CANADIAN HUMAN RESOURCE MANAGEMENT

Performance

8
Management

Chapter
Eight

Krista Uggerslev, NAIT

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Learning Objectives
1. Discuss how managing employee performance relates to achieving
organizational goals.
2. Describe the various purposes of performance appraisals.
3. Describe the commonly used comparative and noncomparative
appraisal methods.
4. Discuss the advantages and disadvantages of the various raters of
performance appraisal information.
5. Describe the guidelines for effective performance evaluation interviews.
6. Explain how talent management uses information about employee
performance and potential to guide employee decisions.
7. Outline steps to creating a performance improvement plan.

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LO1
Performance Management
• Performance management involves much more
than just performance appraisal
• Individual employees need to meet their
performance goals
– Collectively, helps the organization to meet its goals

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Performance Management System
Goals
• Transform organizational objectives into clearly understood,
measurable outcomes
• Provide instruments for measuring, managing, and
improving the success of the organization
• Include measures of quality, cost, speed to provide an in-
depth, predictive system
• Provide forward-looking strategic partnership between top
and middle management and employees

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Approaches to Aligning Organizational

and Individual Performance Goals

Schwind 12th Edition, Figure 8-1

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Performance Management System

Goals
• Balanced Scorecard
– Very popular approach
– Combines the performance measures of the total
organization—integrates financial goals with
customer satisfaction, internal processes,
organizational growth, learning, and innovation

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Balanced Scorecard Example

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LO2 Uses of Performance Appraisal

Schwind 12th Edition, Figure 8-3

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Performance Appraisal Process

Schwind 12th Edition, Figure 8-4

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Types of Performance Measures

• Rater actually sees the

Direct
employee’s performance

Indirect • Substitutes for direct (e.g.,

secondhand observations of others, complaints)

• Verifiable by others
Objective
• Usually quantitative

• Not verifiable by others

Subjective
• Based on rater’s opinions
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Effective Performance Management
Process Requirements

Validity
Reliability
Effective
Performance Input into development
Appraisal
System Acceptable standards
Acceptable goals
Control of standards

more
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Effective Performance Management

Process Requirements
Frequency of feedback
Rater training
Effective
Performance Ratee training
Appraisal
System
Input into interview process
Appraisal consequences
Different sources (raters)

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Considerations for Designing an Effective

Performance Appraisal Process
• Once the performance appraisal purpose is
established and linked to organizational objectives,
other considerations include:
– Setting performance targets
• Behaviours and performance standards required for job success
– Determining the rating method and format
• Comparative and noncomparative formats
– Determining who the raters should be and rater training
– Providing appraisal feedback and following up

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Setting Performance Targets

Schwind 12th Edition, Figure 8-5

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LO3
Comparative Evaluation Methods
• Comparative Evaluation Methods compare one employee’s
performance with that of coworkers.

Ranking • Employees ranked from best to worst

method • Subject to halo and recency effects

• Employees sorted into categories

Forced • Usually a certain proportion must be
distributions put into each category

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Plotting Performance onto the Bell

Curve

Schwind 12th Edition, Figure 8-7

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Noncomparative Evaluation Methods

• Oldest and most widely used method
Rating scale • Subjective (i.e. based on the rater’s opinion)
• Responses may be given numerical values

• Descriptions of effective/ineffective
BARS performance—examples placed along a scale
• Job-related, practical, and standardized

Tests & • May include paper-and-pencil tests or an

Observations actual demonstration of skills

Management • Employee and supervisor jointly establish

by Objectives future performance goals

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A Simplified Rating Scale Example

Schwind 12th Edition, Figure 8-9

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Management-by-Objectives Approach

• Employee and supervisor jointly establish

performance goals for the future
• Goals should be mutually agreed upon and
objectively measurable
• Challenges:
Objectives that are too ambitious or too narrow
Employees may set objectives that are measured by
quantity rather than quality

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LO4
Multiple Sources for Performance
Ratings

Schwind 12th Edition, Figure 8-12

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Rater Training
• Raters are trained on the purpose of the performance
appraisal process, its alignment with the
organization’s strategy, and the forms themselves (e.g.,
rater handbook)
• Rater error training was commonly included:
– Halo effect
– Error of central tendency
– Leniency and strictness biases
– Personal prejudice
– Recency effect
– Contrast errors
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LO5
Evaluation Interviews
• Evaluation interviews are performance review
sessions that give employees feedback
– Tell-and-sell Approach
– Tell-and-listen Approach
– Problem-solving Approach
• The interview should be a positive, performance-
improving dialogue

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Frequency of Feedback
• Appraisals as basis for administrative
decisions are typically conducted annually
• Appraisals for developmental purposes
should be conducted immediately after
incidents of good or bad performance, or
with regular (e.g., quarterly) frequency

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LO6
Talent Management

Schwind 12th Edition, Figure 8-15

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LO7
Establishing a Performance
Improvement Plan
• Getting Started
• Develop an Action Plan
• Review the Performance Improvement Plan
• Meet with the Employee
• Follow Up
• PIP Conclusion

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Human Resource
Management Feedback
• The performance management process also provides insight
into effectiveness of HRM
• If poor performance is widespread, many employees are
excluded from promotions and transfers
• Unacceptably high numbers of poor performance may
indicate errors in the HRM function
– e.g., selection process may be screening candidates
poorly; job analysis information may be inaccurate

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Legal Aspects of Performance
Appraisal

• A performance appraisal form is a legal document

• Raters must use only performance criteria that are relevant to
the job
• Avoid non-relevant criteria
• A reasonable time must be set for performance improvement
• Well-documented performance shortcomings and use of
feedback interviews have been viewed favourably in court and
with arbitrators

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8 Performance Management Summary

After mastering this chapter content, you should be able to:
1. Discuss how managing employee performance relates to achieving
organizational goals.
2. Describe the various purposes of performance appraisals.
3. Describe the commonly used comparative and noncomparative
appraisal methods.
4. Discuss the advantages and disadvantages of the various raters of
performance appraisal information.
5. Describe the guidelines for effective performance evaluation interviews.
6. Explain how talent management uses information about employee
performance and potential to guide employee decisions.
7. Outline steps to creating a performance improvement plan.
© 2019 McGraw-Hill Ryerson Education Limited Schwind 12th Edition 8-28