Analyzing Assessing Performance
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Transcript of Analyzing Assessing Performance
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Dr Sanyukta Jolly
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Performance management is an importantconcept to understand for academic study andbegan in late 1980s and it has been undertakenin several fields such as logistics management,
marketing, human resources management andoperations management to name a few.
The idea of managing both individual and
organizational performance is not new and theexact date when a formal method of reviewingperformance was first introduced is not known.
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Koontz (1971) mentioned the role of imperial rater whose
task was to evaluate the performance of official family of theWei dynasty (AD 221-265) in China.
The first formal system evolved before World War I (WWI) withthe pioneering work of Fredrick Taylor with the ratings ofofficers in the U.S. armed services which took place in early1950s.
It began with personality based appraisals, shifting towardsgoal-setting and assessment of performance related abilities in1960s.
Beginning 1980 to 1990 the organizations underwent a rapidand successive change and performance appraisal became acentral theme for managing people and business in general.
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By the end of 1990, performance management cameto be seen as a core management process and a wellintegrated strategic tool.
Broadly speaking, in the 1950-1960s the focus was
on merit rating in USA and UK and known asperformance appraisal.
1960s to 1970s was the period of management by
objectives (MBO), critical incidents technique and useof behaviourally anchored scales (BARS), which are
used extensively even now by various organizations.
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The word performance management was first used in1970s but did not become a recognized process until thelater half of 1980s.
The performance management literature can be traced inthree major phases-
1. from performance measurement to performancemanagement
2. from individual to collaborative performance measurement
3. from lagging to leading performance management.
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Performance measurement is universal.
In the work setting especially performance measurementgoes beyond annual review and can be used for manypurposes:
1. Criterion data
2. Employee development
3. Motivation/satisfaction
4. Promotion5. Transfer
6. Rewards
7. Layoffs
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Sources forEmployeeAppraisals
Supervisors
Self-AppraisalPeers
Subordinates
Customers
360-DegreeAppraisals
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TraitMethods
Graphic RatingScale
Mixed StandardScale
Forced-Choice
Essay
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Graphic Rating-Scale Method A trait approach to performance appraisal whereby
each employee is rated according to a scale ofindividual characteristics.
Mixed-Standard Scale Method An approach to performance appraisal similar to
other scale methods but based on comparison with
(better than, equal to, or worse than) a standard.
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Graphic RatingScale withProvision forComments
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Example of a Mixed-Standard Scale
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Forced-Choice Method Requires the rater to choose from statements
designed to distinguish between successful andunsuccessful performance.
1. ______ a) Works hard _____ b) Works quickly
2. ______ a) Shows initiative _____ b) Is responsive to customers
3. ______ a) Produces poor quality _____ b) Lacks good work habits
Essay Method Requires the rater to compose a statement
describing employee behavior.
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BehavioralMethods
Critical Incident
Behavioral Checklist
Behaviorally AnchoredRating Scale (BARS)
Behavior ObservationScale (BOS)
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Critical Incident Method Critical incident
An unusual event that denotes superior or inferioremployee performance in some part of the job
The manager keeps a log or diary for each employeethroughout the appraisal period and notes specificcritical incidents related to how well they perform.
Behavioral Checklist Method The rater checks statements on a list that the rater
believes are characteristic of the employeesperformance or behavior.
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Consists of a series of vertical scales, one for eachdimension of job performance; typically developedby a committee that includes both subordinates andmanagers.
Originally conceived by Smith & Kendall (1963) aregraphic-performance rating scales with specificbehavioral descriptions defining points against eachscale (i.e. Behavioral anchors), which represents adimension, factor or work function considered
important for performance
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BARS Example
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A performance appraisal that measures thefrequency of observed behavior (critical incidents).
Preferred over BARS for maintaining objectivity,distinguishing good performers from poor
performers, providing feedback, and identifyingtraining needs.
Developed by Latham & Wexley (1977) aresummated scales based on statements about
desirable & undesirable work behavior.
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BOS Example
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Productivity Measures Appraisals based on quantitative measures (e.g.,
sales volume) that directly link what employeesaccomplish to results beneficial to the organization.
Criterion contamination
Focus on short-term results
Management by Objectives (MBO)
A philosophy of management that ratesperformance on the basis of employee achievementof goals set by mutual agreement of employee andmanager.
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The appraisal focuses on four related categories Financial, customer, processes, and learning
Ensuring the methods success:
Translate strategy into a scorecard of clear objectives. Attach measures to each objective.
Cascade scorecards to the front line.
Provide performance feedback based on measures.
Empower employees to make performanceimprovements.
Reassess strategy.
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Tool Advantages Disadvantages
Graphic ratingscale
Simple to use; provides aquantitative rating for eachemployee.
Standards may be unclear; haloeffect, central tendency, leniency,bias can also be problems.
BARS Provides behavioral anchors.BARS is very accurate.
Difficult to develop.
Alternation ranking Simple to use (but not as simple asgraphic rating scales). Avoids centraltendency and other problems ofrating scales.
Can cause disagreements amongemployees and may be unfair if allemployees are, in fact, excellent.
Forced distributionmethod
End up with a predetermined numberor % of people in each group.
Employees appraisal results dependon your choice of cutoff points.
Critical incident
method
Helps specify what is right and
wrong about the employeesperformance; forces supervisor toevaluate subordinates on an ongoingbasis.
Difficult to rate or rank employees
relative to one another.
MBO Tied to jointly agreed-uponperformance objectives.
Time-consuming.
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Summary of Various Appraisal Methods
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RatingError
What does it mean?Contrast Effect The tendency of the rater to evaluate people in comparison with other
individuals rather than against the standards for the job
FirstImpressionError
The tendency of a manager to make an initial positive or negativejudgment of an employee and allow that first impression to color or distortlater information
Halo or HornEffect
Inappropriate generalizations from one aspect of an individualsperformance to all areas of that persons performance.
Similar-to- meEffect
The tendency of individuals to rate people who resemble themselves morehighly than they rate others.
CentralTendency
The inclination to rate people in the middle of the scale even when theirperformance clearly warrants a substantially higher or lower ratings
Negative &Positive Skew
The opposite of central tendency: the rating of all individuals as higher orlower than their performance actually warrants.
Attribution Bias The tendency to attribute performance failings to factors under the controlof the individual & performance successes to external causes
Recency Effect The tendency to minor events that have happened recently to have moreinfluence on the rating than major events months ago
Stereotyping The tendency to generalize across groups and ignore individualdifferences. 4/21/2012 24
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360 degree feedbck is also known as amultisource assessment
Ward (1997) defined 360 degree feedback asthe systematic collection and feedback ofperformance data on individul or groupderived from a number of stakeholders
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Developmental purpose
For appraisal
For pay
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Define objectives
Define recipients
Decide on who will give the feedback
Decide how feedback will be given
Decide on areas of work and behavior on which feedback will
be given Decide on the method of collecting the data
Decide on data analysis and presentation
Decide how the data will be used
Plan the initial implementation program
Analyze the outcome of the pilot scheme
Plan and implement full program
Monitor and evaluate
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Fit
Design
Skill
Communication Administration
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Broader perspective
Individuals know their strengths & weakneses
More reliable feedback is provided
New insights get highlighted
Critical performance & competency requirementsare clarified
People given more rounded view of theirperformance
Key development areas are identified
Managers are more aware on how they impact
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People may not give frank or honest feedback
People put under stress in receiving or givingfeedback
Lack of action following feedback Over-reliance on technology
Too much bureaucracy
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When there is active support of top management
When there is commitment
Real determination by all to use feedback data
Questionnaire items fit or reflect typical and significant
aspects of behaviour Items relate to actual events
Comprehensive & well delivered communication,followed by training
No one is threatened by the process Questionnaire easy to complete
Bureaucracy is minimized
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The problem is that not everything thatcounts can be counted, and not everythingthat can be counted counts
The origin of the Balance Scorecard can betraced back to 1990, when the research armof KPMG sponsored a study on measuringperformance in organizations.
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Is a strategic approach and a performancemanagement system that enables theorganization to translate its vision andstrategy into implementation.
It is a conceptual framework for translatingorganizations vision into a set ofperformance indicators distributed amongfour perspectives
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Financial: measures reflecting financialperformance, for example number of debtors,cash flow, or ROI
Customer Perspective: captures the ability of theorganization to provide quality goods andservices, effective delivery and overall customersatisfaction for both internal & external
customers. For example, time to process a phonecall, results of customer survey, number ofcomplaints or competitive rankings.
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Business Process Perspective: provides dataregarding the internal business results againstmeasures that lead to financial success andsatisfied customers.
To meet organizational objectives and customerexpectations, organizations must identify the keybusiness processes at which they must excel.
For example, the time spent in prospecting newcustomers, number of units that required reworkor process cost.
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Learning & Growth Perspective: captures theability of employees, information systems andorganizational alignment to manage business
and adapt to change.
In order to meet changing requirements andcustomer expectations, employees are beingasked to take on dramatically newresponsibilities that may require skills,capabilities, technologies, and organizationaldesigns that were not available before.
It measures the organizations learning curve, forexample, number of employee suggestions ortotal hours spent on staff training.
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Clarify and update strategy Communicate strategy throughout the
company
Align unit and individual goals with strategy
Link strategic objectives to long term targetsand annual budgets
Identify and align strategic initiatives
Conduct periodic performance reviews tolearn about and improve strategy
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Translation of strategy into measurableparameters
Communication of strategy to allstakeholders
Alignment of individual goals withorganizations strategic objectives.
Feedback of implementation results to
strategic planning process Preparing the organization for a change
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Lack of well defined strategy Using only lagging measures
Use of generic metrics
Failure at all levels
Failure to follow through completion