Chapter 4 (Part II)

Implementing a
Performance
Management System
 Overview
 System implementation
 Appraisal Period and Number of Meetings
 Who Should Provide Performance
Information?
 A Model of Rater Motivation
 Rating Distortion
 Ongoing Monitoring and Evaluation
 Online Implementation
 Appraisal Period
Number of Meetings
 Annual
• May not provide sufficient opportunity for
supervisor/employee discussion
 Semi-annual
 Quarterly
 When Review Is Completed
Anniversary date
 Supervisor doesn’t have to fill out forms for all
employees at the same time
 Can’t tie rewards to fiscal year
Fiscal year
 Rewards tied to fiscal year
 Goals tied to corporate goals
 May be burden to supervisor, depending on
implementation
 Six Types of Formal Meetings
(Can Be Combined)
1. System Inauguration
2. Self-Appraisal
3. Classical Performance Review
4. Merit/Salary Review
5. Development Plan
6. Objective Setting
Who Should Provide Performance
Information?

Employees should be involved in selecting

 Which sources evaluate
 Which performance dimensions

When employees are actively involved

 Higher acceptance of results
 Perception that system is fair
Who Should Provide Performance
Information?
Direct knowledge of employee performance
 Supervisors
 Peers
 Subordinates
 Self
 Customers
 360-degree feedback
 Supervisors
Advantages
 Can evaluate performance vs. strategic goals
 Make decisions about rewards
 Able to differentiate among performance dimensions
 Viewed as exclusive source in some cultural contexts

Disadvantages
 Supervisor may not be able to directly observe
performance
 Evaluations may be biased
 Peers
Advantages
 Assess teamwork

Disadvantages
 Possible friendship bias
 May be less discriminating
 Context effects
 Subordinates
Advantages
 Accurate when used for developmental purposes
 Good position to assess some competencies

Disadvantages
 Inflated when used for administrative purposes
 May fear retaliation (confidentiality is key)
 Self
Advantages
 Increased acceptance of decisions
 Decreased defensiveness during appraisal
interview
 Good position to track activities during
review period

Disadvantages
 May be more lenient and biased
 Self (Continued)
Suggestions to improve quality of self-
appraisals
 Use comparative instead of absolute
measurement systems
 Allow employees to practice their self-
appraisals
 Ensure confidentiality
 Emphasize the future
Customers (External and Internal)

Advantages
 Employees become more focused on
meeting customer expectations.

Disadvantages
 Time
 Money
 360-degree Feedback
 Manager is no longer the sole source of
performance appraisal information.
 various colleagues and constituencies
supply feedback about the employee to the
manager.
 Advantages:
• More comprehensive
• Better quality of information
• Complements TQM initiatives.
• May lessen bias
• May increase employee self-development
 360-DEGREE FEEDBACK
 Disadvantages:
• The system is complex in combining all
the responses.
• Feedback can be intimidating and can
cause resentment.
• There may be conflicting opinions.
• Requires training to wok effectively.
• Employees may collude.
• Appraisers may not be accountable if
their evaluations are anonymous.
 Disagreement Across Sources
 Expect disagreements
 Ensure employee receives feedback by
source
 Assign differential weights to scores by
source, depending on importance
 Ensure employees take active role in
selecting which sources will rate which
dimensions
 A Model of Rater Motivation
Expected Positive and Negative
Consequences of Rating
Accuracy
Motivation to Provide Accurate
Ratings
Probability of Experiencing
Positive and Negative
Consequences
Rating Behavior

Expected Positive and Negative

Consequences of Rating Distortion
Motivation to Distort Ratings

Probability of Experiencing Positive

and Negative Consequences
 Rating Distortion

 Intentional rating distortion

• Rating inflation

• Rating deflation

 Unintentional rating distortion

• Due to complexity of task
 Reasons for Rating Inflation
• Maximize merit raise/rewards
• Encourage employees
• Avoid creating written record
• Avoid confrontation with employees
• Promote undesired employees out of unit
• Make manager look good to his/her supervisor
 Reasons for Rating Deflation
• Shock employees
• Teach a lesson
• Send a message to employee
• Build a written record of poor
performance
 Reducing Intentional Rating
Distortion
Recommendations:
 Have raters justify their ratings
 Have raters justify their ratings in a face-
to-face meeting
 Ongoing Monitoring and Evaluation
 When system is implemented, decide:
• How to evaluate system effectiveness
• How to measure implementation
• How to measure results
 Evaluation data to collect:
• Reactions to the system
• Assessments of operational and technical requirements
• Effectiveness of performance ratings
 Indicators to Consider
 Number of individuals evaluated
 Distribution of performance ratings
 Quality of information
 Quality of follow-up actions
 Quality of performance discussion meetings
 System satisfaction
 Cost-benefit ratio or return on investment (ROI)
 Unit-level and organization-level performance
 Online Implementation
 Online tools to facilitate implementation
• E-mails
• Electronic newsletters
• Web sites
• Appeal filing
• Training programs
• Pop-up reminders
Online Implementation—Advantages
 Automation
 Speed up processes
 Lower cost
 Gather and disseminate information faster
and more effectively
 System can be linked to other HR functions
 Easier to monitor unit-level and
organizational-level trends over time
 Online Implementation:
Limitations
 PM systems that are not implemented
following best practices will not
necessarily improve from the use of online
components.
 In fact, online implementation may create
a more complicated system that is a big
waste of time and resources for all
involved.