Determining performance rewards/consequences 5. Conducting development and career opportunities discussions Step 1: Defining Performance Expectations -Task performance- an individual’s direct contribution to their job related processes -Focusing on tasks means that performance expectations are grounded in realistic job demands and align with the organization’s strategic objectives and implementation plans -Contextual performance is evaluated as a second factor -Contextual performance – an individual’s indirect contribution to the organization by improving the organizational, social, and psychological behaviours that contribute to organizational effectiveness beyond those specified for the job -Employees require much more clarification of their performance expectations and how these contribute to the organization’s overall results -The performance management process cannot be separated from performance measurement -In global companies, performance appraisal criteria may need to be modified to be consistent with cultural norms and values Step 2: Providing Ongoing Coaching and Feedback -It is important to have open two-way communication, and both the employee and the manager need to check in frequently throughout the performance management process to talk about progression toward goals -Some employees are responsible for monitoring their own performance and asking for help – this promotes employee ownership and control over the process Step 3: Performance Appraisal and Evaluation Discussion Formal Appraisal Methods Graphic Rating Scale -Graphic rating scale – a scale that lists a number of traits and a range of performance for each. The employee is then rated by identifying the score that best describes his or her level of performance for each trait BU354 Chapter 10 – Performance Management Week 8 Alternation Ranking Method -Alternation ranking method- ranking employees from best to worst on a particular trait -First, list all employees to be rated, and then cross out names of any not known well enough to rank Paired Comparison Method -Paired comparison method – ranking employees by making a chart of all possible pairs of employees for each trait and indicating the better employee of the pair Forced Distribution Method -Forced distribution method- predetermined percentages of ratees are placed in various performance categories -Those not on the scale are by default considered the backbone of the workforce and receive moderate compensation increases and development opportunities Critical Incident Method -Critical incident method- keeping a record of uncommonly good or undesirable examples of an employee’s work-related behaviour and reviewing the list with the employee at predetermined times Narrative Forms -See Table 10.1 on p. 270 Behaviourally Anchored Rating Scales (BARS) -Behaviourally anchored rating scales- an appraisal method that aims to combine benefits or narratives, critical incidents, and quantified ratings by anchoring a quantified scale with specific narrative examples of good and poor performance -Usually involve a scale of nine anchors, although seven and give have also been used -They are: a more accurate measure, provide clearer standards, provide feedback, have independent dimensions, provide consistency Management by Objectives (MBO) -Management by objectives- involves setting specific measurable goals with each employee and then periodically reviewing the progress made 1. Set the organization’s goals 2. Set departmental goals 3. Discuss departmental goals 4. Define expected results 5. Performance reviews 6. Provide feedback -Using MBO has three potential problems to avoid: setting unclear, unmeasurable objectives; it is time- consuming, and setting objectives with employees can sometimes turn into a tug of war Mixing the Methods -Most firms combine several appraisal techniques -No one solution is best for all performance management systems -Resource constraints and organizational factors will help determine which of the options is best for each organization The Use of Technology in Performance Appraisals -Computers ultimately improve the overall performance management process, starting with higher completion rates, which can dramatically increase the value of performance management within BU354 Chapter 10 – Performance Management Week 8 organizations of all sizes -Performance management systems provide employees with a clear development path and a better understanding of how their goals are aligned with those of the organization -Succession planning tools provide executives with a clear plan to build a talent pool to meet the organization’s business needs and address potential attrition -Employee performance management has undergone a rapid evolution with the development of powerful, web-based tools -Electronic performance monitoring (EPM) – having supervisors electronically monitor the amount of computerized data an employee is processing per day and thereby his or her performance Performance Appraisal Problems and Solutions -Employees in general tend to be overly optimistic about what their ratings will be, and they also know that their raises, career progress, and peace of mind may well hinge on how they are rated -The majority of organizations view their performance management systems as ineffective Validity and Reliability -Appraisal systems must be based on performance criteria that are valid for the position being rated and must be reliable, in that their application must produce consistent ratings for the same performance -Criteria must be: relevant to the job being appraised, broad enough to cover all aspects of the job requirements, and specific Rating Scale Problems -Seven main problem can undermine appraisal tools like graphic rating sales: unclear standards, the halo effect, central tendency, leniency or strictness, appraisal bias, the recency effect, and the similar-to-me bias -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 o that person on other traits -Central tendency- a tendency to rate all employees in the middle of the scale -Strictness/leniency- the problem that occurs when a supervisor has a tendency to rate all employees either low or high -Appraisal bias – the tendency to allow individual differences, such as age, race, and sex, to affect the appraisal ratings that these employees receive -Recency effect- the rating error that occurs when ratings are based on the employee’s most recent performance rather than on performance throughout the appraisal period -Similar-to-me bias- the tendency to give higher performance ratings to employees who are perceived to be similar to the rater in some way How to Avoid Appraisal Problems -Raters must be familiar with the problems just discussed -Training supervisors on how to eliminate rating errors, can help them avoid these problems – raters are shown videos of jobs being performed and are asked to rate t
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