Unit3: Performance Management Pitfalls and How to Improve

When doing performance appraisals, managers delivering their feedback has a significant impact
on the entire performance management system. Mello (2011) cited different perceptual errors that
supervisors are usually prone to.

• Halo Effect. The rater (supervisor) allows one positive or negative trait, outcome or
consideration to influence other measures. For example, if the employee is always late,
then other aspects might be affected even if it has nothing to do with tardiness.

• Stereotyping or personal bias. The supervisor makes performance judgements based on

characteristics of the employee even it does not necessarily affect the performance of the
job. For example, if the supervisor has bias on millennials being so engrossed with social
media that they won’t do their job if they are provided with internet access.

• Contrast Error. The employee’s assessment is relative to other employees being given
assessment also.

• Recency Error. The evaluation is based on what has happened nearest to the time of
evaluation and that prior events and performances are not considered in the assessment.

• Central Tendency Error. The supervisor avoids the higher or lower ends of performance
assessment placing employees in the middle of the scale.

• Leniency or strictness error. Supervisor generally all rated employees with above average
in order to appease employees or to make supervisors look good or well below standards
making it look like the supervisors are too demanding.

• Personal biases and organizational politics may also affect ratings of employee
performances.

There are also instances that managers or supervisors often resist or ignore performance
management. Mello (2011) listed that the following are the reasons why so.

• Process is too complicated.

• No impact on job performance. This may be because the tools, the key result areas or key
performance indicators being considered in the evaluation has little or no impact to
employee performance.

• Possible legal challenges.

 • Lack of control over process.

• No connection with rewards.

• Complexity and lengthy of forms.

An organization can identify the root causes why their PMS is not effective, then strategies in
order to improve these can be crafted. Mello (2011) also provided strategies on how to improve
the performance management system.

• Involve managers in the design of the system.

• Hold managers accountable for the performance and development of their subordinates.

• Set clear expectations for performance.

• Set specific objectives for the system.

• Tie performance measures to rewards.

• Gain commitment from senior management.

As they say, no organization is a perfect organization. Consequently, no performance

management system is ever perfect because there will always be some constraints that are
beyond the control. Constant review and monitoring of the overall effectiveness of the system
must be done by human resource practitioners so that it may be able to improve PMS. In this era
of new normal, if an organization fails to adapt, especially in its PMS, it may find itself becoming
less and less effective and that they might lose their talent and that they might not be able to
survive in this highly dynamic and ever change business environment.
The Changing Characteristics of Performance Management

Characteristics From Towards

Scope Management All stakeholders

Content Financial Multi-dimensional

Culture Information-power Sharing and learning

Decision-making Gut feel Information/evidence based

Information Sporadic and Universal

controlled
Performance Monitoring/corrective Transformational/continuous
mode improvement

Perspective Historical/retrospective Forward looking

The Information Passive/reporting Interactive

systems
Data timeliness Periodic Real time

Performance Operational Strategic

management role
Technical Separated integrated
infrastructure
Search for Superior Business Performance

New Approaches to meet future needs focus on ff:

1. Financial:

focusing particularly on stock market values and financial management as with the search for
‘Shareholder Value’ or Economic Value Added’.

2. Customer Satisfaction:

putting the customer at the heart of business dealings and seeking to ‘delight’ customers, as with
the concepts around ‘The Service Profit Chain’.
 3. Quality:

▪ building quality processes and seeking ‘zero defects’ in the output of organizations
based around the ‘Total Quality’ movement in the 1980’s, much of it originating in
Japan and then taken up in Europe through the European Foundation for Quality
Management and in North America through GE’s Six Sigma program.

4. Innovation:

▪ with particular reference to disruptive technologies and searching for new solutions
within and outside the corporation.

Most useful performance indicators

 Customer focus, satisfaction and loyalty

 Profitable growth from effective marketing and investment strategies and their
implementation

 Employee productivity through involvement, satisfaction and support

 Process alignment and quality

 Challenging and learning for continuous innovation and support

THE NINE PERFORMANCE VARIABLES

THE THREE THE THREE PERFORMANCE NEEDS

LEVELS Goals Design Management

OF Organization Organiza- Organizational Organizational

PERFORMANCE al level tional goals design management

Process Process goals Process Design Process Management

level

Job/Perform Job/Goals Job/Design Job management

er level

Level 1- Organizational Level

  At the macro level context, the nature and direction of the business and the way It is set
up and managed are examined.

1. Organization goals- these are part of the business strategy.

2. Organization design- this variable focuses on the structure of the organization.

Structure includes the more important dimension of how the work gets done and
whether it makes sense.

▪ Developing a relationship map helps determine the interfaces among the

functions.

3. Organization management- to operate effectively and efficiently, the organization must

be managed to include:

a. Goal management- creating functional sub goals that support the

achievement of the overall organizational goals.

4. Organization management

1. Performance management- obtaining regular customer feedback, tracking actual

performance along the measurement dimensions established in the goals, feeding
back performance information to relevant subsystems, taking corrective action if
performance is off target and re-setting goals so that the organization is continually
adapting to external and internal reality.

2. Resource management- balancing the allocation of people, equipment, and

budget across the system. Resource allocation should enable each function to
achieve its goals, thereby making its expected contribution to the overall
performance of the organization.

3. Interface management- ensuring that the ‘white space’ between functions is

managed. In this capacity, managers resolve functional “turf” conflicts and
establish infrastructures to support the collaboration that characterizes efficient,
effective internal customer-supplier relationships.

Level 2: Process Level

1. Process Goals- as the vehicle through which work gets produced, goals for processes
need to be set. The goals for processes that touch the external customer (i.e. sales,
 service, and billing) should be derived from the Organization Goals and other customer
requirements. The goals for internal processes (i.e. planning, budgeting, and recruiting
should be driven by the needs of the internal customers. Functional goals which are part
of the organization management variable shall be finalized only until the contribution that
each function needs to make to the key processes is seen. If the function serves external
customers, it should be measured on the degree to which its products and services meet
those customers’ needs. Functional goals which are part of the organization management
variable shall be finalized only until the contribution that each function needs to make to
the key processes is seen. If the function serves external customers, it should be
measured on the degree to which its products and services meet those customers’ needs.
2. Process Design- processes are structured (designed) to meet the process goals
efficiently. Processes should be logical, streamlined paths to the achievement of the goals.
3. Process management- a process with logical structure will be ineffective if it is not
managed. Process management includes the same ingredients as organization
management.

Level 3-Job/Performer Level

If processes are the vehicle through which an organization produces its outputs, people are

the vehicle through which processes function.

1. Job goals- establish goals for the people in those jobs that support the processes. If the
company does not take this step, the odds of achieving the strategic goals are low.
2. Job design- jobs are designed so that they make the optimum contribution to the job goals.
The job design question is simple: has the company structured the boundaries and
responsibilities of its jobs so that they enable the job goals to be met?
3. Job management- defined as managing the human performance system. Human
performance management is based on the premise that most people are motivated and
talented. If they don’t perform optimally, the cause is most likely in the system in which
they’ve been asked to perform. The Human performance system, like the organization
system, is composed of :
- inputs, processes, outputs and feedback,
- all of which need to be managed.
A Holistic View of Performance:

1. Effective management of performance requires goal setting, designing and managing

each of the Three Levels of Performance.

2. The Three Levels are interdependent. A job cannot be properly defined by someone who
doesn’t understand the requirements of the business process that the job exists to support.
Any attempt to implement Organization Goals will fail if those goals are not supported by
processes and Human Performance Systems.

3. Automation is generally an attempt to improve the performance of the Process Level.

However, the investment in automation rarely realizes its maximum return because the
link is not made between the process and the Organization Goals to which it is intended
to contribute: the process is inefficient, and so the result is an automated inefficient
process and the automation fails to consider the needs of the Human Performance
Systems of the people involved in the process.

4. If programs to improve performance in such areas as quality, productivity and customer

focus are just hype, they don’t address the needs of any of the Three Levels. Programs
that establish Organization Goals and train employees usually fail to address the needs
at the Process Level and the goals, feedback and consequences required at the Job level.