CHAPTER 8

Managing
employees’
performance
 What Do You Need to Know?

1. Identify the activities involved in PM.

2. Discuss the purposes of PMS.
3. Describe major sources of performance information in terms of
their advantages and disadvantages.
4. Compare the major methods for measuring performance.
5. Define types of rating errors & explain how to minimize them.
6. Explain how to provide performance feedback effectively.
 Introduction
PERFORMANCE MANAGEMENT
The process through which managers ensure that employees’
activities and outputs contribute to the organization’s goals.
 Stages of the
Performance Management Process

Knowing what
activities and
outputs are desired

Evaluating performance
according to
predetermined
standard.

Providing feedback
to help employees
meet expectations
 “PA is a mgt’s way of
highlighting all the
bad things I did all
year” “PA is rubbish! You decide
on the rating you want in a
box and then make up a few
words of narrative in the
sections to ‘justify it’…”

https://youtu.be/KcGhX7Htk9U
 When properly conducted
• They let employees know how well they
are performing
• Influence their future level of effort and
task direction

How many
times a year?
Purposes of Performance Management

• Effective PM helps the organization

STRATEGIC achieve its business objectives.

• Effective PM provides information for

ADMINISTRATIVE decisions about salary & recognition
programs.

• Effective PM serves as a basis for

DEVELOPMENTAL developing employees’
knowledge and skills.
Sources of Performance
Information
Sources of Performance Appraisal

• Manager /Superior
• Appraisal done by an
employee’s superior/manager
• Most popular. Why?

Peer
• Appraisal by fellow employees.
• Advantages?
• Disadvantages?
Sources of Performance Appraisal

• Subordinates
Appraisal of a superior by an
employee, which is more
appropriate for developmental than
for administrative purposes.

• Self-Appraisal
• Appraisal done by the employee
being evaluated, generally on an
appraisal form completed by the
employee prior to the
performance interview.
Customer Appraisal

• Organizations use this approach because it

demonstrates commitment to customer, holds
employees accountable, and fosters change .
 360-Degree Appraisal
Multi-rater evaluation
The system is more comprehensive in that responses are
gathered from multiple perspectives.
May lessen bias/prejudice since feedback comes from more
people, not one individual.
Methods for Measuring
Performance
Performance Appraisal Methods
• Rating attributes
• Graphic Rating Scale
• Rating Behaviors
• Critical Incident Method
• BARS
• BOS

• Measuring Results
• Output/Productivity/performance
• Making comparisons
• Forced-distribution
Performance Appraisal Methods

Rating attributes

Graphic Rating scales

Rating behaviors

Behaviorally Anchored Rating Scale (BARS)

Behavior Observation Scale (BOS)

Measuring Results

Comparison
 Graphic Rating scales
▪ Lists traits and provides a rating scale for each trait.
▪ The employer uses the scale to indicate the extent to which an employee
displays each trait.

Graphic Rating Scale with

Provision for Comments
Rating Behaviors
Behaviorally Anchored Rating Scale (BARS)
• Rates behavior in terms of a scale showing specific
statements of behavior that describe different levels
of performance.
Rating Behaviors
Behavior Observation Scale (BOS)
• BOS asks the manager to rate the frequency with which the
employee has exhibited the behavior during the rating period.
Measuring Results

Productivity Measures
• Appraisals based on quantitative measures (e.g.,
sales volume) that directly link what employees
accomplish to results beneficial to the organization.
 Performance Appraisal Methods
Making Comparison

Forced Distribution

Assign a certain percentage of employees to each category

in a set of categories.
 RECENT TREND in PA
Use of Computer Software

• Available for recording appraisal data

• Reduces required paperwork
• E.g.
• PerformancePro.net
• KnowledgePoint’s Performance Now
 Rating errors in
Performance Appraisals
Rating errors are
factors that mislead
or blind us in the
appraisal process.

“Appraisers must
be on guard against
anything that
distorts reality,
either favorably or
unfavorably."
Common rater-related errors

Similar-to-me

Contrast Error

Leniency or strictness

Central tendency
Recency Error

Favoritism
 Rater Errors

• Similar-to-Me Error (similarity error)

• A rating error in which an appraiser inflates/deflate the
evaluation of an employee due to personal or
professional similarity.

• Contrast Error
• A rating error in which an employee’s
evaluation is biased either upward or
downward because of comparison with
another employee just previously evaluated.

• Leniency or Strictness Error

• A rating error in which the appraiser tends to
give all employees either unusually high or
unusually low ratings.
Rater Errors
• Central Tendency Error
• A rating error in which all employees are rated about average.
• Clustering everyone in the middle performance categories to
avoid extremes of good or bad performance; it’s easy, but it’s
wrong.
• Not fair to employees who are really making an effort, and it can be
demoralizing.

• Favoritism
• Unfair practice of treating some people
better than others.

• Recency Error
• A rating error in which appraisal is based
largely on an employee’s most recent
behavior rather than on behavior throughout
the appraisal period.
 Appraisal Interview
• Discuss employee’s performance
• Assist employee in setting goals and personal development
plans for next appraisal period
• Suggesting means for achieving established goals,
including support from manager and firm
Giving Performance Feedback

Conducting the Feedback Session

During the feedback session, managers can
take any of three approaches:
1. “Tell-and-Sell”
Managers tell employees their ratings and then
justify those ratings.
2. “Tell-and-Listen”
Managers tell employees their ratings and then
let the employees explain their side of the story.
3. “Problem-Solving”
Managers and employees work together to
solve performance problems.
https://youtu.be/idwZlq_yeC4
THANK YOU