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PERFORMANCE MANAGEMENT

Instructor: LTT Xuân 1

Content

Instructor: LTT Xuân 2

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• Why appraise performance?

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Introduction
• Performance
– What an employee does and does not do.
• Quantity of output • Quality of output
• Timeliness of output • Presence at work
• Cooperativeness

• What is performance management?

– Processes used to identify, encourage, measure, evaluate,
improve, and reward employee performance
• Provide information to employees about their performance.
• Clarify organizational performance expectations.
• Identify the development steps that are needed to enhance
employee performance.
• Document performance for personnel actions.
• Provide rewards for achieving performance objectives.
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Introduction
• Individual Performance Factors
– Individual ability to do the work
– Effort level expended
– Organizational support

Performance (P) = Ability (A) x Effort (E) x Support (S)

– What are factors influencing performance?

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Introduction
• Why performance management?
– Strategic purpose – link employee activities with the
organization’s goals
– Administrative purpose – salary administration, promotions,
retention-termination, lay-offs and recognition of individual
performance
– Developmental purpose - to develop employees; to improve
performance

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DISCUSSION QUESTION

What are differences between performance management and

performance appraisal?

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• Performance management from employer and

employee perspective?

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Introduction

Organizational
Strategy
Long and short
term goals
and values

Individual
Attributes Individual Objective
(skills, abilities) Behaviors Results

Situational
Constraints
Culture and
economic
conditions

An Organizational Model of Performance Management

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Introduction

Components of Effective Performance Management

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Approaches to measuring performance

• Category Rating Approach
– A simplest approach, but not providing any specific guidance on
how an employee can support the company’s goals or correct
performance deficiencies
– Need to define a set of traits and evaluate individuals on them
– Common techniques: graphic rating scales, checklist

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Approaches to measuring performance

• Category Rating Approach - Graphic rating scales
– A scale that allows the rater to indicate an employee’s performance
on a continuum of job behaviors.
– Aspects of performance measured:
• Descriptive categories, job duties, and behavioral dimensions
• Behavioral rating scales (e.g., BARS)
– Drawbacks
• Restrictions on the range of possible rater responses
• Differences in the interpretations of the meanings of scale items
and scale ranges by raters
• Poorly designed scales that encourage rater errors
• Rating form deficiencies limit effectiveness of the appraisal

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Approaches to measuring performance

• Category Rating Approach - Checklists
– A performance appraisal tool that uses a list of statements or work
behaviors that are checked by raters.
• Can be quantified by applying weights to individual checklist
items.
– Drawbacks
• Interpretation of item meanings by raters
• Weighting creates problems in appraisal interpretation
• Assignment of weights to items by persons other than the raters

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Approaches to measuring performance

Sample
© 2005 Southwestern College Publishing. All rights reserved.

Performance
Appraisal Form

Figure 11–8

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Approaches to measuring performance

Terms Defining Standards at One Company

Figure 11–9

© 2005 Southwestern College Publishing. All rights reserved. Instructor: LTT Xuân 15

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Approaches to measuring performance

• Comparative approach
– Need the rater to compare an individual’s performance with
that of others
– 3 techniques: ranking, forced distribution, and paired
comparison
Paired comparison
– Comparing every employee with every other employee in the
work group and scoring

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Approaches to measuring performance

• Comparative approach - Ranking
– Listing of all employees from highest to lowest in performance.
– Drawback
• Does not show size of differences in performance between
employees
• Implies that lowest-ranked employees are unsatisfactory
performers.
• Becomes an unwieldy process if the group to be ranked is
large.

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Approaches to measuring performance

• Comparative approach - Forced Distribution
– Performance appraisal method in which ratings of employees
are distributed along a bell-shaped curve.
– Drawbacks
• Assumes a normal distribution of performance.
• Resistance by managers to placing individuals in the lowest
or highest groups.
• Providing explanation for placement in a higher or lower
grouping can be difficult.
• Is not readily applicable to small groups of employees.

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Approaches to measuring performance

Forced Distribution on a Bell-Shaped Curve

Figure 11–9
© 2005 Southwestern College Publishing. All rights reserved. 19

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Approaches to measuring performance

• Behavioral Approach
– Define the behaviors to be effective in the job
• Narrative approach - Critical incident method
– Manager keeps a written record of highly favorable and
unfavorable employee actions.
– Drawbacks
• Variations in how managers define a “critical incident”
• Time involved in documenting employee actions
• Most employee actions are not observed and may become
different if observed
• Employee concerns about manager’s “black books”

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Approaches to measuring performance

• Results approach – MBO
– Focusing on managing the objective, measurable results of a job
or work group

What Is Management by Objectives?

Organizational
Objectives

Divisional
Objectives

Departmental
Objectives

Individual
Objectives

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Approaches to measuring performance

• Quality Approach
– A performance management system designed with a strong
quality orientation can be expected to:
• Emphasize an assessment of both person and system factors
in the measurement system.
• Emphasize that managers and employees work together to
solve performance problems.
• Involve both internal and external customers in setting
standards and measuring performance.
• Use multiple sources to evaluate person and system factors.

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Performance Information

• Who provides performance information?

– Manager
– Peers
– Subordinates
– Self
– Customers

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DISCUSSION QUESTION

What are disadvantages of sources for performance

information?

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Performance Information
• 360-degree appraisal
– A appraisal system for managers including evaluations from a
wide range of persons who interact with manager
– Upward feedback

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Rater errors in performance measurement

• Types of errors
– Similar to me
– Contrast
– Distributional Errors
– Halo and Horns
• Reducing Rater Errors
– Rater error training
– Rater accuracy training
• Appraisal Politics
A situation in which evaluators
purposefully distort ratings to achieve
personal or company goals.

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Performance feedback
• Effective Performance Management Systems (PMS) are:
– Consistent with the strategic mission of the organization
– Beneficial as development tool:
• Review process to prevent undue control of careers
• Counseling to help poor performers improve
– Useful as an administrative tool:
• Formal evaluation criterion that limit managerial discretion
• Formal rating instrument linked to job duties and
responsibilities
– Legal and job-related (Appraisal criteria based on job analysis)
– Viewed as generally fair by employees
– Effective in documenting employee performance

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Performance feedback
• Manager’s role in an Effective Performance Feedback process
– Feedback should be given every day, not once a year.
– Create the Right Context for Discussion.
– Ask employees to rate their performance before the session.
– Encourage the subordinate to participate in the session.
– Recognize effective performance through praise.
– Focus on solving problems.
– Focus feedback on behavior or results, not on the person.
– Minimize criticism.
– Agree to specific goals and set a date to review progress.

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Performance feedback
• Creating Effective Performance Management Systems

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