Lecture 7: Performance Human Resources Management

Dr. Bahareh Assadi

Management
Performance Management
• Today, more than 70 percent of all employees work
in service or knowledge-related jobs.

• Their performance is driven by their skills, attitude,

customer service, computer literacy, etc.—and by
their ability to innovate and drive change by working
through teams.

• These skills must be built over time, and successful

performance management must be focused on
constantly developing these capabilities rather than
ranking them at a moment in time.
 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
The Strategic Importance management, and
disciplinary action.
of Performance
Management
HR by Numbers: Performance Interview Feedback
• Harvard Business Review Survey found:

• 57% of 899 employees said they prefer corrective feedback over praise of recognition.

• 92% of respondents agreed that negative feedback, if delivered appropriate is effective

at improving performance.

• 14.9 % lower turnover rates of employees who received performance review feedback,
when compared with those who received no feedback.

• 50% of high performing employees expect at least one monthly performance meeting –
formal or informal with the boss.

• 53% of high performers (high performing employees) believe that managers meet their
performance feedback expectations.
 Performance Management Process
Step 5: Conduct development and career
opportunity discussions

Step 4: Determine performance

rewards/consequences

Step 3: Conduct performance appraisal and evaluation

discussions

Step 2: Provide ongoing feedback and coaching

Step 1: Define performance expectations

Employee Satisfaction with
Performance Reviews
� Employees are becoming increasingly
dissatisfied with performance
management.

� Research in 2006 found that 71% of

employees felt their organization’s
performance management process was
fair.

� This tumbled to 38% in 2010 and fell

further to 29% in 2013.
 Task Performance
• Direct contribution to job-
related processes.

Contextual Performance
• Indirect contribution to the
organization’s social
responsibility values.

Legal Considerations
Step 1: Defining • correlate performance
expectations to job activities.
Performance Expectations
 oImportant to have open
two-way communication.

oEmployee responsible for

monitoring own
performance and asking
for help.

oManager responsible for

communicating changing
Step 2: Providing Ongoing strategies and objectives if
applicable.
Coaching and Feedback
Step 3: Conduct Performance
Appraisal and Evaluation Discussion

Formal Appraisal Methods:

• Graphic rating scale
• Alternation ranking
• Paired comparison
• Forced distribution
• Critical incident
• Narrative forms
• Behaviourally anchored rating scales
(BARS)
• Management by objectives (MBO)
 Step 3: Conduct 2
Performance Appraisal
and Evaluation Discussion

Graphic Rating Scale

5 3
• A scale that lists a number of
traits and a range of
performance for each.
• The employee is given a rating
that best describes the level of
performance for each trait.
Step 3: Conduct
Performance Appraisal
and Evaluation Discussion
Paired Comparison Method
• For each trait, list all possible
pairs of employees

• For each pair, indicate “+” for

the higher ranked employee, “-”
for the lower ranked

• Rank employees by trait based

on number of “+” scores
Step 3: Conduct Performance Appraisal and
Evaluation Discussion
Forced Distribution Method
• Predetermined percentages of
rates are placed in various
performance categories
• Example:
• 15 percent high performers
• 20 percent high-average
performers
• 30 percent average performers
• 20 percent low-average
performers
• 15 percent low performers
Step 3: Conduct Performance
Appraisal and Evaluation Discussion

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.
 Step 3: Conduct Performance
Appraisal and Evaluation
Discussion

Narrative Forms
• Report of performance
• May take form of performance
improvement plan
Step 3: Conduct Performance Appraisal
and Evaluation Discussion

Behaviourally Anchored
Rating Scales (BARS):
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.
 Behaviourally Anchored Rating Scales
Developing behaviorally anchored rating scales requires 5 steps:

Generate Critical Incidents

• job experts specify effective and ineffective performance
Develop Performance Dimensions
• cluster the incidents into a smaller set of performance dimensions
Reallocate Incidents
• different experts group incidents into same clusters and retain
incidents similarly assigned twice
 Behaviourally Anchored Rating Scales

Scale the incidents

• rate the behaviour described in the incident as to how effectively
or ineffectively it represents performance.

Develop the final instrument

• a subset of the incidents is used as behavioural anchors for each
dimension.
Behaviourally Anchored Rating Scales
(BARS)
Advantages
• a more accurate measure
• clearer standards
• assists in providing feedback
• independent dimensions
• consistency
Disadvantage
• time-consuming
Management by Objectives (MBO)

Step 6: Provide feedback

Step 5: Performance reviews: measure results

Step 4: Define expected results (individual goals)

Step 3: Discuss departmental goals

Step 2: Set departmental goals

Step 1: Set the organization’s goals

 Advantages Disadvantages
Graphic Rating Scale  Simple to use  Standards may be unclear
 Provides a quantitative rating for each  Halo effect, central tendency, leniency
employee.  Bias can be a problem

Alternation Ranking  Simple to use  Can cause disagreements among

 Avoids central tendency and other problems employees and may be unfair if all
with rating scales employees are, in fact, excellent.

Paired Comparison Method  A more precise ranking method that involves  Difficult to sue as employee numbers
multiple traits. increase
 Differences may not be noticeable
enough to rank

Forced Distribution Method  End up with a predetermined number of  Appraisal results depend on the
people in each group. adequacy of the original choice of cut-
off points

Critical Incident Method  Helps specify what is “right” and “wrong”  Difficult to rate or rank employees
about the employee’s performance relative to one another
 Forces Supervisor to evaluate employees on
ongoing basis
 Advantages Disadvantages

Narrative Form  Explicitly states improvement goals and  Employees may take these too
associated outcomes or consequences personally

Behaviourally Anchored Rating  Provides behavioural “anchors”  Difficult to develop

Scale  Very accurate

Management by Objectives  Tied to jointly agreed-upon performance  Risk of unclear performance measures
objectives  Time consuming
 Inflated / deflated goals
 o Enables managers to automate
record keeping and report
writing.

o Provides overall performance

management process.

o Provides employees with clear

development path.

o Advanced reporting capabilities.

Use of Technology in o Electronic performance

Performance Appraisals monitoring (EPM).
 oElectronic Performance
Management:
o Having supervisors
electronically monitor the
amount of computerized
data an employee is
processing per day and
thereby his or her
performance.

Use of Technology in
Performance Appraisals
 Performance Appraisal Problems and Solutions

• Validity and reliability

• Rating scale problems
 Must have consistent ratings for the same
performance
 Relative to the job being praised
 Broad enough to cover all aspects of job
requirements

• Unclear performance • Leniency or strictness

standards • Appraisal bias
• Halo effect • Recency effect
• Central tendency • Similar-to-me bias
 • http://www.youtube
.com/watch?v=gdp4
sPviV74

• http://www.youtube
.com/watch?v=peq0
z49Nw4I

Performance Appraisal Clip

 Performance Appraisal Problems
• Central tendency – if asked to rank employees from 1-7, some supervisor rank only between 3-5. Avoid
other ranks.

• Leniency or strictness – supervisor ranks all employees as either low or high.

• Appraisal bias – allowing individual differences such as age, race, and sex to affect the appraisal ratings of
an employee.

• Recency effect – when ratings are based on the employees most recent performance rather than on
performance throughout the appraisal period.

• Similar-to-me bias – giving employees higher performance ratings based on how similar they are to the
person rating them.

• Halo effect - rating an employee on one trait, then ranking them the same on all trades. An unfriendly
employee will often be rated unsatisfactory in many categories.
Step 3: Conduct Performance
Appraisal and Evaluation
Discussion

Who Should Do the Appraising?

 supervisors
 self
 peers
 committees
 subordinates
 360-degree appraisal (all of the
above)
Step 3: Conduct Performance Appraisal
and Evaluation Discussion

360-Degree Appraisal Advice

• have performance criteria developed by people familiar with the
job
• be clear about who will have access to reports
• provide training for all participants
• ensure confidentiality
• evaluate 360-degree system for fine-tuning
 Ethical
Dilemma
Is it fair to factor in employee
self-ratings in 360 degree
performance appraisal, when
we know that these appraisals
tend to be inflated?
Step 3: Conduct Performance
Appraisal and Evaluation
Discussion
Formal Appraisal Discussions
• supervisor and employee:
• review appraisal, and plan to remedy
deficiencies and reinforce strengths
• types of interviews:
� satisfactory—promotable:
development plans
� satisfactory—not promotable:
maintain performance
� unsatisfactory—correctable: action
plan to correct performance
 Ranking in a Review
Meets Requirements:
Does not require constant supervision
Error rate is acceptable, and all work is completed timely
Forms and required paperwork are completed on time with minimal errors
Exceeds Requirements:
Managers and co-workers have commented on high levels of accuracy and work
productivity
Takes pride in work and strives to improve work performance
All memos, reports, forms and correspondence are completed on time with no errors
Outstanding:
Has less than a 1% error rate on work product
Accuracy is excellent
Quantity of work produced is outstanding
1 • Fails to Achieve Expectations
• Does not fulfill position requirements. Performance improvement plan must be developed and monitored; or termination must be initiated.

• Needs Improvement
2 • Fails to meet one or more of the significant position requirements. Requires improvements in areas noted. Performance improvement plan
must be developed and monitored.

• Fully Achieves Expectations

3 • Reliably performs position duties and responsibilities. Fulfills position requirements, established goals and expectations. Solid performance
results in valuable contributions to unit goals.

• Frequently Exceeds Expectations

4 • Performs beyond expectations in a majority of position duties and responsibilities. Proactively meets and predominantly exceeds position
expectations – making a significant contribution to the overall achievement of unit/department goals.

• Consistently Surpasses Expectations

5 • Works consistently at a superior level in most aspects of position; consistently exceed goals and expectations. Makes an exceptional or
unique contribution to the unit/department.
Performance Rating 1 2 3 4 5

Comments:

 Isabella is a stellar employee. Coworkers look to her as an expert and great

team player. She is always willing to help others.

 Isabella looks for new ways to do things and has great ideas about how to
make things more effective and efficient. She consistently goes above and
beyond what is expected of her. Isabella’s supervisor thinks she has great
potential.
Performance Rating 1 2 3 4 5

Comments:

 Mark sometimes misses deadlines and deliverables he is asked to do.

Mark and his supervisor often need to review his SPD and performance
improvement plan to set clear goals.

 Mark’s performance is looking up and he is trying really hard. He is

beginning to reach out to more people to work more collaboratively and
effectively. He is dedicated to improving his performance, but still has
work to do.
 1. Be direct and specific.
• use objective work
data
2. Do not get personal.
• compare against
standard
3. Encourage the person
to talk.
• use open-ended
questions, listen
How to Conduct the 4. Develop an action
plan.
Interview • agree on future
steps
Step 3: Conduct Performance Appraisal
and Evaluation Discussion
How to Handle Criticism and
Defensive Employees:
1. Recognize that defensive
behaviour is normal.
2. Never attack a person’s
defenses.
3. Postpone action.
4. Recognize human
limitations.
Ensuring the Discussion
Leads to Improved
Performance
1. Notify of unacceptable performance,
explain minimum expectations.
2. Ensure that expectations are reasonable.
3. Explain role of warnings in the process of
establishing just cause.
4. Take prompt corrective measures.
5. Avoid sending mixed messages.
6. Provide a reasonable amount of time for
improvement.
7. Provide support to facilitate improvement.
Step 4: Determine Performance
Rewards/Consequences

o Provide performance awards:

o merit pay, extra pay.

o Important aspects used to

determine the appropriate
reward/consequence:
o achievement of goals
o how the employee
meets the defined
standards.
Step 5: Career Development Discussion

Manager and employee discuss

opportunities for development.

Based on current job requirements or

future development.

Business needs must be balanced with

the employee’s preferences.

What is the future of the employee at

the company?
 • Determine required characteristics
through job analysis.

• Use characteristics in rating

system.

• Ensure rates and raters know

performance standards.

• Use clearly defined dimensions of

performance.

Legal and Ethical Issues in • Avoid abstract trait names.

Performance Management • Use subjective ratings as only one

component.
 100 Best Companies
• Bright Horizons characterizes their employee development program as a company-wide
succession plan, since this awareness enables them to move existing employees into new
roles when positions open.
 This focus enabled Bright Horizons to fill 71% of director roles with internal
candidates in 2012.

• At Mattel, all performance reviews are followed up with a separate meeting to establish
a “Career Action Plan.”

• A “Career Development Workshop” at Intel invites employees at all levels of the

organization to think strategically about their career development, and how to conduct
conversations with managers about their career goals. They have a great succession
planning program.
 Adobe
• Prior to radically reforming its performance management
system, managers at multinational software company Adobe
spent over 80,000 hours per year on traditional performance
evaluations—a process one manager described as soul-crushing.

• Adobe, a company of 11,000 employees, 54 percent of whom

work in North America, tried for five years to modify the
traditional performance management system before abandoning
it as inconsistent with Adobe’s strong culture of teamwork and
collaboration.

• Today, Adobe has a far simpler, but far more effective, system.
Adobe
Either an employee or a manager may request a “check-in” every
three months.
Before the actual meeting occurs, a group of employees N
manager who provide feedback on the employee’s
performance.

The results form the basis of a conversation about performance

improvement, rather than a zero-sum dispute about
compensation or ranking.

The goal is to make coaching and developing a continuous,

collaborative process between managers and employees—a far
more motivating outcome.
Adobe
• Importantly, Adobe’s new system focuses on both ends of the
performance curve—keeping high performers happy and
offering practical advice for lower performers looking to
improve.

• Group performance is also evaluated, leading to a more

rational determination of group compensation.

• The results have been profound: Since rolling out the new
approach worldwide, Adobe experienced a 30 percent
reduction in turnover, in a highly competitive talent
environment.