Performance Management

Definition

“Performance management is a continuous

process of identifying, measuring, and

developing the performance of individuals

and teams and aligning performance with the

strategic goals of the organization”

(Aguinis, 2009, p. 2)

One Model of the Performance Management Cycle

Develop Employee

Manage and develop

career goals of

employee

Set Expectations

Plan performance by setting

standards

Monitor Performance

Give ongoing feedback

Conduct Review

Prepare ratings and hold

annual performance review

Define the Job

Relate work performed by

individuals to unit objectives

and organization goals

Solve Problems

Define and solve

performance-

related problems

Author Unknown

A Few of the Uses of Performance Evaluation Results

(Aguinis, 2009; Wildman, Bedwell, Salas, & Smith-Jentsch, 2011)

• Improve Organizational Performance

• Compensation

• Promotion

• Increase Motivation

• Training/Development/Feedback

• Workforce Planning & Staffing

• Legal/Validation/Research

Termination

Problem

• Performance management systems try to create an

explicit link between individual performance and

organizational strategic goals

BUT

• There is a “Line of Sight Problem” (i.e., – it is sometimes

hard for an employee to see the connection between individual behavior

and organizational outcomes, like higher stock prices)

(Aguinis, 2009; DeNisi & Sonesh, 2011, p. 269)

Who Might Evaluate Performance?

• Managers/supervisors

• Self

• Peers

• Subordinates

• Customers/clients

Given the desired objective to improve employee

performance, recent research has indicated the

importance of:

1. Rater motivation

2. Perceptions and reactions of the employee

(DeNisi & Sonesh, 2011)

Example

• Rater motivation - evidence indicates that raters may

intentionally distort ratings

• ”…when trust is low, the motivation to be accurate will

decrease, and raters will tend to elevate ratings because

accurate but low rating would seem to serve no positive

purpose and rather contribute to employee dissatisfaction”

(DeNisi & Sonesh, 2011, p. 264)

A Few of the Factors That Influence Evaluations

Rater

Skills

Motivation

Characteristics

Performance

Employee

Skills

Motivation

Characteristics

Performance

Rating Environment

Purpose of Rating

Time Pressures

Legal Pressures

Process

Rating Format

Ranking/Comparisons

Graphic

Behavioral

MBO

Performance Rating

Performance Management: Legal Expectations

(cf. Bernardin & Beatty, 1984)

An early review examined 23 court cases involving alleged

violation of Title VII of the 1964 Civil Rights Act regarding

discrimination in the performance evaluation process.

The plaintiffs (the person[s] bringing the lawsuits) won 22

out of the 23 cases.

Performance

Management:

Legal

Expectations

(Pulakos, 2004, p. 28)

Conceptual Level

Ultimate CriterionActual Criterion

Criterion

Contamination Criterion

Relevance

Criterion

Deficiency

Characteristics of a “Good”

Performance Measure

Reliable

Relevant

Sensitive

Practical

Acceptable

Simple Definitions of Reliability & Validity

Validity Extent to which a test measures

what it is supposed to measure

Reliability The consistency and stability of

measurement

Judgment vs. Rating

• “Judgment” is different from a “rating”

• Judgment is a “private evaluation”

• Rating is “public statement” of that evaluation

• Research indicates they are NOT necessarily

consistent with one another

(DeNisi & Sonesh, 2011, p. 259)

A Model of the Performance Rating Process

Attend

Observe

Record

Classify

Integrate

Rate

Rater Errors in Performance Measurement

• “Similar to me”

• Contrast

• Distributional errors (e.g., leniency, severity, central tendency)

• Halo / Horns

Acceptability

Affected by Three Categories of Perceived

Fairness

Procedural Interpersonal Distributive /Outcome

Example Evaluation Method: Forced Distribution

(Riggio, 2000, p. 166)

Example Evaluation

Method: Simple

Graphic Rating Scales

(Riggio, 2000, p. 168)

Example Evaluation

Method: Behaviorally

Anchored Rating Scale

(BARS)

(Muchinsky, 1983, p. 262)

BARS Development Process

• Generate list of critical incidents (Group A)

• Sort incidents into 5 to 10 performance dimensions (Group B)

• RETRANSLATE scrambled incidents back into dimensions (Group C; 50 – 80% must agree on appropriate placement)

• Rate surviving incidents on effectiveness/ineffectiveness (Group C)

• Compile means and standard deviations of effectiveness ratings

• Set standard deviation (SD) criterion (cutoff) for retention (e.g., SD < 1.5)

• Keep incidents with low SDs

• Use mean effectiveness rating to place incidents as “anchors” on scale for each dimension

Example Evaluation

Method: Behavior

Observation Scale

(BOS)

(Wexley & Latham, 1991, p. 119)

Example

Evaluation

Method:

Behavioral

Assessment

Form

(Pulakos, 2004, p. 16)

Performance Management: “Red Flags”

• Employees are not given performance standards

• Employees are not aware of performance standards

• Almost all employees receive the same ratings

• Managers turn in the same review

• Managers and employees do not agree on when the last

appraisal interview occurred

• Minimal documentation of reasons for discharges

• Employees are promoted on the basis of false

information

(Phillips, 1987)

Contributions of Effective Performance

Management Systems

• Increased motivation to perform

• Greater supervisor insight about subordinates

• Clearer understanding of job expectations

• Better protection from lawsuits

• More clearly distinguish levels of performers

• Administrative actions are perceived as more fair

or appropriate

• More positive employee reactions

(Aguinis, 2009, p. 6)

Dangers of Poorly Administered

Performance Management Systems

• Use of false or misleading information in making

employment decisions

• Wasted resources (e.g., time and money)

• Damaged relationships (e.g., diminished trust)

• Decreased motivation to perform

• Increased risk of litigation and/or grievances

• More negative employee reactions (e.g.,

turnover)

(Aguinis, 2009, p. 9)