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MANAGING ANDEVALUATINGPERFORMANCE
Week 3 (cont.) ________________________
Dr. Teal McAteer-Early
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Performance Management
HR system that includes processes usedto identify, encourage, measure, evaluate,improve, and reward employeeperformance
Related to terms such as per formanceappraisal , perform anc e evaluat ion , etc. Although Perform anc e Managem ent is often
considered to be a broader term
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Common Purposes ofPerformance Appraisal
1. Administrative to make employmentdecisions
Promotion, termination
Training who to train; training needs in general Compensation merit increases Legal justification for these decisions
2. Feedback and Development Point out strengths and weaknesses Identify corrective action to address weaknesses Motivation
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The Criterion Problem
Difficulties involved in determining whatperformance 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
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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 employees control
influence his/her performance E.g., machine breakdowns; differences in sales
regions
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Potential Performance Criteria Output
Units produced, items sold, $ sales, commissionearnings, etc.
Quality measures # of errors, # of errors detected, #
complaints/grievances, # commendations, rates ofscrap/breakage
Lost time Absences (unexcused), Lateness/tardiness,
Turnover (withdrawal) from training or job,transfers due to inadequate performance
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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
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The Appraisal Process
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Legal Considerations in PA
Performance standards should be job-related Based on job analysis (content validity)
Employees must be aware of performancestandards
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 performanceim rovement
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Factors Affecting LegalDecisions
McShane (1989) In cases involving dismissal due to poorperformance, Canadian courts may considerthe following:
1. Cause of poor performance Within or outside of employee control
2. 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
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Factors Affecting LegalDecisions
McShane (1989)5. Credibility of appraisal source Source of appraisal must be considered
balanced and detached i.e., fair and
unbiased
6. Contrived appraisals
Courts tend to rule against appraisals thatare 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 containnegative comments
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Importance Elements of PA
In general, Performance Appraisalsystems like selection systems shouldbe:
Valid Reliable
Free from bias Practical
Fairness is also critical
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3 Dimensions of Fairness /Justice
1. Distributive justice Perceived fairness of the distribution of the
rewards
2. Procedural justice Perceived fairness of the procedure/system
used Voice
3. Interactional justice
Perceived fairness of the relationship withthe rater(s); sincerity, etc.
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Now some considerations aboutchoosing the right instrument to
increase the likelihood of the PAbeing valid, reliable, and free frombias
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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
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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 whatthey should start, stop, and continue doing
2 common instrument types: BARS, BOS
A S
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BARS:Behaviourally Anchored Rating
Scales Format was developed to due lack ofstandardization (and reliability) acrossraters
Goal was to help the rater rate Performance standards are concrete
Each standard consists of a number ofspecific, behavioural anchors on the ratingform itself
The behavioural anchors cover the range of
performance from excellent to poor
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BOS: Behavioural ObservationScales
Focus on behaviour Based on job analysis often critical
incident technique
Performance ratings are based on thefrequency of use criterion
How often employee engages in behaviour Using a 5-point frequency scale
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Example of a BOS Criterion
I. Overcoming Resistance to Change1. Provides employees with information about
organizational change Almost never 1 2 3 4 5 Almost
always
2. Addresses/responds to employee concerns and
input regarding change Almost never 1 2 3 4 5 Almostalways
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DevelopingBehavioural Observation Scales (BOS)1. Collect critical incidents
2. Group similar incidents into a behavioura li tem
E.g., 2 critical incidents(1) Describes details of organizational change to subordinates(2) Explains why the change is necessary Could be grouped into a behavioural item Provides
emplo yees wi th info rm at ion abo ut organizat ionalchange
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
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DevelopingBehavioural Observation Scales (BOS)3. Similar behavioural items are grouped
into a meaningful behaviou ral c r i ter ion 2 behavioural items
1. Pr o v i d es em p l o y ees w i t h i n f o rm a t io n a b o u torg anizat ion al ch ange
2. A d d r es s es /r es p o n d s t o e m p l o y ee c o n c er n sand inpu t regard ing ch ang e
Combine to form the beh aviou ral (B OS)cr i ter ion OVERCOMING RESISTANCE TOCHANGE
The PA instrument is created by attaching a 5-oint ratin scale to each behaviou ral i tem
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Example of a BOS Criterion
I. Overcoming Resistance to Change1. Provides employees with information about
organizational change Almost never 1 2 3 4 5 Almost always
2. Addresses/responds to employee concerns and
input regarding change Almost never 1 2 3 4 5 Almost always
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360-degree PA
Subordinateratings
Selfassessment
Customerratings
Peerratings
Supervisorratings
TargetEmployee
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360-degree PA
Benefits More complete picture of job
performance Different stakeholders may observedifferent behaviours
Target may behave differently with differentstakeholders
Reduced bias because feedback comesfrom more than 1 person
Feedback from peers and subordinates
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360-degree PA
Limitations Complex and time consuming Potential for conflicting opinions
Same behaviours may be seen as positive by onegroup and negative by another group E.g., manager who encourages participative
decision-making
Peer, subordinate, and self evaluations notuseful for administrative decisions (e.g.,raises)
Peer and subordinate evaluations may
jeopardize coworker relations
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Questions / Comments ??
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Factors Distorting PA Ratings
Halo effect / error Leniency / Strictness error
Central tendency Similarity error Recency effect
Contrast effect Matthew effect
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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 ofscale
Central tendency
When raters avoid extreme ratings and restrict ratings
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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 employees most recent
behaviour
Contrast effect When an employees evaluation is biased upward or
downward because of a comparison with another
employee who was recently evaluated
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Factors Distorting PA Ratings
Matthew effect Tendency of raters to use previous
evaluations as an anchor for subsequentevaluations
i.e., Employees receive the same appraisalresults, year in and year out
Like a self-fulfilling prophecy -- if they havedone well, they will continue to do well; if they
have done poorly, they will continue to dopoorly
"For everyone who has will be given more,
and he will have an abundance. Whoeverdoes not have even what he has will be
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Reasons PA can fail
1. Rater lacks information re: an employeesactual performance
2. Performance standards are unclear
3. Employee does not receive on-going feedback4. Rater does not take PA seriously; not prepared
for PA review; lacks PA skills
5. Review meeting is ineffective feedback poorlydelivered and/or received6. Insufficient resources to reward performance7. Lack of attention to employee development
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Summary of Recommendations
1. Based on job analysis2. Focus on behaviour (use BOS)
3. Top management must prioritize PA4. Use multiple raters5. Provide raters with extensive training
6. Ensure system is fair7. Make sure performance management is
on-going
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Comments / Questions