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MANAGING AND EVALUATING PERFORMANCE Week 3 (cont.) ________________________ Dr. Teal McAteer-Early. Performance Management. HR system that includes processes used to identify, encourage, measure, evaluate, improve, and reward employee performance

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MANAGING AND EVALUATING PERFORMANCE Week 3 (cont.) ________________________ Dr. Teal McAteer-Early


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managing and evaluating performance week 3 cont dr teal mcateer early

MANAGING AND EVALUATING PERFORMANCEWeek 3 (cont.)________________________Dr. Teal McAteer-Early

performance management
Performance Management
  • HR system that includes processes used to identify, encourage, measure, evaluate, improve, and reward employee performance
  • Related to terms such as performance appraisal, performance evaluation, etc.
    • Although Performance Management is often considered to be a broader term
common purposes of performance appraisal
Common Purposes of Performance Appraisal
  • Administrative – to make employment decisions
    • Promotion, termination
    • Training—who to train; training needs in general
    • Compensation—merit increases
    • Legal justification for these decisions
  • Feedback and Development
    • Point out strengths and weaknesses
    • Identify corrective action to address weaknesses
    • Motivation
the criterion problem
The Criterion Problem
  • Difficulties involved in determining what performance is and how to measure it
  • Ultimate Criterion
    • Includes everything that ultimately defines success on the job
    • Is a construct – conceptual in nature
  • Operational Criterion
    • The aspects of performance that are actually measured
the criterion problem5
The Criterion Problem
  • Criterion Deficiency
    • When performance standards fail to capture the full range of employees’ responsibilities
      • E.g., focus on sale revenue but ignore customer service
  • Criterion Contamination
    • When factors outside of employee’s control influence his/her performance
      • E.g., machine breakdowns; differences in sales regions
potential performance criteria
Potential Performance Criteria
  • Output
    • Units produced, items sold, $ sales, commission earnings, etc.
  • Quality measures
    • # of errors, # of errors detected, # complaints/grievances, # commendations, rates of scrap/breakage
  • Lost time
    • Absences (unexcused), Lateness/tardiness,
    • Turnover (withdrawal) from training or job, transfers due to inadequate performance
potential performance criteria7
Potential Performance Criteria
  • Ratings
    • Performance appraisals by trainers, supervisors, peers, self
    • Performance in work samples, simulations, etc.
  • Others
    • Counterproductive behaviours
    • Safety records, accidents
    • Citizenship (voluntary) behaviours
legal considerations in pa
Legal Considerations in PA
  • Performance standards should be job-related
    • Based on job analysis (content validity)
  • Employees must be aware of performance standards
  • Managers must be able to observe the behaviour they are rating
  • Raters should be trained
    • Ratings should be valid / bias-free
  • Reasonable time frame for performance improvement
factors affecting legal decisions mcshane 1989
Factors Affecting Legal DecisionsMcShane (1989)
  • In cases involving dismissal due to poor performance, Canadian courts may consider the following:
  • Cause of poor performance
    • Within or outside of employee control
  • Effect of poor performance on employer
    • Organizations may be required to show adverse effect of poor performance
    • If found, opportunity must be provided to improve performance
factors affecting legal decisions mcshane 198911
Factors Affecting Legal DecisionsMcShane (1989)
  • Link between job duties and performance standards must exist
    • Manager was fired for poor interpersonal skills – court ruled in her favour because job description did not include interpersonal skills as requirement
  • Feedback / warnings must be provided before employee can be dismissed for poor performance
factors affecting legal decisions mcshane 198912
Factors Affecting Legal DecisionsMcShane (1989)
  • Credibility of appraisal source
    • Source of appraisal must be considered “balanced and detached” – i.e., fair and unbiased
  • Contrived appraisals
    • Courts tend to rule against appraisals that are done just to document poor performance
    • E.g., court ruled in favour of fired TD Bank employee because a management memo requested that the next appraisal contain negative comments
importance elements of pa
Importance Elements of PA
  • In general, Performance Appraisal systems – like selection systems – should be:
    • Valid
    • Reliable
    • Free from bias
    • Practical
    • Fairness is also critical
3 dimensions of fairness justice
3 Dimensions of Fairness / Justice
  • Distributive justice
    • Perceived fairness of the distribution of the rewards
  • Procedural justice
    • Perceived fairness of the procedure/system used
    • “Voice”
  • Interactional justice
    • Perceived fairness of the relationship with the rater(s); sincerity, etc.
slide15
Now some considerations about choosing the right instrument to increase the likelihood of the PA being valid, reliable, and free from bias
considerations re pa methods
Considerations re: PA Methods
  • Absolute judgments vs Relative judgments
    • Absolute
      • Compare employee to pre-established criteria / dimensions
    • Relative
      • Compare employee to other employees - ranking
considerations re pa methods17
Considerations re: PA Methods
  • What do we want to measure: traits, outcomes, or behaviours??
  • Traits (personality)
    • E.g., loyalty, dependability, initiative
    • Problems
      • too ambiguous
      • susceptible to bias
      • not legally defensible
      • focuses on person rather than performance
considerations re pa methods18
Considerations re: PA Methods
  • Outcomes – objective criteria
    • E.g., sales revenue, # of calls taken, # of complaints
    • Problems – influenced by factors beyond employee control
  • Behaviours
    • E.g., works well with others
    • Focuses on what employees do – what they should start, stop, and continue doing
    • 2 common instrument types: BARS, BOS
bars behaviourally anchored rating scales
BARS: Behaviourally Anchored Rating Scales
  • Format was developed to due lack of standardization (and reliability) across raters
  • Goal was to help the rater rate
  • Performance standards are concrete
    • Each standard consists of a number of specific, behavioural anchors on the rating form itself
    • The behavioural anchors cover the range of performance – from excellent to poor behaviour
    • Anchors are worded in the form of expecations – see e.g.
bos behavioural observation scales
BOS: Behavioural Observation Scales
  • Focus on behaviour
    • Based on job analysis – often critical incident technique
  • Performance ratings are based on the “frequency of use” criterion
    • How often employee engages in behaviour
    • Using a 5-point frequency scale
example of a bos criterion
Example of a BOS Criterion
  • Overcoming Resistance to Change
    • Provides employees with information about organizational change

Almost never 1 2 3 4 5 Almost

always

    • Addresses/responds to employee concerns and input regarding change

Almost never 1 2 3 4 5 Almost

always

developing behavioural observation scales bos
Developing Behavioural Observation Scales (BOS)
  • Collect critical incidents
  • Group similar incidents into a behavioural item
    • E.g., 2 critical incidents
      • Describes details of organizational change to subordinates
      • Explains why the change is necessary
      • Could be grouped into a behavioural item Provides employees with information about organizational change
    • 2 more critical incidents

(1) Listens to employee concerns

(2) Asks employee for help in making the change work

      • Could be grouped into a behavioural item Addresses employee concerns and input regarding change
developing behavioural observation scales bos24
Developing Behavioural Observation Scales (BOS)
  • Similar behavioural items are grouped into a meaningful behavioural criterion
    • 2 behavioural items
      • Provides employees with information about organizational change
      • Addresses/responds to employee concerns and input regarding change
      • Combine to form the behavioural (BOS) criterionOVERCOMING RESISTANCE TO CHANGE
      • The PA instrument is created by attaching a 5-point rating scale to each behavioural item
example of a bos criterion25
Example of a BOS Criterion
  • Overcoming Resistance to Change
    • Provides employees with information about organizational change

Almost never 1 2 3 4 5 Almost always

    • Addresses/responds to employee concerns and input regarding change

Almost never 1 2 3 4 5 Almost always

360 degree pa27
360-degree PA
  • Benefits
    • More complete picture of job performance
      • Different stakeholders may observe different behaviours
      • Target may behave differently with different stakeholders
    • Reduced bias because feedback comes from more than 1 person
    • Feedback from peers and subordinates useful for development purposes
360 degree pa28
360-degree PA
  • Limitations
    • Complex and time consuming
    • Potential for conflicting opinions
      • Same behaviours may be seen as positive by one group and negative by another group
      • E.g., manager who encourages participative decision-making
    • Peer, subordinate, and self evaluations not useful for administrative decisions (e.g., raises)
    • Peer and subordinate evaluations may jeopardize coworker relations
factors distorting pa ratings
Factors Distorting PA Ratings
  • Halo effect / error
  • Leniency / Strictness error
  • Central tendency
  • Similarity error
  • Recency effect
  • Contrast effect
  • Matthew effect
factors distorting pa ratings31
Factors Distorting PA Ratings
  • Halo effect
    • Tendency to provide similar ratings across different PA dimensions
  • Leniency / Strictness error
    • Leniency –when ratings are restricted to high part of scale
    • Strictness – when ratings are restricted to low part of scale
  • Central tendency
    • When raters avoid extreme ratings and restrict ratings to middle of scale
factors distorting pa ratings32
Factors Distorting PA Ratings
  • Similarity (“similar-to-me”) error
    • Tendency of rater to inflate ratings when they have something in common with the target
  • Recency effect
    • Ratings are based largely on employee’s most recent behaviour
  • Contrast effect
    • When an employee’s evaluation is biased upward or downward because of a comparison with another employee who was recently evaluated
factors distorting pa ratings33
Factors Distorting PA Ratings
  • Matthew effect
    • Tendency of raters to use previous evaluations as an anchor for subsequent evaluations
      • i.e., Employees receive the same appraisal results, year in and year out
      • Like a self-fulfilling prophecy -- if they have done well, they will continue to do well; if they have done poorly, they will continue to do poorly
    • "For everyone who has will be given more, and he will have an abundance. Whoever does not have, even what he has will be taken from him.”
    • (Matt. 25: 29)
reasons pa can fail
Reasons PA can fail
  • Rater lacks information re: an employee’s actual performance
  • Performance standards are unclear
  • Employee does not receive on-going feedback
  • Rater does not take PA seriously; not prepared for PA review; lacks PA skills
  • Review meeting is ineffective – feedback poorly delivered and/or received
  • Insufficient resources to reward performance
  • Lack of attention to employee development
summary of recommendations
Summary of Recommendations
  • Based on job analysis
  • Focus on behaviour (use BOS)
  • Top management must prioritize PA
  • Use multiple raters
  • Provide raters with extensive training
  • Ensure system is fair
  • Make sure performance management is on-going