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CHAPTER 10:

PERFORMANCE
MANAGEMENT
AND FEEDBACK

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Performance Management & Feedback

• Organizations need broader performance measures


to insure
– Performance deficiencies addressed in timely manner
through employee development programs
– Employee behaviors channeled in appropriate direction
toward performance of specific objectives
– Employees provided with appropriate and specific feedback
to assist with career development
– Focus on both “core” and “citizenship” employee behaviors

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Exhibit 10-2
Strategic Choices in Performance Management

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Exhibit 10-3
Reciprocal Relationship Between T&D and
Performance Management

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Who Evaluates?

• Problems with immediate supervisors conducting


performance evaluations
– Lacking appropriate information to provide informed feedback
on employee performance
– Insufficient observation of employee’s day-to-day work to
validly assess performance
– Lack of knowledge about technical dimensions of
subordinate’s work
– Lack of training or appreciation for evaluation process
– Perceptual errors by supervisors that create bias or lack of
subjectivity in evaluations

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Perceptual Errors of Raters

• Halo effect
– Rater allows single trait, outcome or consideration to
influence other measures of performance
• Stereotyping
– Rater makes performance judgments based on employee’s
personal characteristics, rather than employee’s actual
performance
• Recency error
– Recent events and behaviors of employee bias rater’s
evaluation of employee’s overall performance

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Perceptual Errors of Raters (cont.)

• Central tendency error


– Evaluator avoids higher and lower ends of rating scale in
favor of placing all employees at or near middle of scales
• Leniency or strictness errors
– Evaluator’s tendency to rate all employees above (leniency)
or below (strictness) actual performance level
• Personal biases and organizational politics
– Have significant impact on ratings employees receive from
supervisors

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Purposes of Performance Management
Systems
• Facilitate employee development
– Determine specific training and development needs
– Assess individual and team strengths and weaknesses
• Determine appropriate rewards and compensation
– Salary, promotion, retention, and bonus decisions
– Employees must understand and accept performance
feedback system
• Enhance employee motivation
– Employee acknowledgment and praise reinforces desirable
behaviors and outcomes

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Purposes of Performance Management
Systems (cont.)
• Facilitate legal compliance
– Documentation is strong defense against
charges of unlawful bias
– cf., Werner & Bolino (1997)
• Facilitate HR planning process
– Alert organization to deficiencies in overall
level and focus of employee skills

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Other Performance Feedback Systems

• Peers
– Only effective when political considerations and
consequences are minimized, and employees have sense of
trust
• Subordinates
– Insights into interpersonal and managerial styles
– Excellent measures of individual leadership capabilities
– Same political problems as peer evaluations
• Customers
– Feedback most free from bias

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Other Performance Feedback Systems

• Self-evaluations
– Allow employees to participate in critical employment
decisions
– More holistic assessment of performance
• Multi-rater systems or 360-degree feedback
systems
– Can be very time-consuming
– More performance data collected, greater overall facilitation
of assessment and development of employee
– Costly to collect and process
– Consistent view of effective performance relative to strategy
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What to Evaluate?

• Trait measures
– Assessment of how employee fits with organization’s
culture, not what s/he actually does
• Behavior-based measures
– Focus on what employee does correctly, and what
employee should do differently

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What to Evaluate? (cont.)

• Results-based measures
– Focus on accomplishments or outcomes that can be
measured objectively
– Problems occur when results measures are difficult to
obtain, outside employee control, or ignore means by which
results were obtained
– Limitations
• Difficult to obtain results for certain job responsibilities
• Results sometimes beyond employee’s control
• Ignores means or processes
• Fails to tap some critical performance areas

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Job Performance Competencies

• Closely tied to organization’s strategic


objectives
• Can take tremendous amount of time to
establish
• Must be communicated clearly to
employees
• Must be tied in with organization’s reward
structure

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Exhibit 10-4
Multilevel Corporate Competency Model

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Capital One Success Factors and
Competencies
• Builds relationships • Leads in learning
– Communicates clearly and openly environment
– Treats others with respect – Recruits talent
– Collaborates with others – Motivates and develops
• Applies integrative thinking – Builds and leads teams
– Analyzes information – Influences others
– Generates and pursues ideas – Promotes culture
– Develops and shapes strategies
• Takes personal ownership
– Identifies and solves problems
– Takes responsibility
– Applies integrated decision making
– Learns continuously
• Drives toward results – Embraces change
– Focuses on strategic priorities
– Initiates opportunities for
– Organizes & manages multiple tasks improvement
– Directs and coordinates work – Shows integrity
– Gets job done – Maintains perspective
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How to Evaluate?

• Absolute measurement
– Measured strictly by absolute performance requirements or
standards of jobs
• Relative assessment
– Measured against other employees, and ranked on distance
from next higher to next lower performing employee
– Ranking allows for comparison of employees, but does not
shed light on distribution of performance

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Forced Ranking/Distribution

• Arguments in favor of forced ranking


– Best way to identify highest-performing employees
– Data-driven bases for compensation decisions
– Forces managers to make and justify tough decisions
• Arguments critical of forced ranking
– Can be arbitrary, unfair, and expose organization to lawsuits
– Inherent subjectivity
• Forced rankings tend to be more effective in
organizations with high-pressure, results-driven
culture

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Measures of Evaluation

• Graphic rating scales


• Weighted checklists
• Behaviorally anchored rating scales (BARS)
• Behavioral observation scales (BOS)
• Critical incident method
• Management by objectives (MBO)

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Exhibit 10-6
Graphic Rating Scales

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Exhibit 10-7
Weighted Checklist

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Exhibit 10-8
Behaviorally Anchored Rating Scale (BARS)

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Exhibit 10-9
Behavioral Observation Scale (BOS)

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Objectives-Based Performance
Measurement
• Enhanced employee motivation
• Employees can be far more committed
to reaching performance objectives
(goals) that they have agreed to
• When employee participates, his/her
trust and dependability placed on line

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Objectives-Based Performance
Measurement
• Three common oversights
– Setting vague objectives
– Setting unrealistically difficult objectives
– Not clarifying how performance will be measured
• Objectives selected must be valid

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Other Considerations

• Ensure link between performance management,


training & development, and compensation
• Assignments and responsibilities
• Traditional performance evaluation may need
redesign due to changes in contemporary
organizations
• Degree of standardization or flexibility of
performance management system
– Standardization important to prevent job bias
– Flexibility important for differing levels of
responsibility and accountability
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Reasons Managers Resist or Ignore
Performance Management

• Process is too complicated


• No impact on job performance
• Possible legal challenges
• Lack of control over process
• No connection with rewards
• Complexity and length of forms

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Strategies for Improving Performance
Management System

• Involve managers in design of system


• Hold managers accountable for
performance and development of
subordinates
• Set clear expectations for performance
• Set specific objectives for system
• Tie performance measures to rewards
• Gain commitment from senior managers

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Reading 10.1 (Waldman et al.)
Has 360 Degree Feedback Gone Amok?

• Purposes of 360 Degree feedback systems


– Furthering management and leadership
development
– Facilitating organizational change and improvement
initiatives that allow organization to become more
open and participative
– Expand formal appraisal system by making
feedback evaluative and linking more with formal
performance appraisal

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Reading 10.1
Has 360 Degree Feedback Gone Amok?

• Recommendations for increasing likelihood that


360 feedback will benefit organization
– Assign internal consultant or champion to oversee process,
and hold him/her accountable for results
– Initial implementation should be on limited basis to allow for
evaluation of process using pre-post test control group test
design
– Create focus group to identify effectiveness criteria that
organization values and that will be used in the
measurement process
– Train all raters to avoid systematic rater errors

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Reading 10.2 (Morgan & Rao)
“Super-Measure” (SM)

• Single measure with great relevance up,


down, and across organization and
customer base
• Used to align behaviors and actions of
various parts of firm with value proposition
• Transcends other measures by unifying
actions of disparate organizational functions
and levels

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Reading 10.2
“Super-Measure” (SM)

• Clearest examples from firms within


service sector
– Service encounters often require various
elements of supply system to have direct
customer interface
– Most powerful service guarantees are those
that guarantee satisfaction with no exclusions

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Reading 10-2
Reasons for Adopting SM Management
• Crises may provide pressure to resolve conflict
and to arrive at consensus
• Continuous improvement
• Achieve better alignment with strategy
• Market-share-grabbing strategy
• Achieve rapid growth
• Maintain culture
• Decentralize management

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Reading 10-2
Selecting and Implementing SM
• SMs tie directly to firm’s market and follow
strategy
• SMs are simple and common
– Need not be comprehensive or balanced
• Have horizontal and vertical relevance
– Relevant from executives to employees, across functional
departments, and are linked to market
• Both monetary and behavioral rewards tied to SM
• All employees must understand how they affect
SM
• Dynamic reward system
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Reading 10.3 (Scott & Einstein)
Strategic Performance Appraisal in Team
Organizations

• Effective performance-appraisal systems


require careful consideration of team
contingencies
– Team membership configuration
– Team task complexity
– Nature of interdependencies among team and
external groups

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Reading 10-3
Work or Service Teams
• Well-developed social system
• Quality of interpersonal relationships important
• Individual and team performance appraisals
recommended
• Outcome-based performance appraisal
recommended for team, but not for individual
members
• Members typically responsible for monitoring and
documenting own performance on individual tasks

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Reading 10-3
Project Teams

• Assembled for specific purpose, and expect


to disband once task is complete
• Focused more on tasks than on team
members
• Metrics developed that relate to various
stages of project
– Teams can self-correct before things get too far off
course

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Reading 10-3
Project Teams

• Multisource performance appraisal


particularly useful
• Project leader and peer ratings are good
sources of behavioral ratings
• Members rated on both individual
performance and team contribution

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Reading 10-3
Network Teams
• Virtual
– Potential membership not constrained by time or space
• Work is extremely nonroutine
• Rapid-response units charged with strategically
responding to market challenges
• Performance of whole team often not assessed
formally
• Appraisal focused on
– Developing individual capacity to initiate, participate, and
lead improvisational action, rather than on past outcomes

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Reading 10-3
Network Teams
• Competency-based appraisal systems optimal
• Employees assessed on extent to which they:
– Apply learning to current activities
– Set developmental goals
– Seek out feedback
• Behavior-based appraisal used to assess extent to
which members engage in collaborative
communication and teamwork

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