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Unit 2, Lecture 4: Performance Appraisal PERFORMANCE

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Unit 2, Lecture 4: Performance Appraisal PERFORMANCE APPRAISAL CONCEPTS Prof. John Kammeyer-Mueller MGT 4301 Unit 2, Lecture 4: Performance Appraisal Unit 2, Lecture ... – PowerPoint PPT presentation

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Title: Unit 2, Lecture 4: Performance Appraisal PERFORMANCE


1
Performance Appraisal Concepts
  • Prof. John Kammeyer-Mueller
  • MGT 4301

2
Where we are, where were going
  • Where we are
  • Understand the basics of training and development
  • Where we want to be
  • Why measure performance?
  • How can you measure performance?
  • How well know how were doing
  • Identify the four ways performance can be
    measured
  • Identify and describe three major dimensions of
    performance
  • Results-oriented performance appraisal
  • Behaviorally Anchored Rating Scales (BARS)
  • Comparative approach to performance appraisal
  • Team-based approach to performance appraisal

3
How could you establish a pay-for-performance
plan?
  • How would you establish pay for performance for
    the following jobs
  • College football coach
  • A physician in a large hospital
  • Waiter or waitress
  • A person who manufactures computer motherboards
  • A call center operator
  • What are the advantages and disadvantages of pay
    for performance in these jobs?

4
What Will I Measure?
  • What is incentive compensation?
  • Providing rewards for specific behaviors
  • Linking compensation to some indicator of
    employee competence
  • What are the expected effects of incentives?
  • Task performance
  • Organizational citizenship
  • Deviant behavior
  • Turnover

5
Three Major Questions to Ask in Performance
Management
  • How will I administer the program?
  • What will I measure?
  • How often will I measure?
  • What rewards am I going to offer?
  • Cash?
  • Non-cash benefits?
  • Recognition?
  • At what level will the reward be offered?
  • Individual?
  • Group?
  • Whole organization?

6
Legal issues with performance appraisal
  • Performance appraisals are reflected in,
    compensation, terms, conditions, or privileges
    of employment they are covered by discrimination
    laws
  • Legal precedents
  • Albemarle paper company v. Moody
  • Evaluating performance based on which employees
    were better than others is too subjective
  • Hopkins v. Price Waterhouse
  • Evaluations containing discriminatory language
    (Ms. Hopkins was told to act less macho and to
    walk, talk, and dress more like a woman) provide
    evidence of disparate treatment

7
Monitoring and Incentives
  • Incentives are difficult to administer
  • Performance cant always be monitored cheaply
  • Lock in to old standards
  • If you define a specific objective its difficult
    to change incentives
  • Need to change production programs can slow
    things down as incentives are recalibrated

8
Choosing Measurement Methods
9
What do we measure in performance appraisal?
  • Describe a great co-worker at your current job
  • List three ways youd describe the behavior of
    the best people you see on the job.
  • List three ways youd describe the behavior of
    the worst people you see on the job.

10
Rotundo Sackett Relative Importance of Task,
Citizenship Counterproductive Performance
  • Performance
  • Behaviors under the control of the individual
    that contribute to organizational outcomes
  • Effects of behavior are not performance because
    they are not necessarily under individual
    control, and therefore will be difficult to
    predict with selection tools
  • They want to find a generic group of behaviors
    that is comparable across organizations
  • Generally, it is best if the behaviors are linked
    to a job analysis so that job relatedness can be
    demonstrated

11
Rotundo Sackett Relative Importance of Task,
Citizenship Counterproductive Performance
  • Key concepts
  • Task performance
  • Behaviors that contribute to the production of
    goods and services
  • Need not be part of a formal job description
  • Citizenship
  • Behavior that contributes to the social and
    psychological environment of the organization
  • Counterproductivity
  • Behavior that actively damages the organization

12
Which dimensions of productivity matter most?
  • Supervisors rated the performance of hypothetical
    employees, with levels of task, citizenship, and
    counter-productivity manipulated
  • While task performance dominates, the non-task
    elements, when added together, are nearly as
    important as task performance
  • (Rotundo Sackett, 2002)

13
What Difference Does This Dimensions Stuff Make?
  • Many organizations primarily measure task
    performance and forget other aspects
  • Failing to measure citizenship can discourage
    employees from helping one another
  • There are many examples of a person who is
    outstanding at his or her job but made everyone
    else hate showing up to work
  • There is increasing focus from managers on
    bullying/harassing employees

14
What is Preferred by Employers
  • Our theory of compensation says we most desire to
    have a system that
  • creates maximum effort
  • makes employees part owners in outcomes
  • Therefore, economic theory basically suggests
    that individual output based pay is optimal
  • Think about why you might not want to have all of
    your compensation based entirely on your own
    individual outputs in some jobs

15
The results approach
  • Management by objectives
  • Sales goals
  • Objective increase sales 10 during 2002
  • Performance increased sales 8 during 2002
  • Injury/accident rates
  • Objective decrease from 5 to 2 accidents per
    year
  • Performance decreased to 1 accidents
  • Management goals
  • Objective decrease turnover rate to 5 this year
  • Performance increased turnover of 10 this year
  • A class analogy is test performance

16
What is Preferred by Employers
  • Some practical problems with individual output
    based pay
  • Output is difficult to measure for most jobs,
    especially managerial jobs or for collaborate
    work
  • May lead to perverse incentives (e.g., computer
    programmers paid by the line write too much code,
    doctors who emphasize number of patients over
    quality of care)

17
Another take on results oriented performance
appraisal
18
Behavioral MeasuresEvaluative Ratings Scale
  • Like open-ended essays or papers

19
Behavioral observation system
  • More like multiple choice exams

20
Behaviorally anchored rating scales
  • Most BARS have 20-30 questions for a job
  • Developed by watching a high performing employee
    and rating if employees do as well as him or her

21
Evidence Regarding Potential Bias in Performance
Appraisals
  • Interrater reliability for performance appraisals
    is not very good
  • More variance is due to the person doing the
    rating than to the person being rated
  • This means that any biased manager can create a
    legal problem for an organization
  • Ecological fallacy note although most evidence
    shows limited support for major systematic
    discrimination in performance appraisal, that
    doesnt mean that there arent cases where it
    occurs

22
Cognitive Problems with Perceiving Performance
  • Primacy effects
  • People tend to remember the first things on a
    list
  • First impressions
  • Recency effects
  • People tend to remember the last things on a list
  • People reconstruct their memories for events
    based on whats happened lately
  • Contrast effects
  • People notice differences across candidates
  • Individuals are invariably compared to others

23
Social Problems with Perceiving Performance
  • Similarity-attraction
  • People see others who are like themselves as more
    varied, unique, individual
  • People tend to see those who are similar to
    themselves as better on dimensions like morals
    and values
  • Supported by research on liking and performance
    appraisal
  • Often termed similar-to-me bias

24
Social Problems with Perceiving Performance
  • Influence tactics
  • Flattering the boss
  • Doing personal favors not related to work, etc.
  • Illegal favors and sexual harassment?
  • Giving bad ratings to employees who have good
    ideas that conflict with the boss
  • Political manipulation of consequences
  • Good ratings so people will like you
  • Good ratings for favors later on
  • Good ratings to people you dont like so they get
    promoted away from you

25
This is probably how performance is distributed
  • Few at the top
  • Few at the bottom
  • Lots in the middle
  • Why?
  • Abilities are normally distributed
  • Random variance is normal as well

26
Leniency problems
  • Lots of top performers
  • Few poor performers
  • Why would we see ratings like this?

27
Why measurement errors matter
  • So what if there are social biases?
  • Anything that makes evaluations arbitrary weakens
    their relevance in court
  • Poorly done evaluations can be frustrating for
    employees
  • So what if there are distributional errors?
  • Hard to justify personnel decisions in court if
    ratings are the same
  • Restriction of range hurts ability to validate
  • Overpayment or underpayment if pay is determined
    by skewed ratings
  • Can be very de-motivating (why try harder?)

28
Stauffer BuckleyRacial Bias in Supervisor
Ratings
  • White supervisors tend to give the same ratings
    to white employees as black supervisors
  • White supervisors tend to give lower ratings to
    black employees than do black supervisors
  • The size of these effects is often very small

29
Behavior Based Examples for Class Performance
  • Rating based on a standard for how a person
    should do a project
  • is the project in the right format?
  • is the project of the appropriate length?
  • Ratings based on attendance, completion, and
    participation

30
Standards-Based Approaches
  • Rewards provided for exceeding an absolute
    standard
  • For example, all employees who receive superior
    ratings will receive bonuses
  • Compensation is based on an absolute percentage
    of sales or output

31
Comparative approaches
  • A simple ranking
  • Best performers name________________
  • Second best performers name_______________
  • A forced distribution like a strict curve can be
    used

32
Which Approach is Better?
  • Standards-based
  • Comparative
  • Performance is directly linked to rewards
  • Cooperation can increase rewards
  • Goals can be specific
  • Difficult to control costs, especially with
    supervisor review
  • Performance-reward relationship is based on the
    effort of others
  • Cooperation usually hurts your own rewards
  • Goals are not specific
  • More control over budgeting
  • Tournament theory

33
Wrap Up
  • Where we are
  • Understand the basics of training and development
  • Where we want to be
  • Why measure performance?
  • How can you measure performance?
  • How well know how were doing
  • What four reasons do organizations have for doing
    performance appraisal?
  • Identify and describe three major dimensions of
    performance
  • Open-ended narrative performance appraisal
  • Results-oriented performance appraisal
  • Comparative approach to performance appraisal
  • Behaviorally Anchored Rating Scales (BARS)
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