Human Resource Management

Chapter 8

Performance Management

Presented by: Group 9

Amog, Rovelyn
Boca, Melodie
Magdayo, Joyce
Namoc, Jessa
Salingay, Quiza

Chapter Outline
• Why is Performance Management Important?

• Balanced Scorecard

• Steps in the Performance Management Process

• Setting Goals and Standards

• Performance Information Sources

• Performance Measurement Methods

• Improving Performance Through Feedback and Rewards

• Taking Corrective Action

• Performance Management Obstacles

• Legal and Ethical Issues in Performance Management

Learning Objectives

1. Describe the three main benefits of performance management.

2. Explain the balanced scorecard.

3. Describe how goal setting affects performance.

4. List the possible sources of performance information.

5. Describe the difference between performance measurement and performance

ranking methods.
6. Explain why feedback is important to goal accomplishment.

7. Describe the steps in the progressive discipline process.

8. Describe three common obstacles to performance management effectiveness.

(Reporter: Quiza Salingay)

What is performance management?

-Directs and motivates employees, work groups, and business units to

accomplish organizational goals by linking past performance with future needs, setting

specific goals for future behavior and performance, providing feedback, and identifying

and removing performance obstacles.

Why is performance management important?

1. Aligns organizational goals with individual goals and organizational processes.

2. Gives employees clear goals and feedback.

3. Generates useful data.

Balanced Scorecard

- The balanced scorecard is performance management system that translates

the organization's strategy into four perspectives:

1. Learning and growth outcomes

2. Business process outcomes

3. Customer outcomes

4. Financial outcomes

The balanced scorecard focuses on balancing:

1. Internal and external measures

2. Performance results and the driver of future results

3. Objective and subjective performance measures

4 factors are included for each of the four balanced scorecard perspectives:

1. Objective. What are the major objectives to be achieved?

2. Measures. What observable metrics will be used to measure progress towards the

objectives?

3. Targets. What are the specific goals for each measures?

4. Initiatives. What are the specific actions, resources, or program will be provided to

meet the objectives?

(Reporter: Melodie Boca)

Steps in the Performance Management Process

1. Link short- and long-term organizational goals to the organization’s mission and

business strategy.

2. Identify subgoals for each business unit, department, workgroup, and individual

based on these overall organizational goals and standards.

3. Communicate goals and expectations throughout the organization and motivate

employees to pursue them by connecting them to their personal goals.

4. Create work processes and assign resources to support the goals.

5. Measure progress on goal achievement.

6. Regularly assess individual, workgroup, and business unit performance relative to the

goals.

7. Regularly give feedback on goal progress to improve performance and remove

obstacles.

8. Identify and overcome obstacles to goal achievement.

9. Reward goal achievement.

Setting Goals and Standard

- Organizational goals are usually established during the strategic planning

process. These high-level goals are then translated into results.

Performance goals should be challenging and SMART:

√ Specific, clear and understandable

√ Measurable, verifiable and results- oriented

√ Achievable

√ Relevant to the mission

√ Time- bound with a deadline, schedule, and milestones

Standards specify what level of results will be considered acceptable.

Guidelines for Successful Goal Setting

1. Goals that are both specific and difficult lead to highest performance.

2. Goal commitment is most important when goals are specific and difficult.

3. High goal commitment is achieved when:

(a). The performer is convinced that the goal is important

(b). The performer is convinced that the goal is attainable.

4. In addition to directly influencing performance, self-efficacy influences:

(a). Goal difficulty

(b). Goal commitment

(c). The response to negative feedback or failure

(d). The choice of task strategies

5. Goal setting is most effective when feedback shows progress in relation to the goal.

Performance Information Sources

Multi-source assessments: performance feedback from the employee’s supervisor as

well as other sources who are familiar with a employee’s job performance.
Task acquaintance: the amount and type of work contact an evaluator has with the

person being assessed.

Upward reviews: the target employee is reviewed by one or more subordinates.

(Reporter: Rovelyn Amog)

Performance Measurement Method

Performance rating method: compares employee performance to a set of standards

to identify a number or letter rating that represents the employee’s performance level.

Commonly used Performance Rating Methods:

• Essay Appraisal Method- The assessor writes a brief essay providing an assessment

of the strengths, weaknesses, and potential of the target employee.

• Critical Incident Appraisal Method- An assessor discusses specific examples of the

target employee’s positive and negative behaviours with the employee.

• Graphic Rating Scale- Uses ratings of unsatisfactory, average, above average, and

outstanding to evaluate either work quality or personal traits.

• Behaviorally Anchored Rating Scale- Use a set of behavioural statements relating

to qualities important for performance.

• Behavioral Observation Scales- Measure the frequency of desired behaviors.

• Forced Choice Rating Method- Forces the assessor to choose the statement that

best fits the target employee from a provided set of statements that are scored and

weighted in advance.

• Checklist Method- The assessor uses a checklist of pre- scaled descriptions of

behaviour to evaluate the employee.

• Work Standards- Comparing an employee’s performance to output targets that reflect

different levels of performance.

• Management by Objectives- The rater evaluates the target employee against

mutually set goals.

Performance ranking method: compares employees to each other in some way,

making it impossible for all employees to receive a high rating even if al employees are

outstanding.

Three (3) Primary Performance Ranking Methods:

1. Forced Ranking Method- Employees are ranked in order of best to worst

performance.

2. Paired Comparison Method- Every employees in a work group is compared to the

other group members.

3. Forced Distribution Method- The rater distributes performance ratings into a pre-

specified performance distribution.

(Reporter: Joyce Magdayo)

Improving Performance Through Feedback and Rewards

“ We have come to think very differently about performance reviews. Rather than see

them as evaluations- or, worse, judgments- of the employee’s work of the past year, we

now think of them as opportunities to discuss development.”

- Vineet Nayar, CEO, HCL Technologies

Continuous performance appraisal: an ongoing performance appraisal process that

involves the employee in evaluating his or her performance and setting performance

goals, and provides continuous coaching and feedback.

Providing Effective Feedback

• Focus on the specific behaviour or performance rather that what you think the

feedback indicates about the individual to decrease defensiveness and focus the person

on what he or she can do to be more effective.

• Be supportive and provide feedback that frames the person’s performance relative to

his or her goals, past performance, or improvement rate, and minimize comparisons to

others.

• Be specific in describing the desired behaviour or performance.

• Jointly set specific, relevant goals, or persuade the employee to accept the goals you

provide.

• Provide limit, focuses information and data to avoid overwhelming the employee or

putting him or her on the defensive.

Performance Review Strategies

1. Before the meeting, thoroughly and objectively review the employee’s performance

throughout the entire time period.

2. Identify and focus on no more than three areas for improvement.

3. Begin the performance review meeting in a friendly and respectful way.

4. Communicate the effect that the employee’s positive and negative behaviour or

performance has had on other employees.

5. Focus on what’s in it for the employees to improve in the targeted areas.

6. Clearly communicate the performance goals and standards.

7. After persuading the employees to act on the targeted areas of development, co-

develop an action plan and set SMART goals to achieve it.

8. End the meeting by making sure the employees feels respected, valued and

recognized for his or her contributions and effort.

9. Follow up within a month.

10. Recognize and reward improvement as well as goal accomplishment.

Taking Corrective Action

Performance improvement plan: a tool to monitor and measure an employee’s

deficient work products, processes, and/ or behaviors to improve performance or modify

behaviour

Steps to Write an Effective Performance Plan:

F Facts that defines the problem, including the company’s expectation.

O Objectives that help the employee understand how to resolve the problem.

S Solutions that can help the employee strategize how to reach the objectives.

A Actions that will be taken if the problem is not corrected.

+ Plus your overall efforts and support to help the employee succeed.

Progressive discipline: using increasingly severe measures when an employee fails to

correct a deficiency after being given a reasonable opportunity to do so.

(Reporter: Jessa Mae Namoc)

Performance Management Obstacles

Three (3) of the Most Common Obstacle to Effective Performance Management.

1. Not Communicating a Performance Plan.

Describe desired goals and results, how results will be measures and weighted,

and what standards will be used to evaluate results.

2. A Lack of Accountability.

An Individual is expected to provide a regular accounting to a superior about the

results of what she or he is doing and will be held responsible for the outcome.

3. Human Biases and Errors.

Variety of Rating Errors that can be Compromise Objectivity and

Accuracy in Performance Measurement

1. Personal Standards.

2. Contrast Effect. Over- or underrating someone based on a comparison with

someone else.

3. First Impression Bias. Initial judgements influence later assessments.

4. Recency Effect. Allowing recent events and performance to have a

disproportionately large influence on the rating.

5. High Potential Error. Confusing potential with performance.

6. Halo Effect. Letting one positive factor influence assessments of other areas of

behaviour or performance.

7. Horns Effect. Letting one negative factor influence assessments of other areas of

behaviour or performance.

8. Similar-to-me Effect. Giving high ratings to someone because she or he is

perceived as being similar to the rater.

9. Leniency Error. All employees are given high ratings regardless of performance.

10. Central Tendency. Rating all employees in the middle of the scale regardless of

performance.

11. Stereotype. Believing that everyone in a particular group shares certain

characteristics or abilities or will behave in the same way.

12. Opportunity Bias. Ignoring factors beyond the employee’s control that influence his

or her performance.