Human Resource Management:

Gaining a Competitive Advantage

Chapter 08Performance Management

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Process of Performance Management

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5 Criteria- Performance Measures

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Measuring Performance

Comparative approach- compares performance with others.

Ranking Simple ranking ranks employees from highest to

lowest performer. Alternation ranking - crossing off the best and worst

employees.

Forced distribution- employees ranked in groups.

Paired comparison- managers compare every employee with every other employee in work group.

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Behavioral Approach

Critical incidents approach - requires managers to keep record of specific examples of effective and ineffective performance.

Behaviorally anchored rating scales (BARS)

Behavioral observation scales (BOS)

Organizational behavior modification - formal system of behavioral feedback and reinforcement.

Assessment centers - multiple raters evaluate employees’ performance on a number of exercises.

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Results Approach

Management by Objectives top management passes down company’s

strategic goals to managers to define goals.

Productivity Measurement and Evaluation System (ProMES) goal is to motivate employees to

higher levels of productivity.

Goals

Hierarchy

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Competency Model

Competencies are sets of skills, knowledge, abilities and personal characteristics that enable employees to successfully perform their jobs.

A competency model identifies competencies necessary for each model and provides descriptions common for an entire occupation, organization, job family or specific job.

Also useful for recruiting, selection, training and development.

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Balanced Scorecard Approach-

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5 Performance Information Sources

P Info S

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Reducing Rater Errors and Politics

Approaches to Reducing Rater Error: Rater error training Rater accuracy training

Calibration Meetings- attended by managers to discuss employee performance ratings.

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3 Ways Technology Influences PMS

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Typical Rater Errors

1. Similar to Me

2. Contrast

3. Leniency

4. Strictness

5. Central Tendency

6. Halo

7. HornsAppraisal Politics- evaluations distort ratings to achieve goals.

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Ways to Manage Performance

Solid performers- High ability and motivation; provide development

Misdirected effort- Lack of ability but high motivation; focus on training

Under-utilizers- High ability but lack motivation; focus on interpersonal abilities

Deadwood- Low ability and motivation; managerial action, outplacement, demotion, firing.

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Withstand Legal Scrutiny

1. Conduct a valid job analysis related to performance.

2. Base system on specific behaviors or results.

3. Train raters to use system correctly.

4. Review performance ratings and allow for employee appeal.

5. Provide guidance/support for poor performers.

6. Use multiple raters.

7. Document performance evaluations.

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Summary

Measuring and managing performance are key to gaining competitive edge.

Performance management systems (PMS) serve strategic, administrative and developmental purposes.

PMS should be evaluated against criteria of strategic congruence, validity, reliability, acceptability and specificity.

Effective managers need to be aware of the issues involved in determining best methods. feed performance information back to employees take action based on causes for poor performance: ability,

motivation or both. be sure that PMS can meet legal scrutiny

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