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This guide will provide you with a chapter summary, learning objectives, lecture
outlines, solutions to in-chapter case questions and end of chapter discussion questions
and possible responses.
✓ When presenting Chapter Ten, have the students first read the chapter and encourage
them to absorb the “big picture” of Managing Employees Performance.
✓ Have students read and discuss the Cases and their respective Questions.
✓ Have students validate their knowledge of the chapter by working through the
Discussion Questions at the end of the Chapter.
✓ Lastly, have students review, journal, or discuss the Key Vocabulary Terms at the end of
the chapter.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
Chapter 10 - Managing Employees’ Performance
those errors. Then, the chapter describes ways of giving performance feedback effectively and
intervening when performance must improve. Finally, it summarizes legal and ethical issues
affecting performance management.
Learning Objectives
3. Define five criteria for measuring the effectiveness of a performance management system.
I. Introduction
The opening vignette highlights how Microsoft used to rate their employees on a scale of 1 to 5;
1 being the highest. If rated high, employees would get a large bonus. HR also established a
curve in which managers needed to place their employees to better match the pay of the local
labor market. Managers were also expected to have a few employees at the top and a few at
the bottom of the curve. After some research, the human resource department found that these
systems cause the employees to be in competition with each other rather than thinking of their
co-workers as teammates. So Microsoft changed it practices and now rates employees on
accomplishments, use of coworker’s input, and contributions to coworker’s success. Managers
are required to give feedback more than at the annual review time. Microsoft made the changes
as an important step in creating the best possible environment for their world class talent.
What is better about the new way of performance management at Microsoft compared to
the old way?
Answers will vary. Students should focus on how the old was too competitive and
encouraged individualism instead of team work. It also used some forced ranking which
meant that everyone wasn’t necessarily rated accordingly. The new system allowed for
more feedback which should result in stronger performance and more teamwork as part
of the ranking is based on helping co-workers succeed.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
Chapter 10 - Managing Employees’ Performance
2. The process of performance management requires knowing what activities and outputs
are desired, observing whether they occur, and providing feedback to help employees
meet expectations.
3. In the course of providing feedback, managers and employees may identify performance
problems and establish ways to resolve those problems.
1. Although many employees dread the annual “performance appraisal” meeting at which a
boss picks apart the employee’s behaviors from the past year, performance management
can potentially deliver many benefits.
2. Effective performance management can tell top performers that they are valued,
encourage communication between managers and their employees, establish consistent
standards for evaluating employees, and help the organization identify its strongest and
weakest employees.
3. Figure 10.1, Steps of the Performance Management Process, identifies the stages of
the performance management process. These include:
d. Evaluate performance.
b. Administrative purposes – the ways in which the organization uses the system to
provide information for day-to-day decisions about salary, benefits, and recognition
programs
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
Chapter 10 - Managing Employees’ Performance
HR Oops!
A survey by VitalSmarts, an HR consulting firm, found that four out of 10 employees hear the
same areas for improvement year after year. For most employees the previous performance
appraisal did not help with improvement of performance. 87% of employees said that the
performance management process did not include any plans for improving their performance. In
most cases it is up to the employee to want to improve and those who do generally take on the
responsibility of working toward improvement. One manager, Dharam Singh, works work with
employees to set goals for problem areas and to make a plan to achieve the goals.
1. If employees’ poor performance is unchanged year after year, what does this say about how
effectively performance management is serving its strategic and developmental purposes? How
would the administrative purpose of performance management apply in this situation?
If performance isn’t changing and improving then an organization is losing the competitive
advantage of having the best and most talented employees helping to achieve the
organizational goals. Singh is using the administrative purpose by helping to set goals and
working on a regular basis to see if the plan is working to achieve the goals. The old system of
employees not improving is not the following the administrative purpose.
1. For performance management to achieve its goals, its methods for measuring
performance must be good enough. There are several ways to measure the
performance of an employee. Selecting these measures is a critical part of planning a
performance management system.
2.. A performance management system should aim at achieving employee behavior and
attitudes that support the organization’s strategy, goals, and culture.
3. In the case of performance appraisal, validity refers to whether the appraisal measures all
the relevant aspects of performance and omits irrelevant aspects of performance.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
Chapter 10 - Managing Employees’ Performance
4. Figure 10.2, Contamination and Deficiency of a Job Performance Measure, shows two
sets of information that can be found in a job performance appraisal. Contamination refers
to information that is gathered but irrelevant. Deficiency refers to information that is not
gathered but is relevant.
5. With regards to a performance measure, reliability describes the consistency of the results
that the performance measure will deliver. Interrater reliability is consistency of results
when more than one person measures performance. Test-retest reliability refers to
consistency of results over time.
6. Whether or not a measure is valid and reliable, it must meet the practical standard of
being acceptable to the people who use it.
2. Table 10.1 compares these methods in terms of criteria for effective performance
management.
Best Practices
Medtronic, a large medical device company, had a performance management system that worked
administratively but did not help motivate employees or help with their development. Caroline
Stockdale, Chief Talent Officer, implemented a new program called “performance acceleration”
which had managers meet with employees four times a year to talk about goals and what
employees should start doing, stop doing, and continue doing. They still did an annual review to fill
administrative requirements. The results of the new program helped employees to achieve more
goals and receive feedback on a more regular basis.
2. How does it rate in terms of being acceptable and delivery specific feedback?
The employees and managers now see the system as being an effective tool for
continuous improvement. Feedback on a more regular basis helps employees to
continue and to start doing something that will better help achieve the goals.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
Chapter 10 - Managing Employees’ Performance
A. Making Comparisons
1. The performance appraisal method may require the rater to compare one individual’s
performance with that of others. The usual techniques for making comparisons are:
simple ranking, forced distribution, and paired comparison.
2. Simple ranking requires managers to rank employees in their group from the highest
performer to the poorest performer. Alternation ranking is a variation of this
approach. With alternation ranking, the manager works from a list of employees. The
major downside to ranking involves validity. Ranking also raises questions about
fairness.
5. Ranking employees offers some benefits such as: (1) counteracts the tendency to
avoid controversy by rating everyone favorably or near the center of the scale, (2) can
erase the tendency of evaluating too strictly or too leniently from performance scores,
and (3) some ranking systems are easy to use.
6. Drawbacks of ranking systems include: (1) often are not linked to organizational
goals, and (2) a simple ranking system leaves the basis for the ranking open to
interpretation.
B. Rating Individuals
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
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towards widows and their Providential function as economic aids,
thus:—
Our uncle is not at present able to pay you or any other he
owes money to. If he was able to pay he would; they must
have patience till God enable him. As his wife died in mercy
near twelve months since, it may be he may light of some rich
widow that may make him capable to pay; except God in this
way raise him he cannot pay you or any one else.
It certainly must have been some satisfaction to every woman to
feel within herself the possibility of becoming such a celestial agent
of material salvation.
I wish to state, in passing, that it is sometimes difficult to judge as
to the marital estate of some dames, to know whether they were
widows at the time of the second marriage or not, for the prefixed
Mrs. was used indifferently for married and single women, and even
for young girls. Cotton Mather wrote of “Mrs. Sarah Gerrish, a very
beautiful and ingenious damsel seven years of age.” Rev. Mr.
Tompson wrote a funeral tribute to a little girl of six, which is entitled
and begins thus:—
A Neighbors Tears dropt on ye grave of an Amiable Virgin,
a pleasant Plant cut down in the blooming of her Spring viz;
Mrs Rebecka Sewall Anno Aetatis 6, August ye 4ᵗʰ 1710.
The pious old minister did not really mean by this tribute to the old-
school doctors, that Mrs. Rebecka would have achieved earthly
immortality. He modestly ends his poetic tribute thus:—
Had you given warning ere you pleased to Die
You might have had a Neater Elegy.
These consorts and relicts are now but shadows of the past:—