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Managing Human Resources
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9th Edition Cascio Solutions Manual
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Chapter 09 - Performance Management
Chapter 9
Performance Management
CHAPTER LEARNING OBJECTIVES (SECTION)
Questions this chapter will help managers answer:
1. What steps can I, as a manager, take to make the performance management process
more relevant and more acceptable to those who will be affected by it?
2. How can we best fit our approach to performance management with the strategic
direction of our department and business?
3. Should managers and nonmanagers be appraised from multiple perspectives—for
example, by those above, by those below, by coequals, and by customers?
4. What strategy should we use to train raters at all levels in the mechanics of
performance management and in the art of giving feedback?
5. What would an effective performance management process look like?
KEY TERMS
Performance management
Performance appraisal
Performance facilitation
Performance encouragement
Relevance
Performance standards
Sensitivity
Reliability
Acceptability
Narrative essay
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Practicality
Applicant group
Behavior-oriented rating methods
Relative rating systems
Absolute rating systems
Results-oriented rating methods
Simple ranking
Alternation ranking
Paired comparisons
Forced distribution
Leniency
Severity
Central tendency
Likert method of summed ratings
Critical incidents
Graphic rating scales
Behaviorally anchored rating scales (BARS)
Management by objectives (MBO)
Work planning and review
360-degree feedback
Halo error
Contrast error
Recency error
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Frame-of-reference training
Active listening
Destructive criticism
CHAPTER 9 OUTLINE
PERFORMANCE REVIEWS: THE DILEMMA OF FORCED RANKING
• In forced ranking systems, all employees are ranked against one another and grades
are distributed along a bell-shaped curve.
• This is creating a firestorm of controversy and class-action lawsuits.
• One reason that employees dislike forced rankings is because they suspect, often
correctly, that rankings are a way for companies to rationalize firings.
Challenges
1. Do you support the use of forced rankings or not?
Student answers will vary. Sample answer:
One may support the forced ranking method of performance appraisal because it
forces managers to objectively evaluate employee performance. Further, it provides a
visual clue as to where each employee falls, as far as productivity, which makes it
easy to cull the under-performers. Business is business, not charity, so it only makes
sense to keep the best of the best on the payroll.
2. If the criteria used to determine an employee’s rank are more qualitative than
quantitative, does this undermine the forced-ranking system?
If a qualitative method of the forced ranking method is used, it requires judgment on

the part of the rater, which is more subjective and could result in rater errors, such as
leniency, severity, or central tendency. Therefore, it could undermine the forced-
ranking system, although to only a slight degree.
3. Suppose all of the members of a team are superstars. Can forced-ranking deal
with that situation?
If all employees are superstars, it will be difficult to utilize the forced-ranking method
of performance appraisal because a bell-shaped curve is the end result or objective of
this procedure. This would unfairly force superstars into “average” or
“underperforming” positions on the curve, assuming that one could find a means of
distinguishing between them.
9-3
MANAGING FOR MAXIMUM PERFORMANCE
• Performance management is likened to a compass—one that indicates actual

direction as well as desired direction.
• The job of the manager is to indicate where the individual or team is now, and to help
focus attention and effort on the desired direction.
• Many managers incorrectly equate it with performance appraisal.
• There are solid organizational payoffs for implementing strong performance
management systems.
• Organizations with strong performance management systems are 51 percent more
likely to outperform their competitors on financial measures, and 41 percent are more
likely to outperform their competitors on nonfinancial measures.
• Performance appraisal is a necessary, but far from sufficient, part of performance
management.
• Performance management requires willingness and a commitment to focus on
improving performance at the level of the individual or team every day.
• At a general level, the broad process of performance management requires that you
do three things well:
✓ Define performance
✓ Facilitate performance
✓ Encourage performance
Define Performance
• A manager who defines performance ensures that individual employees or teams
know what is expected of them, and that they stay focused on effective performance.
• A manager does this by paying attention to three key elements:
✓ Goals
✓ Measures
✓ Assessment
• Setting a goal:
✓ Directs attention to the specific performance in question
✓ Mobilizes efforts to accomplish higher levels of performance
✓ Fosters persistence for higher levels of performance.
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• Specific and challenging goals clarify precisely what is expected and leads to high
levels of performance.
✓ On average, productivity improves by 10 percent when goal setting is used.
• The mere presence of goals is not sufficient. Managers must also be able to measure
the extent to which goals have been accomplished.
• In defining performance, the third requirement is assessment.
✓ Regular assessment of progress toward goals focuses the attention and efforts of
an employee or a team.
• There should be no surprises in the performance management process—and regular
appraisals help ensure that there won’t be.
Facilitate Performance
• Managers who are committed to managing for maximum performance have three
major responsibilities:
✓ Eliminate roadblocks to successful performance.
✓ Roadblocks can include:
▪ Outdated or poorly maintained equipment
▪ Delays in receiving supplies
▪ Inefficient design of work spaces
▪ Inefficient work methods
✓ Provide adequate resources to get a job done right and on time; capital resources,
material resources, or human resources.
✓ A final aspect of performance facilitation is the careful selection of employees.
▪ Having people who are ill suited to their jobs (e.g., by temperament or
training) often leads to overstaffing, excessive labor costs, and reduced
productivity.
▪ In leading companies, even top managers often get involved in selecting new
employees
• If you’re truly committed to managing for maximum performance, you pay attention
to all of the factors that might affect performance, and leave nothing to chance.
9-5
Encourage Performance
• To encourage performance, especially repeated good performance, it is important to
provide a sufficient amount of rewards that employees really value in a timely and
fair manner.
✓ Ask your people what’s most important to them, then tailor your awards program
so that employees or teams can choose from a menu of similarly valued options.
• Provide rewards in a timely manner, soon after major accomplishments.
✓ If there is excessive delay between effective performance and receipt of the
reward, then the reward loses its potential to motivate subsequent high
performance.
• Provide rewards in a manner that employees consider fair. Fairness is a subjective
concept, but it can be enhanced by adhering to four important practices:
✓ Voice. Collect employee input through surveys or interviews.
✓ Consistency. Ensure that all employees are treated consistently when seeking
input and communicating about the process for administering rewards.
✓ Relevance. As noted earlier, include rewards that employees really care about.
✓ Communication. Explain clearly the rules and logic of the rewards process.
Performance Management in Practice

• A 2004 study by Rainmaker Thinking of more than 500 managers found that few of
them consistently provide their direct reports with the five management basics:
✓ Clear statements of what’s expected of each employee
✓ Explicit and measurable goals and deadlines
✓ Detailed evaluation of each person’s work
✓ Clear feedback
✓ Rewards distributed fairly
PURPOSES OF PERFORMANCE APPRAISAL SYSTEMS
• In general, appraisal serves a twofold purpose:

✓ To improve employees’ work performance by helping them realize and use their
full potential in carrying out their firms’ missions, and
✓ To provide information to employees and managers for use in making work-
related decisions.
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• More specifically, appraisals:

✓ Provide legal and formal organizational justification for employment decisions.
✓ Are used as criteria in test validation.
✓ Provide feedback to employees.
✓ Can help identify developmental needs of employees and establish objectives for
training programs.
✓ Can help diagnose organizational problems.
• Despite their shortcomings, appraisals continue to be used widely, especially as a
basis for tying pay to performance.
• The real challenge is to identify the appraisal techniques and practices that (1) are
most likely to achieve a particular objective and (2) are least vulnerable to the
obstacles discussed.
REQUIREMENTS OF EFFECTIVE APPRAISAL SYSTEMS
• Legally and scientifically, the key requirements of any appraisal system are:
✓ Relevance
✓ Sensitivity
✓ Reliability
Relevance
• Relevance implies that there are:
✓ Clear links between the performance standards for a particular job and
organizational objectives and
✓ Clear links between the critical job elements identified through a job analysis and
the dimensions to be rated on an appraisal form.
• Relevance is determined by answering the question “What really makes the
difference between success and failure on a particular job, and according to whom?”
✓ The answer to this question is simple: the customer.
• Customers may be internal or external.
✓ In all cases, it is important to pay attention to the things that the customer believes
are important.
• Performance standards translate job requirements into levels of acceptable or
unacceptable employee behavior.
• Job analysis identifies what is to be done. Performance standards specify how well
work is to be done.
✓ Such standards may be quantitative or qualitative.
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• Relevance also implies the periodic maintenance and updating of job analyses,
performance standards, and appraisal systems.
Sensitivity
• Sensitivity implies that a performance appraisal system is capable of distinguishing
effective from ineffective performers.
• A major concern here is the purpose of the rating.
✓ Raters process identical sets of performance appraisal information differently,
depending on whether a merit pay raise, a recommendation for further
development, or the retention of a probationary employee is involved.
✓ Appraisal systems designed for administrative purposes demand performance
information about differences between individuals.
✓ Systems designed to promote employee growth demand information about
differences within individuals.
✓ The two different types of information are not interchangeable in terms of
purposes, and that is why performance management systems designed to meet
both purposes are more complex and costly.
Reliability
• A third requirement of sound appraisal systems is reliability (consistency of
judgment).
✓ For any given employee, appraisals made by raters working independently of one
another should agree closely. In practice, ratings made by supervisors tend to be
more reliable than those made by peers.
✓ To provide reliable data, each rater must observe what the employee has done and
the conditions under which he/she has done it.
• By making appraisal systems relevant, sensitive, and reliable, we can assume that the
resulting judgments are valid.
Acceptability
• In practice, acceptability is the most important requirement of all.
• HR programs must have the support of those who will use them.
• Evidence indicates that appraisal systems that are acceptable to those who will be
affected by them lead to more favorable reactions to the process, increased motivation
to improve performance, and increased trust for top management.
• Smart managers enlist the active support and cooperation of subordinates or teams by
making explicit exactly what aspects of job performance they will be evaluated on.
9-8
Practicality
• Practicality implies that appraisal instruments are easy for managers and employees
to understand and use.
• Those that are not easy, or that impose inordinate time demands, are not practical;
managers will resist using them.
• Managers need as much encouragement and organizational support as possible if
thoughtful performance management is to take place.
• The crucial question to be answered in regard to each appraisal system is whether its
use results in fewer (and less costly) human, social, and organizational errors.
PERFORMANCE APPRAISAL
• To avoid legal difficulties, consider taking the following steps:
✓ Conduct a job analysis to determine the characteristics necessary for successful
job performance.
✓ Incorporate these characteristics into a rating instrument.
✓ Provide written instructions and train supervisors to use the rating instrument
properly.
✓ Establish a system to detect potentially discriminatory effects or abuses of the
appraisal process.
✓ Include formal appeal mechanisms, coupled with higher-level review of
appraisals.
✓ Document the appraisals and the reason for any termination decisions.
✓ Provide some form of performance counseling or corrective guidance to assist
poor performers.
• The type of evidence required to defend performance ratings is linked to the purposes
for which the ratings are made.
• To assess adverse impact, organizations should keep accurate records of who is
eligible for and interested in promotion.
• Eligibility and interest, define the applicant group.
• Implementing scientifically sound, court-proof appraisal systems requires diligent
attention by organizations, plus a commitment to making them work.
• In developing a performance appraisal system, the most basic requirement is to
determine what you want the system to accomplish.
9-9
The Strategic Dimension of Performance Appraisal

• In the study of work motivation, a fairly well established principle is that the things
that get rewarded get done.
• A fundamental issue for managers is “What kind of behavior do I want to encourage
in my subordinates?”
• Managers can emphasize short- or long-term objectives in the appraisal process, or
some combination of the two.
• To be most useful, the strategic management of performance must be linked to the
strategies an organization (or strategic business unit) uses to gain competitive
advantage.
• Some appraisal systems that are popular in the United States, such as management by
objectives (MBO), are less popular in other parts of the world, such as Japan and
France.
• MBO focuses primarily on results, rather than on how the results were accomplished.
Typically it has a short-term focus.
• In Japan, greater emphasis is placed on the psychological and behavioral sides of
performance appraisal than on objective outcomes.
✓ Short-term results are much less important than long-term personal development,
the establishment and maintenance of long-term relationships with customers, and
increasing market share.
• Once managers decide what they want the appraisal system to accomplish, their next
question is, “What’s the best method of performance appraisal, which technique
should I use?”
ALTERNATIVE METHODS OF APPRAISING EMPLOYEE PERFORMANCE
• Many regard rating methods or formats as the central issue in performance appraisal.
However, broader issues must also be considered, such as:
✓ Trust in the appraisal system
✓ The attitudes of managers and employees
✓ The purpose, frequency, and source of appraisal data
✓ Rater training
• Behavior-oriented rating methods focus on employee behaviors, either by
comparing the performance of employees to that of other employees (relative rating
systems) or by evaluating each employee in terms of performance standards without
reference to others (absolute rating systems).
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• Results-oriented rating systems place primary emphasis on what an employee

produces.
✓ Ratings are not strongly related to results.
✓ Because these processes are complex, there may be errors of judgment in the
ratings.
✓ Results depend heavily on conditions that may be outside the control of the
individual worker.
✓ Most measures of results provide only partial coverage of the overall domain of
job performance.
Behavior-Oriented Rating Methods

Narrative Essay
• The simplest type of absolute rating system is the narrative essay, in which a rater
describes, in writing, an employee’s strengths, weaknesses, and potential, together
with suggestions for improvement.
• If essays are done well, they can provide detailed feedback to subordinates regarding
their performance.
• Comparisons across individuals, groups, or departments are almost impossible since
different essays touch on different aspects of each subordinate’s performance.
• This makes it difficult to use essay information for employment decisions since
subordinates are not compared objectively and ranked relative to one another.
Ranking
• Simple ranking requires only that a rater order all employees from highest to lowest,
from “best” employee to “worst” employee.
• Alternation ranking requires that a rater initially list all employees on a sheet of
paper. From this list he/she first chooses the best employee (No. 1), then the worst
employee, then the second best then the second worst, and so forth, alternating from
the top to the bottom of the list until all employees have been ranked.
9-11
Paired Comparisons
• Use of paired comparisons is a more systematic method for comparing employees to

one another.
• Each employee is compared with every other employee, usually in terms of an overall
category such as “present value to the organization.” The rater’s task is simply to
choose the “better” of each pair, and each employee’s rank is determined by counting
the number of times he/she was rated superior.
• The number of comparisons becomes quite large as the number of employees
increases.
• Methods that compare employees to one another are useful for generating initial
rankings for purposes of employment decisions.
Forced Distribution
• Forced distribution is another method of comparing employees to one another.

• The overall distribution of ratings is forced into a normal, or bell-shaped, curve under
the assumption that a relatively small portion of employees is truly outstanding, a
relatively small portion is unsatisfactory, and everybody else falls in between.
• Forced distribution eliminates clustering almost all employees at the top of the
distribution (rater leniency), at the bottom of the distribution (rater severity), or in the
middle (central tendency).
• However, it can foster a great deal of employee resentment if an entire group of
employees is either superior or substandard.
• It is most useful when a large number of employees must be rated and there is more
than one rater.
Behavioral Checklist
• The rater is provided with a series of statements that describe job-related behavior.
His/her task is simply to “check” which of the statements, or the extent to which each
statement, describes the employee.
• Raters are not so much evaluators as reporters whose task is to describe job behavior.
• Descriptive ratings are likely to be more reliable than evaluative (good-bad) ratings.
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• With a Likert method of summed ratings:

✓ A declarative statement (e.g., “He/she follows up on customer complaints”) is
followed by several response categories, such as “always,” “fairly often,”
“occasionally,” and “never.” The rater checks the response category that he/she
thinks best describes the employee.
✓ Each category is weighted, for example, from 5 (“always”) to 1 (“never”) if the
statement describes desirable behavior.
✓ The overall numerical rating (or score) for each employee is the sum of the
weights of the responses that were checked for each item.
Critical Incidents
• Critical incidents are brief anecdotal reports by supervisors of things employees do

that are particularly effective or ineffective in accomplishing parts of their jobs.
• They focus on behaviors, not traits.
• They can provide the basis for training programs.
• Critical incidents lend themselves to appraisal interviews because supervisors can
focus on actual job behaviors rather than on vaguely defined traits.
• Supervisors may find that recording incidents for their subordinates on a daily or even
a weekly basis is burdensome.
• Incidents alone do not permit comparisons across individuals or departments; graphic
rating scales may overcome this problem.
Graphic Rating Scales
• Many different forms of graphic rating scales exist.

• In terms of the amount of structure provided, the scales differ in three ways:
✓ The degree to which the meaning of the response categories is defined.
✓ The degree to which the individual who is interpreting the ratings can tell clearly
what response was intended.
✓ The degree to which the performance dimensions are defined for the rater.
• Graphic rating scales may not yield the depth of essays or critical incidents, but they:
✓ Are less time-consuming to develop and administer.
✓ Allow results to be expressed in quantitative terms
✓ Consider more than one performance dimension
✓ Facilitate comparisons across employees.
• Graphic rating scales, when compared to more sophisticated forced-choice scales,
have proved just as reliable and valid and are more acceptable to raters.
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Behaviorally Anchored Rating Scales
• A variation of the simple graphic rating scale is behaviorally anchored rating scales
(BARS).
• The major advantage of BARS is that they define the dimensions to be rated in
behavioral terms and use critical incidents to describe various levels of performance.
• BARS therefore provide a common frame of reference for raters.
• BARS require considerable effort to develop, yet there is little research evidence to
support the superiority of BARS over other types of rating systems.
• The participative process required to develop them provides information that is useful
for other organizational purposes, such as communicating clearly to employees
exactly what “good performance” means in the context of their jobs.
Results-Oriented Rating Methods

Management by Objectives
• Management by objectives (MBO) relies on goal-setting to establish objectives for

the organization as a whole, for each department, for each manager within each
department, and for each employee.
• MBO is not a measure of employee behavior; rather, it is a measure of each
employee’s contribution to the success of the organization.
• To establish objectives, the key people involved should do three things:
✓ Meet to agree on the major objectives for a given period of time
✓ Develop plans for how and when the objectives will be accomplished, and
✓ Agree on the measurement tools for determining whether the objectives have been
met.
• In theory, MBO promotes success in each employee because, as each employee
succeeds, so do that employee’s manager, the department, and the organization.
✓ This is true only to the extent that the individual, departmental, and organizational
goals are compatible.
✓ In light of the corporate scandals that characterized the early part of the 21st
century, progressive firms do not focus only on results achieved but also on how
those results were achieved. That approach is known as “full-spectrum
leadership.”
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Work Planning and Review
• Work planning and review is similar to MBO; however, it places greater emphasis
on the periodic review of work plans by both supervisor and subordinate in order to
identify goals attained, problems encountered, and the need for training.
When Should Each Technique Be Used?

• The rating format is not as important as the relevance and acceptability of the rating
system.
• An extensive review of the research literature that relates the various rating methods
to indicators of performance appraisal effectiveness found no clear “winner.”
• However, the researchers provided several “if . . . then” propositions and general
statements based on their study:
✓ If the objective is to compare employees across raters for important employment
decisions, don’t use MBO and work planning and review. They are not based on a
standardized rating scheme for all employees.
✓ If you use a BARS, also make diary keeping a part of the process. This will
improve the accuracy of the ratings, and it also will help supervisors distinguish
between effective and ineffective employees.
✓ If objective performance data are available, MBO is the best strategy to use.
✓ In general, the appraisal methods that are best in a broad, organizational sense—
BARS and MBO—are the most difficult to use and maintain.
✓ Methods that focus on describing, rather than evaluating, behavior (e.g., BARS,
summed rating scales) produce results that are the most interpretable across raters
and help remove the effects of individual differences in raters.
✓ No rating method has been an unqualified success when used as a basis for merit
pay or promotional decisions.
✓ When certain statistical corrections are made, the correlations between scores on
alternative rating formats are very high. Hence all the formats measure essentially
the same thing.
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WHO SHOULD EVALUATE PERFORMANCE?

• The most fundamental requirement for any rater is that he/she has an adequate
opportunity to observe the ratee’s job performance over a reasonable period of time.
The Immediate Supervisor
• He/she is probably most familiar with the individual’s performance and, in most jobs,
has had the best opportunity to observe actual job performance.
• Is probably the person best able to relate the individual’s performance to what the
department and organization are trying to accomplish.
• Because he/she also is responsible for reward (and punishment) decisions, and for
managing the overall performance management process, feedback from supervisors is
more highly related to performance than that from any other source.
Peers
• In some jobs, the immediate supervisor may observe a subordinate’s actual job
performance only rarely. In other environments, such as self-managed work teams,
there is no “supervisor.”
• Peers can provide a perspective on performance that is different from that of
immediate supervisors.
• To reduce potential friendship bias while increasing the feedback value of the
information provided, it is important to specify exactly what the peers are to evaluate.
• In light of the potential problems associated with peer appraisals, it is wise not to rely
on them as the sole source of information about performance.
Subordinates
• Appraisal by subordinates can be a useful input to the immediate supervisor’s

development.
• Subordinates know firsthand the extent to which the supervisor actually delegates,
how well he/she communicates, the type of leadership style he/she is most
comfortable with, and the extent to which he/she plans and organizes.
• Managers who met with their direct reports to discuss their upward feedback
improved more than other managers.
• What managers do with upward feedback is related to its benefits.
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• Should subordinate ratings be anonymous?

✓ Managers want to know who said what, but subordinates prefer to remain
anonymous to avoid retribution.
✓ Collect and combine the ratings in such a manner that a manager’s overall rating
is not distorted by an extremely divergent opinion.
✓ Evidence indicates that ratings provided by peers and subordinates are
comparable, for they reflect the same underlying dimensions.
Self-Appraisal
• The opportunity to participate in the performance appraisal process, particularly if

appraisal is combined with goal setting, improves the ratee’s motivation and reduces
his/her defensiveness during the appraisal interview.
• Self-appraisals tend to be more lenient, less variable, and more biased, and to show
less agreement with the judgments of others.
• Self-appraisals are more appropriate for counseling and development than for
employment decisions.
Customers Served
• In some situations the consumers of an individual’s or organization’s services can

provide a unique perspective on job performance.
• Although the customers’ objectives cannot be expected to correspond completely to
the organization’s objectives, the information that customers provide can serve as
useful input for employment decisions.
• It can also be used to assess the impact of training or as a basis for self-development.
Computers
• Technology has made continuous supervision possible—computer software that

monitor employee performance.
Are supervisors’ Ratings Affected by Other Sources of Information about

Performance?
• In practice, appraising performance is not strictly an individual task.
✓ Supervisors often use information from outside sources in making their judgments
about performance.
✓ Supervisors may change their ratings in the presence of indirect information.
• A study revealed that indirect information is perceived to be most useful when it
agrees with the rater’s direct observation of the employee’s performance.
• In sum, although direct observation is the main influence on ratings, the presence of
indirect information also is likely to affect them.
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Multi-Rater or 360-Degree Feedback

• Many organizations now use input from managers, subordinates, peers, and
customers to provide a perspective on performance from all angles (360 degrees).
• There are at least four reasons why such an approach is potentially valuable:
✓ It includes observations from different perspectives, and perhaps includes
different aspects of performance that capture the complexities of an individual’s
performance in multiple roles.
✓ Feedback from multiple sources may reinforce feedback from the boss, thereby
making it harder to discount the viewpoint of that single person.
✓ Discrepancies between self-ratings and those received from others may create an
awareness of one’s needs for development, and motivate individuals to improve
their performance in order to reduce or eliminate such discrepancies.
✓ At least some senior managers believe that if they can improve leadership among
their organization’s leaders, ultimately that will benefit the bottom line.
• Ratings from these different sources generally do not agree closely with each other.
• To overcome the potential problems in the process:
✓ Make sure appraisal has a single, clear purpose—development.
✓ Train all raters to understand the overall process as well as in how to complete
forms and avoid common rating errors.
✓ Seek a variety of types of information about performance.
✓ Help employees interpret and react to the ratings.
✓ Link 360-degree feedback to other HR systems, and take the time to evaluate their
effectiveness.
• In addition to these steps, make it clear who owns the 360-degree reports.
• The written report should contain a summary that integrates the main themes from the
scores (assuming quantitative results are part of the process) and the respondents’
comments.
• Another important consideration is the timing and frequency of performance
appraisal.
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WHEN AND HOW OFTEN SHOULD APPRAISAL BE DONE?

• Research shows that the practice of annual or semi-annual appraisals are far too
infrequent.
✓ This is why some firms add frequent, informal “progress” reviews between the
annual ones.
• If a rater is asked to assess an employee’s performance over a 6- to 12-month period,
biased ratings may result, especially if information has been stored in the rater’s
memory according to irrelevant, oversimplistic, or otherwise faulty categories.
• There should be no “surprises” in appraisals, and one way to ensure this is to do them
frequently.
Evaluating the Performance of Teams

• Team-based organizations do not necessarily outperform organizations that are not
structured around teams, but there seems to be an increased interest in organizing how
work is done around teams.
• Performance management systems should target not only individual performance but
also an individual’s contribution to the performance of his/her team, as well as the
performance of teams as a whole.
• If individual performance is not assessed and recognized, social loafing may occur;
when other team members see there is a “free rider,” they are likely to reduce their
efforts.
• Assessing team performance should be seen as complementary to the assessment and
recognition of individual performance his/her contribution to team performance.
• There are three types of teams:
✓ Work or service teams.
✓ Project teams.
✓ Network teams.
• End-of-project outcome measures should be geared toward the type of team.
• Raters are likely to make intentional or unintentional mistakes in assigning
performance scores.
• Raters can be trained to minimize such biases.
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APPRAISAL ERRORS AND RATER-TRAINING STRATEGIES
• The use of ratings assumes that the human observer is reasonable, objective, and
accurate.
• Rater’s memories are quite fallible, and raters subscribe to their own sets of likes,
dislikes, and expectations about people, expectations that may or may not be valid.
• The most common types of rating errors:
✓ Leniency
✓ Severity
✓ Central tendency
• Other rating errors include:
✓ Halo errors: Raters who commit this error assign ratings on the basis of global
(good or bad) impressions of ratees.
✓ Contrast errors: This results when a rater compares several employees to one
another rather than to an objective standard of performance.
✓ Recency error: This results when a rater assigns his/her ratings on the basis of the
employee’s most recent performance. It is most likely to occur when appraisals
are done only after long periods.
• Implementing a performance management system without training all parties to use it
is a waste of time and money.
• Training managers but then not holding them accountable for implementing what
they have been trained on is not the best use of resources.
• Key topics to address with respect to performance-management training include:
✓ Philosophy and uses of the system.
✓ Description of the rating process.
✓ Roles and responsibilities of employees and managers.
✓ How to define performance, and to set expectations and goals.
✓ How to provide accurate assessments of performance, minimizing rating errors
and rating inflation.
✓ The importance of ongoing, constructive feedback in behavioral terms.
✓ How to give feedback in a manner that minimizes defensiveness and maintains
the self-esteem of the receiver.
✓ How to react to and act on feedback in a constructive manner.
✓ How to seek feedback from others effectively.
✓ How to identify and address needs for training and development.
9-20
• Of the many types of rater training programs available today, frame-of-reference

training (FOR) is the most effective at improving the accuracy of performance
appraisals.
• FOR training proceeds as follows:
✓ Participants are told that they will evaluate the performance of three ratees on
three separate performance dimensions.
✓ They are given rating scales and instructed to read them as the trainer reads the
dimension definitions and scale anchors aloud.
✓ The trainer then discusses ratee behaviors that illustrate different performance
levels for each scale. The goal is to create a common performance theory (frame
of reference) among raters.
✓ Participants are shown a videotape of a practice vignette and are asked to evaluate
the manager using the scales provided.
✓ Ratings are then written on a blackboard and discussed by the group of
participants. The trainer seeks to identify which behaviors participants used to
decide on their assigned ratings, and to clarify any discrepancies among the
ratings.
✓ The trainer provides feedback to participants, explaining why the ratee should
receive a certain rating (target score) on a given dimension.
• Rater training is clearly worth the effort. Research indicates that the kind of approach
advocated here is especially effective in improving the meaningfulness and usefulness
of the performance management process.
SECRETS OF EFFECTIVE PERFORMANCE FEEDBACK INTERVIEWS

Communicate Frequently
• Once-a-year performance appraisals are of questionable value.

• Coaching should be a day-to-day activity—particularly with poor performers or new
employees.
• Feedback has maximum impact when it is given as close as possible to the action.
• Communication of performance feedback in an interview is most effective when the
subordinate already has relatively accurate perceptions of his/her performance before
the session.
Get Training in Performance Feedback and Appraisal Interviewing
• Train raters to observe behavior more accurately and fairly.

• Focus on managerial characteristics that are difficult to rate and on characteristics that
people think are easy to rate but which generally result in disagreements.
• Use a problem-solving, rather than a “tell-and-sell,” approach.
9-21
Encourage Subordinates to Prepare
• Subordinates who spend more time prior to performance feedback interviews

analyzing their job responsibilities and duties, problems they encounter on the job,
and the quality of their performance are more likely to:
✓ Be satisfied with the performance management process
✓ Be motivated to improve their performance
✓ Actually improve.
Encourage Participation
• A perception of ownership is related strongly to subordinates’ satisfaction with the

appraisal interview, the appraisal system, motivation to improve performance, and the
perceived fairness of the system.
• Participation provides an opportunity for employee voice in performance appraisal.
• It encourages the belief that the interview was fair, that it was a constructive activity,
that some current job problems were cleared up, and that future goals were set.
Judge Performance, Not Personality
• In addition to the potential legal liability of dwelling on personality rather than on job
performance, supervisors are far less likely to change a subordinate’s personality than
they are performance.
• Maintain a problem-solving, job-related focus.
• An emphasis on the employee as a person or his/her self-concept, as opposed to task
and task performance only, is likely to lead to lower levels of future performance.
Be Specific, and Be an Active Listener
• Maximize information relating to performance improvements and minimize

information concerning the relative performance of other employees.
• By being an active listener, the supervisor demonstrates genuine interest in the
subordinate’s ideas.
• Active listening requires that you do five things well:
(1) Take the time to listen—hold all phone calls and do not allow interruptions.
(2) Communicate verbally and nonverbally that you genuinely want to help.
(3) As the subordinate begins to tell his/her side of the story, do not interrupt and do
not argue.
(4) Watch for verbal as well as nonverbal cues regarding the subordinate’s agreement
or disagreement with your message.
(5) Summarize what was said and what was agreed to.
• Specific feedback and active listening are essential to subordinates’ perceptions of the
fairness and accuracy of the process.
9-22
Avoid Destructive Criticism
• Destructive criticism is general in nature, frequently delivered in a biting, sarcastic

tone, and often attributes poor performance to internal causes (e.g., lack of motivation
or ability).
• It leads to three predictable consequences.
(1) It produces negative feelings among recipients and can initiate or intensify
conflict;
(2) It reduces the preference of individuals for handling future disagreements with the
giver of the feedback in a conciliatory manner (e.g., compromise, collaboration); and
(3) It has negative effects on self-set goals and on feelings of self-confidence.
• This is one type of communication to avoid.
Set Mutually Agreeable Goals
• Studies demonstrate that goals direct attention to the specific performance in

question, that they mobilize effort to accomplish higher levels of performance, and
that they foster persistence for higher levels of performance.
• Set specific, challenging goals, for this clarifies for the subordinate precisely what is
expected and leads to high levels of performance.
Continue to Communicate, and Assess Progress toward Goals Regularly
• Periodic tracking of progress toward goals has three advantages:

(1) It helps keep behavior on target,
(2) It provides a better understanding of the reasons behind a given level of
performance, and
(3) It enhances the subordinate’s commitment to perform effectively.
• All of this helps to improve supervisor-subordinate work relationships, which in turn
has positive effects on performance.
Make Organizational Rewards Contingent on Performance
• If subordinates see a link between appraisal results and employment decisions, they
are more likely to prepare for performance feedback interviews, to participate actively
in them, and to be satisfied with the overall performance management system.
9-23
PERFORMANCE REVIEWS: THE DILEMMA OF FORCED RANKING
• Forced distributions do differentiate employees from one another, and they eliminate
rater leniency, but they tend to be associated with lower effectiveness of performance
management systems, particularly when appraisal results are tied to termination.
• Proponents of forced rankings argue that they facilitate budgeting and guard against
spineless managers who are too afraid to jettison poor performers.
• Critics say they compel managers to penalize a good but not great employee who is
part of a superstar team. Conversely, a mediocre employee on a struggling unit can
come out looking great.
• Most companies guard against this problem by refraining from rigidly applying the
distribution to smaller teams—but this means the spread has to be made up
somewhere else.
• Another area of contention is the ranking criteria. In contrast to objective criteria,
many organizations use fuzzy, qualitative criteria to evaluate employees.
• After a string of age-discrimination suits fewer companies seem to be adopting
forced-distribution systems.
• A major problem seems to be that they simply don’t work well in company cultures
that value teamwork, collaboration, and risk taking. Moreover, they mask differences
in performance across divisions and workgroups.
• It is likely that some workgroups are more effective than others, but with forced-
distribution ratings it is impossible to distinguish groups that are performing well
from those that are performing poorly.
SUMMARY
• Performance management requires the willingness and commitment to focus on

improving performance at the level of the individual or team every day.
• An ongoing performance management system provides instantaneous, real-time
information that describes the difference between one’s current and desired course.
• At a general level, the broad process of performance management requires that you
do three things well:
✓ Define performance
✓ Facilitate performance
✓ Encourage performance
• Performance appraisal is a necessary, but not sufficient, part of the performance-
management process.
9-24
• It serves two major purposes in organizations:

✓ To improve the job performance of employees
✓ To provide information to employees and managers for use in making decisions.
• Many performance appraisal systems fail because they do not satisfy one or more of
the following requirements: relevance, sensitivity, reliability, acceptability, and
practicality.
• The failure is frequently accompanied by legal challenge to the system based on its
adverse impact against one or more protected groups.
• Performance appraisal is done once or twice a year in most organizations, but
research indicates that this is far too infrequent.
• The specific rating method used depends on the purpose for which the appraisal is
intended.
• Comparisons among employees are most appropriate for generating rankings for
salary administration purposes, while MBO, work planning and review, and narrative
essays are least appropriate for this purpose.
• For purposes of employee development, critical incidents or behaviorally anchored
rating scales are most appropriate.
• The rating methods that focus on describing rather than evaluating behavior (e.g.,
BARS, behavioral checklists) are the most interpretable across raters.
• Performance management and appraisal may be done at the level of the individual or
the team.
• Rater judgments are subject to various types of biases:
✓ Leniency
✓ Severity
✓ Central tendency
✓ Halo
✓ Contrast
✓ Recency
• To improve the reliability and validity of ratings, use frame-of-reference training to
help raters observe behavior more accurately.
9-25
• To improve the value of performance feedback interviews:

✓ Communicate frequently with subordinates
✓ Encourage them to prepare and to participate in the process
✓ Judge performance, not personality
✓ Be specific
✓ Avoid destructive criticism
✓ Set goals
✓ Assess progress toward goals regularly
✓ Make rewards contingent on performance.
ANSWERS TO DISCUSSION QUESTIONS
9-1 What would an effective performance management system look like?
An effective system for one organization will not “look like” that of another. The key
is in the development of the system. Employees and supervisors should be involved to
as great an extent as possible in the development of the system. Managers should
receive initial training on the rationale and importance of the system, and on how to
conduct appraisal interviews. Such training should involve filmed models of effective
and ineffective appraisal interviews, and an opportunity for role-play practice and
reinforcement. It is a good idea to start any change effort–such as implementation of
new performance management system--at the top of the organization and in
departments that are most receptive to the idea. The early successes can generate
momentum for the program. It is important to recognize that changes in appraisal
systems signal major changes in the way of doing business, and therefore should be
handled similarly to large-scale organization development projects.
Whatever the final form of the performance management system, it should be legally
defensible.
9-2 What is the difference between performance management and performance

appraisal?
A performance appraisal is generally done once or twice a year and is used to identify
and discuss job-relevant strengths and weaknesses of individuals and teams.
Performance management is used on a more frequent basis to help individuals and
teams determine where they are now and in what direction they should be headed.
9-26
9-3 You have been asked to design a rater-training program. What types of elements
would you build into the process?
The rater training program would be designed to help raters understand: (a) the
philosophy and uses for the system, (b) the system itself, (c) the roles and
responsibilities of the employees and raters, (d) common rating errors, (e) the
importance of providing ongoing feedback, (f) how to give feedback in a way that
minimizes defensiveness, and (g) how to identify and address training and
development needs. Further, raters should understand the legal issues surrounding the
evaluation process.
9-4. Working in small groups, develop a performance management system for a

cashier in a neighborhood grocery with little technology but lots of personal
touch.
Student answers may vary. The first step is a job analysis to determine what is to be
done by cashiers and how well it is to be done. Students may be able to develop an
adequate list of critical and noncritical job tasks on the basis of their own experience
with grocery cashiers (e.g., correctly inputs prices for items, does not damage foods
during checking, is courteous to customers, etc.). Then, performance standards should
be set and communicated to workers (e.g., no more than one pricing error per 100
items checked, no more than $100 worth of damaged food per month, no more than
two customer complaints per month). Given the store’s focus on customer orientation,
this dimension should be weighted most heavily in determining overall evaluations,
done quarterly, and fed back to cashiers in regularly scheduled performance feedback
sessions.
9-5. The chief counsel for a large corporation comes to you for advice. She wants to
know what makes a firm's appraisal system legally vulnerable. What would you
tell her?
The scientific and legal prerequisites for effective appraisal systems are relevance,
sensitivity, and reliability. Further, an appraisal system is less likely to be the target of
a lawsuit if it is practical and acceptable to users. Beyond these general guidelines,
examination of case law decisions suggests that appraisal systems should:
(a) provide specific instructions for supervisors on how to complete the appraisal and
what the performance standards are,
(b) provide training for supervisors in performance appraisal,
(c) be based on a thorough job analysis,
(d) provide for discussion of appraisal results with subordinates and a formal
mechanism by which subordinates can appeal these results, and
(e) document the appraisal results and any reasons for termination.
9-27
Even after carefully designing a performance appraisal system following these

guidelines, HR managers should still closely monitor selection, promotion, and layoff
rates for minorities to determine if adverse impact is present. Whenever it does, an
organization is vulnerable to lawsuit and must be prepared to demonstrate the validity
of its appraisal system.
9-6 How is performance appraisal for teams different from performance appraisal
for individuals?
Individual performance appraisals focus on how well the individual performed and
how this performance contributed to the success of the team.
Performance evaluations for teams focus on the performance of the team as a whole
and how well the team contributed to the success of the organization.
9-7 How can we overcome employee defensiveness in performance feedback

interviews?
Given the intensely emotional nature of such interviews, it is unlikely that

defensiveness can be totally eliminated. However, defensiveness may be reduced by
following the steps suggested in the text:
(a) communicate performance feedback regularly so that there are “no surprises”
come appraisal time;
(b) use a problem-solving, rather than “tell-and-sell,” approach;
(c) encourage subordinate preparation prior to the meeting and participation during
the meeting;
(d) judge performance, not personality;
(e) communicate clearly and listen actively;
(f) participatively set goals for future performance;
(g) follow-up by assessing progress toward goals; and
(h) make organizational rewards contingent on performance.
Beyond the advice in the text, other approaches are to:

(a) ask subordinates to come to the interview with a completed self-appraisal for
comparison with the supervisor's,
(b) ask subordinates to evaluate the supervisor in terms of how well he/she has
assisted them over the appraisal period,
(c) keep the discussion focused on future development and performance improvement
rather than on past deficiencies, and
(d) separate discussions of development from those involving salary considerations.
9-28
9-8 Should discussions of employee job performance be separated from salary

considerations?
Student answers will vary, depending on their viewpoint. Sample answer:
No, discussions of employee performance should not be separated from salary

considerations because if employees see a link between appraisal results and
employment decisions, they are more likely to try to achieve the performance goals
set for them.
However, employees must understand what the performance goals are before the
performance review, in order to set their behavior patterns. Finding out that they did
not meet expectations at the time of the review leads to confusion, anger, and
resentment, and possibly decreased effort.
APPLYING YOUR KNOWLEDGE
Case 9-1 Problems in Appraisal at Peak Power

Peak Power, a medium-size hydroelectric power plant near Seattle, Washington, hires
you as the HR consultant to design a new appraisal system. The plant’s present 10-
year old appraisal system considers the cumulative ratings over the years, for
evaluating promotion or salary raise issues. Recent problems in other areas of HR
management at the plant and the fear of potential lawsuits led Peak’s president to the
decision.
Questions
1. The president asks you for your general evaluation of this appraisal system.
What is your response?
The system as presented is fairly typical of those in practice in many small and
medium-sized organizations. It is also highly inadequate. It appears to be making no
contribution to either employee development or personnel decision making. If a
discrimination lawsuit is filed, Peak Power will be hard pressed to defend its present
system.
9-29
2. The president asks you for some suggestions for ways in which the present
system can be improved? What would you say?
Many possibilities can be suggested. For example, performance standards based on

job analyses need to be developed for specific jobs within the plant. Forms need to be
redesigned to reflect differences in jobs. Evaluations need to be done more frequently,
and performance feedback needs to be on a continuous basis. The appraisals
themselves need to be used directly in making decisions about allocation of
organizational rewards (e.g., promotions, raises). Appraisals should be discussed with
subordinates before, rather than after, review by higher management. As the present
system has been in existence for 10 years, it is likely that supervisors are in need of
training in performance appraisal, and in particular, in appraisal interviewing.
3. If you should be selected for this position, outline some steps you would take to
ensure that a new performance management system would be accepted by its
users.
The approach used by Corning in implementation of its Performance Management

System provides a good model for implementation. Employees and supervisors
should be involved to as great an extent as possible in the development of the new
system. Managers should receive initial training in the rationale and importance of the
system, and in how to conduct appraisal interviews. Such training should involve
filmed models of effective and ineffective appraisal interviews, and an opportunity
for role-play practice and reinforcement. Ideally, start such change efforts at the top
of the organization and in departments that are most receptive to the idea. That way,
early successes can generate momentum for the program. It is important to recognize
that changes in appraisal systems signal major changes in the way of doing business,
and therefore should be handled similarly to large-scale organization development
projects.
9-30
Another random document with
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The “Soo” Canal not only has the heaviest freight
traffic of any artificial waterway in the world, but is
also on the route of the passenger steamers that
carry thousands of tourists through the Great Lakes.
The longest bascule bridge in the world is
operated by the Canadian Pacific Railway at Sault
Ste. Marie. Each section is 169 feet long, and is
raised by electric power to permit vessels to pass
through the canal.
The moose in the thick forests of Canada feed off
the trees and smaller shrubs. The moose have such
short necks and long front legs that they cannot
browse on grass without getting down on their knees.
Ontario has so many lakes that canoes can be
paddled for hundreds of miles with practically no
portages. Since the days of the French explorers,
these lakes have formed part of the water route from
the East to Hudson Bay.
It is interesting to go through these factories and see the work of
Lake Superior in harness. In the pulp mills, where more than a
hundred huge truck loads of news-print are turned out every day, I
saw the logs ground to dust, mixed with water, and made into miles
of paper to feed printing presses. The output is so great that every
three months enough paper is made to cover a sidewalk reaching all
the way round the world.
In the saw-mills millions of feet of lumber are being cut into
boards for the markets of the United States, and in the veneering
works birch logs as big around as a flour barrel are made into
sheets, some as thin as your fingernail, and others as thick as the
board cover of a family Bible. Here we see that the logs are soaked
in boiling water and then pared, just as you would pare an apple, into
strips of wood carpeting perhaps a hundred feet long. These strips
are used for the backing of mahogany and quartered oak sent here
from Grand Rapids and other places where furniture is made. One
often thinks he is getting solid mahogany or solid oak, whereas he
has only the knottiest of pine or other rough wood on which is placed
a strip of birch, with a veneer of mahogany or oak on top. The thick
birch strips are used also for chair and opera seats.
Near the saw-mills is the Clergue steel plant, with its smoke
stacks standing out against the blue sky like the pipes of a gigantic
organ. The works cover acres and turn out thousands of tons of
metal products every day. They are supplied by the mountains of iron
ore lying on the shores of Lake Superior not far away, with great
steel unloaders reaching out above them.
Sault Ste. Marie is one of the oldest settlements in the Dominion
of Canada. Here in 1668, Father Marquette established the first
Jesuit mission in the New World, and the priests who followed him
were the first white men to travel from lower Canada to the head of
the Great Lakes, where now stand Port Arthur and Fort William. The
town of to-day is a bustling place of almost twenty-five thousand
population. It is connected with its American namesake on the
opposite bank of the river by a mile-long bridge of the Canadian
Pacific Railway.
On both sides of the Saint Mary’s River are the locks of the
famous “Soo” Canal, where the Great Lakes freighters and
passenger boats are lowered and raised twenty feet between the
levels of Lakes Superior and Huron. The first canal was built around
the rapids in 1798, to accommodate the canoes of the Indians and
fur traders. Along it ran a tow-path for the oxen that later pulled the
heavier loads. That canal was destroyed by the United States troops
in the War of 1812.
The present canal was opened in 1897, providing a new link in
the chain of waterways from the head of the Lakes to the Saint
Lawrence. The Canadian lock is nine hundred feet long and when
finished was the longest in the world. Since then it has been
surpassed by one eleven hundred feet in length on the American
side. The United States locks handle about ninety per cent. of the
freight traffic, which has so increased in the last twenty years that it
has been necessary to add three more locks to the original one on
our side of the river. Two of these locks are longer by three hundred
feet than the famous Panama locks at Gatun or Pedro Miguel. Each
is big enough to accommodate two ships at one time. Nevertheless,
during the open season one can often see here a score of steamers,
some of them of from twelve to fifteen thousand tons, waiting to go
through.
The “Soo” is noted for having the heaviest freight traffic of any
artificial waterway in the world. The tonnage passing through it in
one year is three times as large as that of the foreign trade shipping
of the port of New York, four times as great as the freight passing
through the Suez Canal, and five times as great as that of the
Panama Canal. For six months of the year an average of more than
one steamer goes through every fifteen minutes. The chief freight
commodity is ore from the iron mines of Lake Superior, which often
comprises seventy per cent. of the total. Coal and wheat are next in
importance.
In coming to the “Soo” from Cobalt and Sudbury, I have been
travelling through the new Ontario, the “wild northwest” of the
Ontario we know on the shores of Lakes Ontario, Erie, and Huron.
The land near those bodies of water is about as thickly settled as
Ohio. It has some of the best farms of North America, producing
grain, vegetables, and fruits worth millions of dollars a year. At every
few miles are modern cities. The whole country is cut up by railways,
and one can go by automobile through any part of it. The cities and
town hum with factories, and the entire region is one of industry and
thrift.
This new Ontario is the frontier of the province. It is the great
northland between Georgian Bay and Hudson Bay, extending from
Quebec westward through the Rainy River country to Manitoba. This
vast region is larger than Texas, four times the size of old Ontario,
and much bigger than Great Britain or France. It is divided into eight
great districts. The Thunder Bay and Rainy River districts in the west
are together as long as from Philadelphia to Boston, and wider than
from Washington to New York. The Algoma district, in the southern
end of which the “Soo” is located, is almost as wide, extending from
Lake Superior to the Albany River, while the Timiskaming district
reaches from Cobalt north to James Bay, and borders Quebec on
the east.
Until the first decade of the twentieth century this vast territory
was looked upon as valuable only for its timber, of which it had
nearly two hundred million acres. It was thought to be nothing but
rock and swamp, covered with ice the greater part of the year. Its
only inhabitants were Indian hunters, Hudson’s Bay Company fur
traders, and lumbermen who cut the trees along the streams and
floated them down to the Great Lakes. Then a new line of the
Canadian Pacific Railway was put through, the great nickel mines
were discovered, the silver and gold regions were opened up, and
the Dominion and provincial governments began to look upon the
land as an available asset.
Exploration parties were sent out by the Ontario government to
investigate the region from Quebec to Manitoba. They reported that
a wide strip of fertile soil ran through the wilderness about a hundred
miles north of the route of the Canadian Pacific Railway. This land is
of a different formation from the rest of northern Ontario. It is a clay
loam, from which the region gets its name, the Great Clay Belt. This
belt is from twenty-five to one hundred miles wide, and it extends
westward from the Quebec-Ontario boundary for three hundred
miles or more. It is estimated to contain as much land as West
Virginia.
The Clay Belt is just north of the height of land of the North
American continent, which divides the rivers flowing north from those
that flow south. The streams on the southern side of the ridge flow
into the Great Lakes, and some even to the Gulf of Mexico. On the
north slope they flow into Hudson Bay, or by the Mackenzie and
other rivers into the Arctic Ocean. The Clay Belt has seven good-
sized rivers and is well watered throughout.
If there is a moose within sound of the hunter’s
birch-bark horn, he will think it one of his brethren
calling and be so foolish as to come near and be shot.
These animals are still plentiful in Canadian forests.
The trout-filled streams of interior Ontario and
Quebec are a Mecca for the fishermen of both the
United States and Canada. In the tributaries of the St.
Lawrence the fresh-water salmon also provide good
sport.
In midsummer the Clay Belt is as hot as southern Canada or the
northern part of the United States. As a matter of fact, Cochrane, its
chief town, is fifty miles south of the latitude of Winnipeg. Everything
grows faster than in the States, for owing to the high latitude the
summer days are fifteen or sixteen hours long, the sun rising a little
after three and setting between eight and nine. The clay loam is
particularly fitted for growing wheat, and certain districts have yielded
forty bushels an acre. Oats, barley, and hardy vegetables are raised
successfully. The country looks prosperous, and there are well-filled
barns and fine herds of livestock as evidences of its productivity.
When the first settlements were made, Northern Ontario had no
railroads to market its produce. Four thousand miles of track have
since been built, including two lines now a part of the Canadian
National. One of these goes through the very centre of the Clay Belt
and has settlements all along it. At almost every river crossing is a
lumber mill, for Northern Ontario’s vast forest stretches and the
water-power in its streams have made it an important producer of
lumber and wood pulp. The trees of the Clay Belt are mostly of a
small growth, therefore chiefly valuable for pulp and easier to handle
in clearing the land.
Ontario has set aside thirteen million acres of forest reserves,
nine tenths of which is in the northern part of the province. The
Nipigon and Timagami reserves are each larger than Rhode Island
and provide camping grounds unequalled in the Dominion. Lake
Timagami is dotted with hundreds of islands and is a favourite haunt
of canoeists. Farther west, near the Manitoba boundary, the beautiful
Lake of the Woods is another famous camping and hunting district.
Immense herds of caribou roam through Northern Ontario. They
are to be seen in droves of hundreds and sometimes of thousands.
They have cut their trails across the country, and a hunter to whom I
have been talking tells me that from his camp at night he can often
hear the rushing noise they make as they move through the woods.
In the forests farther south moose are found in great numbers.
These animals are browsers rather than grass eaters, their necks
being so short that they have to get down on their knees when they
eat grass. Deer and smaller animals also abound, wild ducks and
geese are plentiful, and the streams are filled with fish. Indeed, it is
little wonder that each year sees thousands of campers making their
way to this “sportsman’s paradise.”
CHAPTER XIX
THE TWIN LAKE PORTS
I am at the nozzle of the mighty grain funnel down which

Canada’s wheat crop is pouring into the boats of Lake Superior. The
prairie provinces of the Dominion produce in one year almost a half
billion bushels of wheat, and after the harvest a steady stream of
golden grain rolls into the huge elevators of Port Arthur and Fort
William, its sister city, three miles away.
These cities are on the north shore of Lake Superior, two or
three hundred miles from Duluth, and within four hundred miles of
Winnipeg. Port Arthur is situated on Thunder Bay, opposite the rocky
promontory of Thunder Cape, and Fort William is a short distance
farther inland at the mouth of the Kaministiquia River. Both towns
have harbours deep enough for the largest lake steamers, and
during eight months of the year a great caravan of boats is moving
back and forth between here and the East. By the Canadian Pacific
and the Canadian National railways, Port Arthur and Fort William
have connection with every part of the wheat belt, and almost the
entire amount of wheat exported, or about seventy per cent. of the
total production, is brought here for storage and transportation.
The two cities are so full of the spirit of the breezy West that one
feels it in the air. The region is in step with twentieth-century
progress. The people look at the future through the right end of the
telescope, and most of them have microscopes in front of the lenses.
Everyone is building air castles—not in Spain, but upon Lake
Superior—and although he acknowledges that he has not yet got far
beyond the foundations, he can in his mind’s eye see cities far
surpassing those of the present.
Speaking of the enthusiasm of the Port Arthurites—the night I
arrived I walked up the street and entered a stationery store. While
making a purchase I happened to remark that the town was
beautifully located.
“It is,” said the clerk, “and if you will come with me I will show you
one of the finest views in the world just behind this store.”
Supposing it to be a walk of a minute or so, I consented. The
clerk grabbed his hat and out we went. He tramped me two miles up
the hills back of Port Arthur, leading me on and on through one
district after another, until I wondered whether I was in the hands of a
gold brick agent or some other confidence man. At last, when we
were out among the real estate signs, he struck an attitude and
exclaimed:
“Behold Port Arthur.”
It was moonlight and I could see the ghost-like buildings
scattered over the hills, while down on the shore of the lake was the
skyline of the business section with the mighty elevators on the edge
of the water beyond. It was a fine moonlight view of Thunder Bay,
but being tired out after my trip from the “Soo,” I was not
enthusiastic.
The government-owned wheat elevator at Port
Arthur is the world’s largest grain storage plant. The
greater part of all the wheat grown on the western
prairies comes to this city or to Fort William for
shipment down the lakes.
The beautiful falls of Kakabeka are almost as high
as those of Niagara. They generate hydro-electric
power that is carried to Fort William, twenty-three
miles away, to light the city and run its factories.
“The lake freighters are like no other craft I have
ever seen. Between the bow and the stern is a vast
stretch of deck, containing hatches into which wheat
or ore is loaded. This boat is six hundred feet long.”
Fort William and Port Arthur are rivals. Port Arthur was built first.
Formerly the site of an Indian village, it was founded by the
Canadian Pacific Railway. Shortly after its birth the baby town
decided to tax that great corporation. This made the railway people
angry, and it is said that the then president of the line decided to
discipline the infant by moving his lake terminus to Fort William,
which was then a Hudson’s Bay Company trading post. He
thereupon shifted the railway shops to Fort William, saying that he
would yet see the grass grow in the streets of Port Arthur. For a time
the grass did grow, but later the Canadian Northern road, now a part
of the Canadian National, was built through, and Port Arthur now has
traffic from both roads. Most of the business of the Canadian Pacific
is still done at Fort William.
Fort William and Port Arthur are connected by a street-car line
and the land between them has been so divided into town lots that
they may some day unite the two cities. Both places believe in
municipal ownership, and each manages its own electric lights,
telephones, and waterworks. Fort William is the larger, Port Arthur
having four or five thousand less people.
During my stay here I have gone through some of the wheat
elevators. Fort William has twenty-two and Port Arthur ten, with a
total storage capacity between them of fifty-six million bushels. Plans
are under way to make this enormous capacity even greater. The
terminal elevator of the Canadian National Railways, built on the
very edge of Lake Superior, is the largest in the world. It consists of
two huge barn-like divisions between which are more than one
hundred and fifty herculean grain tanks. These are mighty cylinders
of tiles bound together with steel, each of which is twenty-one feet in
diameter and will hold twenty-three thousand bushels of wheat. This
great tank forest covers several acres, and rises to the height of an
eight-story apartment house.
The storage capacity of the elevator is eight million bushels of
wheat, which is more than enough to supply a city the size of Detroit
with flour the year round. The elevator can unload six hundred cars
of wheat, or about six hundred thousand bushels, in a single day,
including the weighing and binning. It has scales that weigh forty-
three tons at a time.
The wheat comes to the elevator in cars, each of which holds a
thousand or fifteen hundred bushels. By a car-dumping machine the
grain is unloaded into the basement of the huge buildings at the
sides of the tanks. From there it is raised to the top of the elevator in
bushel buckets on endless chains at the rate of six hundred and fifty
bushels a minute, or more than ten every second. It is next weighed,
and then carried on wide belt conveyors into the storage towers. The
machinery is so arranged that by pressing a button or moving a lever
a stream of wheat will flow to any part of the great granary. The grain
runs just like water, save that the belts conduct it uphill or down.
When ready to be transferred to a steamer, the wheat is drawn
from the bottom of a bin, again elevated to the top of the building,
weighed, and then poured into the vessel through spouts. It is not
touched by hand from the time it leaves the car until it is taken from
the hold of the ship, and the work is done so cheaply that it costs
only a fraction of a cent to transfer a bushel of wheat from the car to
the boats. For ten or eleven cents a bushel it can be carried a
thousand miles or more down the lakes and put into the hold of an
ocean steamer that takes it to Europe.
In one of the elevators of the Canadian Pacific Railway at Fort
William a train of wheat is handled every twenty minutes during the
season. I timed the workers as they unloaded one car. It contained
sixteen hundred bushels of wheat, or enough, at twenty-five bushels
an acre, to equal the crop of a sixty-four acre farm. Nevertheless, it
was elevated, weighed, and put in the tanks within less than eight
minutes.
The open navigation season on the Great Lakes lasts from May
to December, and during this time as much as five million bushels of
wheat a day have been put on freight boats at Fort William or Port
Arthur for trans-shipment to the East. Some of the freighters unload
their cargoes at Georgian Bay ports, on the east side of Lake Huron,
from where the wheat goes by rail to Montreal. Other ships
discharge at Port Colborne, Ontario, from where the grain is carried
on barges through the Welland Canal and thence down the St.
Lawrence and its canals to Montreal. Still other shipments go
through United States ports. A few small steamers take their cargoes
all the way by water from the head of the Lakes to Montreal; the
grain carried in this way is only between two and three per cent. of
the total.
The all-water route and the combined rail-and-water route from
the head of the Lakes to the Atlantic seaboard are much cheaper
than the all-rail route, due to high railway freight rates in eastern
Canada. A bushel of wheat can be sent over the thirteen hundred
miles between Calgary and Fort William for about fifteen cents, while
the overland freight rate from Fort William to Quebec or Montreal, a
distance of only a thousand miles, is twenty-one cents. The rate on
the all-water route from Fort William to Montreal is ten cents
cheaper, or eleven cents. From Fort William to New York via Buffalo
it is fourteen cents, but vessels sailing from New York offer lower
ocean rates and can get cheaper marine insurance, so that more
than half of Canada’s export wheat is shipped abroad via the United
States.
Whenever we have put a high tariff on Canadian wheat, the
amount exported to our country declines. We now admit Canadian
wheat free of duty on condition that none shall be consumed in the
United States. This does not mean that it may not be manufactured.
At present fifty per cent. of all that is imported is made into flour, and
then reëxported.
Some of the lake freighters in the Port Arthur and Fort William
harbours are like no other craft I have seen. They have an elevated
forecastle at the bow for the crew, with the engines and officers’
quarters in the stern. In rough weather one can pass from bow to
stern only by means of a life rope, and orders and reports are given
by telephone. In the stretch of deck between is a series of hatches,
sometimes thirty or more, through which the cargoes are loaded or
discharged. A single vessel will often carry three hundred thousand
bushels of wheat, or the equivalent of six or seven trainloads of forty
cars each. Among the boats in the lake grain trade this season were
a number of small ocean-going freighters from Norway, attracted
here by the cargoes available at profitable rates.
Besides the great fleet of grain-carrying ships, passenger
steamers run from Port Arthur and Fort William to Georgian Bay,
touching at all the important ports on the route. I steamed for
eighteen hours through Lake Superior coming here on one of the
boats from the “Soo.” That lake is so large that at times we lost sight
of land and it seemed as though we were in mid-ocean. At other
times we could see the irregular coastline, which is rock-bound and
picturesque. The water of Lake Superior is as clear as crystal; it is
icy cold the year round.
CHAPTER XX
WINNIPEG—WHERE THE PRAIRIES BEGIN
Stand with me on the top of the Union Bank Building, and take a
look at the city of Winnipeg. You had best pull your hat down over
your ears and button your fur coat up to your neck for the wind is
blowing a gale. The sky is bright, and the air is sharp and so full of
ozone that we seem to be breathing champagne. I venture you have
never felt so much alive. The city stretches out on all sides for miles.
Office buildings and stores are going up, new shingle roofs shine
brightly under the winter sun, and we can almost smell the paint of
the suburban additions. Within fifty years Winnipeg has jumped from
a Hudson’s Bay Company trading post of two hundred people to a
city of more than two hundred thousand, and it is still growing. The
value of the buildings erected last year amounted to more than half
that of the new construction in Montreal.
Now turn about and look up Portage Avenue. Twenty years ago
that street hardly existed. To-day it has millions of dollars’ worth of
business blocks, any of which would be a credit to a city the same
size in the States. That nine-story department store over there is the
largest in western Canada. Farther down Main Street are the
Canadian Pacific hotel and railway offices, and beyond them the
great terminals of the Canadian National Railways. “Yes, sir,” says
the Winnipegger at my side, “you can see how we have grown. It
was about the beginning of this century that we began to build for all
time and eternity. Before that most of our buildings were put up
without cellars and had flimsy foundations. We had not realized that
Winnipeg was bound to be the greatest city of Central Canada.
“Look at those wholesale houses,” he continues. “Did you ever
see anything like them? Most of them started as two- or three-story

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Managing Human Resources

Productivity Quality of Work Life Profits

CHAPTER LEARNING OBJECTIVES (SECTION)

Questions this chapter will help managers answer:

Behavior-oriented rating methods

Relative rating systems

Absolute rating systems

Results-oriented rating methods

Likert method of summed ratings

Graphic rating scales

Behaviorally anchored rating scales (BARS)

Management by objectives (MBO)

Work planning and review

PERFORMANCE REVIEWS: THE DILEMMA OF FORCED RANKING

Student answers will vary. Sample answer:

If a qualitative method of the forced ranking method is used, it requires judgment on

MANAGING FOR MAXIMUM PERFORMANCE

• Performance management is likened to a compass—one that indicates actual

Performance Management in Practice

• In general, appraisal serves a twofold purpose:

• More specifically, appraisals:

The Strategic Dimension of Performance Appraisal

• Results-oriented rating systems place primary emphasis on what an employee

Behavior-Oriented Rating Methods

• Use of paired comparisons is a more systematic method for comparing employees to

• Forced distribution is another method of comparing employees to one another.

• With a Likert method of summed ratings:

• Critical incidents are brief anecdotal reports by supervisors of things employees do

Graphic Rating Scales

• Many different forms of graphic rating scales exist.

Behaviorally Anchored Rating Scales

Results-Oriented Rating Methods

• Management by objectives (MBO) relies on goal-setting to establish objectives for

Work Planning and Review

When Should Each Technique Be Used?

WHO SHOULD EVALUATE PERFORMANCE?

The Immediate Supervisor

• Appraisal by subordinates can be a useful input to the immediate supervisor’s

• Should subordinate ratings be anonymous?

• The opportunity to participate in the performance appraisal process, particularly if

• In some situations the consumers of an individual’s or organization’s services can

• Technology has made continuous supervision possible—computer software that

Are supervisors’ Ratings Affected by Other Sources of Information about

Multi-Rater or 360-Degree Feedback

WHEN AND HOW OFTEN SHOULD APPRAISAL BE DONE?

Evaluating the Performance of Teams

APPRAISAL ERRORS AND RATER-TRAINING STRATEGIES

• Of the many types of rater training programs available today, frame-of-reference

SECRETS OF EFFECTIVE PERFORMANCE FEEDBACK INTERVIEWS

• Once-a-year performance appraisals are of questionable value.

Get Training in Performance Feedback and Appraisal Interviewing

• Train raters to observe behavior more accurately and fairly.

Encourage Subordinates to Prepare

• Subordinates who spend more time prior to performance feedback interviews

• A perception of ownership is related strongly to subordinates’ satisfaction with the

Judge Performance, Not Personality

Be Specific, and Be an Active Listener

• Maximize information relating to performance improvements and minimize

Avoid Destructive Criticism

• Destructive criticism is general in nature, frequently delivered in a biting, sarcastic

• Studies demonstrate that goals direct attention to the specific performance in

Continue to Communicate, and Assess Progress toward Goals Regularly