HUMAN RESOURCE

MANAGEMENT

Chapter 7

Performance
management

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 Chapter outline
7.1 Performance management system
7.2 Developing an effective PMS
7.3 Performance review methods
7.4 Performance review and feedback

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 7.1 Performance management system
• Performance reviews
• A process in which a manager evaluates an
employee’s performance relative to the
requirements of the job and uses the information to
show where improvement can be made and how
• Also called performance appraisals and performance
evaluations.

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 7.1 Performance management system
• Performance management
• The process of creating a work environment in which
people can perform to the best of their abilities.

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 7.1 Performance management system
• Performance management process

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 7.1 Performance management system
• Performance management process
• Step 1: goals setting
• Understand and identify important performance outcomes
or results.
• Align outcomes to organization’s strategies and goals.

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 7.1 Performance management system
• Performance management process
• Step 2: employee behaviours
• Understand the process (or how) to achieve the goals
established in the first step
• Identifying measurable goals, behaviours, and activities that
will help employees achieve the performance results
• Make these part of the employees’ job descriptions.

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 7.1 Performance management system
• Performance management process
• Step 3: ongoing feedback
• Focus on accomplishments as well as issues and challenges
influencing performance.

Feedback Facilities and tools Training

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 7.1 Performance management system
• Performance management process
• Step 4: performance appraisal
• The manager and the employee discuss and compare the
targeted performance goals and supporting behaviours with
the actual results

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 7.1 Performance management system
• Performance management process
• Step 5: formal review and feedback
• Identify what the employee can do to capitalize on
performance strengths and address weaknesses.

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 7.1 Performance management system
• Performance management process
• Step 6: HR decision making
• Provide consequences for achieving (or failing to achieve)
performance outcomes.

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 7.2 Developing an effective PMS
• Activity 1
• Discuss some reasons why performance
management can fail?

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 7.2 Developing an effective PMS
• Activity 1
• Discuss some reasons why performance
management can fail?

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 7.2 Developing an effective PMS
• HR has the primary responsibility for overseeing and
coordinating the performance management system.
• However, line managers must be actively involved to
establish objectives, ensure alignment ed with a
company’s goals, and translate to on-the-job efforts.
• Employees accept and are satisfied when they
participate in its development.

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 7.2 Developing an effective PMS
• Establishing performance standards
• Performance standards should be based on job-
related requirements derived from a job analysis.
• Establishing SMART goals can be very helpful for this
purpose.
• SMART goals –– Goals that are specific, measurable, achievable,
realistic, and time-based Goals that

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 7.2 Developing an effective PMS
• Establishing performance standards

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 7.2 Developing an effective PMS
• Establishing performance standards
• Strategic Relevance
• Strategic relevance refers to the extent to which the
performance standards relate to the objectives of the
organization.

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 7.2 Developing an effective PMS
• Establishing performance standards
• Criterion Deficiency
• When performance standards focus on one criterion (such
as sales) to the exclusion of other less quantifiable
dimensions (such as service), then the performance
management system suffers from criterion deficiency.

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 7.2 Developing an effective PMS
• Establishing performance standards
• Criterion Contamination
• There are factors outside an employee’s control that can
influence his or her performance.

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 7.2 Developing an effective PMS
• Establishing performance standards
• Reliability
• Reliability refers to the consistency of a standard or whether
individuals maintain a certain performance level over time
• Reliability is measured by correlating two sets of ratings
made by one rater or by two different raters.

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 7.2 Developing an effective PMS
• Establishing performance standards
• Fairness and Acceptability
• Employees who believe the performance management
system is unfair consider the process a waste of time or feel
frustrated
• Acceptability relates to how hard it is to administer and use
the performance management system.

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 7.2 Developing an effective PMS
• Sources of Reviews

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 7.2 Developing an effective PMS
• Sources of Reviews
• Manager and/or supervisor evaluation
• Self-evaluation by the employee on a form
• Subordinate evaluations of a superior by an
employee
• Peer evaluation by fellow employees on forms
• Team evaluation recognizes team accomplishments
• Customer evaluation
• Supplier and vendor evaluation

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 7.2 Developing an effective PMS
• Sources of Reviews
• 360-degree evaluation
• A performance evaluation done by different people who
interact with the employee, generally on forms compiled
into a single document for use in the evaluation meeting
conducted by the employee’s manager

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 7.2 Developing an effective PMS
• Appraisers
• The mechanics of the rating system must be
explained for reviews including
• performance records
• how frequently reviews are conducted
• who conducts them
• what performance standards are
• how to prepare.

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 7.2 Developing an effective PMS
• Appraisers
• The mechanics of the rating system must be
explained for reviews including
• performance records
• how frequently reviews are conducted
• who conducts them
• what performance standards are
• how to prepare.

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 7.2 Developing an effective PMS
• Appraisers
• Eliminating Rating Errors
• Error of central tendency –error in which all employees are
rated about average
• Leniency or strictness error –error in which the appraiser
gives employees unusually high or unusually low ratings

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 7.2 Developing an effective PMS
• Appraisers
• Eliminating Rating Errors
• Recency error: evaluation is based on the employee’s recent
behavior not on behavior throughout the evaluation period
• Contrast error – an employee’s review is biased upward or
downward because of comparison with another employee
• Similar-to-me error –an appraiser inflates the review
because of a personal connection

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 7.3 Performance review methods
• Performance review methods can measure
traits, behaviors, or results.
• Trait approaches are based on people’s
characteristics.
• Behavioral approaches provide action-oriented
information to employees
• Results-oriented approaches focus on measurable
contributions that employees

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 7.3 Performance review methods
• Trait approaches
• Graphic rating scale
method: employee is
rated according to a
scale of
characteristics

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 7.3 Performance review methods
• Trait approaches
• Mixed-standard scale method – Rating based on a
comparison with (better than, equal to, or worse
than) a standard

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 7.3 Performance review methods
• Trait approaches
• Essay method – The rater writes a statement
describing an employee’s behavior and make
recommendations for his or her development.

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 7.3 Performance review methods
• Behavioral approaches
• Critical-incident method
• Measuring performance bases on managers' records of
specific examples of the employee acting in ways that are
either effective or ineffective.
• Information can be obtained from a daily or weekly log or
work diary.
• Require significant effort.
• Hard to make comparison.

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 7.3 Performance review methods
• Behavioral approaches
• Behaviorally anchored rating scale (BARS)
• A behavioral approach to performance rating that consists
of a series of vertical scales, for each dimension of job
performance
• These dimensions are “anchored” by behaviors identified
through a critical incident job analysis.
• Critical incidents are placed along the scale and are assigned
point values according to the opinions of experts.

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 7.3 Performance review methods
• Behavioral approaches
• Behaviorally anchored rating scale (BARS)
1 2 3 4 5

Always early Early for work, On time, fully Not fully Late for roll
for work, fully fully dressed dressed dressed for call, does not
dressed, have all roll call, does check
gather all necessary not have all equipment,
equipment, equipment for necessary does not have
use time work equipment all necessary
before roll call equipment to
to review go to work
previous
shift’s activity
and new note
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 7.3 Performance review methods
• Behavioral approaches
• Behavior observation
scale (BOS)
• A behavioral approach to
performance rating that
measures the frequency of
observed behavior

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 7.3 Performance review methods
• Result approaches
• Management by Objectives
• A philosophy of management that rates performance
based on their achievement of goals
• Objectives (such as production costs, sales per
product, quality standards, and profits) are set
mutually by employees and managers

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 7.3 Performance review methods
• Result approaches
• Management by Objectives

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 7.3 Performance review methods

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 7.4 Performance review and feedback
Prepare for review and feedback meeting
• The format for the meeting or session is determined
by its purpose, type of performance management
system used, and a firm’s review form.
•A formal performance evaluation should be
scheduled in advance to allow the subordinate and
manager to prepare for the discussion.
• Usually 10 days to 2 weeks offers sufficient lead
time.

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 7.4 Performance review and feedback
Meeting approaches
• Tell-and-sell:
• Motivational and persuasive techniques used to change
employee behavior.
• Tell-and-listen
• The appraiser communicates the strong and weak points of
performance to explore the employee’s feelings
• Problem-solving
• Obtains employee buy-in for a way to overcome obstacles
and improve performance.

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 7.4 Performance review and feedback
Guideline to enhance employees’ participation:
• Ask for a self-evaluation
• Invite participation
• Express appreciation
• Be supportive and demonstrate that you care
• Minimize criticism
• Establish goals
• Follow up day to day

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 7.4 Performance review and feedback
Guideline to enhance employees’ participation:
• Ask for a self-evaluation
• Invite participation
• Express appreciation
• Be supportive and demonstrate that you care
• Minimize criticism
• Establish goals
• Follow up day to day

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