Chapter 8: Performance Management Flashcards
What is Performance Management?
Creating a work environment where people can perform to the best of their abilities.
Performance Review / Appraisals / Evaluations
A process in which a manager evaluates an employee’s performance relative to the job’s requirements and uses the information to show the person where and how improvements can be made.
Purposes of Performance Management
To influence employees bahaviour and improve an organization’s performance
- Developmental Purposes
- Administrative Purposes
Developmental Purposes
Performance management system gives managers a concrete framework to gather and organize information about an employee’s performance, provide feedback, and discuss employee goals and how they align with the organization’s goals. –> How there’s concrete framework to spark development
Administrative Purposes
Performance management systems provide input that can be used for the entire range of HRM activities, such as promotions, transfers, layoffs, and pay decisions. → Can also be used to defend the company from legal charges and actions.
Steps in the Performance Management Process
- Goals set to align with higher level goals
- Behavioural expectations and standards set and then aligned with employee and organizational goals
- Ongoing performance feedback provided during the cycle
- Performance appraised by manager
- A formal review session conducted
- HR decision making
Basic Performance Management Framework
- Develop strategy
- Measure performance indicators
- Assess Results
- Report and Review Performance
- Align people & culture
Reasons that Performance Management Systems sometimes fail
- A manager has prepared inadequately
- Ratings are inconsistent among supervisors or other raters
- Performance standards may not be clear
- The manager may not be able to observe performance or have all the information
- The performance standards may not be clear
Developing an Effective Performance Management System
- HR Department → Overseeing and coordinating the performance management systems
- Managers → Must be actively involved as well (establish objectives and alignment)
- Employees → More likely to accept and be satisfied with a performance management system when they are also involved.
Performance Standards
Accepted level of performance to be achieved by an employee
- Strategic Relevance
- Criterion Deficiency
- Criterion Contamination
- Reliability
– Calibration - Fairness and Acceptability
Strategic Relevance
The extent to which the performance standards relate to or serve the strategic objectives of the organization in which they are applied. → Translate company objectives into performance standards.
Criterion Deficiency
Focusing on a single criterion while excluding other important but less quantifiable performance dimensions. → Performance standards should capture the entire range of an employee’s performance.
Criterion Contamination
A comparison of the performance of production workers, for example, should not be contaminated because some work with newer machines than others.
Reliability
Stability or consistency of a standard or the extent to which individuals maintain a certain performance level over time.
Correlating two sets of ratings.
Calibration
A process whereby managers meet to discuss the performance of individual employees to ensure that their employee evaluations are in line with one another (with the other managers)
Fairness and Acceptability
Fairness –> Suppose employees are allowed input on what constitutes good performance and how the performance management system operates. In that case, they are more likely to believe that it is fair, and the program is more likely to be successful.
Acceptability –> Difficuly of administering and using the performance management system.
Legal Issues
Performance reviews’s legal guidelines are as follows:
1. Relevance
2. Timeliness
3. Avoid subjectivity
a. Look for bias
b. Apply evaluation standards when making judgments
4. Transparency
5. Fairness
Sources of Performance Review Information
- Manager/Supervisor
- The Employee
- Subordinates
- Peers
- Team Evaluation
- Customers
Manager/Supervisor
A performance evaluation done by an employee’s manager and often reviewed by a manager one level higher
The Employee
A performance evaluation done by the employee being evaluated, generally on an evaluation form completed by the employee prior to the review meeting.
Subordinates
A performance review of a superior by an employee which is more appropriate for developmental than for administrative purposes.
- Submitted anonymously
- For developmental purposes rather than compensation basis
Peers
A performance evaluation is done by one’s fellow employees, generally on forms compiled into a single profile for use in the evaluation meeting conducted by the employee’s manager.
- More accurate and valid information compared to superior evaluation
Team Evaluation
A performance evaluation that recognizes team accomplishment rather than individual performance
Customers
A performance evaluation that includes evaluation from both a firm’s external and internal customers
360-Degree Evaluations
A performance evaluation is done by different people who interact with the employee, generally on forms compiled into a single profile for use in the evaluation meeting conducted by the employee’s manager.
