Learning Objectives Learning Objectives Introduction

Learning Objectives Human Resource Management Gaining a Competitive Advantage

After reading this chapter, you should be able to: • 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, the specific techniques used in each approach, and the way these approaches compare with the criteria for effective performance management systems.

Chapter 8 Performance Management

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, All Rights Reserved.

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Learning Objectives

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Introduction

After reading this chapter, you should be able to:

• Performance management is the process through which managers ensure that employees’ activities and outputs are congruent with the organization's goals. • Performance Appraisal is the process through which an organization gets information on how well an employee is doing his or her job. • Performance Feedback is the process of providing employees information regarding their performance effectiveness.

• Choose the most effective approach to performance measurement for a given situation. • Discuss the advantages and disadvantages of the different sources of performance information. • Choose the most effective source(s) for performance information for any situation. • Distinguish types of rating errors and explain how to minimize each in a performance evaluation. • Conduct an effective performance feedback session. • Identify the cause of a performance problem.

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Basic Marketing – Chapter 6 Handout 6-1

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An Organizational Model of Performance Management

Purposes of Performance Management

Organizational Strategy Long and short term goals and values

Strategic Administrative

Individual Attributes (skills, abilities)

Individual Behaviors

Developmental

Objective Results

Situational Constraints Culture and economic conditions 8-5

Performance Measures Criteria

The Comparative Approach

Five performance criteria stand out:

• Ranking – Simple ranking ranks employees from highest to lowest performer. – Alternation ranking - crossing off the best and worst employees.

Strategic congruence

Specificity

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• Forced distribution

Validity

– Employees are ranked in groups.

• Paired comparison – Managers compare every employee with every other employee in the work group. Acceptability

Reliability 8-7

Basic Marketing – Chapter 6 Handout 6-2

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The Attribute Approach

Behavioral Approach • Critical incidents approach - requires managers to keep record of specific examples of effective and ineffective performance. • Behaviorally anchored rating scales (BARS) • Behavioral observation scales (BOS) • Organizational behavior modification - a formal system of behavioral feedback and reinforcement. • Assessment centers - multiple raters evaluate employees’ performance on a number of exercises.

• Graphic rating scales – A list of traits is evaluated by a five-point rating scale. – Legally questionable.

• Mixed-standard scales – Define relevant performance dimensions and then develop statements representing good, average, and poor performance along each dimension. 8-9

Results Approach • Management by objectives

Quality Approach Goals

– top management passes down company’s strategic goals to next layer of management, and these managers define the goals they must achieve.

• Productivity Measurement and Evaluation System (ProMES) – goal is to motivate employees to higher levels of productivity.

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• A performance management system designed with a strong quality orientation can be expected to: – 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.

Hierarchy

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Basic Marketing – Chapter 6 Handout 6-3

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Sources for Performance Information

Quality Approach (cont.) • Statistical process quality control techniques used: – – – – – –

Managers

Process-flow analysis Cause-and-effect diagrams Pareto chart Control chart Histogram Scattergram

Customers

Peers

Self

Subordinates

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Rater Errors in Performance Measurement

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Reducing Rater Errors and Appraisal Politics • Two Approaches to reducing rater error:

• Similar to me • Contrast • Distributional errors • Halo and horns

– Rater error training – Rater accuracy training

• Appraisal politics - a situation in which evaluators purposefully distort ratings to achieve personal or company goals.

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Basic Marketing – Chapter 6 Handout 6-4

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Improving Performance Feedback

Improving Performance Feedback

• Feedback should be given frequently, not once a year. • Create the right context for the discussion. • Ask employee to rate his or her performance before the session. • Encourage the subordinate to participate in the session.

• Recognize effective performance through praise. • Focus on solving problems. • Focus feedback on behavior or results, not on the person. • Minimize criticism. • Agree to specific goals and set a date to review progress.

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Managing Performance of Marginal Performers

Factors to Consider in Analyzing Poor Performance • • • • •

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• Solid performers

Input Employee characteristics Feedback Performance standards/Goals Consequences

– High ability and motivation; managers should provide development opportunities

• Misdirected effort – Lack of ability but high motivation; managers should focus on training

• Underutilizers – High ability but lack motivation; managers should focus on interpersonal abilities

• Deadwood – Low ability and motivation; managerial action, outplacement, demotion, firing. 8-19

Basic Marketing – Chapter 6 Handout 6-5

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Use of Technology for Performance Management

Following Legal Guidelines • Conduct a valid job analysis related to performance. • Base system on specific behaviors or results. • Train raters to use system correctly. • Review performance ratings and allow for employee appeal. • Provide guidance/support for poor performers. • Use multiple raters.

• Electronic tracking systems includes: – Hand and fingerprint recognition systems – Global positioning systems (GPS) – Systems that can track employees using handheld computers and cell phones

• Increased productivity can be a benefit from these systems. • These systems present privacy concerns.

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Basic Marketing – Chapter 6 Handout 6-6

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