CHAPTER 10:

PERFORMANCE
MANAGEMENT
AND FEEDBACK

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adiba
 Performance Management & Feedback

• Performance management is the process of creating a work

environment or setting in which people are enabled to perform to
the best of their abilities. Performance management is a whole
work system that begins when a job is defined as needed. It ends
when an employee leaves your organization.

• Performance feedback process is ongoing between managers and

employees. The exchange of information involves both
performance expected and performance exhibited.
Differences between Performance Management
& Feedback
Performance management
• Time period – past
• Focus – create records,
documents performance
problems
• Employee role – passive
• Nature of communication –
one-sided
• Formality – high formality,
written form
• Outcomes – compensation
decisions, task directives
Performance feedback
• Time period – past, present
and future
• Focus – link employee work
activities to specific business
objectives and strategy
• Employee role – active
• Nature of communication –
two way
• Formality – informal, verbal
• Outcomes – participation,
enhanced and targeted
performance, improved
relationship.
 Strategic Choices in Performance Management

An organization faces five strategic decisions in establishing its

performance management system:
• Determination of the purpose and how it will be used.
• Who provides and evaluates performance data.
• Determining what is to be evaluated.
• Designing the methods of assessing employees
• Measures of evaluation

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Purposes of Performance Management Systems

• Facilitate employee development

– Determine specific training & development needs
– Assess individual & team strengths & weaknesses
• Determine appropriate rewards & compensation
– Salary, promotion, retention, & bonus decisions
– Employees must understand & accept performance
feedback system
• Enhance employee motivation
– Employee acknowledgment & praise reinforces desirable
behaviors & outcomes

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Purposes of Performance Management Systems

• Facilitate legal compliance

– Documentation is strong defense against charges of
unlawful bias
• Facilitate HR planning process
– Alert organization to deficiencies in overall level & focus of
employee skills

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 Who Evaluates?
Traditionally, performance evaluation was performed by employees
immediate supervisors who communicated directly to the
employee. this approach offered very little opportunity for input or
feedback from the employee.
This traditional method is considered to have various perceptual errors
by the raters. Such as-
• Halo effect- Rater allows single trait, outcome or consideration to
influence other measures of performance
• Stereotyping - Rater makes performance judgments based on
employee’s personal characteristics rather than employee’s actual
performance

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 Who Evaluates?
• Recency error - Recent events & behaviors of employee bias rater’s
evaluation of employee’s overall performance
• Central tendency error - Evaluator avoids higher & lower ends of
rating in favor of placing all employees at or near middle of scales
• Leniency or strictness errors - Evaluator’s tendency to rate all
employees above (leniency) or below (strictness) actual
performance level
• Personal biases & organizational politics - Have significant impact
on ratings employees receive from supervisors

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 Who Evaluates?
In modern performance management other parties are also included
to evaluate the performance of an employee.
• Peers - effective when political considerations & consequences are
minimized, & employees have sense of trust
• Subordinates – this can give insights into interpersonal &
managerial styles and individual leadership capabilities.
• Customers – the Feedback which is considered most free from bias.
• Self-evaluations - Allow employees to participate in critical
employment decisions
• Multi-rater systems or 360-degree feedback systems -
an assessment instrument that collects ratings on behavioral items
from multiple observers. For managers, raters typically include
direct reports, peers, and upper management.
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anny
 What to Evaluate?

• Traits measures
– Assessment of how employee fits with
organization’s culture, not what s/he
actually does
• Behavior-based measures
– Focus on what employee does correctly &
what employee should do differently

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 What to Evaluate?
• Results-based measures
– Focus on accomplishments or outcomes that can be
measured objectively
– Problems occur when results measures are difficult to
obtain, outside employee control, or ignore means by
which results were obtained
– Limitations
• Difficult to obtain results for certain job responsibilities
• Results sometimes beyond employee’s control
• Ignores means or processes
• Fails to tap some critical performance areas

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 Job Performance Competencies
• Closely tied to organization’s strategic
objectives
• Can take tremendous amount of time to
establish
• Must be communicated clearly to employees
• Must be tied in with organization’s reward
structure

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 Exhibit 10-4

Multilevel Corporate Competency

Model

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 How to Evaluate?
• Absolute measurement
– Measured strictly by absolute performance
requirements or standards of jobs
• Relative assessment
– Measured against other employees & ranked on
distance from next higher to next lower
performing employee
– Ranking allows for comparison of employees but
does not shed light on distribution of performance
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 Forced Ranking/Distribution
• Arguments in favor of forced ranking
– Best way to identify highest-performing employees
– Data-driven bases for compensation decisions
– Forces managers to make & justify tough decisions
• Arguments critical of forced ranking
– Can be arbitrary, unfair, & expose organization to
lawsuits
– Inherent subjectivity
• Forced rankings tend to be more effective in
organizations with high-pressure, results-driven
culture
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tanvir
 Measures of Evaluation

• Graphic rating scales

• Weighted checklists
• Behaviorally anchored rating scales (BARS)
• Behavioral observation scales (BOS)
• Critical incident method
• Management by objectives (MBO)

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Graphic Rating Scales

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Weighted Checklist

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Beha
vioral
ly
Anch
ored
Ratin
g
Scale
(BAR
S)

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Behavioral Observation Scale (BOS)

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 Objectives-Based Performance Measurement

Management by Objectives (MBO) is a personnel management

technique where managers and employees work together to set,
record and monitor goals for a specific period of time.
This measurement technique helps to -
• Enhance employee motivation
• Employees can be far more committed to reaching performance
objectives they have agreed to
Three common oversights -
• Setting vague objectives
• Setting unrealistically difficult objectives
• Not clarifying how performance will be measured

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 Other Considerations
Besides the five strategies, there are several other critical factors that
must be considered when developing an effective performance
management system.
• Ensure link between performance management, training &
development, & compensation
• Assignments & responsibilities
• Traditional performance evaluation may need redesign due to
changes in contemporary organizations
• Degree of standardization or flexibility of performance
management system
– Standardization important to prevent job bias
– Flexibility important differing levels of responsibility &
accountability

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 Reasons Managers Resist or Ignore Performance
Management

• Process is too complicated

• No impact on job performance
• Possible legal challenges
• Lack of control over process
• No connection with rewards
• Complexity & length of forms

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 Strategies for Improving Performance Management
System

• Involve managers in design of system

• Hold managers accountable for performance &
development of subordinates
• Set clear expectations for performance
• Set specific objectives for system
• Tie performance measures to rewards
• Gain commitment from senior managers

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