CHAPTER 10:

PERFORMANCE
MANAGEMENT
AND FEEDBACK
 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 & specific
feedback to assist with career development

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 Exhibit 10-2
Strategic Choices in Performance Management

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

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 Purposes of Performance Management
Systems
• Facilitate legal compliance
– Documentation is strong defense against
charges of unlawful bias
• Facilitate HR planning process
– Alert organization to deficiencies in overall
level & focus of employee skills

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 Exhibit 10-3
Reciprocal Relationship Between T&D &
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 & behaviors of employee bias rater’s
evaluation of employee’s overall performance

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 Perceptual Errors of Raters

• Central tendency error

– Evaluator avoids higher & lower ends of rating 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 & organizational politics
– Have significant impact on ratings employees receive from
supervisors

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 Other Performance Feedback Systems

• Peers
– Only effective when political considerations & consequences
are minimized, & employees have sense of trust
• Subordinates
– Insights into interpersonal & 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 & development of employee
– Costly to collect & process
– Consistent view of effective performance relative to strategy
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 What to Evaluate?

• Traits 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 &
what employee should do differently

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 What to Evaluate?

• 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

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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 & 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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 Appraisal Methods: Alteration Ranking

• This method involves ranking employees from best to

worst on traits
• Since it is easier to distinguish between the worst and best
employees, an alteration method is quite popular
• For the trait you are measuring, list all the employees you
want to rank
• On a form, indicate the employees who is the highest on
the characteristics being measured and the one who is the
lowest
Alternation Ranking Scale
 Performance Appraisal Methods (cont.)

• Forced distribution method

– Similar to grading on a curve;
– predetermined percentages of ratees are placed in various
performance categories
– Example:
• Top 20% (high performers)
• Middle 70% (average performers)
• Bottom 10% (low performers)
 Performance Appraisal Methods (cont.)

• Sun Microsystems force-ranks its 43,000

employees.
– Managers appraise employees in groups of 30
– Those of bottom 10% of each group get 90 days to improve
– If they are still in the bottom 10%, they can resign and take
dismissal pay
– Some prefer to resign and some stay
– Those who stay must perform and if they fail, the firm fires
them without dismissal
 Performance Appraisal Methods (Cont.)

• Arguments in favor of forced ranking

– Best way to identify highest-performing employees
– Data-driven bases for compensation decisions
– Forces managers to make & justify tough decisions
• Arguments critical of forced ranking
– Can be arbitrary, unfair, & 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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 Appraisal Methods (Cont.)

• Graphic Rating Scale Method

- It is the simplest and most popular method
- It lists traits (e.g. quality of work, quantity of work,
efficiency, teamwork, communication, leadership) and a
range of performance values (from “unsatisfactory” to
“outstanding” or “below expectations” to “role model”)
for each trait.
Graphic Rating Scale
 Performance Appraisal Methods (cont’d)

• Behaviorally anchored rating scale (BARS)

– An appraisal method that anchors a numerical rating scale
with specific narrative examples of good and poor
performance.
 Exhibit 10-8
Behaviorally
Anchored Rating
Scale (BARS)

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 Management by Objectives (MBO)

• Involves setting specific measurable goals with

each employee and then periodically reviewing
the progress made.
1. Set the organization’s goals.
2. Set departmental goals.
3. Discuss departmental goals.
4. Define expected results (set individual goals).
5. Performance reviews.
6. Provide feedback.
 Objectives-Based Performance
Measurement
• Enhanced employee motivation
• Employees can far more committed to
reaching performance objectives they
have agreed to
• When employee participates, his/her
trust & 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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 Reasons Managers Resist or Ignore
Performance Management

• Process is too complicated

• No impact on job performance
• Lack of control over process
• No connection with rewards
• Complexity & length of forms

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 Strategies for Improving Performance
Management System

• Involve managers in design of system

• Hold managers accountable for
performance & 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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“There are only three measurements that tell you
nearly everything you need to know about your
organization’s overall performance: employee
engagement, customer satisfaction, and cash flow. It
goes without saying that no company, small or
large, can win over the long run without energized
employees who believe in the mission and
understand how to achieve it.”
– Jack Welch

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Thank You!

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