Performance Management

Chapter 8

Krista Uggerslev, NAIT

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-1

 Learning Objectives
1. Define Performance Management and Performance Appraisal
2. Explain the purposes of performance management.
3. Identify the issues that influence the selection of a performance
management process.
4. Discuss rater biases in performance appraisals.
5. Describe the characteristics of effective performance measurement.
6. Describe commonly used appraisal methods.
7. Examine strategies to communicate performance management
processes to all levels of the organization.
8. Describe the guidelines for effective performance evaluation
interviews.
© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-2
 Discussion Questions
What is Performance Management?
What is a Performance Appraisal?
What are performance appraisals used for?
(i.e., promotions)
What has your experience been with
performance management and performance
appraisals? Positive/Negative
© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-3
 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

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-4

 Peformance Management Defined

Performance management the continuing

process of identifying, measuring, and
developing the performance of individuals and
teams and aligning performance with the
strategic goals of the organization.
Performance Appraisal is the process by which
organizations evaluate employee job
performance over a period of time.

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-5

 Approaches to Aligning Organizational
and Individual Performance Goals

Schwind 13th Edition, Figure 8-1

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-6
 What are some of the uses of
Performance Appraisals?

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-7

 Uses of Performance Appraisal

Schwind 13th Edition, Figure 8-3

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-8
 Performance Appraisal Process

Schwind 13th Edition, Figure 8-4

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-9
 Setting Performance Objectives
Performance objectives are targets for employee
performance and they should be
• Job-related
• Practical
• Based on performance standards
Performance standards are measurable benchmarks
that may relate to:
• Quality
• Quantity
• Time

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-10

 Measuring Performance
• 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
© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-11
 Why are direct and objective measures of
performance usually considered superior
to indirect and subjective measures?

Direct measures are based on actual observation

of job behaviour, i.e., the supervisor has
opportunities to see an employee in action.
Indirect measures are substitutes for direct
observation, e.g., a test substituted for direct
observation.
© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-12
 Effective Performance Management
Process Requirements

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

more
© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-13
 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)

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-14

 Most Critical Characteristic:
A Nurturing Organizational Environment:
Trusting relationship between employee and
manager
Used as a tool for organizational change
(Learning Organization)

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-15

 Various Methods of Performance
Appraisals

• Comparative
• Non-comparative

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-16

 Measuring Performance: 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

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-17

Measuring Performance: 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

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-18

 A Simplified Rating Scale Example

Schwind 12th Edition, Figure 8-9

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-19
Sample BARS Approach
Team
Bank of Ontario
Management
Can be expected to praise publicly for tasks completed well, and
Outstanding
Performance
7 constructively criticizes in private those individuals who have produced less
than adequate results.
Very Good
6
Can be expected to show great confidence in subordinates, and openly
Performance displays this with the result that they develop to meet expectations.
Can be expected to ensure that employee HR records are kept right up to
Good
Performance
5 date, that reports are written on time, and that salary reviews are not
overlooked.
Acceptable
4
Can be expected to admit a personal mistake, thus showing that he or she is
Performance human too.

Marginally Can be expected to make “surprise” performance appraisals of

Acceptable 3
Performance subordinates.

Poor Performance 2
Can be expected not to support decisions made by a subordinate (makes
exceptions to rules).
Very Poor
1
Can be expected not to accept responsibility for errors and to pass blame to
Performance subordinates.

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition, Figure 8-7 Schwind 13th Edition 8-20
 Measuring Performance: Multiple Sources
for Performance Ratings

Schwind 13th Edition, Figure 8-9

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-21
LO4
Multiple Sources for
Performance Ratings – 360 –
Degree Performance Appraisals

Schwind 12th Edition, Figure 8-12

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-22
 Homework – using your textbook
• Review the different Performance Appraisals
methods/developments
• Outline advantages and disadvantages of the
method and rater biases that may affect the
success of the method
• Identify when this method would be most
appropriate to use
© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-23
 Measuring Performance:
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
© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-24
 Communication Feedback:
Evaluation Interviews
Evaluation interviews are performance review sessions that give
employees feedback
Potential Approaches:
• Tell-and-sell: try to convince employee to perform better
• Tell-and-listen: allows employee to explain reasons, excuses,
attempting to overcome those reactions by counselling
employee on how to perform better
• Problem-solving approach: identifies problems interfering
with employee performance. Through training, coaching, or
counselling, efforts are made to remove deficiencies, setting
goals for future ***
The interview should be a positive, performance-improving dialogue
© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-25
 Communicating Feedback: Frequency

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

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-26

 HR Records and Decisions
HR uses performance records to guide their HR
decisions as set out in the purpose of the
performance appraisal up front

HR is responsible for maintaining records of

employee performance for legal purposes

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-27

 Establishing a Performance
Improvement Plan

Schwind 13th Edition, Figure 8-12

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-28
 Human Resource
Function 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

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-29

 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

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-30

 Explain the legal aspect of a
performance appraisal system.
Under what circumstances could it
become a crucial document?

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-31

 Effective Evaluation Interviews (True
or False?)
• Emphasize negative aspects of employee
performance
• Tell each employee the evaluation session is to
discipline, not to improve performance
• Conduct the performance review session in private
without interruptions
• Review performance on an ongoing basis and
formally at least annually
• Make criticisms general and vague, not specific
more

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-32

 Effective Evaluation Interviews
(True or False?)

 Focus criticisms on personality, not on performance

 Stay calm and do not argue with the person being
evaluated
 Identify specific actions to improve performance
 Emphasize unwillingness to assist the employee’s
efforts to improve performance
 End the evaluation by stressing negative aspects
and do not review plans to improve

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-33

Performance Appraisal Assignment
Posted in BlackBoard

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-34

8 Performance Management Summary
After mastering this chapter content, you should be able to:
1. Define Performance Management and Performance Appraisal
2. Explain the purposes of performance management.
3. Identify the issues that influence the selection of a performance
management process.
4. Discuss rater biases in performance appraisals.
5. Describe the characteristics of effective performance measurement.
6. Describe commonly used appraisal methods.
7. Examine strategies to communicate performance management
processes to all levels of the organization.
8. Describe the guidelines for effective performance evaluation interviews.

© 2022 McGraw-Hill Education Ltd. Schwind 13th Edition 8-35