Managing Employees

Performance
Chapter 8
Fundamentals of Human Resource Management
Noe et. al. (2009)
Discussed by: Orchid N. Leonor, MBA

Learning Objectives
1. Identify the activities involved in performance management
2. Discuss the purposes of performance management systems
3. Define five criteria for measuring the effectiveness of a performance
management system
4. Compare the major methods for measuring performance
5. Describe the major sources of performance information in terms of
their advantages and disadvantages
6. Define types of rating errors, and explain how to minimize them
7. Explain how to provide performance feedback effectively
8. Summarize ways to produce improvement in unsatisfactory
performance

L01
Identify the
activities involved
in performance
management

L02
Discuss the purposes of performance
management systems
Strategic Purpose means effective performance
management helps the organization achieve its business
objectives by helping to link employees behavior with the
organizations goals.
Administrative Purpose refers to the ways in which
organizations use the system to provide information for dayto-day decisions about salary, benefits, and recognition
programs.
Developmental Purpose means that is serves as a basis for
developing employees knowledge and skills.

L03
Define five criteria for measuring the effectiveness
of a performance management system
Fit with Strategy define the kinds of behavior that contribute to
good customer service.
Validity extent to which a measurement tool actually measures
what it is intended to measure.
Reliability consistency of the results that the performance measure
will deliver.
Acceptability practical standard of being acceptable to the people
who use it.
Specific Feedback - tell employees what is expected of them and how
they can meet those expectations

L04
Compare the major methods for measuring
performance
Making Comparisons
Simple ranking managers rank employees in their
group from the highest performer to the poorest
performer.
Forced-distribution method assigns a certain
percentage of employees to each category in a set of
categories.
Paired-comparison method compares each
employee with each other employee to establish
ranking

L04: Compare the major methods for

measuring performance
Rating Individuals
Rating Attributes
Graphic rating scale - uses scale to indicate the extent to which
an employee displays each trait (Figure 8.3)
Mixed-standard scale uses several statements describing each
trait to produce a final score for that trait (Figure 8.4)

Rating Behaviors
Critical Incident Method see pg 10
Behaviorally anchored rating scale (BARS) Figure 8.5
Behavioral Observation scale (BOS) Figure 8.6

L04
Compare the
major
methods for
measuring
performance

L04
Compare the
major
methods for
measuring
performance

L04: Compare the major methods for

measuring performance
Critical-incident method method of performance
measurement based on managers records of specific
examples of the employee actin in ways that are either
effective or ineffective.
i.e A customer called in about a refrigerator that was not cooling
and was making a clicking noise every few minutes. The technician
prediagnosed the cause of the problem and checked his truck for
the necessary parts. When he found he did not have them, he
checked the parts out from inventory so that the customers
refrigerator would be repaired on his first visit and the customer
would be satisfied promptly.

L04
Compare the
major
methods for
measuring
performance

L04
Compare the
major
methods for
measuring
performance

L04: Compare the major methods for

measuring performance
Measuring Results
Management by Objective (MBO) a system in which people at each level of
the organization set goals in a process that flows from top to bottom, so
employees at all levels are contributing to the organizations overall goals;
these goals become the standards for evaluating each employees
performance.

L04: Compare the major methods for

measuring performance
Total Quality Management
Subjective feedback from managers, peers, and customers about
the employees personal qualities such as cooperation and
initiative;
Objective feedback based on the work process
Statistical quality control that uses charts to detail causes of
problems, measures of performance, or relationships between
work-related variables.

L05: Describe the major sources of performance

information in terms of their advantages and
disadvantages
360-degree performance appraisal performance management that
combines information from the employees managers, peers,
subordinates, self, and customers.

Managers
Peers
Subordinates
Self
Customers

L06: Define types of rating errors, and explain

how to minimize them
Types of Rating Errors
Contrast Error rater compares the individual against individual rather
than the objective standard.
Distributional Error when raters tend to use only one part of the rating
scale. (timeliness how about cost, quality, etc.)
Leniency - rater rates everyone near the top
Strictness when rater favors lower rankings
Central tendency when rater puts everyone near the middle of the scale.

Halo error if positive rating (i.e. perceived as helpful or talented)

Horns error if negative rating of halo error (i.e. perceived as tardy &
unmotivated)

L06: Define types of rating errors, and explain

how to minimize them
Ways to reduce errors
Training of employees
Raters can be trained to avoid errors

Political Behavior in Performance Appraisal

People rating performance distort an evaluation on purpose to
advance their personal goals organizations try to identify and
discourage appraisal politics.

L07: Explain how to provide performance

feedback effectively
Scheduling performance feedback should be regular,
management activity. i.e. twice a year
Preparing for a feedback session neutral location, assessment
should have been prepared in advance.
Conducting the feedback session
Tell and sell approach mgrs. tell employees their rating then justify
the ratings
Tell and listen mgrs. Tell employees their rating then let the
employees explain their side of the story
Problem-solving manager and employees work together to solve
performance problems

L08 : Summarize ways to produce

improvement in unsatisfactory performance
Finding solutions to performance problems
Lack of ability (KSA) manager offer coaching, training
and more detailed feedback.
Lack of motivation manager to explore ways to
demonstrate that the employee is being treated fairly and
rewarded adequately.
Lack of both manager to direct the attention to the
significance of the problem by withholding rewards or
providing specific feedback. Demote or terminate
employee, if necessary.