GROUP 1

MANAGING
EMPLOYEE’S
PERFORMANCE
Module 10

Reference:
Fundamentals of Human Resource
Management by Raymond Noe
Learning Objectives:

Performance Management
Key Activities; Criteria;
Main Purposes Methods
(LO 10-1; 10-2) (LO 10-3;10-4)
Sources;
Rating Errors
(LO 10-5; 10-6)

Feedbacks; Legal
Improvement Ethical Standards
(LO 10-7; 10-8) (LO 10-9)
Performance Management

— process through which managers ensure

that employees’ activities and outputs
contribute to the organization’s goals.

— requires knowing what activities and outputs

are desired, observing whether they occur, and
providing feedback to help employees meet
expectations.

✔️ In the course of providing feedback,

managers and employees may identify
performance problems and establish ways to
resolve those problems.
Process of Performance
Management

Note: To be effective, the

entire performance
management process
should be reviewed each
year to ensure that what is
being measured at the
employee level aligns
strategically with the
company , division , and
departmental goals and
objectives.

Steps in the Performance Management Process

 Purpose of Performance
Management

Strategic Purpose Administrative Purpose Developmental Purpose

To help the organization Ways in which organizations Serves as a basis for
achieve its business use the system to provide developing employee’s
objectives. information for day-to-day knowledge and skills.
decisions about salary,
It measures each employee’s benefits, recognition program. Effective performance
performance to identify feedback makes employees
where those expectations are Also supports decision making aware of their strengths and
and are not being met. related to employee retention, of the areas in which they
termination for poor behavior, can improve.
and hiring or layoffs.
 Criteria for Effective
Fit with Strategy
Performance Management
A performance management system
should aim at achieving employee
behavior and attitudes that support the
organization’s strategy, goals, & culture.

Validity
In the case of perf. appraisal, validity
refers to whether the appraisal measures
all the relevant aspects of performance &
omits irrelevant aspects of performance. Fit with Strategy
A performance management system
Reliability
With regard to a performance measure,
should aim at achieving employee
reliability describes the
consistency of the results that the behavior and attitudes that support the
performance measure will deliver.
organization’s strategy, goals, & culture.
Acceptability
Whether or not a measure is valid and
reliable, it must meet the
practical standard of being acceptable to
the people who use it.

Set Expectation
Specific Feedback
A performance measure should
specifically tell employees what is
expected of them and how they can meet
those expectations. Define behaviors
& Develop skills

Measure behaviors
& Provide Feedback
 Criteria for Effective
Fit with Strategy
A performance management system
Performance Management
should aim at achieving employee
behavior and attitudes that support the
organization’s strategy, goals, & culture.

Validity
In the case of perf. appraisal, validity
refers to whether the appraisal measures
all the relevant aspects of performance &
omits irrelevant aspects of performance.
Fit with Strategy
Validity
A performance management system
Reliability In the case of perf. appraisal, validity
With regard to a performance measure, should aim at achieving employee
reliability describes the
refers to whether the appraisal measures
consistency of the results that the
behavior and attitudes that support the
performance measure will deliver.
all the relevant aspects of performance &
organization’s strategy, goals, & culture.
omits irrelevant aspects of performance.
Acceptability
Whether or not a measure is valid and
reliable, it must meet the
practical standard of being acceptable to
the people who use it.

Specific Feedback
A performance measure should
specifically tell employees what is
expected of them and how they can meet
those expectations.
 Criteria for Effective
Fit with Strategy
Performance Management
A performance management system
should aim at achieving employee
behavior and attitudes that support the
organization’s strategy, goals, & culture.

Validity

Reliability
In the case of perf. appraisal, validity
refers to whether the appraisal measures
all the relevant aspects of performance &
omits irrelevant aspects of performance.
With regard to a performance measure,
Reliability
reliability describes the
With regard to a performance measure,
reliability describes the
consistency of the results that the
consistency of the results that the
performance measure will deliver. performance measure will deliver.

Acceptability
Whether or not a measure is valid and
reliable, it must meet the
practical standard of being acceptable to
the people who use it.

Specific Feedback
A performance measure should
It is the consistency It is the consistency
specifically tell employees what is
expected of them and how they can meet of results when of results over time
those expectations.

more than one

person measures
performance

Interrater Reliability Test-retest Reliability

 Criteria for Effective
Performance Management
Fit with Strategy
A performance management system
should aim at achieving employee
behavior and attitudes that support the
organization’s strategy, goals, & culture.

Validity
In the case of perf. appraisal, validity
Acceptability
Whether or not a measure is valid and
refers to whether the appraisal measures
all the relevant aspects of performance &
omits irrelevant aspects of performance.
reliable, it must meet the
practical standard of being acceptable to
Reliability
With regard to a performance measure, the people who use it.
reliability describes the
consistency of the results that the
performance measure will deliver.

Acceptability
Whether or not a measure is valid and
reliable, it must meet the
practical standard of being acceptable to
the people who use it.

Pra Co Rej imp

cti bel mp co ectin
ief a per rov
Specific Feedback
Me cal fai i pas ring co wor g fo ing
A performance measure should
asu rn n tp
erf /
w mp k rm
re ess ari er an
specifically tell employees what is
expected of them and how they can meet
those expectations. . so ce
n
 Criteria for Effective
Fit with Strategy
Performance Management
A performance management system
should aim at achieving employee
behavior and attitudes that support the
organization’s strategy, goals, & culture.

Validity
In the case of perf. appraisal, validity
Specific Feedback
refers to whether the appraisal measures
all the relevant aspects of performance & A performance measure should
specifically tell employees what is
omits irrelevant aspects of performance.

expected of them and how they can meet

Reliability
With regard to a performance measure,
those expectations.
reliability describes the
consistency of the results that the
performance measure will deliver.

Acceptability
Whether or not a measure is valid and Specific Feedback
reliable, it must meet the
practical standard of being acceptable to
the people who use it.

Specific Feedback
A performance measure should
specifically tell employees what is
expected of them and how they can meet
those expectations.

clarifies expectations Guides improvement

Supports strategy
Methods for Measuring
Performance

Making Comparisons

Rating Individuals

Measuring Results

Total Quality Management

 Methods for Measuring Performance
Managers rank
employees in

Ranking
their group Note: Alternation Ranking - manager works from a list of

Simple
from the employees, deciding which employee is best or words then
highest to the crossing them out until all employees have been ranked.
poorest
performer.

Comparison Distribution
Assigns a
Forced

certain For example, the organization might establish the following

Making percentage of percentages and categories:
Exceptional - 5%
employees to
Comparison each category
Exceeds Standards - 25%
Meets Standards - 55%
in a set of Room for improvement - 10%
categories. Not acceptable - 5%
Paired

Involves
comparing
each employee
with each other
employee to
establish
rankings.
Making Comparison
 Methods for Measuring Performance
Performance measurement evaluates employees relative to uniform standards (attributes or behaviors)

1. Graphic Rating Scale 2. Mixed-Standard Scale

How it Works: How it Works:
Lists traits (Knowledge; Judgement; Teamwork) Multiple statements per trait (High/Medium/Low)
Manager rates on scale (1-5 or line) Manager compares employee to each statement
Most widely used method Rates: Above (+), At (0), Below (-)
Statements mixed together randomly.

Example: COMMUNICATION

1—— 2——3——4——5
➡️
Poor Excellent
Scoring Example: INITIATIVE
✔️ ADVANTAGE:
✅ PROS: ❌ CONS: Reduces subjectivity with
concrete behavioral
Easy to Develop Low Reliability statements.
Wide Applicability Subjective Interpretation
Quick to Use Not linked to strategy
Employees Defensive

⚠️ Arbitrary Numbers ⚠️ No Improvement Guide ⚠️ Rarely Strategic

KEY ISSUES WITH
ATTRIBUTE-BASED METHODS: “You scored 2/5” - feels Doesn’t tell HOW to Not linked to
subjective. improve. organizational goals.

Rating Individuals: Attribute-Based Methods

 Methods for Measuring Performance
1. Graphic Rating Scale 2. Mixed-Standard Scale

Rating Individuals: Attribute-Based Methods

 Methods for Measuring Performance
Solution to attribute problems: Measure behaviors associated with job success.

1. Critical-Incident Method ✅❌
+ Specific Feedback
WHAT ❓❓ - Time-consuming
Managers keeps record of specific examples ot effective/ineffective behavior. - Hard to compare

2. Behaviorally Anchored Rating Scale (BARS) ✅ PRO: ❌ CON:

➡️ HOW IT WORKS: Improves Can bias
Uses critical incident as ‘anchors’.
Defines performance levels with specific behavioral statements. interrater manager’s
Scale from 1-7 with behavior descriptions. reliability. memory.

3. Organizational Behavior Modification (OBM)

Based on behaviorism: Past behaviors that were
rewarded will be repeated.
Plan for managing the behavior of employees
through a formal system of feedback and
reinforcement. COMPONENTS OF OBM ➡️
✅ Behavioral methods - strengths ⚠️Behavioral methods - limitations

✔️ Link company goals to specific behaviors. ❌ Don’t work well for complex jobs.
✔️ Generate specific, actionable feedback. ❌ Difficult when multiple paths to success.
✔️High validity and acceptance. ❌ Hard to link behavior to results.
✔️High reliability (when raters trained). ❌ Can be time-consuming to implement.

Rating Individuals: Behavior-Based Methods

 Methods for Measuring Performance
MEASURING RESULTS - PERFORMANCE MEASUREMENT
Focus on managing objective, measurable results of a job or work group (e.g. sales, costs, productivity).

PRODUCTIVITY MEASUREMENT MANAGEMENT BY OBJECTIVES (MBO)

Measuring Results
 Methods for Measuring Performance
Evaluating Results-Based Measurement

Key Balance: Results methods are OBJECTIVE & GOAL-LINKED but watch
for VALIDITY & UNINTENDED CONSEQUENCES

Measuring Results
 Methods for Measuring Performance
Total quality management (TQM) differs from traditional performance measurement in that it assesses both individual
performance and the system within which the individual works.

With TQM, performance measurement essentially combines measurements of attributes and results. The feedback in
TQM is of two kinds:

Subjective Objective
Feedback Feedback
from managers, based on the work process.
peers, and customers through statistical quality
about the employee’s control.
personal qualities Use charts to detail causes A TQM approach to performance measurement
such as of problems, measures of includes subjective feedback from managers, peers,
and customers as well as objective feedback based on
cooperation and performance, or
the work process
initiative; relationships between
work-related variables.

Total Quality Management

Sources of Performance Information

DEFINITION
Employee receives confidential, anonymous feedback from
multiple sources including manager, peers, subordinate, and
sometimes even customer.

PURPOSE
Provides comprehensive and well-rounded view of performance.

MAIN GOAL
To identify both strengths and areas for development to improve
skills, behavior, and overall collaboratio.

360-degree performance appraisal

 Sources of Performance Information
Managers Subordinates
They have an extensive knowledge of They are people reporting to the
job requirement and that they have manager who often have the best
enough opportunity to observe their chance to see how well a manager
employees. treats employee.

Self
Employees evaluate their own
performance before the feedback
session which then gets employees
thinking about their performance.

Peers Customers
Excellent source of information Services are often produced and
about performance in a job where consumed on the spot, so the customer
th esupervisor does not often is often the only person who directly
observe th eemployee. observes the service performance and
may be the best source of performance
ADVANTAGES information.
 Sources of Performance Information
Managers Subordinates
For employees in some jobs, the Subordinates are reluctant to say
supervisor does not have enough negative things about the person to
opportunity to observe the employee whom they report; they prefer to
performing job duties. provide feedback anonymously.

Self
Individuals have a tendency to inflate
assessments of their performance.
Not appropriate as basis for
administrative decisions.

Peers
Friendships/Rivalries have the Customers
potential to bias ratings. When Weakness of customer surveys are
evaluations are done, peers are their expense. Expense for traditional
uncomfortable with rating employees survey can add up to thousands of
for decisions that may affect pesos to evaluate one individual.
themselves.
DISADVANTAGES
 Errors in Performance
Management

People tend to give a higher If the rater compares an individual,

evaluation to people they consider not against an objective standard,
similar to themselves. but against other employees,
contrast error occur.

Possible Rating Errors in Performance Management

 Errors in Performance
Management

Raters make distributional

errors when they tend to use
only one part of the rating
scale.

Leniency - reviewer rates

everyone near the top.

Strictness - rater favors

lower rankings.

Central Tendency - rater

puts everyone near the
middle of the scale.

Possible Rating Errors in Performance Management

 Errors in Performance
Management

Raters often let their opinion of one quality color their opinion of others.
When the bias is in a favorable When it involves negative ratings,
direction, this is called the halo it is called the horns error.
error.

Possible Rating Errors in Performance Management

 Errors in Performance Management

Political Behavior in
Ways to Reduce Error Performance Appraisals
Sometimes the people rating
Raters can be trained to avoid performance distort an evaluation on
ratings errors. purpose to advance their personal
goals.
(This training aims to help raters
evaluate employees’ performance This kind of appraisal politics is
more thoroughly and accurately.) unhealthy especially because the
resulting feedback does not focus on
A growing number of helping employees contribute to the
organizations are bringing data organizations’ goals.
analytics into the rating
Sugar coating feedback- where
process.
managers only say nice things and
avoid giving criticism.
(Computers and wearable devices can
track employees’ activities; analytics
software can find patterns in what Calibration meeting- technique to
employees do.) minimize appraisal politics.
 Giving Performance Feedback

Scheduling Performance Preparing for a Feedback Conducting the Feedback

Feedback Session Session
Performance feedback should be a
regular, expected management 1. “Tell-and-sell” approach: managers tell
activity. the employees their ratings and then justify
those ratings.
But annual feedback is not enough.
One reason is that managers are 2. “Tell-and-listen” approach: managers
Create Identify
responsible for correcting Describe tell employees their ratings and then let the
neutral areas for
performance deficiencies as soon as purpose. employees explain their side of the story.
setting. discussi
they occur.
on
3. “Problem-solving” approach: managers
& employees work together to solve
Employees should instead receive performance problems in an atmosphere of
feedback so often that they know what respect and encouragement. Problem
the manager will say during their solving thus focuses as much on the future
annual performance review. as on the past.
 Giving Performance Feedback

Improving the Feedback Process

-Use open-ended questions to encourage two-way conversation:
• What have you learned?
• What skills would you like to develop?
• What do you think the next steps should be?

-Emphasize behavior, not personalities (e.g., “You did not meet the
deadline” vs. “You’re not motivated”)

Focus on Strengths
Most impact comes from focusing on employee’s areas of strength
and building on those. This makes employees see their manager as
more supportive and trustworthy

Concluding the Session

End with goal setting and timelines for follow-up. Goal setting is one of
the most effective motivators of high performance.
Finding Solutions to
Performance Problems
Lack of Ability
When employees have Managers may offer coaching, training, and more
detailed feedback. Restructuring the job so the
high levels of ability and employee can handle it is also appropriate.
motivation, they
perform at or above Lack of Motivation
standards.
The solution may be as simple as more positive
feedback (praise). Employees may need a referral
When they lack ability, for counseling or help with stress management.
motivation, or both,
corrective action is Lack of Both
needed. Performance may improve if manager directs the
employee’s attention to the significance of problem
The type of action by withholding rewards/proving specific feedback..
No response = demote/terminate employee.
called for depends on
what the employee Lack of Neither
lacks:
Such valuable employees are apt to leave if they
see no potential for growth. To maintain high
motivation levels, the managers should use
rewards, direct feedback, and growth oppurtunities.
 Finding Solutions to Performance Problems

Rewards/
Inputs Feedback Goals/Objectives Consequences
Does the employee know what he Does the employee get Are goals specified? Are there rewards for
or she is supposed to do? frequent performance superior performance?
feedback? Does the employee know the
Are procedures clear and logical? goals? Are the rewards valued?
Is feedback timely, accurate,
Do employees have adequate and understandable? Does the employee believe Are the rewards timely?
resources (supplies, tools, time, the goals are achievable and
etc.)? fair? Are there rewards (such as
co-worker approval) for
Do other work demands conflict falling short?
with performance?

Questions for Diagnosing Remedies to Performance Problems

 Legal and Ethical Issues in
Performance Management

PERFORMANCE MANAGEMENT
SYSTEM

LEGAL ISSUES ETHICAL ISSUES

DISCRIMINATION
ELECTRONIC MONITORING

ACT
......
UNJUST DISMISSAL
Privacy protection
 Electronic
Discrimination Unjust Dismissal Privacy Concern
Monitoring

NOITINIFED/SEUSSI Performance system discriminates Employee fired for reasons other Use of technology to monitor Concerns about employee data
based on: than stated performance: protection & dignity
Race
Sex Electronic databases
Age Claim: Termination was retaliation or Computer/sensor tracking "Electronic sweatshop" - treating
Religion unfair Real-time productivity data employees like robots
Disability
wal senippilihP

Labor Code of the Philippines

Article 297 (Labor Code): Data Privacy Act of 2012 (RA Data Privacy Act of 2012 (RA
Anti-Sexual Harassment Act (RA
Just/authorized causes only 10173) 10173)
7877)
Security of Tenure principle
Magna Carta of Women (RA
Whistleblower Protection (RA Regulates collection, use & storage Enforced by: National Privacy
9710)
6713, RA 9485) of employee data Commission (NPC)
Anti-Age Discrimination Act (RA
NLRC reviews termination cases
10911)

✓ Valid job analyses ✓ Document performance issues ✓ Communicate reasons for ✓ Obtain consent before collecting
seigetarts noitcetorP

✓ Evaluate behaviors/results, NOT ✓ Provide coaching/training first monitoring data

traits ✓ Due process before termination ✓ Use for coaching, not punishmnt ✓ Implement security measures
✓ Multiple raters + self-appraisal ✓ Upper management review of ✓ Focus on accomplishments, not ✓ Allow employee access to their
✓ Train raters on system use ratings just time data
✓ Clear job success criteria ✓ Employee appeal system ✓ Obtain employee consent ✓ Collect only relevant & necessary
✓ Collect only necessary data data
✓ Ensure legitimate purpose
Summary
LO 10-1; 10-2
Performance management is the process through which managers ensure that
employees’ activities and outputs contribute to the organization’s goals.
The strategic purpose is aimed at meeting business objectives. The system does this
by helping to link employees’ behavior with the organization’s goals.
The administrative purpose of performance management is to provide information
for day-to-day decisions about salary, benefits, recognition, and retention or
termination.
The developmental purpose of performance management is using the system as a
basis for developing employees’ knowledge and skills.

LO 10-3
Performance measures should be strategic—fitting with the organization’s strategy
by supporting its goals and culture.
Performance measures should be valid, so they measure all the relevant aspects of
performance and do not measure irrelevant aspects of performance.
These measures should also provide interrater and test-retest reliability, so that
appraisals are consistent among raters and over time.
Performance measurement systems should be acceptable to the people who use
them or receive feedback from them.
A performance measure should be specific, telling employees what is expected of
them and how they can meet those expectations.
Summary
LO 10-4; 10-5
Performance measurement may use ranking systems such as simple ranking,
forced distribution, or paired comparisons to compare one individual’s performance
with that of other employees.
Other approaches involve rating employees’ attributes, behaviors, or outcomes.
Performance information may come from an employee’s self-appraisal and from
appraisals by the employee’s supervisor, employees, peers, and customers.
Using only one source makes the appraisal more subjective. Organizations may
combine many sources into a 360-degree performance appraisal.

LO 10-6

People observe behavior often without a practical way of knowing all the relevant
circumstances and outcomes, so they necessarily interpret what they see.
Ways to reduce rater error are training raters to be aware of their tendencies to
make rating errors and training them to be sensitive to the complex nature of
employee performance so they will consider many aspects of performance in
greater depth.
Politics also may influence ratings. Organizations can minimize appraisal politics by
establishing a fair appraisal system and bringing managers together to discuss
ratings in calibration meetings.
Summary
LO 10-7; 10-8
Performance feedback should be a regular, scheduled management activity so that
employees can correct problems as soon as they occur.
Managers should prepare by establishing a neutral location, emphasizing that the
feedback session will be a chance for discussion, and asking the employee to prepare
a self-assessment; during the feedback session, managers should strive for a
problem-solving approach.
Managing employees requires tailoring approaches to their ability and motivation
levels. High motivation/low ability requires coaching and training. High ability/low
motivation needs investigation of personal issues or increased recognition. Low in
both may require termination if feedback doesn’t help. High performers need
ongoing development and rewards.​​

LO 10-9
Lawsuits related to performance management usually involve charges of
discrimination or unjust dismissal. Managers must make sure that performance
management systems and decisions treat employees equally, without regard to their
race, sex, or other protected status.
An ethical issue of performance management is the use of electronic monitoring.
This type of performance measurement provides detailed, accurate information, but
employees may find it demoralizing, degrading, and stressful. Another ethical issue is
also privacy concerns.
 GROUP (Module 10)

THANK YOU
FOR YOUR ATTENTION

Reference:
Fundamentals of Human Resource
Management by Raymond Noe