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Chapter 8 Managing Employees’ Performance

Performance management:
process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals.
Performance management process requires:
Knowing what activities and outputs are desired
Observing whether they occur
Providing feedback to help employees meet expectations
Purposes of Performance Management
Strategic Purpose
Administrative Purpose
Developmental Purpose
Strategic Purpose
means effective performance management helps the organization achieve its business objectives.
Administrative Purpose
refers to the ways in which organizations use the system to provide information for day-to-day decisions about salary, benefits, and recognition programs.
Developmental Purpose
means that it serves as a basis for developing employees’ knowledge and skills.
Criteria for Effective Performance Management
Fit with Strategy
Validity
Reliability
Acceptability
Specific Feedback
Methods for Measuring Performance
Comparative
Quality
Attribute
Results
Behavior
Measuring Performance: Making Comparisons
Simple Ranking
Forced Distribution
Paired Comparison
Simple Ranking
Requires managers to rank employees in their group from the highest performer to the poorest performer.
Forced Distribution
Assigns a certain percentage of employees to each category in a set of categories.
Paired Comparison
Compares each employee with each other employee to establish rankings.
Measuring Performance: Rating Individuals – Attributes
Graphic Rating Scale
Mixed-Standard Scale
Graphic Rating Scale
Lists traits and provides a rating scale for each trait.
The employer uses the scale to indicate the extent to which an employee displays each trait.
Mixed-Standard Scale
Uses several statements describing each trait to produce a final score for that trait.
Measuring Performance: Rating Individuals – Behaviors
Critical-Incident Method
Behaviorally Anchored Rating Scale (BARS)
Behavioral Observation Scale (BOS)
Organizational Behavior Modification (OBM)
Critical-Incident Method
Based on managers’ records of specific examples of the employee acting in ways that are either effective or ineffective.
Employees receive feedback about what they do well and what they do poorly and how they are helping the organization achieve its goals.
Behaviorally Anchored Rating Scale (BARS)
Rates behavior in terms of a scale showing specific statements of behavior that describe different levels of performance.
Behavioral Observation Scale (BOS)
A variation of a BARS which uses all behaviors necessary for effective performance to rate performance at a task.
A BOS also asks the manager to rate the frequency with which the employee has exhibited the behavior during the rating period.
Organizational Behavior Modification (OBM)
A plan for managing the behavior of employees through a formal system of feedback and reinforcement.
Measuring Performance: Measuring Results
Management by Objectives (MBO)
Management by Objectives (MBO)
people at each level of the organization set goals in a process that flows from top to bottom, so that all levels are contributing to the organization’s overall goals.
These goals become the standards for evaluating each employee’s performance.
of total quality management (TQM)
provide methods for performance measurement and management.
360-Degree Performance Appraisal:
performance measurement that combines information from the employees’:
Managers
Peers
Subordinates
Self
Customers
Types of Performance Measurement Rating Errors
Contrast errors
Distributional errors
Rater bias
Contrast errors
the rater compares an individual, not against an objective standard, but against other employees.
Distributional errors
the rater tends to use only one part of a rating scale.
Leniency
Strictness
Central Tendency
Leniency
the reviewer rates everyone near the top
Strictness
the rater favors lower rankings
Central Tendency
the rater puts everyone near the middle of the scale
Rater bias:
raters often let their opinion of one quality color their opinion of others.
Halo error:
when the bias is in a favorable direction. This can mistakenly tell employees they don’t need to improve in any area.
Horns error
when the bias involves negative ratings. This can cause employees to feel frustrated and defensive.
Scheduling Performance Feedback
Performance feedback should be a regular, expected management activity.
Annual feedback is not enough.
Employees should receive feedback so often that they know what the manager will say during their annual performance review.
Preparing for a Feedback Session
Managers should be prepared for each formal feedback session.
Conducting the Feedback Session
During the feedback session, managers can take any of three approaches:
“Tell-and-Sell” – managers tell employees their ratings and then justify those ratings.
“Tell-and-Listen” – managers tell employees their ratings and then let the employees explain their side of the story.
“Problem-Solving” – managers and employees work together to solve performance problems.
Legal
Performance management processes are often scrutinized in cases of discrimination or dismissal.
Ethical
Employee monitoring via electronic devices and computers may raise concerns over employee privacy.
Lawsuits related to performance management usually involve charges of:
Discrimination
Unjust dismissal
legally defensible performance management system includes:
Based on valid job analyses, with requirements for job success clearly communicated to employees.
Performance measurement should evaluate behaviors or results, rather than traits.
Multiple raters (including self-appraisals) should be used.
All performance ratings should be reviewed by upper-level managers.
There should be an appeals mechanism for employees.

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