Performance Management
Professor Lucia Miree American University in Bulgaria
Performance Management
Management = getting work done through others Managers performance is only as good as his/her employees performance Managers job = performance management of others
Performance Management
Organizational system Focusing on employee performance Consistently applied throughout organization With a supporting structure
Names of Systems
Performance Management Performance Appraisals Evaluation Systems Job Review Systems Feedback Systems
Performance Management
Ensuring appropriate performance by all employees through: -Reinforcement -Rewards -Modeling -Coaching -Training -Development Using a consistent feedback system
Working of Performance Management
Managers Speaks with Employee re: performance Continuously Once per Year Formal goals Organizational Reporting System Tied to Organizational Outcomes
Examples of System Output
Words and What They Mean
Exceptionally well qualified Made no major errors yet Active socially Parties & drinks too much Family is active socially Family drinks too much Plans for advancement Buys drinks for all of the boys Aggressive Obnoxious Uses logic on difficult jobs Gets someone else to do it Expresses himself well Speaks the local language Has Leadership qualities Is tall or has a loud voice Keen sense of humour Knows lots of dirty jokes Career-minded Back-stabber Relaxed attitude Sleeps at work Work is first priority Too ugly to get a date Independent worker Nobody knows what he does Good communication skills Talks on phone lots Loyal Cant get another job
PERFORMANCE = Doing present job at a certain level (high or low) as measured by a formal system POTENTIAL = Includes future service, learning interest, motivation level
PROBLEM =
Deviation from expectations Do something in different way Not do something Do something not expected/needed
Opportunity
Reinforce/Reward Behavior Change Behavior Model Behavior Establish Culture
PERFORMANCE MANAGEMENT
-Based on Scientific Management concepts -Focus on observable performance -Goal directed -Planning required and formalized -Consistent, continuous collection, analysis, and collection of data -Value of feedback reinforced -Facilitates benchmarking
Performance Management Trends
Shift from viewing financial figures as main criteria to one of multiple indicators More weight on indicators of efficiency and effectiveness Change to viewing PM as on-going, evolving process
Principles of Performance Management
Supports business-oriented strategy Is values based Communicates organizational mission Fulfills responsibilities to organizational members Enables employees to manage own performance Manages expectations (clarifies roles and responsibilities) Creates partnership between management and employee Emphasizes importance of measurement, feedback, and reinforcement Empowers employees Natural extension of management
Associated Costs
Staff Costs Production and Processing Costs Training Costs Action Costs Opportunity Costs
Key PM Questions
1. 2. 3. 4. 5. 6. Why assess performance What performance to asses How to assess performance Who do assess performance When to assess performance How to communicate performance assessment
The WHY of Performance Management Systems
-Administer Salary & Wages -Correct Performance/Behavior -Plan for Future (promotion, transfer, career dev) -Facilitate Decision-Making (counseling, terminations) -Facilitate Human Resource Planning -Create Culture -Building Good Relationships -Increase Organizational Loyalty -Determine Effectiveness of Selection and Placement Methods
WHAT to Assess
Skills/Abilities/Needs/Traits of Individuals That Interact with the Organization to Produce Behaviors Which Result in Outcomes
Skills/Abilities/ Needs/Traits
Job Knowledge Strength Coordination Desire to Achieve Dependability Creativity Leadership Honesty
Behaviors
Perform Tasks Obey Instructions Report Problems Follow Rules Submit Suggestions Follow-up Write Reports Completes Reviews
Results
Sales Production Levels Production Quality Scrap/Waste Accidents Equipment Repairs Customers Served Customer Satisfaction Feedback
Business Knowledge Maintain Equipment
Measures Focus
Consistent indicators across industry or similar organizations Comparison of indicators over time in organization Comparisons with pre-determined standard
Approaches to PM
Comparative Attribute Behavioral
HOW to Assess Performance
Traditional Management-by-Objective Assessment Center Peer Review Panel Critical Events Upward Feedback 360 Degree
Techniques of PM
Essay (open-ended) Management by Objective Ranking Paired Comparisons Forced Choice Forced Distribution Ratings: -Checklist -Scales -Behaviorally Anchored Ratings (BARS) Critical Incidents
Essay Technique
Describe in detail the quantity and quality of the employees performance during the past twelve months. Describe the employees strength and weakness . How do you describe the employees potential within the company? What leadership skills does the employee bring to the job? What future development activities do you recommend for the employee?
Morgan Stanleys Essay System
Consider objectives identified in prior years Summary as well as this years objectives. Evaluation: Strengths 1. 2. 3. Development Areas 1. 2. 3. Comments
Comments
Examples of essays on PMs.
His men would follow him anywhere, but only out of curiosity. I would not suggest breeding for this person. When she opens her mouth, it seems that it is only to change the foot that was previously there. He has carried out each of his duties to his entire satisfaction. He would be out of his depth in a car park puddle. This person is like a gyroscope: always spinning at a fast pace, but not really going anywhere. This person has delusions of adequacy.
Continued examples.
Since my last report, he has reached rock bottom and is digging. She sets low personal standards and then consistently fails to meet them. He has the wisdom of youth & the energy of old age. This person should go far. And, the sooner he starts, the better. In my opinion, this pilot should not be authorized to fly below 250 meters. This person works well under constant supervision and when cornered. This man is depriving a village somewhere of its idiot.
Management-by-Objective Examples
Employee will contribute to organizational profit margin by lower costs in department by 3.5percent. To implement new recruitment system, the employee will evaluate the effectiveness of the advertisements placed during the year.
Ranking Example
Manager ranks all employees from best to worst: Overall performance On specific criteria (communication, customer relations skills, etc.)
Paired Comparisons Example
Rank each employee grouping overall or on a characteristic: Employee A and Employee B Employee B and Employee C Employee A and Employee C Employee C and Employee D Employee D and Employee A Employee D and Employee B etc.
Forced Distribution Example
Pace each of the employees in your department in the following categories based upon overall or specific category performance: Top 10 percent: 50 89 percent: 10-49 percent: Bottom 10 percent:
Outstanding: Average: Good: Below Average: Unacceptable:
General Electrics Distribution The Vitality Curve
High Top Performers 10% Highly Valued 70% Least Effective 20% Promotability Medium Limited
Ratings Example: Checklists
Program Auditor: _____ 1. Unable to separate important from irrelevant data. _____ 2. Omits important info from summaries. _____ 3. Cross-references to improve reporting. _____ 4. Produces summaries which lead to good reports. _____ 5. Requires excessive instruction to produce work. _____ 6. Unable to reduce data to manageable form. _____ 7. Communicates well with peers on reports. _____ 8. Fails to meet deadlines. _____ 9. Provides detailed, professional work. _____ 10. Protects confidentiality of information.
Ratings Example: Scales
Rate the employees behavior on the scale provided. Excellent Good Fair Poor N/A 4 3 2 1 ___ Reasoning ability Decisiveness in Decision-making Imagination & originality Ability to plan and control Cooperation with peers Cooperation with management Professionalism Interpersonal skills 4 4 4 4 4 4 4 4 3 3 3 3 3 3 3 3 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 ___ ___ ___ ___ ___ ___ ___ ___
Citibanks Performance Scorecard
Measurements Below Par Par Standards Leadership, Ethics/Integrity Customer Interaction Community Involvement Contribution to Overall Business People Performance Teamwork Training & Development Employee Satisfaction Control Auditors standards Managers assessment Managers assessment
Above Par
Citibanks Performance Scorecard..
Measurements Customer Satisfaction Strategy Implementation Households Cross-sell, splits, mergers Retail asset balances Market share Financial Revenue Expense Margin Objective stadards External company survey Goal of 80% Objective standards Below Par Par Above Par
Citibanks Link to Compensation
Ratings Above Par Par Below Par Bonus 30% 15% 0%
Microsofts PA System
Overall Employee Rating:
5 = Exceptional performance rarely achieved; precedent setting results 4.5 =Consistently exceeds all requirements & expectations work highly valued 4 =Consistently exceeds position requirements and expectations; work often noteworthy 3.5 =Exceeds position requirements; successful in all objectives 3 =Meets position requirements and expectations; meets most or all objectives; needs some development for quality 2.5 =Falls below performance standards and expectations; has performance deficiencies 1.0-2.0 =Does not meet minimum requirements in critical aspects of job
Microsoft: Adding Distribution to Rankings
4.0 + 3.5 = 3.0 or lower = 35% of employees 40% of employees = 25% of employees
Ratings Example: BARS
Indicate the appropriate level of performance on each factor: Quantity of work
Volume low & erratic Satisfactory steady volume Volume above expectations
Quality of work
Results always accurate; model work Results accurate and thorough Results generally inaccurate and not thorough
Judgment
Systematic, analytical, good with complex problems Practical judgment, solves problems, difficulty with assessing relative value of factors Does not always show good judgment; problem analysis not always adequate
Microsoft Competency Toolkit
FACTOR: COMPETENCY: Individual Excellence Intellectual Horsepower (is bright, intellectual sharp, learns quickly)
Level 1
Structures basic info accurately; draws informed conclusions
Level 2
Analyzes & organizes complex info from specific content area, identifying key issues, assessing impact, drawing reasonable conclusions
Level 3
Analyzes, explains & draws logical conclusions based upon complex data from multiple content areas
Level 4
Rapidly identifies the significance of info & insightfully determines strategic action.
With guidance, learns quickly Learns new skills & ideas on the job rapidly
Rapidly learns & assimilates complex info involving unfamiliar situations & circumstances
Rapidly learns new concepts & ideas; integrates & assimilates highly complex info across broad, multifunctional content areas
Picks up new skills & understands ideas when structured Learns effectively from experience
Quickly adjusts thinking for new info or ideas Is able to apply & explain logic related to problems
Microsoft Competency Toolkit
FACTOR: COMPETENCY: Long-term Approach Developing people (provides job-relevant learning, developmental
exercises, and feedback to enhance individual performance)
Level 1
Level 2
Level 3
Level 4
Holds managers accountable for developing people in their group/ organization Identifies key people in his/her organization to assume high-level management responsibilities, and is an advocate for them when opportunities for advancement occur
Assigns challenging tasks and Takes time to learn about and Actively coaches direct assignments that will help understand direct reports; reports how to get the most people develop their skills career goals learning from their current assignments Provides direction in correct Provides stretch jobs and Gives direct reports candid, performance of tasks and assignments for direct reports thoughtful feedback on their assignments to help them develop their strengths and weaknesses skills
Critical Incident Example
Employee Name:___________________________________ Date of Incident:__________________ Type of Incident:___________________________________ Individuals Involved: Description of Incident: Outcome of Incident: Recommendations:
Date Discussed with Employee:____________ Supervisor Signature:______________________________ Employee Signature: ______________________________
Focus
Judgmental
Developmental
Preparation for future performance
Time orientation Past performance Method
Improving performance Improving by changing behavior performance by selfthrough rewards learning & personal growth Counselor who listens, helps, encourages & guides Actively involved in charting future plans
Supervisors Role Judge who appraises
Subordinates Role
Listener, reactor to, defender of past performance
Criteria for Performance Measures
Relevant Reliable Discriminating Practical
Problems with Performance Measures
Controllability Motivational impact Fallout Role Modeling Impact Reliability Relevance Control
WHO Should Assess Performance
Superior Only Subordinate(s) Peers/Coworkers Self Customers Others
WHEN to Assess Performance
Probation Period Annually (anniversary date, assigned date, set date for all) Semi-annually For Cause On-going As needed
How to Communicate PM Info
Orally In Writing Formally Informally Public Private Moderated
Handling Performance Issues
What to do Where to start How to do it
PROBLEM =
Deviation from expectations Do something differently Not do something Do something not expected/needed
Performance Problems
Research shows that there is a huge performance gap between high and low performers in any organisation between 30%-50% for unskilled jobs and up to 100% for highly technical ones.
From : Why people do not get fired: the psychology of discipline avoidance - [Link]
PROBLEM ID
PRELIMINARY SCAN
What shouldnt be happening? Impact of this? Worth pursuing?
ORGANIZATIONAL SCAN
Match strategic plan? Critical functions missing? Culture and performance gaps?
FUNCTIONAL JOB ANALYSIS
Specific job deficiencies? Job knowledge and training?
CAUSAL ANALYSIS
ID: When problem began What else has changed PARETOS LAW: Rule of 20/80 80% of any problem is caused by 20% of possible causes.
-Lack of ability -Low motivation -Poor work ethic -Substance abuse -Personal problems -Lack of time -Poor peer relationships -Unfamiliarity with equipment or process
CAUSES OF PERFORMANCE PROBLEMS
PERFORMANCE OPPORTUNITIES
Excellent Poor Perf Perf
No/Low Knowledge
High Knowledge
PERFORMANCE OPPORTUNITIES
Excellent
---
OK
Poor Perf
Training
Perf
Org Development
No/Low Knowledge
High Knowledge
ALTERNATIVE SOLUTIONS
1. Return to old system 2. Fire, transfer, hire new 3. Train 4. Reassign or isolate RATE EACH BY:
-Contribution to Objectives (high, medium, low) -Cost to fix and to ignore (high, medium, low)
RANK IN ORDER
Training & Development
Definition: planned, continuous effort by management to improve employee competency levels and org performance.
TRAINING: provide learners with knowledge & skills for job DEVELOPMENT: prepare organization and employees to keep pace with industry and fields of expertise
Skill requirements change with more work complexity Workers more educated Workers more diverse Org restructuring continues Training often outsourced More technology use in Training Training Departments = Brokers J-I-T and J-W-I-N Training Grow Increase on human performance
T & D TRENDS
Factors Influencing T & D
Top management support Commitments from Specialists and Generalists Technological Advances Organizational Complexity Behavioral Science Knowledge Learning Principles Performance of Other Human Resource
TRAINING & DEVELOPMENT METHODS
Coaching Business Games Role Playing In-Basket Training Job Rotation Mentoring Case Studies Videotapes Internships Computer-
Methods (continued)
Cyberlearning: -Internet/Intranet -Virtual Reality -Distance Learning -Video Conferencing Classroom Programs Corporate Universities Colleges & Universities On-the-Job Training Apprenticeship Trainin Simulators Vestibule Training
DEVELOPMENT
1. HARDWARE -equipment -people -space -money -transportation -reward -structure -peer -personality
2. SOFTWARE -policies & procedures systems -communication systems 3. BEHAVIORAL -supervision relationships -values & attitudes
EMPLOYEES PERFORMANCE : CATEGORIES AND STRATEGIES
DEADWOOD: No training; demotions or removal; remedial work; training to prevent loss; orientation to lower job; divest WORKHORSES: Training stressing improvement, orientation or maintaining skills; career counseling on limits PROBLEM CHILDREN: Remedial, therapeutic or corrective dev plan; divest STARS: Special effort, programs and funds to maximize value; invest
IMPLEMENTATION PLAN
Priorities Options Budget Development Selection of Methods Plan with Benchmarks Pilot Program Evaluation Adjustments and New Plan Full Implementation On-Going & Periodic Evaluations (Is it working? If no, why not?)
Why PM Is Difficult
Job/Outcomes not quantified Personal relationships with employees Unable to give criticism Personality biases Poor communication Conflicting Goals Playing God
Errors in Performance Measurement
Strictness or Leniency Central Tendency Halo Error Recency Error Supervisor Bias Overall Ratings
Correcting PM Errors
Isolate Job Areas Observe Regularly Minimize Number of Ratings Completed Train Raters Define Dimensions Better Give Feedback Use Continual Feedback Include Other Sources Decrease Generalities, Include Specifics
Effective PM Systems
System acceptable to employees Managers use system regularly & correctly Perception of being treated fairly by system Useful feedback provided Focus on problem solving, not blame Serve to increase productivity & satisfaction System used by organization
Training for PM Interviews
Have documentation Be objective judge job, not individual Use specific examples Share control Make it a year-round process
[Link]
Solicit & give feedback
-Clear -Constructive -Descriptive, not judgmental
Avoid arguments Strive for consistency Get it down in black and white By-the-book Listen
PRIOR TO PM INTERVIEW
Decide on best time Decide on best place Prepare facilities Gather info and materials Prepare employee Plan the opening Plan the approach Plan the conclusion
After PM Interview
Meet deadlines Solicit input Reinforce, reward, punish (follow through) Review regularly
How to Destroy PM System
Do not follow policies Be inconsistent in application Treat it as unimportant Do not follow-up Reprimand in public; Reward in private Conduct when angry Be late
The WHY of Performance Management Systems
-Administer Salary & Wages -Correct Performance/Behavior -Plan for Future (promotion, transfer, career dev) -Facilitate Decision-Making (counseling, terminations) -Facilitate Human Resource Planning -Create Culture -Building Good Relationships -Increase Organizational Loyalty -Determine Effectiveness of Selection and Placement Methods