An organization pursuing a loyal soldier hr strategy

Measuring Performance and Providing Feedback

Chapter 8

LEARNING OBJECTIVES

After reading this chapter you should be able to:

Describe how merit-based and parity-based performance management systems relate to overall HR and competitive strategy.

Describe the three dimensions of job performance.

Explain differences among and common problems with various types of performance measures.

Explain the value of using multiple sources to obtain performance appraisal ratings.

Describe effective methods for providing feedback to employees.

CAN PERFORMANCE MANAGEMENT MAKE AN ORGANIZATION EFFECTIVE?

What is Performance management?

It is the process of measuring and providing feedback about employee contributions to the organization.

Studies have found that measuring performance and providing feedback does indeed improve employee performance.

This improvement translates into better organizational performance.

Strategic Performance Management

Organizations tend to follow one of two approaches in measuring performance.

Merit-Based Systems – process of recognizing and rewarding high performance.

Some Merit-Based Systems use the forced distribution method. Which means certain percentage of employee will receive the highest rating, a majority will be ranked in the middle, and a few will receive the lowest. Examples: Exceed Standards, Meets Standards, Does Not Meet Standards.

Strategic Performance Management

Parity-Based Systems – encourage cooperation and allow everyone who meets a certain standard to be classified as a high performer.

Parity-based performance measures frequently focus on processes rather than outcomes.

High performance is defined as following guidelines and performing behaviors assigned by supervisors.

When employees are compare to established benchmarks rather than with each other it is called absolute measures.

The basic objective of a parity-based system is to encourage cooperation and allow everyone who meets a certain standard to be classified as a high performer.

Parity-based performance measures frequently focus on processes rather than outcomes.

High performance is defined as following guidelines and performing behaviors assigned by supervisors.

This usually involves absolute measures that compare employees with an established benchmark rather than with each other. Some of the criteria used is Exceeds Standards, Meets Standards, Does Not Meet Standards. Newer terminology include Exceeds, Achieved and Underperformed.

Most parity-based systems also adopt a free distribution, which allows any percentage of employees to be placed in a particular category .

Aligning Performance Management to HR Strategy

The merit-based approach is most beneficial for organizations pursuing a Free Agent HR strategy.

The production of exceptional products and services is the key to success and is best accomplished by employees who are stretching to accomplish high goals.

The merit-based approach is most beneficial for organizations pursuing a Free Agent HR strategy.

Producing exceptional products and services is the key to success and is best accomplished by employees who are stretching to accomplish high goals.

Employees performing poorly are identified and encouraged to leave the organization so that they can be replaced with others who have greater skill and motivation.

Organizations pursuing a Committed Expert HR strategy also tend to adopt merit-based approaches.

Aligning Performance Management to HR Strategy

For organizations using a Loyal Soldier HR strategy, success comes from cooperative employees who work with maximum efficiency.

The contribution of an exceptional performer is often no more beneficial than the contribution of others who simply do what they are asked.

Organization using a Loyal Soldier HR strategy, success comes from cooperative employees who work with maximum efficiency.

The contribution of an exceptional performer is often no more beneficial than the contribution of others who simply do what they are asked.

Like organizations that use a Loyal Soldier HR strategy, organizations pursuing a Bargain Laborer HR strategy are not concerned with identifying top performers.

In this case, the reason is that these individuals are unlikely to stay employed with the organization for long periods. In addition, placing employees in different performance categories is time consuming and difficult. For an organization requiring only that employees meet expectations, such classification may not be worth the effort.

Figure 8.1 Strategic Framework for Performance Management.

WHAT IS PERFORMANCE?

Job performance represents the contribution that individuals make to the organization that employs them.

In the simplest sense, job performance represents the contribution that individuals make to the organization that employs them.

For Example:

In the game of golf, high performance is being able to hit the ball from a tee to the hole in the fewest possible shots.

Track, high performance is getting to the finish line in the shortest time.

Gymnastics is based on scores received from a set of judges.

Figure 8.2 Elements of Job Performance.

Figure 8.2 shows a diagram of important elements of job performance.

At the top of the figure is a general performance factor that represents overall contribution to the organization. This general factor is important because all specific measures of job performance tend to be positively related, meaning that people who do well at one aspect of performance tend to do well at other aspects.

Some people are simply better performers than others. Because they have positive traits, such as intelligence and motivation, these individuals excel no matter which aspect of performance is being measured.

Under the general performance factor you will see three main performance dimensions: task, citizenship, and counterproductive performance. Task performance is behavior that contributes to the actual production of goods or services. An employee planning a production process, operating a machine, or inspecting output is involved in task performance. Citizenship performance is behavior that contributes to the social and psychological environment of the organization. Specific examples of citizenship performance include helping another employee repair a machine, voluntarily staying late to complete an order, and making constructive suggestions about ways to improve the workplace. Unlike task and citizenship performance, counterproductive performance is not constructive. Specifically, counterproductive performance is voluntary behavior that harms the organization. It can include acts such as destroying property, taking unauthorized work breaks, and threatening violence toward coworkers

Task Performance

Task performance occurs when employees perform actions that transform raw materials into goods and services.

It is the most obvious form of contribution to an organization.

Employees make significant contributions to the organization’s success when they have appropriate knowledge, skill, and motivation.

Citizenship Performance

Citizenship behavior contributes by building a positive organizational environment.

Employees are good citizens when they willingly go beyond minimum expectations to cooperate and help others.

Examples of citizenship behavior include volunteering to take on tasks that are not part of one’s job, following organizational procedures even when it is not convenient, and supporting and defending the organization.

Counterproductive Performance

This is behavior that is harmful to the organization.

Counterproductive Behavior can be aimed at the organization or individuals.

Counterproductive Organizational Behavior:

Production deviance occurs when employees do things that reduce the speed and accuracy with which goods and services are produced. Example: taking unauthorized breaks.

Property deviance includes actions that destroy the assets of an organization. Employees who do this sabotage equipment, misuse expense accounts, or steal materials and products.

This is behavior that is harmful to the organization.

There is two types of Counterproductive Behavior:

Production deviance occurs when employees do things that reduce the speed and accuracy with which goods and services are produced. Such as taking unauthorized breaks

Property deviance, which includes actions that destroy the assets of an organization. Employees who do this sabotage equipment, misuse expense accounts, or steal materials and products.

Counterproductive Performance

Counterproductive Individual Behavior

Political deviance occurs when an employee does things that put other employees at a disadvantage. Examples include showing favoritism, gossiping about coworkers, and competing with others in non-beneficial ways.

Personal aggression is harmful employee actions that seek to personally harm coworkers. Examples: violence and sexual harassment.

HOW IS PERFORMANCE MEASURED?

The process of measuring what each employee contributes, called performance appraisal.

Basic problems with performance appraisal are shown in Figure 8.3.

Figure 8.3 Inaccuracy in Performance Measurement.

Different Types of Performance Measures

There are two types of measures:

Objective Measures

Which are numerical and based on counts of either behavior or outcomes.

Subjective Measures

Which are based on judgments from raters.

Common Problems

Common Problems with Performance Measures.

Rater Errors

Rating errors occur when raters provide assessments that follow an undesirable pattern or when the rater does not properly account for factors that might influence assessments

A common error is central tendency error, which is the pattern of placing almost everyone in the middle of the scale.

Situational Influences

Source: Information from Lawrence H. Peters and Edward J. O’Connor, ‘‘Situational Constraints and Work Outcomes: The Influences of a Frequently Overlooked Construct,’’ Academy of Management Review 5 (1980): 391–397.

Common Problems

Another error occurs when a rater unintentionally compares people with one another.

This is called contrast error.

General Impression Errors

Over an extended period, the rater observes a number of different behaviors and forms an overall judgment of the contribution of the employee.

This is called Halo Error.

Common Problems

Yet another type of error is recency error.

Which arises when raters place too much emphasis on recent behaviors and outcomes.

The opposite is primacy error

This occurs when a rater places too much emphasis on the behavior that is first observed.

Different Types of Performance Appraisals

Organizations that use narrative ratings ask supervisors or other raters to simply provide a written description of performance.

However, without consistent measurement it may be difficult to determine which employees are high and low performers.

Different Types of Performance Appraisals

Graphic Rating Scale

Raters are asked to provide a numerical rating for a number of different dimensions of work performance.

Common dimensions of performance include such things as quality of output, quantity of output, cooperation with others, and skill development.

An example of a graphic rating scale is shown in Figure 8.4.

Figure 8.4 Graphic Rating Scale.

Directions: Please circle the number that you feel best describes this worker’s performance for each work dimension.

Different Types of Performance Appraisals

Forced ranking, occurs when a rater is required to rank all employees.

Such as an office manager being asked to rank the office’s five secretaries in order from highest performer to lowest performer.

The forced ranking technique eliminates central tendency error and provides guidance for organizations in giving promotions and pay raises to top performers.

WHO SHOULD MEASURE PERFORMANCE?

Performance Appraisal is generally done by the individual in the organization who is closest to observing the employee’s performance.

This is usually the employee’s immediate supervisor or manager.

Figure 8.5 360-Degree Performance Appraisal. This is an example of multisource performance ratings.

Multisource Performance Rating

Multisource performance ratings seek to evaluate performance by obtaining information from multiple raters who have different perspectives.

Ratings are obtained not only from supervisors but also from coworkers, peers, customers/suppliers and the employee.

The multiple ratings give a more complete picture of performance and usually also provide better guidance about what the employee can do to improve.

Providing Feedback

After measuring performance, the employee must now receive feedback on their performance.

Feedback has been shown to have a positive influence on performance. It lets the employee know how they are doing and areas where improvement can take place.

Figure 8.6 Effects of Positive and Negative Feedback.

Source: Information from Avraham N. Kluger and Angelo DeNisi, ‘‘The Effects of Feedback Interventions on Performance: A Historical Review, A Meta-Analysis, and a Preliminary Feedback Intervention Theory,’’ Psychological Bulletin 119(1996): 254–284.

Appraisal Interviews

Source: Information from David Javitch, ‘‘Appraising Employee Performance,’’ Management Services 50, no. 3 (2006): 19–20.

Giving Feedback

Pygmalion effect

This occurs when leaders perceive their employees as having an exceptional ability and communicate greater confidence in them or have high expectations of their skills and abilities.

This results in the employees’ raising their level of performance.