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Strategic Performance Management

Week 3

Lecture11: Performance Dimensions: Task and context


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Performance
• PMS include measures of both behaviors (what an employee does) and
results (the outcomes of an employee’s behavior).
• Performance is about behavior or what employees do, not about what
employees produce or the outcomes of their work.
• Characteristics of Behaviour (performance)-
- Evaluative-behaviors can be judged as negative, neutral, or positive
-multidimensional- different kinds of behaviors having the capacity to
advance (or hinder) organizational goals.

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Behaviour and Results
– Behaviors Are NOT always observable and measurable
– Set of behaviour include Works with others within and outside the
unit to improves their effectiveness; sharing information and
resources; develops effective working relationships; builds consensus;
and constructively manages conflict.
– Results/Consequences May Be Used to infer behavior As proxy for
behavioral measure

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Determinants of Performance
• Three factors cause an employee to perform at a certain level
1. Declarative knowledge -information about facts and things, task’s
requirements, labels, principles, and goals.
2.Procedural knowledge - combination of knowing what to do and how to do it
and includes cognitive, physical, perceptual, motor, and interpersonal skills.
3. Motivation- It involves
a) Choice to expend effort(e.g., “I will go to work today”)
b) Choice of level of effort (e.g., “I will put in my best effort at work” versus “I will not try very
hard”)
C) Choice to persist in the expenditure of that level of effort (e.g., “I will give up after a little
while” versus “I will persist no matter what”)

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Determinants of Performance
• Determinants have a multiplicative relationship-
Performance = Declarative Knowledge X Procedural Knowledge X Motivation
If any of the determinants has a value of 0, then performance also has a value of 0.
Factors Determining Performance
Declarative Knowledge Procedural Knowledge Motivation
Facts Cognitive skill Choice to perform
Principles Psychomotor skill Level of effort
Goals Physical skill Persistence of effort
Interpersonal skill

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Deliberate practice and top performance
• Top performers in all fields engage in deliberate practice consistently
• Involves the following five steps:
1. Approach performance with the goal of getting better and better.
2. As you are performing, focus on what is happening and why you are doing things the way
you do.
3. Once your task is finished, seek performance feedback from expert sources, and the more
sources the better.
4. Build mental models of your job, your situation, and your organization.
5. Repeat steps 1–4 continually and on an ongoing basis.

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Implications for Addressing Performance Problems
• Managers must find information that will allow them to understand
whether the source of the problem is –
declarative knowledge, procedural knowledge, motivation, or some
combination of these three factors
• PMS need not only to measure performance but also to provide
information about the source of any performance deficiencies.

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Factors Influencing Determinants of Performance
• Factors include employee (i.e., abilities and previous experience), human
resources (HR) practices, and the work environment.
• Three individual characteristics that determine performance:
-procedural knowledge, declarative knowledge, and motivation
• Managers first need to identify which of these factors is hampering
performance and then help the employee improve his or her performance

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Dimensions of Performance
• Performance is multidimensional
• we need to consider many different types of behaviors to understand
performance.
• two types of behaviors or performance facets stand out: task performance
and contextual performance
• Pro-social behaviors” and “organizational citizenship behaviors” is also
contextual performance
• Contextual and task performance must be considered separately because
they do not necessarily occur in tandem

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Task Performance
• Activities that transform raw materials into the goods and services that
are produced by the organization
• Activities that help with the transformation process by replenishing the
supply of raw materials, distributing its finished products, or providing
important planning, coordination, supervising, or staff functions that
enable the organization to function effectively and efficiently

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Contextual performance
• Those behaviors that contribute to the organization’s effectiveness by
providing a good environment in which task performance can occur.
• includes behaviors such as-
-persisting with enthusiasm and exerting extra effort to complete one’s own task activities
successfully (e.g., being punctual and rarely absent, expending extra effort on the job)
-Volunteering to carry out task activities that are not formally part of the job (e.g., suggesting
organizational improvements, making constructive suggestions)
-helping and cooperating with others (e.g., assisting and helping coworkers and
customers)
following organizational rules and procedures (e.g., following orders and regulations, showing
respect for authority, complying with organizational values and policies)
-endorsing, supporting, and defending organizational objectives (e.g., organizational loyalty,
representing the organization favorably to outsiders)

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Main Differences Between Task and Contextual
Performance
• Task Performance Contextual Performance
• Varies across jobs Fairly similar across jobs
• Likely to be role prescribed Not likely to be role prescribed
• Antecedents: abilities and skills Antecedent: personality

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Why Include Task and Contextual
Performance Dimensions in PM System?
Global competition
Customer service
Teamwork
Employee perceptions of PM
Supervisor views
Cultural differences

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Voice Behavior
Behavior that emphasizes expression of constructive challenge with the
goal to improve rather than merely criticize
Challenges the status quo in a positive way
Makes innovative suggestions for change
Recommends modifications to standard procedures

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Lecture 12: Behaviour, result, and
trait approach to performance

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Job Performance in Context

A performer Engages in
In a given That produce
(individual or certain
situation various results
team) behaviors

TRAIT BEHAVIOR RESULTS

Source: Adapted from Grote, D. (1996). The complete guide


to performance appraisal

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Approaches to measure performance
• Employees work in an organizational context, engaging in
certain behaviors that produce certain results.
• The same employee may behave differently (and produce
different results) if placed in a different situation
• There are three approaches that can be used to measure
performance:
-the behavior, results, and trait approaches

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Behavior Approach
• Emphasizes what employees do on the job
• Does not consider employees’ traits or the outcomes resulting from their
behaviors
• A process-oriented approach that emphasizes how an employee does the
job

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Appropriateness of behaviour approach
Appropriate if…
• Employees take a long time to achieve desired outcomes
• Link between behaviors and results is not obvious
• Outcomes occur in the distant future
• Poor results are due to causes beyond the performer’s control
Not appropriate if…
• Above conditions are not present
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Example of Behaviour Approach
• Zenser Tech.-a provider of local, wireless, long-distance voice, and voiceover IP
services
• All employees are evaluated, and development plans are created through the use
of five core competencies or “dimensions- act with integrity, focus on the customer,
deliver results, build relationships, and demonstrate leadership
• These dimensions include the consideration of both task and contextual
performance
• Employees in the evaluation and development process are asked to write
behavioral examples of how they have performed on each dimension
• The firm recognized the importance of considering both task and contextual
components of a job in its performance management system
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Behavior-based (behavior-oriented): measure
– Examples for a retail store manager:
• Good teamwork
• Welcome & thank customers
• Good attendance
• Monitor customers & employees for theft
– Makes sense for many jobs
• Use it where how the employee produces results matters

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Behavior-based (behaviour-oriented): measure
• Behavior-based (cont’d.):
– Makes it easier to provide detailed feedback
• Examples for a retail store manager:
– Results: “You didn’t achieve your sales goal.”
– Behavior: “You are allowing your employees to wait too
long before offering help to customers.”
– Challenges:
• Difficult to capture the full range of relevant behaviors
• Different behaviors can lead to the same results — do we
always care which behaviors were used?

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Results Approach
• Emphasizes the outcomes and results produced by the employees
• A bottom-line approach that is not concerned about employee behaviors
and processes but, instead, focuses on what is produced
• Examples include sales, number of accounts acquired, time spent with
clients on the telephone, number of errors etc.
• Defining and measuring results usually takes less time
• More cost-effective because results can be less expensive to track than
behaviors

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Results Approach
• The results approach is most appropriate under the following
circumstances-
• Workers are skilled in the needed behaviors.
• Behaviors and results are obviously related.
• Results show consistent improvement over time.
• There are many ways to do the job right

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Results-based (results-oriented): measure
• Results-based (results-oriented): measure the results
produced by the employee
– Examples for a retail store manager:
• Sales of the store
• Profit per square foot
• Inventory shrinkage
• Customer satisfaction
– Makes sense for many jobs
• Use it where results matter
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Results-based (results-oriented): measure
• Results-based (cont’d.):
– Challenges:
• Which results are relevant may not be obvious for
all jobs
• Some results are not under the employee’s control
• May foster “results at all costs” mentality
• May interfere with teamwork
• May be difficult to provide effective feedback
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Behavior Approach Versus Results Approach
• Behavior approach to measuring • Adopting a results approach to
measuring performance is most
performance
appropriate when
• The link between behaviors and • Workers are skilled in the needed
results is not obvious behaviors
• Outcomes occur in the distant • Behaviors and results are obviously
future related
• Poor results are due to causes • Results show consistent improvement
beyond the performer’s control over time
• There are many ways to do the job right

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Trait Approach

• The trait approach emphasizes the individual performer and ignores the
specific situation, behaviors, and results
• If one adopts the trait approach, raters evaluate relatively stable traits.
• These can include abilities, such as cognitive abilities (which are not easily
trainable) or personality (which is not likely to change over time).
• Positive relationship between abilities, personality traits, and desirable
work-related behaviors
• Appropriate if structural changes planned for organization

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Challenges in implementing trait based approach
• Traits are not under the control of individuals.
• They are fairly stable over one’s life span.
• They do not change even if an individual is willing to exert substantial
effort to do so
• Employees may feel that a system based on traits is not fair because the
development of these traits is usually beyond their control
• Possessing certain trait (e.g., intelligence) does not mean that it will lead
to desired results and behaviors.
• In most organizations, performance is not measured using the trait
approach

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Lecture 13: Measuring Behaviour and
results

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Measuring results: Some issues

• key accountabilities-What are the different areas in which this individual is


expected to and responsible for producing results.
• Expected objectives-Within each area, statements of important and
measurable outcomes.
• performance standards- How do we know how well the
results have been achieved?

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Determining Accountabilities

• The first step is to collect information about the job through job
description
• Resulted from the job analysis and a consideration of unit- and
organization-level strategic priorities.
• Tasks included in the job description can be grouped into clusters of tasks
based on their degree of relatedness
• Each of these clusters or accountabilities is a broad area of the job for
which the employee is responsible for producing results

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Relative importance of accountabilities
• Ask the following questions-
What percentage of the employee’s time is spent
performing each accountability?
If the accountability were performed inadequately, would
there be a significant impact on the work unit’s mission?
Is there a significant consequence of error?
Could inadequate performance of the accountability
contribute to the injury or death of the employee or others,
serious property damage, or loss of time and money
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Example of determining accountability
• Company: Delta consulting
• Role: training specialist/consultant
• Job description: training need analysis of workers; design, development
and delivery of training; evaluating training effectiveness; leadership and
strategic responsibility.
• List of the accountabilities: Process leadership, Supervision of nonexempt
staff, Coaching, Team-building consultation, Assessment instrument
feedback, Product improvement

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Determining Objectives
• Statements of an important and measurable outcome if accomplished
ensure success for the accountability.
• Identify a limited number of highly important results having dramatic
impact on the overall success.
• feedback on their progress toward attaining the objective
• Rewards allocation if objectives are reached

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Characteristics of a good objective
• Specific and clear- cut cost by 20%
• Challenging- stretchable to reach
• Agreed upon- result from an agreement between the manager and the
employee
• Significant- must be important and contribute to success
• Prioritized- set priority and handle one be one
• Bound by time-deadlines and mileposts
• Achievable- doable
• Fully communicated- Making aware

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Determining Performance Standards

• Yardsticks designed to help people understand to what extent the


objective has been achieved
• Provide raters with information about what to look for to determine the
level of performance that has been achieved
• refer to various aspects of a specific objective, including quality, quantity,
and time

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Performance criteria
• Each of these aspects can be considered a criterion to judge the extent to
which an objective has been achieved.

- Quality-how well the objective has been achieved, include usefulness,


responsiveness, effect obtained acceptance rate, error rate, and feedback
- Quantity: how much has been produced, how many, how often, and at
what cost?
- Time: due dates, adherence to schedule, cycle times, deadlines.

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Example of Standards

• Standards must include an action, the desired result, a due date, and some
type of quality or quantity indicator
• Example: Reduce overtime from 150 hours/month to 50 hours/month by
December 1, 2017, at a cost not to exceed $12,000. The action is reduce, the
due date is December 1, 2017
• As soon as a standard has been created, one can create standards that
describe minimum performance and outstanding performance
• Example- Reduce overtime from 150 hours/month to 40 hours/month by
October 1, 2018, at a cost not to exceed $12,000.

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Characteristics of good performance
• Related to the position
• Concrete, specific, and measurable
• Practical to measure
• Meaningful
• Realistic and achievable
• Reviewed regularly

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Measuring behaviour

• A behavior approach to measuring performance includes the assessment


of competencies.
• Competencies are measurable clusters of knowledge, skills, and abilities
(KSAs).
• Critical in determining how results will be achieved
• Examples of competencies – customer service, written or oral
communication, creative thinking, and dependability

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Type of competencies
• Two types of competencies
• differentiating competencies- allow us to distinguish between average and
superior performers
• threshold competencies- those that everyone needs to display to do the job to
a minimally adequate standard
• Example of a IT project manager-differentiating competency is process
management (ability to manage project activities), and threshold competency
is change management (knowledge of behavioral sciences, operational and
relational skills, and sensitivity to motivators)
• Example of a professor- communication, conveying information during
preassigned times and dates

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Indicators of Competencies
Observable behaviors and Used to measure the
Leadership competency indicators
extent to which competencies are present or not Supports subordinates’ projects
Asks about the well-being of
employees’ lives outside of work
Encourages subordinates to reach
their established goals
Gets to know employees personally
Shows respect for employees’ work
and home lives

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Components of competency
• Definition of competency
• Description of specific behavioral indicators that can be observed
when someone demonstrates a competency effectively
• Description of specific behaviors that are likely to occur when
someone doesn’t
• demonstrate a competency effectively (what a competency is not)
• List of suggestions for developing the competency in question
the measurement of competencies is intrinsically judgmental.

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Measuring competency

• Competencies are measured using data provided by individuals who make


a judgment regarding the presence of the competency
• behaviors displayed by the employees are observed and judged by raters
• raters might also include peers, customers, subordinates, and the
employee himself).

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Lecture 14: Measurement System

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Selecting a measurement system

• Two types of systems are used to evaluate competencies: comparative


systems and absolute systems
• Comparative systems base the measurement on comparing employees
with one other.
• Absolute systems base the measurement on comparing employees with a
prespecified performance standard

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Comparative and Absolute Behavioral Measurement
Systems

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Advantages of Comparative Systems
• Easy to explain
• Straightforward
• Identifies top as well as underperformers
• Better control for biases and errors found in absolute systems
– Leniency
– Severity
– Central tendency

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Disadvantages of Comparative Systems

• Rankings may not be specific enough for:


– Useful feedback
– Protection from legal challenge

• No information on relative distance between employees

• Specific issues with forced distribution method

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Comparative systems
– Simple Rank order- Advantages:
subjectively rank employees Simple and easy to do
from best to worst
Results are clear
• Example:
Disadvantages:
1. Ramu
Judges performance based on one
2. Gopal dimension only
3. Tushar
May be difficult to rank similar
4. Zafar performance levels

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Alternation Rank Order
• Advantages:
The supervisor initially lists all employees.
– Simple and easy to do
– Results are clear
– Uses two anchors (best and worst)
Then, the supervisor selects the best
• Disadvantages:
performer (#1), then the worst performer (#n),
– Judges performance based on one
then the second best (#2), then the dimension only
second worst (#n1), and so forth, alternating – May be difficult to rank similar
performance levels
from the top to the bottom of the list
– Does not specify threshold for
until all employees have been ranked acceptable performance

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Comparative systems
• Paired Comparisons: in all possible pairs of Advantages:
employees, subjectively rate which
employee is better Thorough
• # of paired comparisons = (N2 – N)/2 Final rankings are more
• Example: N = 4 → 6 paired accurate
comparisons:
– Ramu > Gopal; Ramu > Disadvantages:
Tishar; Ramu > Zafar
Very time consuming
– Gopal > Tushar; Gopall >
Zafar May encounter problem of
– Tushar > Zafar comparing “apples and
• Example: N = 12 → 66 paired oranges”
comparison

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Relative Percentile
• Asks raters to consider all ratees at the same Advantages:
time and to estimate the relative performance Simple and easy to use
of each by using a 100-point scale Evaluates specific competencies
• include one such scale for each competency or overall performance
and also include one scale on which raters Disadvantages:
evaluate the overall performance of all May be difficult to consider all
employees. ratees at the same time
Time consuming if using several
scales for different
competencies

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Forced distribution
Employees are apportioned according to Advantages:
an approximately normal distribution.
Evaluator must place a fixed percentage Categorizes employees into specific
of employees in each performance performance groups
category
Facilitates reward assessment
• Example:
10% must be rated 5 = Excellent Competition may be good for
20% must be rated 4 = Very satisfactory organizational performance
40% must be rated 3 = satisfactory Disadvantages:
20% must be rated 2 = Unsatisfactory Assumes performance scores are
10% must be rated 1 = Very normally distributed
unsatisfactory
But what if the distribution being forced May discourage contextual
doesn’t fit? performance and teamwork

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Absolute Systems
• It includes Essays, Behavior checklists, Critical incidents, and Graphic
rating scales.
• Advantages:
– Can be used in large and small organizations
– Evaluations more widely accepted by employees
• Disadvantages:
– Higher risk of leniency, severity, and central tendency biases
– Generally, more time consuming than comparative systems

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Rating scale
– graphic rating scale: subjectively rate the
employee’s performance on a labeled
numeric measuring scale Use a graphic or just use
• Rate overall job performance as well words?
as specific aspects of job Label all the points in the
performance scale, or just label the endpoints
• Example: of the scale?
5 = Excellent Odd or even number of points
4 = Very satisfactory in the scale?
3 = Satisfactory Fewer points in the scale, or
2 = Unsatisfactory more points in the scale?
1 = Very unsatisfactory

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Graphic rating scale
• Advantages:
– Meanings, interpretations, and dimensions being rated are
clear
– Useful and accurate
– Most popular tool
• Disadvantages:
– Time consuming and resource-laden to develop
– Lacks individualized feedback and recommendations

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Behaviorally Anchored Rating Scale (BARS)
• Replace the vague descriptors in a traditional rating scale with specific examples
of performance
• Example: Customer assistance
• 5 = Expected to volunteer to help customer and to walk with customer
• 4 = Expected to walk with customer to desired product location when
asked for help by customer
• 3 = Could be expected to tell and point customer to where the desired
product is located
• 2 = Could be expected to shrug shoulders and walk away when asked for
assistance by customer
• 1 = Could be expected to hide from customers in the employee break-
room

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BARS (Continued)
• A different scale will be needed for each aspect of
performance
• Advantages:
– Job-relevant measures of performance
– Involves employees in developing scales
Disadvantages:
– More work to develop BARS (time & money)
– Employees may not consistently fit into one of the BARS
categories

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Behavior Checklists
• Consists of a form listing Advantages:
behavioral statements Easy to use and understand
that are indicators of the Provides quantitative information
various competencies to Widespread use
be measured.
More objective than other systems
Disadvantages:
• The supervisor’s task is to
indicate (“check”) May feel impersonal and disconnected
statements that describe Scale points used are often arbitrary
the employee being rated Difficult to get detailed and useful
feedback

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Essays
• Describing each employee’s strengths and weaknesses and makes suggestions for
improvement.
• Advantages: Simplest absolute method
Individualized for each employee
Can be done anytime
Potential for detailed feedback
• Disadvantages: Unstructured and may lack detail
Depends on supervisor’s writing skill
Comparisons virtually impossible
Lack of quantitative information; difficult to use in personnel decisions

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Critical incidents technique
• Involves gathering reports of situations in which employees exhibited
behaviors that were especially effective or ineffective in accomplishing
their jobs.
• Advantages:
– Focus on actual job behavior
– Provides specific examples
– Employees identify with rating
• Disadvantages:
– Collecting critical incidents can be very time consuming
– Quantification is difficult

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Lecture 15: Collecting information in
Performance Measurement

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Components of an appraisal form
• Basic employee information
• Accountabilities, objectives, and standards
• Competencies and indicators
• Major achievements and contributions
• Developmental achievements
• Developmental needs, plans, and goals
• Stakeholder input
• Employee comments
• Signatures
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Characteristics of an appraisal form
• Simplicity
• Relevancy
• Descriptiveness
• Adaptability
• Comprehensiveness
• Definitional clarity
• Communication
• Time orientation

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Determining Overall Rating
• Two main strategies are used-judgmental and mechanical
• Judgmental procedure consists of considering every aspect of
performance and then arriving at a defensible summary
• Mechanical procedure consists of first considering the scores assigned to
each section of the appraisal form and then adding them up to obtain an
overall score

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Open-Ended (Comments) Sections
Challenges

• Difficult to systematically categorize and analyze

• Quality, length, and content vary

Tools to overcome challenges

• Computer-aided text analysis (CATA) software

• Establish goals of information provided

• Training in systematic and standardized rating skills

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Appraisal period and number of meetings
• How long should the appraisal period be?
• Annual review; semiannual or quarterly formal reviews
• Annual review might not provide sufficient opportunity for the supervisor and
subordinate to discuss performance issues
• When Review Is Completed-
Anniversary date: Supervisor doesn’t have to fill out forms for all
employees at the same time; Can’t tie rewards to fiscal year

Fiscal year: Rewards tied to fiscal year; Goals tied to corporate goals;
May be burden to supervisor, depending on implementation

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Six formal meetings in PMS
• System inauguration
• Self-appraisal
• Classical performance review
• Merit/salary review
• Development plan
• Objective setting

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Who Should Provide Performance Information?
Employees should be involved in selecting
• Which sources evaluate

• Which performance dimensions

When employees are actively involved


• Higher acceptance of results

• Perception that system is fair

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Who Should Provide Performance Information?
Direct knowledge of employee performance
• Supervisors
• Peers
• Subordinates
• Self
• Customers
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Who Should Provide Performance Information?
• Supervisors- Peers-
Advantages
• Can evaluate performance vs. Advantages
strategic goals
• Make decisions about rewards Assess teamwork
• Able to differentiate among
performance dimensions Disadvantages
• Viewed as exclusive source in some
cultural contexts Possible friendship bias
Disadvantages
• Supervisor may not be able to May be less discriminating
directly observe performance
• Evaluations may be biased Context effects

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Who Should Provide Performance Information?
• Subordinates- • Self-
Advantages Customers-
Advantages: Accurate when used
for developmental purposes • Increased acceptance of Advantages
decisions
Good position to assess some Employees become more
competencies • Decreased defensiveness focused on meeting
during appraisal interview
customer expectations.
Disadvantages: Inflated when used
• Good position to track
for administrative purposes activities during review Disadvantages
period
May fear retaliation Time
(confidentiality is key) Disadvantages
• May be more lenient and Money
biased
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Disagreement Across Sources
• Expect disagreements

• Ensure employee receives feedback by source

• Assign differential weights to scores by source, depending on


importance

• Ensure employees take active role in selecting which sources


will rate which dimensions

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Common appraisal problems
• Supervisory bias
• Unclear standards
• Halo effect or Horn effect
• Central tendency-
- Leniency
- Strictness
- Similar to me
- Recency
- Spillover effect
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A Model of Rater Motivation
Expected Positive and Negative
Consequences of Rating
Accuracy
Motivation to Provide Accurate
Probability of Experiencing Ratings
Positive and Negative
Consequences
Rating Behavior
Expected Positive and Negative
Consequences of Rating
Distortion Motivation to Distort Ratings

Probability of Experiencing
Positive and Negative
Consequences
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publishing as Prentice Hall
Motivation for rating inflation and deflation
• Motivations for Rating Inflation- • Motivations for Rating Deflation
• Maximize merit raise/rewards
• Shock employees
• Encourage employees
• Teach a lesson
• Avoid creating written record
• Send a message to employee
• Avoid confrontation with employees
• Build a written record of poor
• Promote undesired employees out of unit
performance
• Make manager look good to his/her
supervisor
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Rater Training Programs
• Information

• Motivation

• Identifying, observing, recording and evaluating performance

• How to interact with employees when they receive performance information

• Reducing Intentional Rating Distortion through-

• Have raters justify their ratings and Have raters justify their ratings in a face-to-face meeting

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