Chapter 11 Performance Management Systems

1
Chapter 11Performance Management Systems 
2
Objectives

• Understand the role of employee appraisal as one
  part of a holistic performance management system.
• Identify performance standards as the benchmark
  for measuring performance.
• Recognize commonly used formal appraisal formats.
• Understand the role of the supervisor as
  providing daily informal appraisals.

3
Performance Management System

• Compared with established performance standards,
  provides planning, identification, encouragement
  through the communication of standards
• Evaluations of actual performance
• The effectiveness of performance practices is
  related to the supervisors awareness concerning
• service perspective
• leadership practice
• worker motivation
• work life development

4
Purpose of performance measurement

• To provide feedback to employees about their
  performance
• To be able to take actions to facilitate
  improvement
• Provide recognition of successful performance
  levels by giving rewards

5
The Performance Management Process

• Starts with performance standards (behavioral
  goals)
• Job criteria are established (job lists)
• Prioritize the importance of each job function by
  listing the procedures to meet each standard
• The worker exceeds, meets, or does not meet each
  category of performance
• Attach mathematical weights to each performance
  category for important aspects of performance
• The averaged total will provide an indication of
  the overall performance levels

Performance Appraisal
6
The holistic approach to management performance
responsibility
7
The holistic approach to management performance
responsibility- Performance management system

• Every management activity from strategic planning
  through performance appraisal
• Planning
• Organizing
• Influencing
• Control
• Management control (A control process)
• Compares actual performance with standards for
  performance

8
Types of Performance Appraisals

• Informal appraisal
• Done daily and is mostly verbal
• Formal appraisal
• Written on a performance appraisal form and is
  done periodically

9
Who appraises whom?

• 180 degrees model
• Supervisors appraise their workers, and workers
  appraise their supervisors
• 360 degrees model
• Subordinates, supervisors, and peers participate
  in the appraisal process.
• Self evals
• Good introspection tools.
• But most people lack the level of self-awareness
  to do this function effectively.
• Multi-source rating
• Customer feedback plus other ratings

10
Performance Appraisals Methods

• There are various formal appraisal methods.
• Category rating method The most popular type
• Comparative methods Rate employees against each
  other
• Ranking method Rank employees from best to worst
• Forced distribution Put most in the middle and a
  few at each end
• Narrative methods Writing reports based on
  performance observations
• Critical incident method Combines informal with
  formal reviews
• Essay appraisal Used for senior level
  management positions in most cases
• includes a thorough written essay on the
  performance of the executive
• Behavioral approaches use predetermined job
  behaviors

11
Performance Appraisals MethodsCategory rating
method

• The most popular..
• Graphic rating scales (1-5)
• Checklist methods (check off the statement that
  applies)

12
Performance Appraisals Methods Forced
Distribution

• Put most in the middle and a few at each end

13
Performance Appraisals Methods Written
Methods- Critical Incident Method

• Managers take notes on observations of
  important/critical activities/incidents for each
  employee
• Place the notes in a file marked for each worker
• One year's worth of notes on each workers
  performance
• A powerful tool
• Combines informal with formal reviews
• BUT..

14
Performance Appraisals Methods Behavioral
Approaches

• Focus on pre-defined specific job behaviors
• Behaviorally Anchored Rating Scale (BARS)
• Management by Objectives (MBO)
• Balanced Scorecard

15
Performance Appraisals Behavioral
approachesBehaviorally Anchored Rating Scale
(BARS)

• Less applied to hospitality and tourism positions
• Uses concrete descriptions of expected behaviors
  in a checklist format
• Adheres to the Dictionary of Occupational Titles
  to identify position descriptions
• More geared toward manufacturing and
  administrative positions

16
Performance Appraisals Behavioral approaches-
Management by Objectives

• Both a Goal Setting activity and Performance
  Appraisal method
• Involves top/down (organizational/departmental
  objectives), and bottom/up (the employees
  personal strength/career goals) to be set for
  every level of the organization based on the
  mission
• Supervisors review the accomplishment of
  objectives at some later date

17
Performance Appraisals Behavioral approaches-
Balanced Scorecard

• (quantitative measurements on one axis and
  qualitative metrics on the other axis)
• Provide weights for measuring service to all of
  the stakeholder groups, as opposed to other
  methods that focus solely on the contributions to
  the customers and shareholders

18
Validity Errors- Factors that invalidate the
performance appraisal

• Recency effect
• Fail to use the critical incident method and can
  only remember the last few weeks of performance
  for each worker
• Central tendency
• Intend to make everyone average
• Rater bias
• Personal issues cloud the objective criteria of
  the review.
• Halo effect Horn effect
• Rating whole range of performance on a single
  attribute/incident
• Contrast error
• Comparisons are made to other workers instead of
  objective criteria

19
The Formal Appraisal Process

• The administrative aspect of appraisal
  development, distribution, and documentation
• To ensure
• fairness
• consistency
• uniformity
• Require multi-level review and approval
• Include the approval of the HR director.

20
Formal Performance Appraisal Process

• HR office tracks the time period of performance
  appraisals
• HR office distributes appraisal instruments 30
  days prior to due date
• Operating managers complete the appraisal
  instruments.
• Operating managers attain approval of the rating
  from executive and human resource managers.
• Operating manager establishes a scheduled
  interview time with the employee.
• Operating manager gives the employee sufficient
  time to review the appraisal document.

21
Formal Performance Appraisal Process (cont.)

• Operating manager conducts the appraisal
  interview by engaging in dialogue with the
  employee.
• Employee provides written commentary and
  signature on the appraisal document.
• Executive and HR director signatures indicate
  approval.
• The appraisal document is admitted to the
  employees personnel file.
• HR office schedules the next periodic appraisal
  date for trace.
• HR office processes payroll change document in
  the event of a pay increase.
• The accounting office processes the payroll
  change document.

22

• The most significant problem with conducting
  performance appraisals annually or semi-annually
• Appraisers cannot remember events and behaviors
  that occurred as long as six or twelve months ago

23
The Formal Appraisal Process

• Time consuming
• Vital to good employee relations
• Experienced managers recognize the leadership
  opportunity involved with taking sufficient time
  to provide feedback to the workers