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Transcript of Performance Management Professor Lucia Miree American University in Bulgaria.
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Performance Management
Professor Lucia MireeAmerican University in Bulgaria
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Performance ManagementManagement = getting work done
through others
Manager’s performance is only as good as his/her employee’s performance
Manager’s job = performance management of others
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Performance Management
Organizational system
Focusing on employee performance
Consistently applied throughout organization
With a supporting structure
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Names of Systems
Performance Management
Performance Appraisals
Evaluation Systems
Job Review Systems
Feedback Systems
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Performance ManagementEnsuring appropriate performance by all
employees through:
-Reinforcement -Rewards -Modeling -Coaching -Training -Development
Using a consistent feedback system
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Working of Performance Management
Managers Speaks with Employee re: performance
Continuously
Once per Year
Formal goals
Organizational Reporting System
Tied to Organizational Outcomes
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Examples of System OutputWords and What They Mean
Exceptionally well qualified Made no major errors yetActive socially Parties & drinks too muchFamily is active socially Family drinks too muchPlans for advancement Buys drinks for all of the boysAggressive ObnoxiousUses logic on difficult jobs Gets someone else to do itExpresses himself well Speaks the local languageHas Leadership qualities Is tall or has a loud voiceKeen sense of humour Knows lots of dirty jokesCareer-minded Back-stabberRelaxed attitude Sleeps at workWork is first priority Too ugly to get a dateIndependent worker Nobody knows what he doesGood communication skills Talks on phone lotsLoyal Can’t get another job
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PERFORMANCE =Doing present job at a
certain level (high or low) as measured by a formal system
POTENTIAL =Includes future service, learning
interest, motivation level
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PROBLEM =
Deviation from expectations
Do something in different way
Not do something
Do something not expected/needed
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Opportunity
Reinforce/Reward Behavior
Change Behavior
Model Behavior
Establish Culture
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PERFORMANCE MANAGEMENT
-Based on Scientific Management concepts-Focus on observable performance-Goal directed-Planning required and formalized-Consistent, continuous collection, analysis, and collection of data-Value of feedback reinforced-Facilitates benchmarking
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Performance ManagementTrends
Shift from viewing financial figures as main criteria to one of multiple indicators
More weight on indicators of efficiency and effectiveness
Change to viewing PM as on-going, evolving process
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Principles of Performance Management
Supports business-oriented strategyIs values based
Communicates organizational missionFulfills responsibilities to organizational membersEnables employees to manage own performance
Manages expectations (clarifies roles and responsibilities)
Creates partnership between management and employee
Emphasizes importance of measurement, feedback, and reinforcement
Empowers employeesNatural extension of management
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Associated Costs
Staff Costs
Production and Processing Costs
Training Costs
Action Costs
Opportunity Costs
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Key PM Questions
1. Why assess performance2. What performance to asses3. How to assess performance4. Who do assess performance5. When to assess performance6. How to communicate performance
assessment
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The WHY of Performance Management Systems
-Administer Salary & Wages-Correct Performance/Behavior
-Plan for Future (promotion, transfer, career dev)
-Facilitate Decision-Making (counseling, terminations)
-Facilitate Human Resource Planning-Create Culture
-Building Good Relationships-Increase Organizational Loyalty
-Determine Effectiveness of Selection andPlacement Methods
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WHAT to Assess
Skills/Abilities/Needs/Traits of Individuals
That Interact with the Organization to Produce Behaviors Which
Result in Outcomes
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Skills/Abilities/
Needs/Traits
Behaviors Results
Job Knowledge Perform Tasks Sales
Strength Obey Instructions Production Levels
Coordination Report Problems Production Quality
Business Knowledge Maintain Equipment Scrap/Waste
Desire to Achieve Follow Rules Accidents
Dependability Submit Suggestions Equipment Repairs
Creativity Follow-up Customers Served
Leadership Write Reports Customer Satisfaction
Honesty Completes Reviews Feedback
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Measures Focus
Consistent indicators across industry or similar organizations
Comparison of indicators over time in organization
Comparisons with pre-determined standard
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Approaches to PM
Comparative
Attribute
Behavioral
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HOW to Assess Performance
Traditional
Management-by-Objective
Assessment Center
Peer Review Panel
Critical Events
Upward Feedback
360 Degree
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Techniques of PM
Essay (open-ended)Management by Objective
RankingPaired Comparisons
Forced ChoiceForced Distribution
Ratings: -Checklist
-Scales -Behaviorally Anchored Ratings (BARS)
Critical Incidents
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Essay TechniqueDescribe in detail the quantity and quality of the employee’s performance during the past twelve months.
Describe the employee’s strength and weakness.How do you describe the employee’s potential within the company?What leadership skills does the employee bring to the job?What future development activities do you recommend for the employee?
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Morgan Stanley’s Essay System
Consider objectives identified in prior year’s Summary as wellas this year’s objectives.
Evaluation: Strengths Comments 1. 2. 3.
Development Areas Comments 1. 2. 3.
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Examples of essays on PMs….His men would follow him anywhere, but only out of curiosity.
I would not suggest breeding for this person.
When she opens her mouth, it seems that it is only to change the foot that was previously there.
He has carried out each of his duties to his entire satisfaction.
He would be out of his depth in a car park puddle.
This person is like a gyroscope: always spinning at a fast pace, but not really going anywhere.
This person has delusions of adequacy.
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Continued examples….
Since my last report, he has reached rock bottom and is digging.
She sets low personal standards and then consistently fails to meet them.
He has the wisdom of youth & the energy of old age.
This person should go far. And, the sooner he starts, the better.
In my opinion, this pilot should not be authorized to fly below 250 meters.
This person works well under constant supervision and when cornered.
This man is depriving a village somewhere of its idiot.
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Management-by-ObjectiveExamples
Employee will contribute to organizational profit margin by lower costs in department by 3.5percent.
To implement new recruitment system, the employee will evaluate the effectiveness of the advertisements placed during the year.
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Ranking Example
Manager ranks all employees from best to worst:
Overall performance
On specific criteria (communication, customer relations skills, etc.)
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Paired Comparisons ExampleRank each employee grouping overall or on a characteristic:
Employee A and Employee BEmployee B and Employee CEmployee A and Employee CEmployee C and Employee DEmployee D and Employee AEmployee D and Employee B
etc.
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Forced Distribution Example
Pace each of the employees in your department in the following categories based upon overall or specific category performance:
Top 10 percent: 10-49 percent:50 – 89 percent: Bottom 10 percent:
Outstanding: Average:Good: Below Average:
Unacceptable:
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General Electric’s DistributionThe Vitality Curve
Promotability High Medium Limited
Top Performers 10%
Highly Valued 70%
Least Effective 20%
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Ratings Example: Checklists
Program Auditor:_____ 1. Unable to separate important from irrelevant data._____ 2. Omits important info from summaries._____ 3. Cross-references to improve reporting._____ 4. Produces summaries which lead to good reports._____ 5. Requires excessive instruction to produce work._____ 6. Unable to reduce data to manageable form._____ 7. Communicates well with peers on reports._____ 8. Fails to meet deadlines._____ 9. Provides detailed, professional work._____ 10. Protects confidentiality of information.
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Ratings Example: ScalesRate the employee’s behavior on the scale provided.
Excellent Good Fair Poor N/A4 3 2 1 ___
Reasoning ability 4 3 2 1 ___ Decisiveness in Decision-making 4 3 2 1 ___ Imagination & originality 4 3 2 1 ___Ability to plan and control 4 3 2 1 ___Cooperation with peers 4 3 2 1 ___Cooperation with management 4 3 2 1 ___Professionalism 4 3 2 1 ___Interpersonal skills 4 3 2 1 ___
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Citibank’s Performance Scorecard
Measurements Below Par
Par Above Par
Standards Manager’s assessment
Leadership,
Ethics/Integrity
Customer Interaction
Community Involvement
Contribution to Overall Business
People Manager’s assessment
Performance
Teamwork
Training & Development
Employee Satisfaction
Control Auditors’ standards
Audit
Legal
Regulatory
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Citibank’s Performance Scorecard..
Measurements Below
ParPar Above
Par
Customer Satisfaction External company survey
Goal of 80%
Strategy Implementation Objective standards
Households
Cross-sell, splits, mergers
Retail asset balances
Market share
Financial Objective stadards
Revenue
Expense
Margin
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Citibank’s Link to Compensation
Ratings Bonus
“Above Par” 30%
“Par” 15%
“Below Par” 0%
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Microsoft’s PA SystemOverall Employee Rating:
5 = Exceptional performance rarely achieved; precedent setting results
4.5 =Consistently exceeds all requirements & expectations work highly valued4 =Consistently exceeds position requirements and expectations;
work often noteworthy3.5 =Exceeds position requirements; successful in all objectives3 =Meets position requirements and expectations; meets most or all objectives; needs some development for quality2.5 =Falls below performance standards and expectations; has
performance deficiencies1.0-2.0 =Does not meet minimum requirements in critical aspects
of job
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Microsoft: Adding Distribution to Rankings
4.0 + = 35% of employees3.5 = 40% of employees3.0 or lower = 25% of employees
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Ratings Example: BARS
Indicate the appropriate level of performance on each factor:
Quantity of work
Quality of work
Judgment
Volume low & erratic Satisfactory steady volume
Volume above expectations
Results always accurate; model work
Results accurate and thorough
Results generally inaccurate and not thorough
Systematic, analytical, good with complex problems
Practical judgment, solves problems,
difficulty with assessing relative value of factors
Does not always show goodjudgment; problem analysis
not always adequate
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Microsoft Competency Toolkit
Level 1 Level 2 Level 3 Level 4Structures basic
info accurately; draws informed conclusions
Analyzes & organizes complex info from specific content area, identifying key issues, assessing impact, drawing reasonable conclusions
Analyzes, explains & draws logical conclusions based upon complex data from multiple content areas
Rapidly identifies the significance of info & insightfully determines strategic action.
With guidance, learns quickly on the job
Learns new skills & ideas rapidly
Rapidly learns & assimilates complex info involving unfamiliar situations & circumstances
Rapidly learns new concepts & ideas; integrates & assimilates highly complex info across broad, multi-functional content areas
Picks up new skills & understands ideas when structured
Quickly adjusts thinking for new info or ideas
Learns effectively from experience
Is able to apply & explain logic related to problems
FACTOR: Individual ExcellenceCOMPETENCY: Intellectual Horsepower (is bright, intellectual sharp, learns quickly)
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Microsoft Competency Toolkit
Level 1 Level 2 Level 3 Level 4Assigns challenging tasks and assignments that will help people develop their skills
Takes time to learn about and understand direct reports; career goals
Actively coaches direct reports how to get the most learning from their current assignments
Holds managers accountable for developing people in their group/
organization
Provides direction in correct performance of tasks and assignments
Provides stretch jobs and assignments for direct reports to help them develop their skills
Gives direct reports candid, thoughtful feedback on their strengths and weaknesses
Identifies key people in his/her organization to assume high-level management responsibilities, and is an advocate for them when opportunities for advancement occur
FACTOR: Long-term ApproachCOMPETENCY: Developing people (provides job-relevant learning, developmental
exercises, and feedback to enhance individual performance)
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Critical Incident ExampleEmployee Name:___________________________________Date of Incident:__________________Type of Incident:___________________________________Individuals Involved:
Description of Incident:
Outcome of Incident:
Recommendations:
Date Discussed with Employee:____________Supervisor Signature:______________________________Employee Signature: ______________________________
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Focus Judgmental Developmental
Time orientation
Past performance Preparation for
future performance
Method Improving performance by changing behavior through rewards
Improving performance by self- learning & personal growth
Supervisor’s Role
Judge who appraises Counselor who listens, helps, encourages & guides
Subordinate’s
Role
Listener, reactor to, defender of past performance
Actively involved in charting future plans
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Criteria for Performance Measures
Relevant
Reliable
Discriminating
Practical
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Problems with Performance Measures
ControllabilityMotivational impact
“Fallout”Role Modeling Impact
ReliabilityRelevance
Control
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WHO Should Assess Performance
Superior Only
Subordinate(s)
Peers/Coworkers
Self
Customers
Others
Subordinates
All Stakeholders
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WHEN to Assess Performance
Probation Period
Annually (anniversary date, assigned date, set date for all)
Semi-annually
For Cause
On-going
As needed
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How to Communicate PM Info
Orally
In Writing Formally
Informally Public
Private
Moderated
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Handling Performance Issues
What to do
Where to start
How to do it
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PROBLEM =
Deviation from expectations
Do something differently
Not do something
Do something not expected/needed
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Performance Problems
Research shows that there is a huge performance gap between high and low performers in any organisation –
between 30%-50% for unskilled jobs
and up to 100% for highly technical ones.
From : Why people do not get fired: the psychology of discipline avoidance - http://www.workrelationships.com/site/articles/performance_management.htm
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PROBLEM ID
PRELIMINARY SCANWhat shouldn’t be happening?
Impact of this?Worth pursuing?
ORGANIZATIONAL SCANMatch strategic plan?
Critical functions missing?Culture and performance gaps?
FUNCTIONAL JOB ANALYSISSpecific job deficiencies?
Job knowledge and training?
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CAUSAL ANALYSIS
ID:When problem beganWhat else has changed
PARETO’S LAW: Rule of 20/80“80% of any problem is
caused by 20% of possiblecauses.”
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CAUSES OFPERFORMANCE
PROBLEMS-Lack of ability
-Low motivation-Poor work ethic
-Substance abuse-Personal problems
-Lack of time-Poor peer relationships
-Unfamiliarity with equipment or process
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PERFORMANCEOPPORTUNITIES
P
oor
Perf
Excellen
t P
erf
No/Low Knowledge High Knowledge
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PERFORMANCEOPPORTUNITIES
--- OK
TrainingOrg
Development
P
oor
Perf
Excellen
t P
erf
No/Low Knowledge High Knowledge
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ALTERNATIVE SOLUTIONS1. Return to old system2. Fire, transfer, hire new3. Train4. Reassign or isolate
RATE EACH BY: -Contribution to Objectives (high, medium, low) -Cost to fix and to ignore (high, medium, low)RANK IN ORDER
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Training & Development
Definition: planned, continuous effort by management to improve employee competency levels and org performance.
TRAINING: provide learners with knowledge & skills for job
DEVELOPMENT: prepare organization and employees to keep pace with industry and fields of expertise
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T & D TRENDSSkill requirements change with more work
complexity
Workers more educated
Workers more diverse
Org restructuring continues
Training often outsourced
More technology use in Training
Training Departments = Brokers
J-I-T and J-W-I-N Training Grow
Increase on human performance
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Top management support
Commitments from Specialists and Generalists
Technological Advances
Organizational Complexity
Behavioral Science Knowledge
Learning Principles
Performance of Other Human Resource Functions
Factors Influencing T & D
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TRAINING & DEVELOPMENT METHODS
Coaching Mentoring
Business Games Case Studies
Role Playing Videotapes
In-Basket Training Internships Job Rotation Computer-based
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Methods (continued)
Cyberlearning: -Internet/Intranet -Virtual Reality -Distance Learning -Video ConferencingClassroom ProgramsCorporate Universities Colleges & Universities On-the-Job Training Apprenticeship Training Simulators Vestibule Training
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DEVELOPMENT1. HARDWARE
-equipment -space -money
-people -transportation
2. SOFTWARE-policies & procedures -reward
systems-communication systems -structure
3. BEHAVIORAL-supervision -peer relationships-values & attitudes -personality -individual goals & priorities
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EMPLOYEES PERFORMANCE :CATEGORIES AND STRATEGIES
DEADWOOD: No training; demotions or removal; remedial work; training to prevent loss; orientation to
lower job; divest WORKHORSES:
Training stressing improvement, orientation or maintaining skills; career counseling on limits
PROBLEM CHILDREN: Remedial, therapeutic or corrective dev plan; divest
STARS: Special effort, programs and funds to maximize
value; invest
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IMPLEMENTATION PLAN
Priorities OptionsBudget DevelopmentSelection of Methods
Plan with BenchmarksPilot Program
EvaluationAdjustments and New Plan
Full ImplementationOn-Going & Periodic Evaluations
(Is it working? If no, why not?)
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Why PM Is Difficult
Job/Outcomes not quantified
Personal relationships with employees
Unable to give criticism
Personality biases
Poor communication
Conflicting Goals
Playing God
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Errors in Performance Measurement
Strictness or Leniency
Central Tendency
Halo Error
Recency Error
Supervisor Bias
Overall Ratings
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Correcting PM Errors
Isolate Job AreasObserve Regularly
Minimize Number of Ratings CompletedTrain Raters
Define Dimensions BetterGive Feedback
Use Continual FeedbackInclude Other Sources
Decrease Generalities, Include Specifics
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Effective PM SystemsSystem acceptable to employees
Managers use system regularly & correctly
Perception of being treated fairly by system
Useful feedback provided
Focus on problem solving, not blame
Serve to increase productivity & satisfaction
System used by organization
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Training for PM Interviews
Have documentation
Be objective judge job, not individual
Use specific examples
Share control
Make it a year-round process
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Training….continued
Solicit & give feedback -Clear -Constructive
-Descriptive, not judgmental
Avoid arguments
Strive for consistency
Get it down in black and white
By-the-book
Listen
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PRIOR TO PM INTERVIEW
Decide on best timeDecide on best place
Prepare facilitiesGather info and materials
Prepare employeePlan the opening
Plan the approachPlan the conclusion
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After PM Interview
Meet deadlines
Solicit input
Reinforce, reward, punish(follow through)
Review regularly
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How to Destroy PM SystemDo not follow policies
Be inconsistent in application
Treat it as unimportant
Do not follow-up
Reprimand in public; Reward in private
Conduct when angry
Be late
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The WHY of Performance Management Systems
-Administer Salary & Wages-Correct Performance/Behavior
-Plan for Future (promotion, transfer, career dev)
-Facilitate Decision-Making (counseling, terminations)
-Facilitate Human Resource Planning-Create Culture
-Building Good Relationships-Increase Organizational Loyalty
-Determine Effectiveness of Selection andPlacement Methods