Performance Management
Definition
“Performance management is a continuous
process of identifying, measuring, and
developing the performance of individuals
and teams and aligning performance with the
strategic goals of the organization”
(Aguinis, 2009, p. 2)
One Model of the Performance Management Cycle
Develop Employee
Manage and develop
career goals of
employee
Set Expectations
Plan performance by setting
standards
Monitor Performance
Give ongoing feedback
Conduct Review
Prepare ratings and hold
annual performance review
Define the Job
Relate work performed by
individuals to unit objectives
and organization goals
Solve Problems
Define and solve
performance-
related problems
Author Unknown
A Few of the Uses of Performance Evaluation Results
(Aguinis, 2009; Wildman, Bedwell, Salas, & Smith-Jentsch, 2011)
• Improve Organizational Performance
• Compensation
• Promotion
• Increase Motivation
• Training/Development/Feedback
• Workforce Planning & Staffing
• Legal/Validation/Research
Termination
Problem
• Performance management systems try to create an
explicit link between individual performance and
organizational strategic goals
BUT
• There is a “Line of Sight Problem” (i.e., – it is sometimes
hard for an employee to see the connection between individual behavior
and organizational outcomes, like higher stock prices)
(Aguinis, 2009; DeNisi & Sonesh, 2011, p. 269)
Who Might Evaluate Performance?
• Managers/supervisors
• Self
• Peers
• Subordinates
• Customers/clients
Given the desired objective to improve employee
performance, recent research has indicated the
importance of:
1. Rater motivation
2. Perceptions and reactions of the employee
(DeNisi & Sonesh, 2011)
Example
• Rater motivation - evidence indicates that raters may
intentionally distort ratings
• ”…when trust is low, the motivation to be accurate will
decrease, and raters will tend to elevate ratings because
accurate but low rating would seem to serve no positive
purpose and rather contribute to employee dissatisfaction”
(DeNisi & Sonesh, 2011, p. 264)
A Few of the Factors That Influence Evaluations
Rater
Skills
Motivation
Characteristics
Performance
Employee
Skills
Motivation
Characteristics
Performance
Rating Environment
Purpose of Rating
Time Pressures
Legal Pressures
Process
Rating Format
Ranking/Comparisons
Graphic
Behavioral
MBO
Performance Rating
Performance Management: Legal Expectations
(cf. Bernardin & Beatty, 1984)
An early review examined 23 court cases involving alleged
violation of Title VII of the 1964 Civil Rights Act regarding
discrimination in the performance evaluation process.
The plaintiffs (the person[s] bringing the lawsuits) won 22
out of the 23 cases.
Performance
Management:
Legal
Expectations
(Pulakos, 2004, p. 28)
Conceptual Level
Ultimate CriterionActual Criterion
Criterion
Contamination Criterion
Relevance
Criterion
Deficiency
Characteristics of a “Good”
Performance Measure
Reliable
Relevant
Sensitive
Practical
Acceptable
Simple Definitions of Reliability & Validity
Validity Extent to which a test measures
what it is supposed to measure
Reliability The consistency and stability of
measurement
Judgment vs. Rating
• “Judgment” is different from a “rating”
• Judgment is a “private evaluation”
• Rating is “public statement” of that evaluation
• Research indicates they are NOT necessarily
consistent with one another
(DeNisi & Sonesh, 2011, p. 259)
A Model of the Performance Rating Process
Attend
Observe
Record
Classify
Integrate
Rate
Rater Errors in Performance Measurement
• “Similar to me”
• Contrast
• Distributional errors (e.g., leniency, severity, central tendency)
• Halo / Horns
Acceptability
Affected by Three Categories of Perceived
Fairness
Procedural Interpersonal Distributive /Outcome
Example Evaluation Method: Forced Distribution
(Riggio, 2000, p. 166)
Example Evaluation
Method: Simple
Graphic Rating Scales
(Riggio, 2000, p. 168)
Example Evaluation
Method: Behaviorally
Anchored Rating Scale
(BARS)
(Muchinsky, 1983, p. 262)
BARS Development Process
• Generate list of critical incidents (Group A)
• Sort incidents into 5 to 10 performance dimensions (Group B)
• RETRANSLATE scrambled incidents back into dimensions (Group C; 50 – 80% must agree on appropriate placement)
• Rate surviving incidents on effectiveness/ineffectiveness (Group C)
• Compile means and standard deviations of effectiveness ratings
• Set standard deviation (SD) criterion (cutoff) for retention (e.g., SD < 1.5)
• Keep incidents with low SDs
• Use mean effectiveness rating to place incidents as “anchors” on scale for each dimension
Example Evaluation
Method: Behavior
Observation Scale
(BOS)
(Wexley & Latham, 1991, p. 119)
Example
Evaluation
Method:
Behavioral
Assessment
Form
(Pulakos, 2004, p. 16)
Performance Management: “Red Flags”
• Employees are not given performance standards
• Employees are not aware of performance standards
• Almost all employees receive the same ratings
• Managers turn in the same review
• Managers and employees do not agree on when the last
appraisal interview occurred
• Minimal documentation of reasons for discharges
• Employees are promoted on the basis of false
information
(Phillips, 1987)
Contributions of Effective Performance
Management Systems
• Increased motivation to perform
• Greater supervisor insight about subordinates
• Clearer understanding of job expectations
• Better protection from lawsuits
• More clearly distinguish levels of performers
• Administrative actions are perceived as more fair
or appropriate
• More positive employee reactions
(Aguinis, 2009, p. 6)
Dangers of Poorly Administered
Performance Management Systems
• Use of false or misleading information in making
employment decisions
• Wasted resources (e.g., time and money)
• Damaged relationships (e.g., diminished trust)
• Decreased motivation to perform
• Increased risk of litigation and/or grievances
• More negative employee reactions (e.g.,
turnover)
(Aguinis, 2009, p. 9)
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