PERFORMANCE

MANAGEMENT

Group 5
Bulut, Kyle
Cano, Jeffrey
Gregorio, Gabby
Manguba, Mike
Tan, Kim
OBJECTIVES
Identify the major determinants of individual
performance.
Discuss the three general purposes of
performance management.
Identify the five criteria for effective performance
management systems.
Discuss the four approaches to performance

management.
Discuss the pros and cons of the different sources
of performance information.
Identify the cause of a performance problem.
WHAT IS PERFORMANCE MANAGEMENT?

Employees outputs and activities = Companys

goals
DEFINING PERFORMANCE

Specifies which aspects of performance are

relevant to the organization through job analysis
Job Analysis- getting detailed information about
jobs
MEASURING PERFORMANCE

Measures those specified aspects through

performance appraisal

Performance Appraisal- method for managing

employee performance
FEEDING BACK PERFORMANCE
INFORMATION
Provides feedback to the employees through
performance feedback

Performance feedback- process of providing

employees information about their performance
effectiveness
PRACTICE OF PERFORMANCE
MANAGEMENT
Frequency of Reviews= 76% Annually
Use: Individual performance management (82%),
Pay decisions (66%), Setting individual
development needs (52%), Establishing training
priorities (17%), Succession planning (21%)
Many companies are moving to more frequent,
streamlined performance reviews.
MODEL OF PERFORMANCE MANAGEMENT
PURPOSES OF PERFORMANCE
MANAGEMENT

Strategic Administrative Developmental

STRATEGIC

Link employee activities with the organizations

goals
ADMINISTRATIVE

Administrative decisions like salary, pay raises,

promotions, retention, terminations, layoffs
DEVELOPMENTAL

Develop employees who are effective at their jobs

RECOMMENDATIONS FOR
DEVELOPING AN EFFECTIVE
PERFORMANCE MANAGEMENT
SYSTEM
Mirror the corporate culture and values
Have visible CEO and senior management support.
Focus on the right company performance measures.
Link job descriptions to the performance management system.
Differentiate performance fairly and effectively.
Train managers in performance management.
Communicate the total rewards system.
Require managers to search, offer and acquire regular
performance feedback.
Set clear expectations for employee development.
Track effectiveness of the performance management system.
Adjust the system as required.
PERFORMANCE MEASURES
CRITERIA
STRATEGIC CONGRUENCE

- the extent to which the performance management

system elicits job performance that is
consistent with the organizations strategy,
goals and culture.
VALIDITY

- the extent to which a performance measure

assesses all the relevant and only the
relevantaspects of job performance.
RELIABILITY
- the consistency of a performance measure; the
degree to which a performance measure is free
from random error.
ACCEPTABILITY
- the extent to which a performance is deemed to
be satisfactory or adequate by those who use
it.
SPECIFICITY

- the extent to which a performance measure gives

detailed guidance to employees about what is
expected of them and how they can meet
those expectations.
APPROACHES TO MEASURING
PERFORMANCE
COMPARATIVE APPROACH

- the comparative approach to performance measurement

requires the rater to compare an individuals
performance with that of the others. This approach
usually uses some overall assessment of an individual
performance or worth, and seeks to develop some ranking
of the individuals within a work group.
THERE ARE THREE (3) KINDS:
1. Ranking
Simple Ranking the employer ranks every one from the
highest performer or the poorest performer (or best to
worst).
Alternative Ranking rater picks first the best employee,
then keeps him. The left names would slowly taught
about who the worst performer was and crosses his name
off the list, and so on.
2. Forced Distribution

This technique requires the manager to put certain

percentages of employees into predetermined categories.
3. Paired Comparison

This method requires managers to compare every

employee with every other employee in the work group,
giving an employee a score of 1 every time he or she is
considered the higher performer. In the end, the manager
computes for the number of times each employee received a
favorable decision, making it their evaluation.
EVALUATING THE COMPARATIVE
APPROACH

PROS:
Effective tool in differentiating employee performance
Eliminates problems of leniency, central tendency, and strictness
Good basis for pay raises and promotions
Easy to develop, easy to use

CONS:
If not enough evaluators, personal biases and opinions would
greatly affect the ratings
Lack for specificity for feedback purposes, as employees arent
aware of what they should improve on for their ranking
individually
ATTRIBUTE APPROACH

- This approach focuses on the characteristics and traits

of the people that are geared towards the success of the
company. The techniques that use this approach define a
set of traits such as initiative, leadership, and
competitivenessand evaluate individuals on them.
EVALUATING THE ATTRIBUTE
APPROACH
PROS:
Easy to develop
Generalizable across variety of jobs
If much attention is devoted in identifying attributes related to job
performance, it would be reliable and valid

CONS:
Little congruence between the techniques and the companys strategy
Could be vague due to different interpretations by different raters
BEHAVIORAL APPROACH
CRITICAL INCIDENTS
Requires managers to keep a record of specific
examples of effective and ineffective performance
on the part of each employee.
BEHAVIORALLY ANCHORED RATING
SCALES
BEHAVIORAL OBSERVATION SCALES
ORGANIZATIONAL BEHAVIOR
MODIFICATION
Entails managing the BAHAVIOR of employees
through a formal system of BEHAVIORAL
feedback and reinforcement.
ASSESSMENT CENTERS
A process in which multiple raters evaluate
employees performance on a number of exercises.
RESULT APPROACH
MANAGEMENT BY OBJECTIVES
QUALITY APPROACH
 Emphasize an assessment of both person and
system factors in the measurement system.
Emphasize that managers and employees work
together to solve performance problems.
Involve both internal and external customers in
setting standards and measuring performance.
Use multiple sources to evaluate person and

system factors.
DIFFERENCES FROM TRADITIONAL
APPROACH
Most existing systems measure performance in
terms of quantity, not quality
Employees are held accountable for good or bad
results to which they contribute but do not
completely control
Companies do not share the financial rewards of
successes with employees according to how much
they have contributed to them
Rewards are not connected to business results
STATISTICAL PROCESS CONTROL
TECHNIQUES
Process-flow analysis
Cause and effect diagrams

Pareto chart

Control charts

Histograms

Scattergrams
PARETO CHART
CONTROL CHART
HISTOGRAM
SCATTERGRAM
PERFORMANCE INFORMATION
SOURCES
Managers

Customers Peers

Subordinates
Self

8-44
HEURISTICS
Research consistently reveals that humans have
tremendous limitations in processing
information.
Because we are so limited, we often use
heuristics, or simplifying mechanisms, to make
judgments, whether about investments or about
people.
These heuristics, which appear often in
subjective measures of performance, can lead to
rater errors.
Performance evaluations may also be
purposefully distorted to achieve personal on
company goals (appraisal politics).
PERFORMANCE MEASUREMENT
RATER ERRORS

1. Similar to Me
2. Contrast
3. Distributional
Errors
4. Halo and Horns
5. Appraisal Politics

8-46
REDUCING RATER ERRORS AND
POLITICS
Approaches to Reducing Rater Error:
Rater error training
Rater accuracy training

Calibration Meetings - attended by

managers to discuss employee performance
ratings

8-47
PERFORMANCE FEEDBACK
It is necessary to feed performance information
back to employees so they can correct any
deficiencies.
The performance feedback process is complex and

provokes anxiety for both the manager and the

employee.
PERFORMANCE FEEDBACK (CONT.)
To provide effective performance feedback managers
should consider the following recommendations:
Feedback should be given frequently, not once a year.
Create the right context for the discussion.
Ask the employee to rate his/her performance before the
session.
Encourage the subordinate to participate in the session.
Tell-and-sell
Tell-and-listen
Problem-solving approach
Recognize effective performance through praise.
Focus on solving problems.
Focus feedback on behaviour or results, not on the person.
Minimize criticism.
Agree on specific goals and set a date to review pro
WHAT MANAGERS CAN DO
Diagnose the causes of poor performance.

Input

Employee Performance
Characteristics Standards/
5 Factors to Goals
Consider
When Analyzing
Poor Performance
Feedback Consequences
WHAT MANAGERS CAN DO (CONT.)
Marginal employees are those employees who
are performing at a bare minimum level because
of lack of ability and/or motivation to perform
well.
Four different types of employees:
Solidperformers
Underutilizers
Misdirected effort
Deadwood
DEVELOPING SYSTEMS
Because performance measures play a central
role in such administrative decisions such as
promotions, pay raises, and discipline, employees
who sue an organization primarily attack
measurement systems on which the decisions
were made.
Two types of cases have dominated:
Discrimination
Uniform Guidelines on Employee Selection Procedures
Unjust dismissal
CHARACTERISTICS OF A SYSTEM
THAT WILL WITHSTAND LEGAL
SCRUNITY
Developed by conducting job analysis that
ascertains the important aspects of job
performance.
Based on either behaviours or results.

Raters should be trained.

Reviewed by upper-level management; employees

should be able to appeal.
Provide some form of performance counseling or
corrective guidance for poor performers.
Engages multiple raters. Employees should be
asked to comment on their appraisals.
USE OF TECHNOLOGY
Electronic tracking systems include hand and
fingerprint recognition systems, global
positioning systems (GPS), computer software,
and systems that can track employees using
handheld computers and cellphones.
To avoid the potential negative effects of
electronic monitoring, managers must
communicate why employees are being
monitored.
SUMMARY
Performance management is one of the key
factors in gaining competitive advantage.
These systems serve strategic, administrative,
and developmental purposes.
Deciding on which approach and which source of
performance information are best depends on the
job in question.
Performance information has to be sent back to
employees in a way that results in improved
performance rather than defensiveness and
decreased motivation.
MINI-QUIZ
________ systems seek to tie the formal
performance appraisal process to the companys
strategies by specifying at the beginning of the
evaluation period the types and level of
performance that mush be accomplished to
achieve the strategy.
A.) People Development System
B.) Performance Planning and Evaluation
C.) Strategic Congruence
D.) Organizational Behaviour Modification
 Managers find that out of all the primary sources
for performance information, _____ helps them
make more appropriate performance ratings
based on the discussion and feedback they receive
from employees.
A.) peer evaluation
B.) subordinate evaluation
C.) self-evaluation
D.) customer evaluation
 Employees with poor performance resulting from
lack of ability but not motivation.
A.) Underutilizers
B.) Solid Performers
C.) Deadwood
D.) Misdirected efforts
VIDEOS TO WATCH:
http://www.youtube.com/watch?v=6GufMa-J8cI
http://www.youtube.com/watch?v=DgiHW10tRe4&
feature=related
THANK YOU!