10–1

Morgan Stanley - Firm-wide 360˚ Performance Evaluation

• Managers and professionals selected pertinent data

• 360˚ feedback: superiors, peers, subordinates, internal clients

• Self-assessment• Broad evaluation criteria/detailed feedback

– Market/professional skills– Management and leadership– Commercial orientation– Teamwork/One Firm contribution (cross-selling)

10–2

Strategic Importance of Performance Assessment

• Consistency between organizational strategy, values and job behavior

• Including:– Defining performance– Appraisal process– Measuring performance– Feedback and coaching

10–3

Figure 10.1 Performance Management Cycle

10–4

Table 10.1 Multiple Organizational Uses for Performance Appraisal Information

Source: J.N. Cleveland, K.R. Murphy, and R.E. Williams, “Multiple Uses of Performance Appraisal: Prevalence and Correlates,” Journal of Applied Psychology, Vol. 74. 1989, pp. 130-135. Copyright © 1989 by the American Psychological Association. Adapted with permission.

10–5

Functions of Performance Assessment

• Performance Assessment as an Administrative Tool – Linking Rewards to Performance

• Salary & bonuses• Promotion/layoff/transfer/discipline

– Evaluation of HRM Policies and Programs

10–6

Functions of Performance Assessment

• Performance Assessment as an Employee Development Tool– Goal Setting– Reinforcing and Sustaining Performance– Improving Performance– Determining Career Progression Goals– Determining Training Needs

10–7

Criteria for a Good Appraisal System

• Validity– Content: measures important parts of job– Construct: actually measures performance

• Relevance: measures important characteristics

• Contamination: not influenced by extraneous factors

• Deficiency: encompasses whole job

10–8

Criteria for a Good Appraisal System

• Reliability– Inter-rater (more likely when raters

come from same level of organization)

– For subjective measures, know:• What type of measure was used?• Who used it?

10–9

“Just” Appraisal Systems• Distributive: rewards and punishments fairly

distributed• Procedural:

– Consistency: consistent across persons, time

– Bias suppression– Accuracy: correct information– Correctability: decisions can be modified– Ethicality: based on prevailing moral and

ethical standards

10–10

Criteria for a Good Appraisal System

• Freedom from Bias– Legal Issues of Fairness

• Race Differences• Age Differences

– Freedom from Rating Errors• Leniency Errors• Severity Errors• Central Tendency Errors• Halo Errors

– Why Do Rating Errors Occur?• Unintentional Errors

– Cognitive Information Processing (CIP)– Schemas

• Practicality: costs must outweigh benefits

10–11

Criteria for Avoiding Discrimination

• Rating content must be:– Job related (valid)– Developed from thorough job analysis

• Raters must observe job performance• Rater’s evaluations are based on objective,

specific factors• Ratings are collected and scored under

standardized conditions

10–12

Table 10.2 Why Supervisors Inflate and Deflate Ratings

Source: Based on C.O. Longnecker, H.P. Sims, and D.A. Gioia, “Behind the Mask: The Politics of Employee Appraisal,” Academy of Management Executive, Vol. 1, 1987, pp. 183-193.

10–13

Deciding What Types of Performance to Measure

• Trait-Based Appraisals– Abilities– Personal characteristics

• Behavior-Based Appraisals– Specific, well-defined job behaviors

• Results-Based Appraisals– “Bottom-line”– Outcomes/outputs (quantity) – Quality

10–14

Methods of Appraising Performance

• Objective Measures – Production Measures– Dollar Sales

• Opportunity Bias

– Personnel Data• Personnel Measures• Contamination

– Performance Tests– Business Unit Performance Measures– Overall Value

10–15

Methods of Appraising Performance (cont’d)

• Subjective Measures– Comparative Procedures

• Ranking– Straight Ranking– Alternate Ranking– Paired-Comparison Ranking

• Forced Distribution• Advantages and Disadvantages of Comparative

Procedures

– Absolute Standards• Graphic Rating Scales• Mixed Standard Scales

10–16

Figure 10.6 Examples of Typical Graphic Rating Scales

10–17

Methods of Appraising Performance (cont’d)

• Subjective Measures (cont’d)

– Weighted Checklists• Critical-Incident Technique• Behaviorally Anchored Rating Scales (BARS)

– Behavioral Observation Scales (BOS)

• Management by Objectives

10–18

Raters of Employee Performance

• Self-Evaluation

• Peer Evaluation

• Subordinate Evaluation

• Customer Evaluation

• 360-Degree Assessment

• Self-Managed Teams

10–19

Enhancing the Measurement of Employee Performance

• Training Evaluators– Rater Error Training (RET)– Frame-of-Reference (FOR) Training– Information-Processing Approaches

• Observation Training• Decision-Making Training

– Which Training Method is Best?

• Feedback to Evaluators

10–20

Feedback of Results: The Performance Appraisal Interview

• Types of Feedback Interviews– Tell and Sell– Tell and Listen– Problem Solving

• Problems with the Appraisal Interview– Disagreement and Defensiveness– Multiple Purposes– Impression Management in the Feedback Process

10–21

Feedback of Results: The Performance Appraisal Interview

• Improving the Performance Appraisal Interview– Feedback Specificity– Subordinate Acceptance– Setting Clear Goals

10–22

Performance Feedback (Hill and Gabarro)

• Timely

• Descriptive/specific

• Without subjective, general attributes (i.e., objective and specific)

• Oriented toward problem solving and action

10–23

Coaching (Hill and Gabarro)

• Be as specific as possible

• Take advantage of critical incidents

• Identify specific developmental agendas

• Identify resources available

• Adapt coaching style to the individual

10–24

Managing Performance (Hill and Gabarro)

• Show interest in long-term career development

• Provide supportive autonomy

• Set high, attainable goals

• Hold subordinates accountable

• Give problem-solving feedback

• Serve as a role model