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Outline
y Performance Measurement y Functions of Performance Appraisal y Criteria for Effective Performance Appraisal Systems y Types of Performance to Measure y Performance Appraisal Methods y Performance Raters (Evaluators) y Performance Feedback
Performance Management
y Performance appraisal: the measurement and assessment of an employee s job performance y Performance management: the integration of performance appraisal systems with other HRM systems for the purpose of aligning the employees work behaviors and results with the organization s goals y Example: link an employee s pay increase to the employee s job performance
y
s job performance
employees
Source of figure: Adapted from Fisher, Schoenfeldt, & Shaw (2006), Figure 10.1, p. 421
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Involve the employee in goal setting Make the goals specific, concrete, & measurable y Example goals (some of many) for a retail store manager: y Sales goal for year = $2 million y Customer satisfaction goal = average rating of 4.5 on 5-point customer satisfaction rating scale Make the goals difficult but achievable, challenging but realistic Empower employees to achieve their goals
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Employees need to know how they are doing Be a coach in addition to being a boss
Do employees have job performance deficiencies for which training would be an effective remedy?
Examples: pay increases, promotions, demotions, terminations, disciplinary actions, etc. Goal: Create incentives to motivate employees to increase their performance Example: Evaluate a training program: Measure job performance before and after training to see if performance improved
We want to measure important ( relevant ) aspects of job performance, in a way that is free from extraneous or contaminating influences, and that encompasses the whole job (i.e., our measures of job performance are not deficient : we aren t leaving out important aspects of job performance)
If two people observe a particular employee s job performance, do they agree in their rating of the employee s performance?
y 4. Practicality y The benefits the organization gets from using it should outweigh the costs of developing & using it
y
Utility analysis
we measure?
y We have 3 basic choices:
y
Results produced by the employee y Example for a salesperson: Amount of sales ($) in the past month Behaviors of the employee y Example for a salesperson: Number of sales calls in the past month Traits of the employee y Example for a salesperson: Friendliness
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results for which the store manager has responsibility and so should be held accountable):
y y y y
Sales of the store Profit per square foot Inventory shrinkage Customer satisfaction
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Which results are relevant may not be obvious for all jobs Some results are not under the employee s control May foster a results at all costs mentality May interfere with teamwork May be difficult to provide effective feedback
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Good attendance Completes management reports correctly & on time Monitors customers and employees for theft Coaches employees to welcome customers to the store & offer assistance within 3 minutes, and to thank customers as they leave Conducts regular sessions with employees to develop teamwork
y Makes sense for many jobs y Use it where how the employee produces results matters
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Examples for a retail store manager: y Feedback with results-oriented performance appraisal: You didn t achieve your sales goal. (Measured by sales reports) y Feedback with behavior-oriented performance appraisal: You are allowing your employees to wait too long before offering help to customers. (Measured by observations of a secret shopper)
y Challenges: y Difficult to capture the full range of relevant behaviors y Different behaviors can lead to the same results y We may not always care which behaviors were used
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Ability to make decisions Loyalty to the company Communication skills Level of initiative
y This is usually a bad idea for several reasons: y Poor reliability & validity of measures of traits y Weak relationship between traits and job effectiveness y Measurements of traits are more likely to be subject to biases (sexism, racism, ageism, etc.) y Hard to use traits to provide effective feedback
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job
y
Starting point: Use the job description to identify the essential tasks of the job y Example task statement on job description for a Retail Store Manager: Manage inventory shrinkage. Translate the tasks into results & behaviors y Example (continued): Measure the amount of inventory shrinkage in the store (a result)
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measure, we next need to decide how to measure those results & behaviors
y We have 3 categories of choices:
y y y
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s job performance in terms of things we can see and count with no (or minimal) use of opinion
y Production measures: count units produced by an
employee y Sales measures: count the sales ($) of an employee y Personnel data: count things in the employee s personnel file
y
Examples: y Number of times late to work y Number of times absent y Number of disciplinary actions taken
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Example: for an airline pilot, program a flight simulator with specific flight conditions to test if the pilot handles it correctly
responsible for a business unit, measure their performance by measuring the performance of the business unit they lead
y
Examples: y Market share of the business unit y Profit measures for the business unit: profits & profit rates (return on sales, return on assets, return on equity) y Stock price
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y y
Example: 1. Bob 2. Carol 3. Ted 4. Alice Note carefully that the ranking is in terms of subjective opinion (e.g., who is your best salesperson overall?), not objective factors (e.g., which salesperson sold the most?) Note the ranking requires you to compare one employee to another Problem: it can be hard to determine the subjective ranking position of employees who are in the middle (it all blurs together)
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y y y
# of paired comparisons = (N2 N)/2 Example: N = 4 J (42 4)/2 = 6 paired comparisons: y Bob > Carol; Bob > Ted; Bob > Alice y Carol > Ted; Carol > Alice y Ted > Alice Example: N = 12 J (122 12)/2 = 66 paired comparisons Note that you are comparing one employee to another Problem: inconsistent subjective comparisons: Bob > Carol; Carol > Ted; Ted > Bob (see the inconsistency here?)
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Rating scales are perhaps the most commonly used method of subjectively evaluating an employee s job performance Before we use a rating scale to subjectively rate an employee s job performance, we need to: y Identify the aspects of job performance (results & behaviors) that are to be evaluated (rated) using the rating scale y Develop the rating scale itself
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The same rating scale can be used to rate: y Overall job performance, and y Multiple specific aspects of job performance Some aspects of job performance can be measured objectively and subjectively y Example: Quality of work y Objective measure: defect rate (percentage of units produced by an employee that fail inspection) y Subjective measure: subjectively rate the quality of the employee s work using a 5-point rating scale
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Note how the same 5-point rating scale is used to evaluate several different aspects of the professor s job performance: y Course as a whole y Instructor s contribution to the course y Use of class time y Etc.
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Note that rating scales do not require you to compare one employee to another the ratings are absolute, not comparative Problems: y No limits on leniency, severity, & central tendency errors y Example: a manager rates all of his employees at 5= Excellent regardless of the employees actual performances y Possible solution: forced distribution? y The terms used in a rating scale to describe different levels of performance tend to be short and vague y Example: What does Excellent really mean? y Possible solution: BARS?
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y y
Example: 10% must be rated 5 = Excellent 25% must be rated 4 = Very satisfactory 45% must be rated 3 = Satisfactory 15% must be rated 2 = Unsatisfactory 5% must be rated 1 = Very unsatisfactory Note that you are comparing one employee to another Problem: what if the distribution being forced doesn t fit?
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Example: Customer assistance 5 = Could be expected to volunteer to help customer and to walk with customer to location of desired product 4 = Could be expected to walk with customer to location of desired product when asked for help by customer 3 = Could be expected to tell and point customer to where the desired product is located when asked for help by customer 2 = Could be expected to shrug shoulders and walk away when asked for assistance by customer 1 = Could be expected to hide from customers in the employee breakroom
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Note that a different scale will be needed for each aspect of job performance Advantages: y Job-relevant measures of performance y Involves employees in developing scales Disadvantages: y More work (time & money) to develop BARS y Employees may not consistently fit into one of the BARS categories y Possible solution: BOS?
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Example: on a list of possible employee behaviors, rate how often the employee engages in each behavior using a rating scale where: 1 = almost never 5 = almost always
job performance in terms of the extent to which the employee achieved each of his or her goals during a specified period of time
y Goals can be both objective and subjective y Example goals (some of many) for a retail store manager: y Objective: Sales goal for year = $2 million y Subjective: Customer satisfaction goal = average rating of 4.5 on 5-point customer satisfaction rating scale y Commonly used for managers and professionals
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At the beginning of the review period, the employee and the supervisor meet and they agree on a set of goals to be achieved by the employee during the review period y Review period is typically one year, but could be more often y Apply the goal setting principles: y Involve the employee in goal setting y Make the goals specific, concrete, & measurable y Make the goals difficult but achievable, challenging but realistic y Empower employees to achieve their goals
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Throughout the review period, progress toward the goals is monitored y Employee s supervisor should be providing coaching to help the employee achieve his or her goals At the end of the review period, the employee and the supervisor meet to evaluate the extent to which each goal was achieved and to set new goals for the next review period
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of an employee?
y Performance evaluators need to have:
y y
Opportunity to observe the employee s job performance Ability to translate observations of performance into an evaluation of performance Motivation to do a good job of observing & evaluating
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y 360-Degree Appraisals
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Performance Feedback
y Employees need effective feedback y Allow time & eliminate distractions y Okay to cover both administrative issues (e.g., pay increase) & developmental issues (e.g., future goals) in one feedback session y Provide specific feedback
y
Example: y Don t say: You re always late. y Do say: You were more than 5 minutes late on 25 occasions in the past 3 months. This is unacceptable. We need to develop (1) a specific goal concerning prompt attendance and (2) an action plan that you will follow to achieve the goal.
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Performance Feedback
y Types of feedback sessions: y Tell-and-sell: the supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct y Tell-and-listen: the supervisor tells the employee the results of the performance appraisal and listens to the employee s response y Problem solving: the supervisor acts as a coach to assist the employees in setting their own goals and in evaluating their own job performance
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Performance Feedback
y Types of feedback sessions (more): y Combination of tell-and-sell & problem solving:
y
First part of feedback session: tell-and-sell y Focus on the past: y Supervisor tells the employee the results of the performance appraisal and explains the reasons why the appraisal is correct y Supervisor tells the employee about any administrative decisions that were made (e.g., pay increases, etc.) Second part of feedback session: problem solving y Focus on the future: y Supervisor acts as a coach to help the employee identify barriers to improved future job performance
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Outline
y Performance Measurement y Functions of Performance Appraisal y Criteria for Effective Performance Appraisal Systems y Types of Performance to Measure y Performance Appraisal Methods y Performance Raters (Evaluators) y Performance Feedback
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