Performance Management Professor Lucia Miree American University in Bulgaria
Performance Management Management = getting work done through others Manager’s performance is only as good as his/her employee’s performance Manager’s job = performance management of others
Performance Management Organizational system Focusing on employee performance Consistently applied throughout organization With a supporting structure
Names of Systems Performance Management Performance Appraisals Evaluation Systems Job Review Systems Feedback Systems
Performance Management Ensuring appropriate performance by all employees through: -Reinforcement -Rewards -Modeling -Coaching -Training -Development Using a consistent feedback system
Working of Performance Management Managers Speaks with Employee re: performance Continuously Once per Year Formal goals Organizational Reporting System Tied to Organizational Outcomes
Examples of System Output Words and What They Mean Exceptionally well qualified Made no major errors yet Active socially Parties & drinks too much Family is active socially Family drinks too much Plans for advancement Buys drinks for all of the boys Aggressive Obnoxious Uses logic on difficult jobs Gets someone else to do it Expresses himself well Speaks the local language Has Leadership qualities Is tall or has a loud voice Keen sense of humour Knows lots of dirty jokes Career-minded Back-stabber Relaxed attitude Sleeps at work Work is first priority Too ugly to get a date Independent worker Nobody knows what he does Good communication skills Talks on phone lots Loyal Can’t get another job
PERFORMANCE =Doing present job at acertain level (high or low) as measured by a formal system POTENTIAL = Includes future service, learning interest, motivation level
PROBLEM = Deviation from expectations Do something in different way Not do something Do something not expected/needed
Opportunity Reinforce/Reward Behavior Change Behavior Model Behavior Establish Culture
PERFORMANCE MANAGEMENT -Based on Scientific Management concepts -Focus on observable performance -Goal directed -Planning required and formalized -Consistent, continuous collection, analysis, and collection of data -Value of feedback reinforced -Facilitates benchmarking
Performance ManagementTrends Shift from viewing financial figures as main criteria to one of multiple indicators More weight on indicators of efficiency and effectiveness Change to viewing PM as on-going, evolving process
Principles of Performance Management Supports business-oriented strategy Is values based Communicates organizational mission Fulfills responsibilities to organizational members Enables employees to manage own performance Manages expectations (clarifies roles and responsibilities) Creates partnership between management and employee Emphasizes importance of measurement, feedback, and reinforcement Empowers employees Natural extension of management
Associated Costs Staff Costs Production and Processing Costs Training Costs Action Costs Opportunity Costs
Key PM Questions 1. Why assess performance 2. What performance to asses 3. How to assess performance 4. Who do assess performance 5. When to assess performance 6. How to communicate performance assessment
The WHY of Performance Management Systems -Administer Salary & Wages -Correct Performance/Behavior -Plan for Future (promotion, transfer, career dev) -Facilitate Decision-Making (counseling, terminations) -Facilitate Human Resource Planning -Create Culture -Building Good Relationships -Increase Organizational Loyalty -Determine Effectiveness of Selection and Placement Methods
WHAT to Assess Skills/Abilities/Needs/Traits of Individuals That Interact with the Organization to Produce Behaviors Which Result in Outcomes
Measures Focus Consistent indicators across industry or similar organizations Comparison of indicators over time in organization Comparisons with pre-determined standard
Approaches to PM Comparative Attribute Behavioral
HOW to Assess Performance Traditional Management-by-Objective Assessment Center Peer Review Panel Critical Events Upward Feedback 360 Degree
Techniques of PM Essay (open-ended) Management by Objective Ranking Paired Comparisons Forced Choice Forced Distribution Ratings: -Checklist -Scales -Behaviorally Anchored Ratings (BARS) Critical Incidents
Essay Technique Describe in detail the quantity and quality of the employee’s performance during the past twelve months. Describe the employee’s strength and weakness. How do you describe the employee’s potential within the company? What leadership skills does the employee bring to the job? What future development activities do you recommend for the employee?
Morgan Stanley’s Essay System • Consider objectives identified in prior year’s Summary as well • as this year’s objectives. • Evaluation: • StrengthsComments • 1. • 2. • 3. • Development AreasComments • 1. • 2. • 3.
Examples of essays on PMs…. His men would follow him anywhere, but only out of curiosity. I would not suggest breeding for this person. When she opens her mouth, it seems that it is only to change the foot that was previously there. He has carried out each of his duties to his entire satisfaction. He would be out of his depth in a car park puddle. This person is like a gyroscope: always spinning at a fast pace, but not really going anywhere. This person has delusions of adequacy.
Continued examples…. Since my last report, he has reached rock bottom and is digging. She sets low personal standards and then consistently fails to meet them. He has the wisdom of youth & the energy of old age. This person should go far. And, the sooner he starts, the better. In my opinion, this pilot should not be authorized to fly below 250 meters. This person works well under constant supervision and when cornered. This man is depriving a village somewhere of its idiot.
Management-by-ObjectiveExamples Employee will contribute to organizational profit margin by lower costs in department by 3.5percent. To implement new recruitment system, the employee will evaluate the effectiveness of the advertisements placed during the year.
Ranking Example Manager ranks all employees from best to worst: Overall performance On specific criteria (communication, customer relations skills, etc.)
Paired Comparisons Example Rank each employee grouping overall or on a characteristic: Employee A and Employee B Employee B and Employee C Employee A and Employee C Employee C and Employee D Employee D and Employee A Employee D and Employee B etc.
Forced Distribution Example Pace each of the employees in your department in the following categories based upon overall or specific category performance: Top 10 percent: 10-49 percent: 50 – 89 percent: Bottom 10 percent: Outstanding: Average: Good: Below Average: Unacceptable:
General Electric’s DistributionThe Vitality Curve Promotability HighMediumLimited Top Performers 10% Highly Valued 70% Least Effective 20%
Ratings Example: Checklists Program Auditor: _____ 1. Unable to separate important from irrelevant data. _____ 2. Omits important info from summaries. _____ 3. Cross-references to improve reporting. _____ 4. Produces summaries which lead to good reports. _____ 5. Requires excessive instruction to produce work. _____ 6. Unable to reduce data to manageable form. _____ 7. Communicates well with peers on reports. _____ 8. Fails to meet deadlines. _____ 9. Provides detailed, professional work. _____ 10. Protects confidentiality of information.
Ratings Example: Scales Rate the employee’s behavior on the scale provided. Excellent Good Fair Poor N/A 4 3 2 1 ___ Reasoning ability 4 3 2 1 ___ Decisiveness in Decision-making 4 3 2 1 ___ Imagination & originality 4 3 2 1 ___ Ability to plan and control 4 3 2 1 ___ Cooperation with peers 4 3 2 1 ___ Cooperation with management 4 3 2 1 ___ Professionalism 4 3 2 1 ___ Interpersonal skills 4 3 2 1 ___
Citibank’s Link to Compensation RatingsBonus “Above Par” 30% “Par” 15% “Below Par” 0%
Microsoft’s PA System • Overall Employee Rating: • = Exceptional performance rarely achieved; precedent setting results • 4.5 =Consistently exceeds all requirements & expectations work • highly valued • =Consistently exceeds position requirements and expectations; work often noteworthy • 3.5 =Exceeds position requirements; successful in all objectives • =Meets position requirements and expectations; meets most • or all objectives; needs some development for quality • 2.5 =Falls below performance standards and expectations; has performance deficiencies • 1.0-2.0 =Does not meet minimum requirements in critical aspects of job
Microsoft: Adding Distribution to Rankings 4.0 + = 35% of employees 3.5 = 40% of employees 3.0 or lower = 25% of employees
Ratings Example: BARS Indicate the appropriate level of performance on each factor: Quantity of work Quality of work Judgment Volume low & erratic Volume above expectations Satisfactory steady volume Results accurate and thorough Results generally inaccurate and not thorough Results always accurate; model work Does not always show good judgment; problem analysis not always adequate Systematic, analytical, good with complex problems Practical judgment, solves problems, difficulty with assessing relative value of factors
Microsoft Competency Toolkit FACTOR: Individual Excellence COMPETENCY: Intellectual Horsepower (is bright, intellectual sharp, learns quickly)
Microsoft Competency Toolkit FACTOR: Long-term Approach COMPETENCY: Developing people (provides job-relevant learning, developmental exercises, and feedback to enhance individual performance)
Critical Incident Example Employee Name:___________________________________ Date of Incident:__________________ Type of Incident:___________________________________ Individuals Involved: Description of Incident: Outcome of Incident: Recommendations: Date Discussed with Employee:____________ Supervisor Signature:______________________________ Employee Signature: ______________________________
Criteria for Performance Measures Relevant Reliable Discriminating Practical
Problems with Performance Measures Controllability Motivational impact “Fallout” Role Modeling Impact Reliability Relevance Control
WHO Should Assess Performance Superior Only Subordinate(s) Peers/Coworkers Self Customers Others Subordinates All Stakeholders
WHEN to Assess Performance Probation Period Annually (anniversary date, assigned date, set date for all) Semi-annually For Cause On-going As needed
How to Communicate PM Info Orally In Writing Formally Informally Public Private Moderated
Handling Performance Issues What to do Where to start How to do it
PROBLEM = Deviation from expectations Do something differently Not do something Do something not expected/needed