Chapter 1
Performance
Management
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Overview
Definition of Performance
Management (PM)
The PM Contribution
Disadvantages/Dangers of Poorly
Implemented PM Systems
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Overview (continued)
Purposes of PM Systems
Characteristics of an Ideal PM
System
Integration with Other Human
Resources and Development
Activities
PM Around the World
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Definition of PM
1. Continuous process of …
• Identifying
• Measuring
• Developing
… the performance of individuals and
teams
2. Aligning performance with the
strategic goals of the organization
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Definition of PM (continued)
Performance management (PM)
is NOT
performance appraisal (PA)
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Definition of PM (continued)
PM PA
Strategic business Driven by HR
considerations
Assesses employee
Driven by line • Strengths
manager
• Weaknesses
Ongoing feedback
Once a year
• So employee can
improve performance Lacks ongoing
feedback
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Contributions of
Performance Management
For Employees
For Managers
For Organization/HR Function
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Contributions of Performance
Management for Employees
Clarify definitions of
• Job
• Success criteria
Increase motivation to perform
Increase self-esteem
Enhance self-insight and
development
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Contributions of Performance
Management for Managers
Communicate supervisors’ views of
performance more clearly
Managers gain insight about
subordinates
Better and more timely differentiation
between good and poor performers
Employees become more competent
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Contributions of Performance
Management for Organization/HR
Function
Clarify organizational goals
Facilitate organizational change
Fairer, more appropriate
administrative actions
Better protection from lawsuits
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Disadvantages/Dangers of
Poorly Implemented
PM Systems
For Employees
For Managers
For Organization/HR Function
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Disadvantages/Dangers of Poorly
Implemented PM Systems for
Employees
Lowered self-esteem
Employee burnout and job
dissatisfaction
Damaged relationships
Use of false or misleading
information
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Disadvantages/Dangers of Poorly
Implemented PM Systems for
Managers
Increased turnover
Decreased motivation to perform
Unjustified demands on managers’
resources
Varying and unfair standards and
ratings
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Disadvantages/Dangers of Poorly
Implemented PM Systems for
Organization/HR Function
Wasted time and money
Unclear ratings system
Emerging biases
Increased risk of litigation
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Purposes of PM Systems
Strategic
Administrative
Informational
Developmental
Organizational maintenance
Documentation
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Purposes of PM Systems
Strategic Purpose
Link individual goals with
organization’s goals
Communicate most crucial business
strategic initiatives
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Purposes of PM Systems
Administrative Purpose
Provide information for making
decisions regarding:
• Salary adjustments
• Promotions
• Retention or termination
• Recognition of individual performance
• Layoffs
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Purposes of PM Systems
Informational Purpose
Communicate to employees:
• Expectations
• What is important
• How they are doing
• How to improve
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Purposes of PM Systems
Developmental Purpose
Performance feedback/coaching
Identification of individual strengths
and weaknesses
Identification of causes of
performance deficiencies
Tailor development of individual
career path
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Purposes of PM Systems
Organizational Maintenance Purpose
Plan effective workforce
Assess future training needs
Evaluate performance at
organizational level
Evaluate effectiveness of HR
interventions
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Purposes of PM Systems
Documentation Purpose
Validate selection instruments
Document administrative decisions
Help meet legal requirements
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An Ideal PM System:
15 Characteristics
1. Strategically congruent
2. Contextually congruent
3. Thorough
4. Practical
5. Meaningful
6. Specific
7. Identifies effective and ineffective
performance
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An Ideal PM System:
15 Characteristics (continued)
8. Reliable
9. Valid
10. Acceptable and fair
11. Inclusive
12. Open (No Secrets)
13. Correctable
14. Standardized
15. Ethical
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An Ideal PM System:
15 Characteristics
Strategically Congruent
Consistent with organization’s
strategy
Aligned with unit and
organizational goals
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An Ideal PM System:
15 Characteristics
Contextually Congruent
Congruent with the organization’s
culture as well as the broader
cultural context of the region or
country
• Example: A 360-degree feedback is
not effective where communication is
not fluid and hierarchies are rigid
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An Ideal PM System:
15 Characteristics
Thorough
All employees are evaluated
All major job responsibilities are
evaluated
Evaluations cover performance for
entire review period
Feedback is given on both positive
and negative performance
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An Ideal PM System:
15 Characteristics
Practical
Available
Easy to use
Acceptable to decision makers
Benefits outweigh costs
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An Ideal PM System:
15 Characteristics
Meaningful
Standards are important and relevant
System measures ONLY what employee
can control
Results have consequences
Evaluations occur regularly and at
appropriate times
System provides for continuing skill
development of evaluators
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An Ideal PM System:
15 Characteristics
Specific
Concrete and detailed guidance
to employees
• What’s expected
• How to meet the expectations
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An Ideal PM System:
15 Characteristics
Identifies effective and ineffective
performance
Distinguish between effective and
ineffective:
• Behaviors
• Results
Provide ability to identify
employees with various levels of
performance.
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An Ideal PM System:
15 Characteristics
Reliable
Consistent
Free of error
Inter-rater reliability
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An Ideal PM System:
15 Characteristics
Valid
Relevant (i.e., measures what is
important)
Not deficient (i.e., doesn’t measure
unimportant facets of job)
Not contaminated (i.e., only
measures what the employee can
control)
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An Ideal PM System:
15 Characteristics
Acceptable and Fair
Perception of Distributive Justice
• Work performed Evaluation received
Reward
Perception of Procedural Justice
• Fairness of procedures used to:
Determine ratings
Link ratings to rewards
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An Ideal PM System:
15 Characteristics
Inclusive
Represents concerns of all involved
• When system is created, employees
should help with deciding:
What should be measured
How it should be measured
• Employee should provide input on
performance prior to evaluation
meeting.
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An Ideal PM System:
15 Characteristics
Open (No Secrets)
Frequent, ongoing evaluations and
feedback
Two-way communications in
appraisal meeting
Clear standards and ongoing
communication
Communications are factual, open,
and honest
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An Ideal PM System:
15 Characteristics
Correctable
Recognizes that human judgment
is fallible
Appeals process provided
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An Ideal PM System:
15 Characteristics
Standardized
Ongoing training of managers to
provide
Consistent evaluations across:
• People
• Time
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An Ideal PM System:
15 Characteristics
Ethical
Supervisor suppresses self-interest
Supervisor rates only where (s)he
has sufficient information about the
performance dimension
Supervisor respects employee
privacy
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Integration with other Human
Resources and Development
Activities
PM provides information for:
• Development of training to meet
organizational needs
• Workforce planning
• Recruitment and hiring decisions
• Development of compensation systems
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PM Around the World
PM used in United States, Mexico,
Turkey, India, Australia, China, and
so on
Common across countries: Need to
align individual and organizational
goals to enhance the performance of
individuals and groups
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PM Around the World
(continued)
Yet, different countries emphasize
different components of PM
• EX 1: PMs in Japan tend to emphasize
behaviors to the detriment of results
• EX 2: The current challenge among many
organizations in South Korea is how to
reconcile a merit-based approach with
more traditional cultural values
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Quick Review
Definition of Performance Management (PM)
The Performance Management Contribution
Disadvantages/Dangers of Poorly Implemented PM
Systems
Definition of Reward Systems
Aims and Role of PM Systems
Characteristics of an Ideal PM System
Integration with Other Human Resources and
Development Activities
PM Around the World
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