Strategic Human

Resource
Management
PERFORMANCE MANAGEMENT AND
FEEDBACK
 Performance Management and Feedback
Performance Management
▪ Also called performance evaluation, performance appraisal, or performance
measurement
▪ A process to manage employee performance and ensure that performance
measures are consistent with the organization’s needs.
Performance Feedback
▪ A way for employees to understand and accept the performance management
system and provide them with meaningful information to be effective.
 Performance Management and Feedback
Performance appraisal and performance evaluation
▪ imply a one-sided judgmental approach to performance management, where
employees have little involvement in the process;
▪ involves hierarchical, downward communication from supervisor to subordinate
concerning the subordinate’s performance; and
▪ puts employees in a defensive position
 Performance Management and Feedback
Performance feedback
▪ involves a mutual exchange of information that both parties share, discuss,
and jointly assess in planning future work activities;
▪ usually perceived as more neutral; and
▪ a process over which employees have some control and influence
Key Differences Between Performance
Feedback and Performance Appraisal
 Performance Management and Feedback
Effective performance management systems require employees and supervisors to
work together to set performance expectations, review results, assess organizational and
individual needs, and plan for the future
Effective performance management systems are one that connect three time periods and
utilize data about past performance to set goals, plans, and objectives for the present that
would result in high levels of performance in the future
Performance Management and Feedback
Organizations need broader performance
measures to ensure:
▪ Performance deficiencies addressed in a timely manner through employee
development programs
▪ Employee behaviors channeled in an appropriate direction toward the
performance of specific objectives
▪ Employees provided with appropriate and specific feedback to assist with
career development
Strategic Choices in Performance Management Systems
How the Performance Management System
will be Used
Purposes of the Performance Management
Systems:
▪ Facilitate employee development
▪ Determine rewards and compensation
▪ Enhance motivation
▪ Facilitate legal compliance
▪ Facilitate human resource planning
How the Performance Management System
will be Used
Facilitate employee development
▪ By assessing deficiencies in performance levels and skills, an organization
can determine specific training and development needs.
▪ The performance feedback process can be designed to provide information
to fuel the organization’s training and development programs.
▪ Assessing individual and team strengths and weaknesses can allow
employee and team development plans to be established.
Reciprocal Relationship Between Training and
Development and Performance Management

A reciprocal relationship exists between the two, as desired outcomes of

training and development initiatives must be incorporated into the performance
management system.
How the Performance Management System
will be Used
Determine the appropriate rewards and
compensation
▪ Salary, promotion, retention, and bonus decisions are frequently based
on data collection as part of performance measurement.
▪ Employees must understand and accept the performance feedback
system as a prerequisite for accepting decisions made relative to rewards
and compensation.
▪ Any perceived unfairness of the performance feedback system on the part of
employees will result in a perceived unfairness of the compensation system.
How the Performance Management System
will be Used
Enhance employee motivation
▪ Allows for employee acknowledgment and praise can reinforce the
behaviors and outcomes that are beneficial to the unit or organization.
▪ Employees are specifically told what the organization’s expectations for them
are, and the employees can inform their employers of the types of job
assignments and responsibilities they want and desire.
How the Performance Management System
will be Used
Facilitate legal compliance
▪ Claims of unfair dismissal and discrimination violations are best
supported when the organization has documentation of performance
deficiencies.
▪ This information can be admitted into court to prove nondiscriminatory
means of taking remedial action against employees for termination of
employment.
How the Performance Management System
will be Used
Facilitate the human resource (HR) planning
process
▪ Performance data can alert the organization to deficiencies in the overall
level and focus of employee skills which can be used in critically planning
for future staffing needs relative to the skills and abilities of current employees
▪ Since performance feedback has multiple functions, organizations must
decide how it will be used prior to developing the system and determine the
specifications of its design.
 Who Evaluates?
Problems with immediate supervisors conducting
performance evaluations
▪ Lacking appropriate information to provide informed feedback on employee
performance
▪ Insufficient observation of employee’s day-to-day work to validly assess performance
▪ Lack of knowledge about technical dimensions of subordinate’s work
▪ Lack of training or appreciation for evaluation process
▪ Perceptual errors by supervisors that create bias or lack of subjectivity in evaluation
 Perceptual Errors of Raters
Halo error/Halo effect
▪ Rater allows a single trait, outcome, or consideration to influence other measures
of performance
Horn error/Stereotyping
▪ Rater makes performance judgments based on the employee’s personal
characteristics rather than the employee’s actual performance
Recency error
▪ Recent events and behaviors of employee bias rater’s evaluation of employee’s
overall performance
 Perceptual Errors of Raters
Central tendency error
▪ Evaluator avoids higher and lower ends of rating in favor of placing all employees
at or near the middle of the scales
Leniency or strictness error
▪ Evaluator’s tendency to rate all employees above (leniency) or below (strictness)
actual performance level
Personal biases and organizational politics
▪ Have a significant impact on ratings employees receive from supervisors
 Other Performance Feedback Sources
Peers
▪ Must be administered with care especially when used for political or self-serving
purposes, when employees compete with each other or peer has personal gain or
loss at stake in assessing a co-worker.
▪ Can raise havoc in the organization by escalating conflict which is detrimental to
employee morale and teamwork
▪ Effective when political considerations and consequences are minimized (peers
have nothing at stake in assessing colleagues) and when employees have a sense
of trust in the organization and its performance measurement system.
 Other Performance Feedback Sources
Subordinates
▪ Provide insights into the interpersonal and managerial styles of employees
▪ Assist the organization in addressing high-potential employee developmental
needs
▪ Excellent measures of an individual’s leadership capabilities and ability to
manage others (behavior and skills)
▪ Suffer the same political problems as peer evaluations
▪ Supervisors or subordinates can retaliate against each other
 Other Performance Feedback Sources
Customers
▪ Feedback most free from bias
▪ Have nothing at stake in their assessment of employee performance
▪ Critical for facilitating employee development and determining rewards
Self-evaluations
▪ Allow employees to participate in critical employment decisions
▪ More holistic assessment of performance
 Other Performance Feedback Sources
Multi-rater system or 360-degree feedback system
▪ Can be very time-consuming
▪ Excessive amount of information can cause the most relevant and critical
performance data to be lost or obscured in the process
▪ More performance data collected, greater overall facilitation of assessment and
development of employee
▪ Costly to collect and process
▪ Consistent view of effective performance relative to strategy
 What to Evaluate?
Traits measures
▪ Focus on the general abilities and characteristics of the employee (loyalty to the
organization, industriousness, or gregariousness)
▪ Determines how an employee fits with the organization’s culture, but such
measures may ignore what s/he actually does
Behavior-based measures
▪ Focus on what an employee does correctly and what an employee should do
differently (getting along with others, punctuality, willingness to take initiative, ability
to meet deadlines)
 What to Evaluate?
Results-based measures
▪ Focus on accomplishments or outcomes that can be measured objectively
▪ Limitations:
o Results are difficult to obtain for certain job responsibilities (jobs involved in the future/
forecasting or jobs dependent on the external environment)
o Results sometimes are beyond employees’ control (budget cuts, resource availability)
o Focuses on the ends or outcomes/goals but ignores means or processes by which the
results were obtained
o Fails to tap some critical performance areas – such as teamwork, initiative, and
openness to change
 Job Performance Competencies
In addition to traits, behaviors, and outcomes, employers are also
beginning to measure job performance competencies displayed by
employees:
▪ Competencies can be closely tied to the organization’s strategic objectives
▪ Can take a tremendous amount of time to establish
▪ Must be communicated clearly to employees
▪ Must be tied in with the organization’s reward structure
Multilevel Corporate Competency Model
Success Factors and their Competencies
 How to Evaluate?
Absolute measurements
▪ measured strictly by absolute performance requirements or standards of jobs
Relative assessment
▪ measured against other employees and ranked on distance from next higher to
next lower-performing employee
▪ Ranking allows for comparison of employees but does not shed light on
distribution of performance
 Forced Ranking/Distribution
Arguments in favor of forced ranking
▪ best way to identify the highest-performing employees
▪ data-driven bases for compensation decisions
▪ forces managers to make and justify tough decisions
Arguments critical of forced ranking
▪ can be arbitrary, unfair and expose organizations to lawsuits
▪ inherent subjectivity
Forces ranking tends to be more effective in organizations with high-pressure,
results-driven cultures.
 Measures of Evaluation
▪ Graphic rating scales
▪ Weighted checklists
▪ Behaviorally anchored rating scales (BARS)
▪ Behavioral observation scales (BOS)
▪ Critical incident methods
▪ Management by objectives (MBO)
Example of Graphic Rating Scales
Example of a Weighted Checklist
Example of a Behaviorally Anchored
Rating Scale
Example of a Behavioral Observation Scale
Objectives-Based Performance Measurement
▪ Enhances employee motivation because employees are allowed to
provide input in determining their job responsibilities
▪ Employees can be far more committed to reaching performance
objectives they have agreed to and negotiated for themselves
▪ When an employee participates in the process, his/her trust and
dependability are placed on the line
Objectives-Based Performance Measurement
Three common oversights that inhibit effectiveness:
▪ Setting vague objectives
▪ Setting unrealistically difficult objectives
▪ Not clarifying how performance will be measured
The objectives selected must be valid;
Selection measures need to be valid;
Objective performance measures must also be valid.
 Reasons Managers Resist or Ignore
Performance Management
▪ Process is too complicated
▪ No impact on job performance
▪ Possible legal challenges
▪ Lack of control over process
▪ No connection with rewards
▪ Complexity and length of forms
 Strategies for Improving Performance
Management Systems
▪ Involve managers in the design of the system
▪ Hold managers accountable for the performance and development of
subordinates
▪ Set clear expectations for performance
▪ Set specific objectives for the system
▪ Tie performance measures to rewards
▪ Gain commitment from senior managers